How to implement open innovation Lessons rom studying large multinational companies
Open innovation is... “the use o purposive infows and outfows o knowledge to accelerate internal innovation, and expand the markets markets or external use us e o innovation, respectively.” Henry Chesbrough, 2003
Tis report sets out to answer the question: ‘I want to implement open innovation – where should I start and w hat should I do?’ It provides an overview o existing approaches to OI and outlines how a company can start to implement a strategy to match the organisation’s needs. Te report will be particularly relevant or CEOs, COs and senior managers o R&D and supply chains. It It will also be useul or senior managers who have been charged with OI implementation. Te report is the product o two years’ years’ research within t he Cambridge Open Innovation Innovation Network, a network hosted by the Institute or Manuacturing and unded by Unilever and the Cambridge Integrated Knowledge Centre. It illustrates the challenges acing senior managers who are setting out to implement an open innovation strategy in their companies. Te importance o organisational organisational culture, and ways in which the culture can be inuenced, has been the key ocus o this research. From interviews across various sectors, it was clear that OI means dierent things to dierent industries. However, However, all the companies involved recognised that OI represents represents an opportunity to improve innovation capability and to conront business challenges. All the contributors to our study showed a great interest in understanding and sharing practice about ways to implement OI in their business.
Acknowledgements We would like to thank our sponsors, Unilever and the Cambridge Integrated Knowledge Centre (CIKC), and the ollowing organisations, which also participated in our research: Akzo Nobel, BAE Systems, BBC, BP, B, CadburySchweppes, Crown Holdings, Dow Corning, East o England Development Agency, Agency, France elecomm, Giesecke & Devrient, Goodman, GlaxoSmithKline, Henkel, Innovation Relay Centre (now Enterprise Europe Network), InnovationXchange (IXC UK Ltd), Kodak, Mars, MBDA, MBDA, Mercedes Benz F1, Microso, NESA, NHS Innovations, Nokia, NRP Enterprise Ltd, Danone Baby and Medical Nutrition BV (ormerly Numico), O2, Procter & Gamble, PepsiCo, Philips, Rolls-Royce, SA partners LLP, Schlumberger, Shell. We would also like to thank Andrea Shuo An, James Anderson, Sourabh Khan, zelin Loo and Dan Schmidt or their contributions contributions and acknowledge the editorial support o Fraser Pettigrew and Sally Simmons (Cambridge Editorial Partnership Partnership Ltd).
How to implement open innovation: Lessons from studying large multinational companies By Letizia Mortara, Johann Jakob Napp, Napp, Imke Slacik and im Minshall Centre or echnology echnology Management, Institute or Manuacturing © Institute or Manuacturing 2009. All rights reserved.
First published in Great Britain 2009 by the University o Cambridge Institute or Manuacturing, Te Alan Reece Building, 17 Charles Babbage Road, Cambridge CB3 0FS, UK Printed using recycled paper ISBN: 978-1-902546-75-9 978-1-902546-75-9
Foreword
o many, the term open innovation (OI) signies a new way o working; or others it is an evolution e volution or rebranding rebranding o their existing way o doing things. For both experienced and novice practitioners it is i mportant to develop a common language and tools or innovation that can improve the successul commercialisation o ideas – wherever they may originate.
Te existence o a common language and tools across organisations organisations means that the exchange o new ideas increases and the trading risks are lowered. From the perspective o large organisations this means an increase in the quality and choice o ideas coming to the table. o those who are used to ‘closed’ innovation, a more open approach can be a liberating experience. For the company strategist it provides more exibility. For the product developer it is a bigger sand pit to play in. Our experience at Unilever has shown that it is a gross generalisation to label the whole company as being either an open or a closed organisation closed organisation.. Some parts have always been more open than others and, to an extent, this will continue to be the case. Te greatest transormation, however, has been the change in the company’s mind set: an acknowledgement that it is possible to achieve through partnership more more than we can achieve alone. Much has been made in the business press and conerence circuit about the skills, knowledge and motivation to implement OI. Tere has been much less discussion about the practicalities o encouraging an OI mind set; the culture and structural changes required to adopt and e volve ways o working within open innovation. In particular, this involves the realisation that open innovation is not just another way o doing R&D but another way o doing business. Tis report is timely as many organisations organisations take on the exciting challenge o open innovation. innovation. It provides the basis to develop a common language or OI and a shared understanding o the benets and complexities o collaboration. Jonathon Hague VP o Open Innovation Innovation Unilever
1
Contents
Executive summary
5
Introduction
Aims o this report
8
Target readership How to read this report The companies involved What we did
8 8 8
What does open innovation mean?
