Open Innovation: Comparing Collaborative and Non-Collaborative Idea Sharing in SMEs

Open Innovation has been hyped for over a decade now. Despite of the fact that many researchers have been researching core aspects of the Open Innovation definition – as Henry Chesbrough has put it in 2003 and redefined it in 2010 – the concept has somewhat ‘blurred’, meaning that Open Innovation oftenly is mistaken for related terminology, such as (plain and easy) collaboration, co-creation or corporate transparancy. So it’s time to make choices…what is Open Innovation and what is not Open Innovation?

Ed Cottam, a researcher currently undertaking a PhD on Open Innovation at the Newcastle Business School, recently started an extended research study to break down the topic of open innovation into its bare essentials. This way he aims to be able to identify the key concepts that really matter and removing the superfluous.

He is asking your help, as part of the Open Innovation expert community, to gather as much qualitative information as possible. If you have experience in the field of (open) innovation or innovation management, he (and the whole community) is desparately waiting for your input.

Please answer the following questions (preferably in a comment, but an email will also do fine); leave your email address and we’ll share the final results with you personally. Thanks in advance on behalf of Ed Cottam!

  1. Please specify your current position/organisation and your experience with Open Innovation. Please specify an URL to your Linkedin-account so that Ed Cottam is able the check your credentials (for research purposes).
  2. Currently, what are the key on-going debates within open innovation?
  3. What are the key perspectives in open innovation?
  4. What resource(s) would you recommend a PhD student study, providing an excellent account of the chronological development, perspectives and debates in open innovation? This could be a thesis, article(s) or book(s).
  5. If you were to train a student for 8 weeks so they could produce an excellent, PhD standard literature review on open innovation and you had a million dollars on the line, what would you have them focus on? What would that programme look like?
  6. Do you know any researchers who’ve tackled this corpus very effectively and efficiently? Who are they? What did they do that was different?
  7. What are your favourite open innovation instructional books and resources? If a PhD student had to teach themselves, what would you suggest they use?

Who’s kicking off?

Innovation Management Game: start-up of the year

Innovation Management Game: start-up of the year

Just like last year, we’ll publish a (small) list containing the most promising start-ups of the year. Obviously, we’ll share our opinion from the perspective of Open Innovation by answering the following questions:

  • Does the start-up contribute to the field of Open Innovation?
  • Does the start-up contribute to the field of Innovation Management?
  • Does the start-up contribute to the European knowledge economy?
  • Is the product/idea innovative?
  • Does it meet customer needs?

1st: Innovation Management Game

This year, the number 1 position goes to the Innovation Management Game. The Innovation Management Game is a business strategy simulation game for universities, higher education, business schools and corporate/executive trainings. The game centralizes topics like Open Innovation, Co-Creation, Innovation Management and Business Model Innovation.

Does the start-up contribute to the field of Open Innovation? 5/5
Does the start-up contribute to the field of Innovation Management? 5/5
Does the start-up contribute to the European knowledge economy? 5/5
Is the product/idea innovative? 4/5
Does it meet customer needs? 5/5
Overall: 4.8/5

2nd: Owlin

The second position goes to Owlin; a start-up in the financial sector that scans and analyzes social data and creates insights in financial opportunities before organisations and press offices would be able to recognize it themselves. Owlin is part of the Rockstart’s Acceleration Programme and received earlier this week €200.000 euro on venture capital.

Does the start-up contribute to the field of Open Innovation? 4/5
Does the start-up contribute to the field of Innovation Management? 4/5
Does the start-up contribute to the European knowledge economy? 5/5
Is the product/idea innovative? 5/5
Does it meet customer needs? 5/5
Overall 4.6/5

 3rd: Fosbury

Just a few months online, however already getting wide attention, Fosbury. A start-up, developed by two of the former founders of Yunoo, that enables organization to quickly segment and advertise coupons and vouchers to smartphones. We’re expecting this type of organisation to set back the traditional paper advertising markets before the end of 2013.

Does the start-up contribute to the field of Open Innovation? 4/5
Does the start-up contribute to the field of Innovation Management? 3/5
Does the start-up contribute to the European knowledge economy? 5/5
Is the product/idea innovative? 4/5
Does it meet customer needs? 5/5
Overall: 4.2/5


Vodafone shares Headquarters with High-Tech Firestarters

On April 10th, Vodafone will open up part of their recently finished new regional headquarters in Amsterdam for high-tech potential. The first group of firestarters will derive from the cross-European competition Startupbootcamp. At maximum 10 teams will be approved for an acceleration phase in this brand new facility, offering them mentoring, financial support, expertise and tapping into a high-end brand name.


