November 03 2009
Integrating different perspectives on Open Innovation
Tagged Under : Bekerley, Center for Open Innovation, chesbrough, collaboration, collaborative innovation, collective intelligence, communitites, competitors, crowdsoursing, Eric von Hippel, global innovation, global innovation market, Henry Chesbrough, innovate, innovation process, innovation results, innovation sources, investigators, new collaboration, new markets, new technology, OBEA, Open innovation, R&D, R&D budget, research group, research projects, technologies, University of California
Aitor Bediaga is a computer engineer from the Universidad de Deusto and MBA from Mondragon Unibertsitatea. At present he is professor and investigator at Mondragon Unibertsitatea and is involved in research projects related to open innovation, social networks and enterprise 2.0
The term Open Innovation was coined several years ago but only in the last two years it seems to become popular among those responsible for innovation within leading organizations. Open innovation is a relatively new term although it involves certain aspects that are not . The present economic, social and technological circumstances are generating a paradigm shift at the innovation systems. Some of the main facts responsible for the said change are:
Globalization. In a world where globalization is a fact and our competitors threaten us from across the borders with hard to beat competitive advantages, organizations need to seek excellence to stay in the market. The world has become global and competitors are able to reach any domestic market as fast as local organizations. But the good news is that there is a bigger number of potential customers. Customers can be anywhere in the world and new technology and low cost air companies have made them easily reachable. Global production, new markets such as India and China and outsourcing practices become drivers of global innovation. In brief, organizations will have to implement a global innovation policy which apart from being global will implicate distributed collaborative work.
Loss of competitiveness. Organizations have lost the important competitive advantages provided by the abundance of information. Information is not power anymore. According to Irving Wladawsky-Berger, IBM Vice President of Technology and Strategy: This emerging era is characterized by the collaborative innovation of many people working in gifted communitites, just as innovation in the industrial era was characterized by individual genius.
Therefore companies need to maintain their competitive advantages not only via their natural allies such as technological organizations, universities and so on but relaying on their own competitors, customers and employees.
Democratization of the technologies. It is true that developed countries adopt new technologies increasingly fast but in developing countries adoption rate is extremely high too. Most homes have a computer and internet access. Some young users consider computers a home appliance, essential for life, such as a television set, the fridge or the microwave. But it is not the computer only, any individual fond of photography, astrology or any other activity has enough technology available to become an amateur carrying out professional activities.
More demanding users. Users are not simple consumers with a passive behavior towards the product. They have adopted a much active attitude. In fact they have party assumed the producer role. There is a new term –prosumer- to describe those producing goods, services or experiences for their own use and pleasure, before selling or exchanging them. According to Charles Leadbeather “From astronomy to activism, from surfing to saving lives, Pro-Ams – people pursuing amateur activities to professional standards – are an increasingly important part of our society and economy. For Pro-Ams, leisure is not passive consumerism but active and participatory, it involves the deployment of publicly accredited knowledge and skills, often built up over a long career, which has involved sacrifices and frustrations.”
Above facts imply the idea that the organizations dealing with systems of innovation have to adapt to the new era. The individual efforts done by companies in order to innovate have to disappear and give way to a more open and permeable innovation method where collaboration and sharing with external organizations and individuals are the key words.
One of the first investigators to coin the term open innovation was Henry Chesbrough, executive director of the Center for Open Innovation at the University of California, Bekerley. Professor Chesbrough sustains that R&D monolithic models retrain the flow of intellectual capital into organizations, limiting the chances for innovation. According to Chesbrough’s point of view on open innovation, there is a global innovation market where the innovation is a pure commodity that can be bought, sold, licensed, lent and/or reinvested.
Some investigators maintain different opinions on the open innovation concept and the functional areas it covers. OBEA, research group of Mondragon Unibertsitatea, has arranged the different views in four scenarios.
Intraorganizational open innovation. In this scenario the innovation process is opened to all the members of the organization i.e. any worker can participate in it. This is the scenario where everybody can participate in the innovation process. Suggestions boxes and pools of ideas are example of practices used to develop the above described policy but new and more efficient tools have to be available.
This setting originates after considering the incoherence of having an organization open to the exterior but closed to internal collaboration. In this scenario is important to identify the participation channels as well as the incentives for the employees transferring their knowledge to the organization.
Interorganizational open innovation. This scenario have been examined in depth by several experts and among them Henry Chesbrough. It involves accepting the collaboration of external agents such as suppliers, advisers, universities, technology centers and even competitors.