The concept o OI OI in dierent sectors A global OI perspective Reasons or adopting OI Encouraging OI Routes to OI Routes to OI in practice
12 13 14 14 14 16
Enablers and obstacles to open innovation
OI culture OI procedures OI skills OI motivation
20 21 21 21
How to build an open innovation culture
Company culture Cultural archetypes OI sub-cultures OI and R&D
24 24 25 26
How to set up open innovation procedures
How to acquire open innovation skills
How to motivate employees
How does this all t together? A ramework
12
The OI implementation implementati on team Case studies Activities o the OI implementation implementation team
30 30 35
Skills or OI
42
A ramework ramework or training and skills The risk o losing skills
42 44
Overcoming the NIH syndrome Reward systems and career paths
46 47
Top management Functions and sub-cultures Individual sta The OI implementation implementati on team
50 50 51
Related topics and resources resources
55
Reerences
57
The authors
Inside back cover
3
Executive Executiv e summary
O
pen innovation (OI) is a strategy by which companies allow a ow o knowledge across their boundaries as they look or ways to enhance their innovation capability. Company boundaries become ‘permeable’, enabling the matching and integration o resources between the company and external collaborators. In a closed approach to innovation, a company relies on internal resources only.
Tis report was compiled rom a series o interviews and workshops involving involving a total o 36 rms, structured to gather understanding o the ollowing questions: •
What does OI mean and why do companies open up?
•
What are the routes to OI and what strategies are companies using to open up their innovation process?
•
How can a company implement OI and what are the implications or company culture, structure, skills and incentives?
OI – an innovation in itsel Our study showed that OI is an innovation in itsel and thereore has to be managed accordingly i it is to be implemented successully. It oers dierent advantages to dierent industrial sectors and has very dierent maniestations in corporations around the globe. Employment models, the selection o external partners or collaboration, patterns o knowledge transer and models o interaction all vary in dierent countries and these dierences must be taken into account. Te companies reviewed cited no single outstanding outstanding reason or the adoption o OI. Reducing product time to market, the availability o new technologies and gaining access to competencies were o approximately approximately equal importance. Moreover, our interviewees were quick to point out that OI should not be seen as a cure-all and has clear limits, depending on the industry involved. Companies can take dierent routes to OI, depending on what is driving the impetus to adopt OI in the rst place. Te approach or most companies is either a top-down, strategically-driven process or one that evolves more naturally rom the bottom-up. Tis report ocuses predominantly on the ormer model. OI activities within a rm are usually either managed centrally by a core team or distributed throughout the organisation. From our evidence, a top-down, strategically-driven approach approach to OI oen relies on centralised OI services and a core team to develop the OI strategy and support its implementation. implementation.
Our analysis o enablers and obstacles or OI reveals our main issues that companies have to tackle: culture, procedures, skills, and motivation. OI culture For almost all the companies in our study, the shi towards an open approach to innovation required the direct involvement o top management. Tis oen translated into a shi o c ulture, whereby whereby working with other companies became accepted and endorsed throughout the organisation. OI procedures Independent OI teams working within the traditional company conguration conguration are a very popular choice or OI implementation. Moving people around within an organisation may also be used to improve improve the intensity o internal networks and increase cross-unctional working. OI skills Tere is no ‘right’ blend o skills that is considered a denite enabler o OI. However, the lack o an appropriate skills blend is seen as an obstacle to its implementation. Tis suggests that training is essential, rather than merely desirable, when preparing the company or OI. OI motivation Appropriate changes in the incentive structure are essential to implement OI successully.