According to Patrick de Zeeuw and Ruud Hendriks, co-founders of Startupbootcamp Amsterdam – the local intitiative as part of the cross-European network – “Startup teams from all around the world have sent in their applications. We are now busy rating all the applications. Teams with high ratings will be invited to pitch live or on Skype the following weeks.” The team went through a serious selection process: in February all participators had to pitch through Skype and live meetings, resulting in 20 teams being invited to the finals in March. During those finals 20 teams presented their ideas and 10 of them were finally selected for the intensive acceleration programme. The companies who will start on April 10th are:


Open Innovation Platform

According to Startupbootcamp Amsterdam these companies will set off in a 6 month project providing them free office space, free housing in Amsterdam, €17000,- funding per team, a sponsor package worth over €75000,- including fiscal advise, marketing advise, software, server space, testing in the Vodafone Innovation Lab and business model advise and the possibility to tap into the experience and knowledge of over 300 mentors in Europe who attached themselves to the project.

A New Model for Innovation: Fast Track Innovation

A New Model for Innovation: Fast Track Innovation

Recently, I spoke to Deloitte‘s Innovation Concepts Manager Marc Maes and Innovation Consultant Klaas Langeveld about their idea of managing innovation and idea generation within companies. They explained me about their Fast Track strategy and their home-made Innovation Maturity Model. The model intrigued me because of its fairly complete coverage of innovation-related issues and its slim simplicity. It triggered me to grab some literature to find prove of this model. My rationality: if it looks simple and complete, it must be good. And if it’s really good, it must be (partly) supported by earlier findings.

Deloitte’s Innovation Maturity Model: a short explanation.

Below, you’ll see the adopted version of Deloitte’s Innovation Maturity Model. The goal of the model is to “score” companies performances on innovation in the model. As Marc and Klaas said, probably in slightly other words, the line should be straight and preferably as high up as possible. Take a look for yourself:

So in the basis the model contains two axes, both unnamed. I’ll try to figure out correct names for them later on. On the vertical axe we’re basicly seeing four forms of doing business. On the horizontal axe we’re seeing management topics, three of which are combined into one: the innovation process. The result of the model would look something like this (I tried to complete them for [edit: anonymized on request], two companies I know fairly well):

Why is it good?

Now, it is time to look into some literature and give the two axes name plates. First of all, the vertical axe. The four aspect seem to correlate on “innovation effectiveness”. In innovation literature, when researching the effectiveness of innovation, scholars are often referencing to Organizational Development. Basically, the four above-mentioned steps have a lot in common with Greiner’s model of organizational growth (Greiner, 1972), which still is the most valued model about organization growth. Another perspective would be Rothwell‘s generations of innovation, who looks into adopted innovation models over time and shows the increasing professionalization of innovation management literature. The first three aspects are based on Greiner’s work, the “Network”-factor in Deloitte’s model is more or less based upon Rothwell’s work. Moreover, another traditional model organizational development – and later oftenly used to explain cultural differences – is Quinn & Cameron‘s model for Organizational Growth.


So, to be scientifically correct, I would suggest to use “organizational development” as the dimension of the vertical axis. And, if we would like to stick to just four aspects, then use:

  • Adhocracy-oriented organization
  • Interal-oriented organization
  • Hierarchy-oriented organization
  • Market-0riented organization

The second axis looks like two groups of aspects that are of interest for innovation managers. But why these? I’m seeing two different groups of aspects:

  • Change management issues: what to do when you want your organization to change (develop)?
  • Innovation process: how to manage your innovation process better?

For the first item, I would suggest to use one of the widely adopted change management models. For instance, the six logical levels interpretated from organizational perspective:

  1. Mission: is innovation part of your mission statement? Why (not)?
  2. Identity: is innovation part of your identity?
  3. Values: is innovation part of your key values? Is it part of your companies’ culture? How do you manage this?
  4. Knowledge: is your company competent on innovation? Do you include innovation in HRM?
  5. Behaviour: see next.

