shaping the future of open innovation

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RESEARCH CENTER

Prof. Sabine Brunswicker, Purdue University7th Innovation Summit, European Parliament, December 7, 2015Open Digital InnovationShaping the Future of Open InnovationRESEARCH CENTEROpen Digital Innovation

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OPEN INNOVATION

A FAD ORA PHENOMENON?

Well, lets face it: Indeed, there has been a growing interest in the open innovation in the recent years. A search on google confirms this. When searching for open innovation on google, you get more than 8.000.000 million hits. There are any examples of individual companies that have adopted and experimented with open innovationAcademic research has also provided empirical evidence of open innovation; has mostly confined itself to the interpretation of data of the community innovation surveyWell, there are also concerns and critical voices stating that open innovation is a fad and has become passe (that firms move back to the closed systems)

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Executive study 2013 UC Berkeley and FraunhoferStudy among the largest firms in Europe and USFirm criteria: >1000 employees and >250 million USD in salesKey informants: CEO, COO, or CTO at headquarterData collection October December 2012125 datasets

Adoption of open innovation AbandonmentOpen innovation experienceManagement support Intensity 78% practice open innovation in 2013 No firm has abandoned open innovationMedian of 5 years71 % have increased management support 82 % have increased open innovation activityOpen Innovation Not a Fad but a PhenomenonSource: Chesbrough & Brunswicker (2013), Chesbrough & Brunswicker (2015)THE OPEN INNOVATION EXECUTIVE STUDY in 2013 ALREADY SUGGESTED THAT OPEN INNOVATION IS NOT A FAD BUT A PHENOMENON

In our ONGOING Open Innovation EXECUTIVE STUDY 2015 WE Learn more About The Particularities of Managing Open Innovation in Large Firms

Study among the largest firms in Europe and US

Firm criteria: >1000 employees and >250 million USD in sales

Organizational & Project level analysis

Data collection: January 2015 to August 2015

Current responses: 121 firm-level data, additional project level data Executive Study 2015 Purdue & Berkeley Adoption of open innovation Abandoning open innovation Financial support Expenditures Human resourcesOpen Innovation Not a Fad but a Phenomenon ~78% of firms (94 firms) practice open innovation today (n=121)~ 2.5% of firms adopting open innovation have abandoned it~61 % have increased the financial investment~22 % have increased the financial investment by more than 50%~72% invest less than 20% of the total expenditures for innovation in open innovation ~53% allocate more than 5 full-time employees to open innovation

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Large Firms Access External Know-how with and WITHOUT DIRECT FINANCIAL COMPENSATIONSource: Global Open Innovation Executive Survey 2015; n=76 firms Emerging Open Innovation Modes

Pecuniary Inbound Open Innovation PracticesNon-pecuniary Inbound Open Innovation Practices

Median = 25%Median = 20%25 percentile: 5% 25 percentile: 10% 75 percentile: 50% 75 percentile: 50% Share of projects completed within the last 2 years with inflows of knowledge (inbound)

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Free Revealing non Pecuniary Outbound Innovation is Rather RARE; 50% of Firms Freely Reveal in more than 5% of their ProjectsSource: Global Open Innovation Executive Survey 2015; n=73 firms Emerging Open Innovation ModesMedian = 5%25 percentile: 0% 75 percentile: 20% Share of projects completed in 2013 with free revealing

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FIRMS ARE NET TAKERSSource: Global Open Innovation Executive Survey 2015; n=73/76 firms Median = 5%

Free knowledge sharing with external partners Free access external knowledge

Median = 20%25 percentile: 0% 75 percentile: 20% 25 percentile: 5% 75 percentile: 50% Share of projects completed in 2013 with free inflows/ free revealing Emerging Open Innovation Modes

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Emerging Open Innovation Modes

Indeed, Existing work on Open Innovation Discusses A Variety of Open Innovation ModesIP LicensingInformal networkingPublically funded R& D consortiaExternal R&D servicesOpen Innovation Intermediaries

Open innovation modesUniversity grantsSupplier awardsCrowdsourcing

User co-creationIdea competition

Source: Chesbrough & Brunswicker (2014); Enkel & Gassmann (2009); Van de Vrande et al (2009) Emerging Open Innovation Modes

We Also Learn that Firms Combine Different Modes IN order to Solve One Particular Innovation Problem

Open call to the crowdCall for solutions in the area of Powering your HomeCrowds solutions4000 idea submitted23 partnershipsUSD 200 million investment by GESource: www.ge.com, Chesbrough (2012) California Management Review