Seeding an OI culture A perect OI culture cannot be created overnight; however, making changes to company structure, skills, incentives and control methods can gradually help to develop a company culture that supports OI. Te starting point or change is most likely to be an OI implementation team, which can seed an OI culture within the organisation. It is inevitable that dierent units in a rm will have dierent sub-cultures o their own but it is possible to make use o these cultures and nd ways to support OI within them. Tis report uses several case studies to examine how an OI implementation implementation team can c an establish OI procedures. Te OI implementation implementation team needs to identiy which unctions within a rm should be connected, and what tools are available or must be ound in order to accomplish this. In order to build skills in open innovation, companies should train groups o people who have diverse proessional skills rather than trying to create single OI ‘masters’. A company needs people with a range o expertise to be able to assess and review external capabilities and opportunities. Te ‘not-invented-here’ syndrome – when employees devalue
5
innovations innovations that have originated outside the company – is a common obstacle to OI implementation. implementation. Such demotivation can be overcome by involving people in the decision-making process, improving improving internal communication and establishing ade quate reward systems. argets are not always the best approach. From these our central issues (culture, procedures, procedures, skills, and motivation) a ramework or implementing OI is presented to show how an OI team could be embedded within a company. company. Te crucial role o top management is discussed. By demonstrating commitment and support, top management are key to overcoming the objections o those who are less inclined to accept the new approach to innovation. Tis report ocuses on internal company issues. It should be remembered that there are other issues, external to the company, company, that need to be considered, including partnership management, alliance management, trust building and IP management. Te report concludes with some suggested sources o urther inormation.
6
Introduction
Aims o this report Target readership How to read this report The companies involved What we did
Aims o this report
How to read this report
You can read the report conventionally rom start to nish, but sections can also be read individually to provide inormation inormation on a particular aspect o OI that might be relevant to you. you.
his report sets out to answer the question: ‘I want to implement open innovation – where should I start and what should I do?’ It provides an overview o existing approaches to implementing OI and outlines how you can start to implement a strategy to match your company’s needs. We worked on the assumption that OI would be a benecial approach to company innovation, based on Chesbrough’s and other scholars’ scholars’ suggestions and on the e vidence o several practitioners’ success. However, we did not explore questions such as: Is OI a ‘good’ approach? or How open should a company be? It is important to note that the report deals only with internal company issues (e.g. structure and culture) and concentrates on how to set up a company to embrace OI. In particular, we paid attention to the cultural aspects o adopting OI (the inner circle in Figure 1). However, this report does not tackle other cultural aspects, or example, how to work with dierent partners (such as start-ups, universities or customers). Te adoption o an OI strategy has many repercussions, raising issues o intellectual property, property, partnerships with outside organisations and so on, but these are beyond the scope o the present document.
Target readership Te report has been written to illustrate the challenges in implementing OI. It will be p articularly relevant or top managers (CEO, CO) and senior managers o R&D and supply chains in companies that are setting out to implement an OI strategy. strategy. It will also be useul or senior managers in dierent roles who have been charged with OI implementation, implementation, and anyone anyone else who has an interest in this subject.
Large firms
N a a t ti i o o
n a
l R e g i o n
Each section concludes with a blue box (What ( What does this mean or my organisation? ). ). Case studies i llustrate the ndings and provide guidance on ways to apply OI concepts in your own company. Four key sections on culture, procedures, procedures, skills and motivation are highlighted with colour-coded tabs.