For the second item, which is all about behaviour, Deloitte has suggested three steps that make up the process of innovation. Many scholars have looked into these processes. I’ve gathered some of them:

(Gopalakrishnan en Damanpour 1997) (Adams e.a. 2006) (Goffin en Pfeiffer 1999) (Verhaeghe en Kfir 2002) (Rothwell 1992)
Idea Generation Knowledge management Creativity Idea Generation Idea Generation
Project Definition Human Resources Technology Acquisition
Problem Solving Strategy Innovation Strategy Networking
Design and development Project management Portfolio Management Development Developing,
prototyping & manufacturing
Marketing and commercialization Commercialization Project management Commercialization Marketing &

What we see is that there is no standard for the innovation process. But most of the literature suggests at least three items to be part of every innovation process:

  1. Idea Generation
  2. Concept Development
  3. Commercialisation

Those items are indeed very coherent with Deloitte’s model for innovation. To my opinion, “knowledge management” should be an integrated part of the innovation process. And then I mean “external knowledge management”, or, if you wish, market research or crowdsourcing. It should be step 0.

Conclusion: a practical model for innovation

All in all, Deloitte’s model would suffice for practical implementation and for companies looking for a way to place their own activities into perspective. Although it needs scientific perfectioning, it is very usable and friendly. What do you think? How is your company performing on the above-mentioned aspects?

Note: Deloitte did not instruct or reward me in any way for writing this article. Above-mentioned perspective is my personal reflection of their model. In fact, we are not only friends, we are also competitors, but that doesn’t mean I could not be interested in their perspective on innovation 😉


6 leading pharma players join forces to beat costs

pharma largeSix leading companies from the pharmaceutical industry have decided to join forces to beat cost pressures. While on the one hand being strong competitors, they on the other hand decided to get together and share best practises in “a bid to improve efficiency and  bring down rising operation costs.”

This article was brought to our attention by one of our readers; thanks for sharing this example with us, Aravind Ananthakrishnan

We are talking about Lupin Pharmaceuticals, Aurobindo Pharma, Zydus Cadila, Orchid Chemicals  and PharmaceuticalsDr Reddy’s Laboratories and Ranbaxy Laboratories, together generating annual revenues of more than €6 billion euro. The collaboration gave themselves a name: LAZORR.

In the first months they have learned many lessons from each other, for instance:

  • They used Ranbaxy’s best case of buying power from India and so cutting on the energy bill.
  • When visiting each others plants, they saw Orchid using a condensate recovery system in their boilers, which cut down water usage.
  • From Ranbaxy, they learned to use poweroperated boilers instead of steamoperated ones, increasing efficiency.
  • They joined forces on procurement, such as buying crude oil. “Procurement calls are being taken on the basis of our discussions and collective understanding of the market,” says H.T. Patel of Zydus Cadila, who heads LAZORR’s purchase and procurement platform.
  • They also joined forces to see trends coming, looking out of the industry borders itself.

More examples can be found in the original article at Business Today or download a copy here.


Exclusive preview: Managing Open Innovation

Exclusive preview: Managing Open Innovation

We collaborated with Marcel Bogers, Associate Professor* at the University of Southern Denmark, to show you an exclusive preview of a lecture on “Managing Open Innovation”, that will air on Danish television later this winter. The lecture is about the “sources for innovation”: how to obtain and make use of external knowledge to commercialize ideas into innovations.

The talk focuses on Open Innovation and the role that companies and users play in the process. He addresses three steps:

  1. Obtaining
  2. Integrating
  3. Commercialization

In obtaining external knowledge for innovation, he firstly shows some examples of companies collaborating. When the talk continues, he moves towards the increasingly important role of consumers in this process, building a bridge between Open Innovation and, for instance, Co-Creation. Marcel Bogers referring to an example of the development of the internet:

“Is it something that came about because some large firm invested a lot in R&D and is now making a lot of money from it? Not really. It was Tim Berners-Lee – who was working at CERN in Geneve – who invented the internet. Did it came from large R&D investments? No, he just needed something to work more effeciently. So in fact, users are very important sources of innovation.”

His elaboration on co-creation as a substantial element of Open Innovation, is (in my opinion) one of the best parts of the lecture. Bogers gives several great examples of products that make up our daily routines and are basicaly invented by ourselves. Bogers: “Sometimes, it doesn’t come from users, but from specialists or small groups of users. And sometimes the experts and users join forces.”

He also refers to a recent study on the impact of consumers in R&D. In the UK alone there are some 3 billion people involved in innovating activities and they spend approximately £5 billion  on technological innovations. This is incomparable to the roughly 22.000 people actually working in R&D and is twice as much expenditure as corporate R&D. This leads to the hypothesis that the closed model of innovation isn’t longer valid anymore.

