Open Innovation –

Experiences and Success Factors

Lars Bengtsson, Professor,

LTH Faculty of Engineering

Lund University

Industrial Engineering and Management at

Faculty of Engineering LTH

• Best Engineering Program in

”Industriell Ekonomi” in Sweden

• Competitive research in:

• Operations Management

– Supply Chain Management

• Innovation, strategy and

business models

– Innovation Governance

– University – Industry

innovation

Follow-up and evaluation of two Ideon

Open projects

• An independent follow-up and

evaluation of the Inwido and Tetra

Pak-projects

• Important questions: What are the

experiences, effects and results of

these projects? What can be

learned from these projects?

• Inwido – Documents and post

project interviews with Inwido,

project teams, Ideon Open and

Implement

• Tetra Pak – Documents and

interviews and real-time

observations (project not finished)

Agenda

• Brief introduction ”Open Innovation” – What is it? Why? What forms can it take?

– Are companies using open innovation practices?

– Crowdsourcing and Innovation intermediaries

• The two open innovation cases – Inwido Compete & Incubate

– Tetra Pak – Can you fold it?

• Success factors

Open Innovation

• “Open innovation is the use of purposive inflows and

outflows of knowledge to accelerate internal

innovation, and expand the markets for external use

of innovation, respectively. [This paradigm] assumes

that firms can and should use external ideas as well

as internal ideas, and internal and external paths to

market, as they look to advance their

technology.”(Chesbrough, 2006)

Why should companies engage in open

innovation?

• Innovation important – An important competitive factor in more and more markets

– To influence the development of markets/industries

– Development pace has increased

• Specialization – ”No company can be good at all things”

– ”Not all smart people work for you”

• Overcome Local search – Search for new knowledge is costly

– People tend to rely on low-cost knowledge (knowledge they

already possess)

Intended effects of open innovation

• INBOUND

• Increase competiveness - accelerate innovation (more and

faster innovation projects), better innovation projects (higher

degree of market acceptance), lower cost of innovation

• New business opportunities – new ventures

• Cultural change - Stimulate flow of ideas from employees,

customers etc and stimulate corporate entrepreneuship

• OUTBOUND

• Increased revenues from knowledge commercialization

(licensing, spin-offs, sale of business units)

• Influencing market and industry development

• Establishing/promoting technical standards

• Marketing, branding, creating buzz…

Open Innovation – many forms

Most common and important inbound

innovation practices

Open innovation partners

Open innovation intermediaries with an IT-plattform

and a community and those without a community and

primarily working offline

Ninesigma

Implement Consulting

Inwido Compete and Incubate’s goal is to

deliver 5 ideas for Inwido to invest in

”Innovate new applications, products and services

from digitalization of Windows and Doors”

Project Vision - Digitalization

”Involve a broad set of people and organizations

for an intense 10 weeks period of time to produce

at least 5 ideas and teams to go into incubation”

Project Mission – Mix, fast and intense

Project Deliverables – 5 ideas and teams

”Compete & Incubate aims at creating 5 ideas and

teams that develop into concrete products and/or

services based on the theme “Digitalization of

Windows and Doors”.”

Inwido Compete and Incubate results

• 15 concepts pitched and ranked – Roughly half of the concepts could not be realized without the

acceptance and support from Inwido’s retailers and installation

partners

– One concept involved a completly new function and technology

for a window

• 6 highest ranked projects received further

investment in time and money – 3 projects continued as entrepreneurial start-ups by teams (now

discontinued? Or still some entrepreneurial acivity?)

– 2 projects taken further by Inwido and partners for tests and

verification, (2 discontinued or still some activity?)

• 1 project still being tested and still invested

money into (the highest ranked)

Tetra Pak – Can you fold it?

• Intended result – one or more

new folds for current and new

packages meeting certain

constraints (product and process

constraints)

• Global broadcast search mainly to

origamists, industry designers,

mathematicians

• Qualifying competition – 119

entries

• 10 participants selected for two

intense workshops in Lund/Malmö

• 5000 Euros to each and bonus

opportunity for the group

Comparing the Inwido and Tetra Pak-

projects

Inwido

• Fairly open call

• Market and technology

challenges

• Rewards - ”no clear prize”

• IPR not regulated

• Many types of project

proposals – high complexity

• Many people in Inwido

involved

• No extra time or budgets for

the open projects

• Projects had varying or unclear

fit with current business model

Tetra Pak

• Selective call

• Only technology challenge

• Rewards – ”5.000 Euros”

• IPR regulated

• Focus on folds only – low

complexity

• Four technical experts directly

involved

• Budget and time allocated for

the project, also afterwards

• Good fit with current business

model

Challenges in the two projects fairly well

described in research

• Identifying, selecting and motivating

persons/groups/companies

• IPR (collaborating with ”the crowd” unusual)

• Culture of ”Not-Invented-here” and/or ”Already done it”

• Radical or incremental project (fit with current

business model)

• Integration of open innovation projects –

– Allocating resources and time

– Mechanisms for integration into company’s

innovation processes

Bengtsson & Ryzhkova (2013) Managing a

strategic source of innovation – online users

Effects and results in the Inwido and Tetra

Pak projects

Inwido

• New contacts and new

network

• Looked at 15 new

business opportunities, 6

more in depth

• PR and marketing

• Cultural change (?)

• Inspiration for internal

projects

• 1 new business venture

still under development

Tetra Pak

• First workshop - group

performed well

• Continues to work with a

dozen folds, some

completely new to TP

experts

• New contacts and new

network

• PR and marketing

• New fold in current product

and new prod’s (?)

Success factors for inbound

”crowdsourcing” open innovation projects

(from research)

• Strategic factors – Top management involvement and support

– Strategy for openness and participation (degree of

openness: fit or stretch in relation to current business model)

– In the long term – develop an ”eco-system for proprietary

and open innovation processes”

• Project specific factors – Strategic alignment of project

– Clear aim of project

– Internal champion(s)

– Complexity of project

Success factors cont’d

• Disclosure factors – Transparent and relevant incentives for external contributors

(money, career opportunities, stakes in project, fun, personal

development, plattform for opportunities, networking etc)

– IP issues negotiated beforehand (or the process of handling

it) and transparent as much as possible

• Appropriation and integration factors – Internal champion(s)

– Support to external developers equivalent to APIs in software

– Budget, time and other resources on same terms as internal

projects

– Equal internal incentives for R&D, marketing and sales etc

for projects of internal or external origin