The companies involved Our research into open innovation was carried out in 2007 and 2008 and involved 36 companies. Te research took place within the Cambridge Open Innovation Innovation Network, a network hosted by the University o Cambridge Institute or Manuacturing and unded by Unilever and the Cambridge Integrated Knowledge Centre. Te participating companies were o dierent sizes and had varying levels o expertise and experience i n OI. Tis mix contributed contributed to the understanding understanding o issues asso ciated with the implementation implementation o OI practice, rom beginners (“Where do I start?”) and practitioners who elt they were ‘immature’, to more experienced companies (“How can we improve improve our OI practice urther?”). Te principal people taking part in the research were R&D managers, in particular those responsible or implementing OI or actively involved in it. Te industries represented included: •
Fast moving consumer goods (FMCG)
•
Energy and oil
•
Aerospace and deence
•
Sotware and media
•
Electronics and telecommunication telecommunication
•
Intermediaries (e.g. knowledge and ser vice brokers)
a
l
S e ec
t o
C
r
C u l t u
r
u
l
t
u
r
e
e
Company Culture
Universities
Other
What we did A series o interviews and workshops was organised, structured to gather understanding o the ollowing questions: •
What open innovation means: Open versus closed innovation: innovation: why do companies ‘open up’?
•
Routes to open innovation: What underlying strategies are companies using to open up their innovation process?
•
How to implement open innovation: What are the implications or company culture, structure, skills and incentives when implementing OI?
Small firms
= Intermediaries
Figure 1: The dierent levels o cultural issues in the implementation o OI 1 1
8
Adapted rom Alvesson and Berg, 1992
Figure 2 illustrates the phases o the research process. Following an initial literature review we hosted a workshop attended attended by representatives rom 13 dierent companies. At this event we
captured captured inormation on the companies’ backgrounds, their reasons or adopting OI and the key challenges they aced in OI implementation. implementation. Tis workshop revealed that OI skills and the cultural issues around OI adoption were o paramount concern. We then conducted a series o in-depth case study interviews with ve companies which claried routes to OI and began to dene the required structures and skills.
16 dierent companies. Tis second phase consolidated our understanding o the structures and skills or implementing OI. A nal series o interviews with nine companies, a third literature literature review and a third t hird workshop concluded the process by dening company cultural issues and incentives in OI implementation.
Tis cycle was repeated with a urther literature review, review, a second series o case-study interviews and a second workshop involving
Phase I
Phase II
Phase III
Literature review Open Innovation
Literature review OI Skills + Procedures
Literature review OI Culture
Case interview series I 15 Case interviews in 5 companies
Case interview series II 16 Case interviews in 16 companies
Case interview series III 17 Case interviews in 9 companies
Workshop I 14 participants from 13 companies
Workshop II 21 participants from 16 companies
Workshop III 17 participants from 15 companies
Figure 2: Structure o the research process
9
What does open innovation mean? The concept o OI OI in dierent sectors A global OI perspective Reasons or adopting OI Encouraging OI Routes to OI Routes to OI in practice
The concept o OI
O
pen innovation has been dened as: the use o purposive inows and outows o knowledge to accelerate internal innovation, and expand the markets or external use o innovation, respectively. (Chesbrough, (Chesbrough, 2003) With the introduction o OI, company boundaries become ‘permeable’, enabling the matching and integration o resources between the company and external collaborators. collaborators. In the ‘closed’ ‘closed’ innovation model, companies innovate relying on internal resources alone. OI is characterised by the involvement involvement o all company company unctions, at dierent stages o the innovation process, not just R&D. Te unnel-shaped unnel-shaped diagram in Figure 3 is a common representation representation o the open innovation process. Ideas (the mauve circles) are investigated at the research stage and the best and most promising o these make it to development and commercialisation phases. Less promising ideas are dropped. Te key eature o this diagram, and what distinguishes it rom a closed innovation process, is that the company’s boundaries become permeable (the dashed line in the gure). Whereas Whereas in a traditional closed innovation innovation process all the invention, research and development is kept sec ure and condential within the company until the end product is l aunched. With With OI the company can make use o external competencies (e.g. technology) and even allow other organisations to spin out byproducts rom its innovations. innovations. Te diagram shows a lot o activity (the mauve circles) going on within the company at the research stage. Tere are also ideas
Research
Development
IP in-licensing
and technologies developed outside, either collaboratively or perhaps bought in (green circles). At the development phase, as research ndings are narrowed down to viable projects, it may also be advantageous advantageous to invest in externally developed innovation in the orm o intellectual property (IP) licences or certain technologies, to advance these projects. Meanwhile IP licences that have emerged rom the company’s own research might be sold to other developers, either because they are o no strategic relevance to the company’s own business, or because the company has no capacity or expertise to develop them itsel. Alternatively, the company might see the opportunity to create spin-out companies to take on some o its core projects. At the point o commercialisation there will be core products that may have come through an entirely internal route rom research to realisation, or with a variety o inputs rom outside. At this stage, the OI company could still choose to buy in market-ready products rom outside, or example in co-branding exercises, where it could use its established brand prole to sell a new product rom another company that currently has no presence in the relevant market.