Large CrowdBilateral Partnership Emerging Open Innovation Modes

Emerging Open Innovation ModesThe Variety of Open Innovation Modes Can be Classified Into Four Major ArchetypesMarkets/ ContractsOpen InnovationPartnershipsOpen Innovation Platforms (Contest)Open InnovationCommunityMedium to high-powered incentivesHigh-powered, cooperativeModerate incentivesLow to moderate incentivesUsually high (and externally owned)NegotiableVariedVariedIncentivesControl over IPKnow-how sharingLimitedStrongLimited (Problem)Strong and multidimensionalLowLowHighHighDiversity of sourcesSource: Bagherzadeh & Brunswicker (2015), see also Felin & Zenger (2014) BilaterialMultiple actorsDigitally transformed

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Emerging Open Innovation ModesTwo Project (Problem) Dimensions Matter in order TO MAKE THE RIGHT CHOICEComplexity of the ProblemHiddenness of Solution KnowledgeA large number of highly interdependent tasks & knowledge areas Difficult to decomposeLittle knowledge about the sources or locations of solution knowledgeHoly grail problemsSource: Mehdi Bagherzadeh (2015), Felin & Zenger (2014), Nickerson & Zenger (2004)

Emerging Open Innovation ModesOur Analysis of Our Survey Data Showed, An Association Between Different Problem Types and Open Innovation Modes

Problem ComplexityHiddenness of KnowledgeHighLowLowHighOpen Innovation Platforms (Contest) Markets/Contracts CommunityType 1Type 3Type 2Type 4

Open Innovation Partnerships

Source: Bagherzadeh & Brunswicker (2015)

The Shift Towards Greater Access and Less ControlINDEED, INNOVATION ARCHITECTURES BECOME INCREASINGLY UNBOUNDED AND OPEN; EVEN APPLE SUPPORTS GENERATIVE AND OPEN DEVELOPER COMMUNITIESInternetISPTTTPhoneWiFiEndusersystemHandsetDistributionGUIShopOS APIsAudio-DateiformatAAA

Millions of songs

Thousands of AppsAssemblyCCCC

Hundreds of componentsHardware interfaceBIOSBetriebs-system iTunesDesignSource: Baldwin (2011)

Closed IP

External supplier

Complementor

Open SourceClosed StandardOpen StandardLegend

A central keystone is federating the ecosystem through the system of the systems and also its openness

The Shift Towards Greater Access and Less ControlINDEED, INNOVATION ARCHITECTURES BECOME INCREASINGLY UNBOUNDED AND OPEN; EVEN APPLE SUPPORTS GENERATIVE AND OPEN DEVELOPER COMMUNITIESInternetISPTTTPhoneWiFiEndusersystemHandsetDistributionGUIShopOS APIsAudio-DateiformatAAA

Millions of songsThousands of AppsAssemblyCCCC

Hundreds of componentsHardware interfaceBIOSBetriebs-system iTunesDesignSource: Baldwin (2011)

Closed IP

External supplier

Complementor

Open SourceClosed StandardOpen StandardLegend

SAMSUNG

It is actually Open Source Software that is eating the world(VentureBeat, Dec 7, 2015)

One of the challenges in Open Innovation right now in our organization or any other high tech organization is to figure out how we or they can [work] with open source communities (Participant in Open Innovation Study)

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The Shift Towards Greater Access and Less ControlOPENSTACK, A OSS CLOUD SOFTWARE SOLUTION IS DEVELOPED FOLLOWING PRINCIPLES OF OPEN SOURCE SOFTWARE; MULTIPLE COMPETING VENDORS PARTICIPATE IN IT

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The Shift Towards Greater Access and Less ControlSource: Global Open Innovation Executive Survey 2014/2015 Purdue University & UC Berkeley ; n=56

IP Allocation Over Technological Solutions Successful Projects (n=32)

Selective Openness Seems to be Pay OffSuccessful Projects (n=32)Unsuccessful Projects (n=24)

Completely retaining legal ownership rights

Selective retaining legal ownership rights

Completely waiving legal ownership rights

introduction

Initiative to create openness in Government to ensure public trust and establish a system of transparency, public participation, and collaboration (President Obama, 2009).

What is open government and open data?

The Open Data Movement is here just searchOpen governmental data play an increasing role in open innovation

Despite these efforts, however, CVC has been disappointing. While there have been more than 4 million downloads of open data since 2009 (Data.gov 2013), only a few applications are used, and they are rated poor in quality. For example, out of the 137 applications developed for the Android platform, only about 24% have more than 10,000 downloads. Out of the Apple applications, none of the apps were ranked in top 100 overall applications (usa.gov 2013). The number of open data downloads has actually been declining since 2011 even though the number of releases has increased. Our own research on open data in European cities also reveals that the interest in new applications is only short-term, if there is any. After a peak in downloads early on, there is generally little use afterwards (Almirall et al. 2013). The company that won the $100,000 first prize in the Department of Energys Apps for Energy ch

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