Watch the full lecture:

Do you have any further questions?Marcel Bogers

Bogers indicated that he will be glad to answer any questions regarding his talk: “If you are interested in
some of the references, let me know, as most of the references to the research upon which I base the talk aren’t visible in the lecture. Most of the material is coming from my own work with various collaborators, and I would be happy to share or discuss this work.” Please feel free to drop your question or remark below.

We will update this post once it has been aired on Danish Television.

*As of Febraury 1, 2012.

Teaming up on Open Innovation: art or science?

Teaming up on Open Innovation: art or science?

Earlier this week, ABN AMRO, released a report on Open Innovation, titled “Teaming up on Open Innovation: art or science?”. Although solely released for the food sector, it explores Open Innovation theory from a new and interesting perspective. The report is authored by prof. dr. Omta (University of Wageningen), dr. Fortuin (Food Valley) and drs. Dijkman (ABN AMRO).

The core of the article consists of 5 key elements: the critical (failure) factors for Open Innovation.

What are the critical (failure) factors of Open Innovation?
  • Defining problems and setting goals: according to the authors there are three ways of overcoming this issue. First of all, do a lot of (premature) research and dare to stop when you’re on a dead end road. Secondly, create road maps. Meaning: use trends and market knowledge to look at least 5 years ahead, because that’s time it takes for a radical innovation to land. And lastly, “look different, look foward”, referring to Henry Fords quotation: “If I had asked people what they wanted, they would have said faster horses.”
  • Partner selection: try to find partners as fast as possible. Management commitment in this process is essential. Also, don’t be egocentric. Open Innovation is about contributing rather than perceiving. And lastly, there is more contracts. A succesfull collaboration is built by mutual trust and commitment.
  • Building a contract: set rules and find and define the risks that are involved in collaboration. It is easy to say that risks are inevitable, but in fact, they are not if you think about them thouroughly.
  • Executing the Open Innovation project: don’t let fear rule the process. It happens to every project that – at some time – there is some distrust or mistrust in the partnership. Invest in trust, do what it takes. Link cultures and communicate oftenly and profoundly. This also means investing in speaking each others (technical) language and managing conflicts.
  • Monitoring the project: start off by knowing how important costs are, how the project will be managed and what other preconditions are necessary during the project.

Art or Science?

Oddly, the report doesn’t give an answer to the question that is raised in the title of their work. Which gives us the opportunity to ask you: what do you think: is Open Innovation art or science?

What Steve Jobs did (not do) for Open Innovation

Last autumn Steve Jobs passed away and everybody seems to agree: Steve Jobs was an inspiring and creative leader. His visionary view on technology stood at the basis of several radical innovations, which changed the lives of almost every single one of us. The fact that the iPhone, iTunes and the iPad are probably the three most important “disruptive innovations” of the last decade, surely isn’t a point of discussion. However, what does come to mind when debating about key issues of innovation at Apple’s is the fact if their way of innovation is future-proof. Apple has been blamed regularly that the company has proven to be more than average skilled to exploit the consumer by utilizing above-mentioned radical innovations. Which is an effective Business Model as long as there is a constant of flow of radical innovation finding its way through the funnel. But: is Apple’s methodology really sustainable?

Open Innovation:

Characteristic for a sustainable business model are the following 6 fundamental principles of Open Innovation:

  1. Not all the smart people in the field work for us. We need to work with smart people inside and outside the company.
  2. External R&D can create significant value: internal R&D is needed to claim some portion of that value.
  3. We don’t have to originate the research to profit from it.
  4. Building a better business model is better than getting to the market first.
  5. If we make the best use of internal and external ideas, we will win.
  6. We should profit from others’ use of our IP, and we should buy others’ IP whenever it advances our business model.

Let’s take a closer look on these elements:

Steve Jobs & Open Innovation:
  1. Steve Jobs has built its organisation around the best people. And the best people should work for Apple. The New York Times has published about this phenomenon:

    “In choosing key members of his team, he looks for the multiplier factor of excellence. Truly outstanding designers, engineers and managers, he says, are not just 10 percent, 20 percent or 30 percent better than merely very good ones, but 10 times better.”

  2. Apple’s perspective on tapping into external using doesn’t comply with the “rules” of Open Innovation. This results in a paradox, because Apple’s products (iTunes, iPhone) are fundamentally changing our options on sharing knowledge with each other. Former Apple employee, Tasra Mar, argues:

    Having worked there for a year, I know firsthand about the tight hold that is placed on knowledge and information—basically everything is on a need to know basis. No open discussions, forums or free conversations. That philosophy has paid off handsomely for them.