OI in dierent sectors Open innovation oers dierent advantages to dierent industrial sectors. Our case studies reveal that OI is interpreted dierently in dierent sectors (see able 1). In all these cases, however, however, OI represents represents an opportunity opportunity or the company to improve its innovation capability and to ace its business challenges. All the industrial contributors contributors to this work showed a great interest in developing an understanding o OI in
Commercialisation
Products in-sourced (e.g. Co-branding) Company Boundaries
Core Market Focus
Company Boundaries
Technology Spin-outs IP out-licensing
Ideas & Technologies
Figure 3: A diagram illustrating an open innovation process. The boundaries o the rm, represented represented by the dashed lines o the unnel, are permeable and allow ideas and technologies (the mauve and green circles) to pass in and out o the rm. 2
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general as well as in sharing practice about how to implement OI
Example The permanent employment model
in their own businesses.
A global OI perspective
In some countries an employee is expected to spend all his or her working lie with the same company. Permanent employees are hired as generalists, not as specialists or specic positions. In technology-based companies, people are expected to start their career as young scientists, looking at the undamental science underpinning the current business. Moving rom research to development implies career advancement towards business. In this situation, the mind set o researchers researchers changes progressively progressively and subtly to acquire a more businessoriented character. character. I the dynamics o applied research do not suit the employee, moving back to a undamental science role is considered a backward career step. There are very ew examples o mobile careers and people who deviate rom the traditional path struggle with their career.
Open innovation takes very dierent orms in corporations around the globe. Dierences in national culture and the way in which innovation is carried out need to be taken into account. Te ollowing considerations should be borne in mind. •
ypical career paths Employment models (see example right) ypical vary signiicantly between countries and this can have an impact on the openness o employees. hese issues are oten underestimated underestimated or may even be invisible to someone rom outside the culture, but they can result in misunderstanding and the wrong expectations being created in OI relationships. relationships.
•
Partner selection here is a strong tendency to orm
partnerships with organisations (e.g. universities) that share the same national identity, even i they are not the best in their ield. his was observed particularly in multinationals multinationals
•
that have a strong national identity and a very centralised approach to research and development. his attitude has an impact on their ability to access innovation outside outside their own national boundaries. •
Knowledge transfer Knowledge transer can be complex
when the partners involved are o dierent nationality and are
Partnerships take dierent orms in Interaction models Partnerships dierent parts o the globe. In South East Asia, or example, it is necessary to build trust between the parties beore discussing contract details and ormalities. In the West these steps are reversed and people eel more comortable i the deal is ormalised and the terms are agreed in advance.
For more on national culture issues, it is interesting to reer to the work o other researchers, such as rompenaars (1998).
geographically distant rom each other. other.
Industry characteristics
What orm does OI take?
Electronics and telecoms
Strong need to adapt to growing demand from consumers and keep up to date with the rapid pace of technology development. development. Importance of collaboration to create industry standards. Reducing costs is a priority.
OI is being used as a means of gaining access to new technologies in order to anticipate competition, keep up with fast moving markets and reduce costs. Standards and regulations are both an opportunity to work openly and a ‘constraint’ on innovation.
Energy/oil
Business is changing because of sustainability issues (declining oil supplies, global warming).
OI is an opportunity to identify new technologies to improve oil supply and to help the industry evolve and increase its sustainability.
Aerospace and deence
Traditional Traditional engineering businesses. Long technology lifespan and long lead times for their adoption. Strong condentiality issues especially for defence. Strong inuence of policy makers and government on innovation strategies.