According to Chesbrough and Schwartz the collaboration in the development of products or services is one of the main issues in the open innovation models. The use of external partners produce business models that reduce the R&D budget, improve the innovation results and open new markets.
When shifting an organization to this scenario, new collaboration and co-creation practices have to be employed. That means a certain loss of control since more than one organization takes part in the process and therefore decisions will have to be made by the different agents participating in the creation of the product or service.
User Innovation. This is a kind of collaborative innovation where users have a capital role. Different investigators such as Eric von Hippel and Charles Leadbeater conclude that users are one of the chief innovation sources and therefore it seems logical to define scenarios where the procedure for users and producers collaboration and co-creation is defined.
Users innovation is not generated through every single user but only via the innovative user who Eric von Hippel calls lead user. When these lead users are allowed to participate in the processes of innovation and co-creation of products and services, the organizations can improve their development pace and reduce costs associated to development efficiently.
The shift allows organizations to learn from users and share experiences in the process of creating a product or service that meets better the users’ requirements. In 1776, the prominent economist Adam Smith pointed out that many of the machines used in the manufacturing industry had been invented by common people. Some years later, Charles Bagage acknowledged the capability of the workers to innovate and create new tools or to simplify industrial processes.
The following responses make clear the growing importance of innovation generated by users
• Organizations are developing products based on contents generated by users. Many products and systems emerge as a direct result of users contributions and sharing of their own contents.
• Organizations make toolkits available to users so that they innovate
• Organizations are disclosing the architecture of products to users. This strategy has been proved to be really effective in the case of the most sophisticated users innovation processes
• Organizations are hiring lead users to involve them in the development of new products. Users inform of new developments or test new products, take part of users communities or become beta-testers of new products.
User innovation allows the incorporation into the organization of the innovation capacity held by the users of those products and services generated by the organization. Therefore one of the main benefits is to take advantage of the users talent and increase the social capital of the organization. This approach to users allows a more efficient identification of the market needs and co-create with the user and eventually minimize the risk of commercializing new products. But it is not easy for users to get involved in the organization processes. There are many difficulties to attract and interest users in the co-creation course and to establish a mechanism which preserves the products and services quality level.
Collective innovation. Under the idea of collective innovation lays the concept of collective intelligence. Collective intelligence is an intelligence form that emerges from the collaboration and association of many individuals. George Pór defined the collective intelligence as “the capacity of human communities to evolve towards higher order complexity and harmony, through such innovation mechanisms as differentiation and integration, competition and collaboration” Collective innovation allows the participation of anyone in the organizational innovation process. In this case the organization has to consider issues such as the lead users governance, support to of users collaboration, etc. Writer Jeff Howe and Mark Robinson editor of the magazine Wired have identify this scenario as crowdsoursing and defined it as “the intend to substitute the selective contracts and specific formation of work forces by means of massive participation of volunteers and the application of auto-organization principles.
As an example of application of the collective intelligence, we point out two companies: Threadless and iStockphoto. The first one, Threadless, was establish by Jake Nickell and Jacob DeHart who met in a community of T-shirts designers. Both quit university and decided to host a contest where the jury would be the general publish who would vote via the Internet. The idea was such a success that they decided to maintain the website and encourage the users to post their designs. Their promise was to print the weekly winning t-shirt and sell it via Internet.
Above described scenarios make clear the need of a new policy which allows capturing different innovation sources located out of the organization and this is made by opening the organization to these external innovation sources. Each organization will have to decide on the scenario they prefer depending upon the market sector they belong to, their resistance to changes, the people involved and their needs.
We, from the research group OBEA, would like to study in depth each possible scenario, examine the methods for the organizations to shift to any of the said scenarios and define the eventual benefits generated by them. Right now it is important to get moving, demolish the thick walls surrounding the organizations as to let fresh air and light into them.
The benefits of open innovation during the current economic downturn have only recently been analyzed.
This course focuses on entrepreneurship, intrapreneurship and corporate venturing with focus on new product/new market combinations including a finance, marketing, sales, technology and human capital framework relevant for start-up ventures. During the course, Open Innovation is introduced as a tool to create a meeting ground for corporate environments, universities and start-ups where resources, knowledge but especially new business options can jointly be developed.
La mayoría de las innovaciones fracasan. Y las compañías que no innovan desaparecen.