  3. As well as the former two principles, also this one isn’t acknowledged by Steve Jobs:

    “To all outward appearances, Steve Jobs believes that knowledge and information confer power only if they are carefully guarded.” (Xconomy)

  4. To be honest, on this matter Apple’s needs to receive compliments. Steve Jobs has been able to combine both elements: creating and succesfully implement new business models (such as iTunes: The iTunes Business Model and its widespread effects) and focusing on a very short Time-to-Market (How Apple manages time-to-market thanks to Open Innovation).
  5. At least to the outside world, Apple seems to be a very intransparant company. The company isn’t open about new developments and outsources only very small elements of the production process. The role of Steve Jobs in this strategy is much-discussed and important

    Jobs’ flippant communications style may not adversely affect Apple’s reputation or brand value, but a front-of-store employee telling a customer to “Please, leave us alone” surely would. (Rosanna Fiske).

  6. Sharing IP isn’t exactly one the stronger points of Apple, even not when it could contribute to Apples business. Apple is very conservative when it comes to sharing IP, while the current trends are moving opposite, such as Creative Commons, being Android an excellent example. The following table shows Android’s market share growing rapidly over the last few years. For those of you who now think: “Apples share isn’t doing bad as well”, I would like to point out that this is mainly due to the fact that iOS is an obliged system for a hugely popular device, not because the system itself is so popular.image
    (October Market Share report)
Conclusion: Steve Jobs is an innovator, not an Open Innovator per se.

Steve Jobs has proven to be running a very succesful company. However, that doesn’t answer the question: is Apple’s methodology sustainable and future-proof? Based on above-mentioned comparison: no, it isn’t. It seems to me that in the unfortunate case that Apple doesn’t continue creating disruptive innovations, their business model could fail in the near future. Or is Apple the perfect proof that Open Innovation may not be the only sustainable business model?

5 steps towards Open Innovation

Open Innovation is a broad and relatively new concept. And while ‘opening up’ your company’s innovation it isn’t easy to a grab a book from the shelf, find the perfect page that addresses your question and start implementing a new model in your organization. No, you are probably disappointed: the current literature is mainly theoretical and offers little useful information to get started immediately. One of my favorite works by Lindegaard makes an ambitious attempt, but is still too abstract for an innovation manager who needs to start á la minute.

It’s time for a – basic but concrete – roadmap:

1. Business Unit

The first important step is to implement Open Innovation in the processes of the research department (or new business development, innovation, etc.). Taking a top-down perspective, this means that the innovation manager is starting to spread the word, facilitates co-workers and needs to emphasize the importance for the organisational process. This results in the fact that employees will have to adapt to new circumstances and start shifting towards an open-minded attitude. R&D isn’t secret anymore and sharing knowledge becomes a basic routine. Even if all the ingredients for succesfull knowledge sharing are present, the succes of this step will be dependant on a number of soft factors, most importantly trust, networking and social talk. This is the first and most difficult phase. If you start something off well, you’re already half on your way

2. Organisation

The second step aims at implementing the model in the enterprise as a whole. R&D can’t only be “created” between thick walls in the clean room. No, R&D has to become a process in which every part of the organization is participating. First of all, start by getting the Marketing, Supply Chain and Production departments involved in the process. Having done that, start with the other departments. The best ideas come from the most unexpected places and an enterprise-wide network of open-minded people accelerates this process.

3. Suppliers

Depending on the sector you’re operating in, the next three steps could be started in whatever order. Start with the group which is most influenceable from your position.  In traditional markets those will be your suppliers. It is now time to get them around the table and talk about cooperative strategies. So, don’t start talking about integrating each other supply chain but about combining your innovation efforts. Share knowledge, share people, share managers. Get to know each other.

4. Customers

For companies in a Business-to-Business environment, this step will be easier than for companies in a Business-to-Consumer market. In B2B follow the process mentioned at step 3. Don’t be shy in sharing your knowledge about critical details. In B2C you’ll have to meet consumers and start talking about co-development and co-creation.

5. Competitors

Last but not least, your competitors. If your organization has development a strong Open Innovation strategy and made a reputation of an open-minded player, it is time to start talking to your competitors. Get involved in each other’s R&D-developments, research, suppliers, customers and mission statements. Go your own way if there is no cooperation possible, but work together if you could stay ahead of other competitors this way. Remember: the best people may be working for them and not for you.

Get started

Easier said than done, but this is a start. You’ll need a culture change, about which you’ll find more on this site. In what steps are you foreseeing the most problems? What things would you do different while starting implementing Open Innovation. Let’s co-create a better 5-step-model together.