OI is a new concept, especially for defence companies who are wary of information leaks. However, OI approaches are being adopted in response to increasingly complex technologies and rising R&D and innovation costs.
FMCG
Need to reduce time to market and to nd new ideas OI is an opportunity to innovate and increase competitive to generate new products. Strong marketing inuences advantage. Most FMCG companies are currently developing their innovation strategy. OI strategies (more formalised OI).
Sotware and media
Software companies have almost always been open due to the nature of their technology.
Open source software, and internet 2.0 have revolutionised the innovation processes so that users (customers) can themselves contribute to innovation.
Table 1: Trends in OI interpretation across dierent sectors
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Reasons or adopting OI In our workshops we asked companies what advantages they saw in adopting OI compared with the traditional closed model o innovation. Tose interviewed were R&D managers, in particular those responsible or implementing OI or actively involved in it in order to support the core business. Figure 4 shows the advantages that were cited most oen as important by the dierent companies. A larger number o stars indicates that the advantage was cited by a higher proportion o the companies surveyed. As Figure 4 indicates, no single outstanding advantage advantage was revealed. O approximately equal importance were: •
Reducing time to market or products (particularly important or FMCGs and electronics companies who seem to require the astest rate o innovation) innovation)
•
Availability o new technologies (especially important or chemical industries)
•
Access to competencies (especially important or FMCGs)
OI was seen to oer no advantages in relation to the exploitation o non-strategic, internally developed technologies by t hose interviewed. A signicant issue in technology or brand exploitation is that they are used properly. For example, i an FMCG company associates its brand name with somebody else’s business, they want to be absolutely sure that the association is not going to damage their brand’s reputation. Shorter time to market Find new technologies Access to additional competence Find new ideas
•
Provide incentives or innovation and disincentives or innovation avoidance, i.e. monitor and measure progress, and reward good use o new OI practices
•
Remove obstacles to open innovation by allowing ‘time to absorb and learn about the new practices’
•
Listen to complaints and concerns
Whatever approach is ollowed, companies should be prepared or open innovation to take a long time to become successully established in their organisation. GSK was an early pioneer o open approaches to innovation. Te case study opposite describes their experiences and provides some key lessons that others can benet rom.
Routes to OI Companies can take dierent routes to OI, depending on what is driving the impetus to become more open in the rst place. Many o the activities that constitute OI may be amiliar to companies, and some o them may have been commonly perormed or a long time. ypically, ypically, some individual business units within a company might already be very open in the way they operate, while the company as a whole may not. We have used a classication system derived rom the available literature literature to dene the routes taken by the companies who participated in our research (see Figure 5). Tis characterises a company’s company’s OI implementation implementation approach (the vertical axis) as either a top-down, strategically-driven process or one that evolves more naturally rom the bottom-up. Te location o OI activities within a company company (the horizontal axis) is dened as either centralised (a single team/unction/department has the responsibility o implementing an OI approach) or distributed throughout throughout dierent parts o the organisation (spread over several several unctions/departments/activities). unctions/departments/activities). Figure 5 gives an indication o how the organisations involved involved in our
Cost reduction + cost eciency Top down strategically strategically driven
Access to new + other markets Inuencing innovation in an ecosystem Access to vital information for decision making Flexibility of skills Exploiting technologies from inside Increase of quality
Figure 4: Advantages o open innovation 3
Encouraging OI Our study showed that open innovation innovation is an innovation itsel and thereore has to be eectively managed rom the b eginning i it is to be successully implemented. implemented. Klein and Sorra (1996) suggested that the ollowing steps are needed to achieve an ‘innovation implementation climate’: •
3
14
Develop necessary skills or open innovation through training and other assistance
Based on the responses o 26 managers at one workshop
s e i t i v i t c a I O d e t u b i r t s i D
s e c i v r e s I O d e s i l a r t n e C
Bottom up evolutionarily evolutionarily achieved
Figure 5: An indication o where the companies we observed are placed across the spectrum o routes to OI
CASE STUDY GSK: a gradual shit towards OI GSK is one o the world’s largest pharmaceutical companies. It develops, manuactures and sells prescription and over-the-counter over-the-counter pharmaceutical products, vaccines and consumer healthcare products. Although its customers and sta rarely perceive it to be a technology company, technology is important to acilitate the research, development development and manuacture o its pharmaceutical pharmaceutical products. The Pharmaceutical Development division is signicant within GSK. It employs around 1,600 people based in ten countries and is responsible or drug ormulation, manuacturing process development development and clinical manuacturing or GSK’s oral and inhaled prescription drug products. Drug ormulation must address several key challenges: the drug must be delivered to the patient’s body at the correct site and in the correct quantity; the delivery vehicle (e.g. tablet, capsule, inhaler) must be designed to allow the drug to be absorbed by the patient; the requency o the dosing and the duration o drug release should be appropriate; appropriate; and the manuacturing processes must be well understood, understood, cost-eective and reliable. About ten years ago, Pharmaceutical Development decided to develop some highly novel drug delivery systems. Its primary motivations were to ensure the availability o reliable, controlled-release controlled-release systems (as ew drug delivery systems have been developed to ull commercialmanuacturing scale), to improve existing delivery and manuacturing technologies, and to avoid the need to pay royalties to external technology providers. There were some early challenges. GSK realised at the outset that it did not have all the resources in-house to develop the required technologies, and so it chose to orm deep partnerships with two outside partners. However, However, the breadth o skills that were required and the extent o the technical challenges led to diculties in these two early relationships. GSK learned rom this experience and broadened its approach rom a limited set o relationships to a more distributed model in which the company collaborated in a network with a broad set o dierent participants, pursuing a clearly-specied and diverse set o outputs. The distributed nature o the approach allowed GSK to respond to changes in the organisation’s organisation’s priorities (i.e. to its perceived technology needs) and to the progress – or lack o progress – o the development programmes. As a result,
the approach evolved into one in which GSK put itsel at the centre o a web or network o activities. This model acted as a orm o risk diversication – minimising the impact o the ew external collaborations that ailed to yield benets. More importantly, this arrangement addressed the need to access a wide variety o specialist skills: GSK’s initial steps had provided it with sucient competence competence in selecting and managing external relationships to enable it to speciy and allocate sophisticated technology development development work packages. In the evolved model, partner selection is central. GSK needs to identiy what it is that each contributor does best – what is the specic expertise that GSK requires and what is the clear competitive advantage that each potential partner might provide. While GSK acknowledges that many other companies have excellent technologies, technologies, it eels that it has extensive experience in the development o drug delivery technologies and that it has something to oer to potential partners. GSK can advise on how the technology should be used, can oer potential partners access to its experience in developing technology (e.g. in connection with engineering, scale-up and regulatory issues), and can help to ‘push’ products and technologies through to the market by providing a drug compound portolio that is broad enough to provide a signicant probability o use o the technology. Under one model o collaboration, GSK oers these benets and seeks a limited share o IP rights in return. In order to deliver its drug compound portolio to the market with delivery approaches that meet patients’ needs, GSK seeks access to appropriate technologies technologies that are eective and robust. Accordingly, GSK seeks to blend internal and external activities in a ashion that maximises the return to GSK. In its ‘network’ collaborative model, GSK varies the types o partnership between the purely transactional and those that are potentially deeper and more strategic (recognising that transactional relationships are oten simpler and less costly) and selects the type o relationship depending on the work concerned. GSK seeks to control critical IP rights, and negotiates IP exploitation rights (including partners’ exploitation exploitation rights) early in the relationship. The use o this model enables GSK to minimise xed sta costs and to utilise external partners’ highlyspecialised skills and expertise. GSK views its choices as being among buying in a completely-developed technology (o which there are ew available in this market), contracting out development development
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work, doing the development internally, or selecting some combination o external and internal work. Each approach has dierent costs and benets and the selection is inormed by understanding what it is that GSK does best. GSK is now exploiting the technologies that it has developed through these activities by granting licences to other parties and exploring the creation o spin-out companies.
Key lessons 1. The approach employed has evolved over time, in the light o experience. experience. •
Speciicity in the identiication o expertise and understanding o the internal need is critical, and this division o GSK is prepared prepared to maintain 60–100 active relationships in order to provide this.
•
GSK has developed a pipeline o early, middle and late stage technologies. technologies.
•
The resource mix has moved to a 50/50 internal/external mix, rom one that was largely external at the outset.
•
GSK has a balanced mix between pure transactional contracts and strategic (high-maintenance but potentially high-value) alliances.
•
Alliance management skills have developed signiicantly and need to be consciously developed and maintained.
third workshop lie across this spectrum o routes to OI. In these companies the most common approach ollowed was to ask managers to take responsibility or the development o a strategy or the adoption o OI and to manage its rollout. Tey also tended to rely on the creation o centralised OI services and a core team to develop the OI strategy and support its implementation. For some companies the introduction o an open approach may evolve over time, driven by external actors, rather than by the direct intervention o management. Management intervention implies a ‘conscious’ movement towards a new organisational orm and a consequent step change where “management, “management, in view o environmental environmental actors as well as internal actors, actively ‘promote’ and ‘experiment’ with new organizational orms” (Chakravarthy and Gargiulo, 1998). Conversely, Conversely, companies may evolve their structure over a period o time, driven by environmental conditions such as market orces, globalisation, knowledge-intensive knowledge- intensive environment, deregulation or customer demands (Dunord et al., 2007). Organisations may appoint a central group to encourage the adoption o an open approach or they may decide to distribute OI activities around the company – in the same way that R&D unctions may be centralised or decentralised (Gerybadze and Reger, 1999; irpak et al., 2006). Te dierent approaches usually lead to dierent levels o expertise
16
•
Project and portolio management tools need to be used actively.
•
Partner selection requires rigorous rigorous evaluation with upront IP negotiations and active post-deal management.
2. Agree key commercialisation terms early in the relationship (e.g. IP rights, payments and royalties). Negotiate intellectual intellectual property rights very early in the process, to provide clarity to both partners. Split exploitation rights by entire and substantive elds o activity wherever possible. 3. Accept that the work required to acilitate collaboration requires both procurement (transactional) and alliance management (relational) (relational) skills and st yles, and select and develop sta accordingly. 4. Make the best use o appropriate nancial valuation tools: acknowledge (in writing, and with numbers) the option-based nature o many technology development investments. 5. Seek highly capable inormation brokers, brokers, who are connected to relevant networks, to scout or new ideas. Develop cost-eective search processes or technical elds in which the organisation has no expertise is highly problematic.
and characteristics, as shown in the OI strategy matrix in Figure 6, opposite. Some companies (bottom le quadrant) have many, oen distributed OI activities, that derive rom a slow realisation that innovation innovation can also be achieved with the help o external resources. Tese companies came to OI by an evolutionary evolutionary route and are now attempting to rationalise the implementation implementation o their activities. Other companies (top right quadrant) made a top-level decision to implement OI over a relatively short period.
Routes to OI in practice Te examples below illustrate the our main routes to OI, three o which we observed (see Figure 6 opposite).
1. Top-down, strategically-driven, centralised activities wo major FMCG organisations have reviewed their innovation processes in the light o the OI ramework. Having Having relied or a long time on internal resources to innovate, they now see OI as an opportunity to accelerate innovation and continue growing in a sector where revolutionary innovation is very hard to achieve, competition is very high and the market is very demanding. A large US consumer electronics corporation has seen its business disrupted by new s oware-based technologies. o o maintain a prime position in the market, internal competencies competencies had to be integrated speedily with new external competencies.
Top down d own strategically driven 2 NOT VERY MATURE OI APPROACH
s e i t i v i t c a I O d e t u b i r t s i D
1 QUITE MATURE OI APPROACH
Focus of this report 4
3 QUITE MATURE OI APPROACH
Not observed
s e c i v r e s I O d e s i l a r t n e C
Bottom up achieved by evolution Figure 6: The OI strategy matrix: general characteristics o the approaches taken by companies adopting OI
2. Top-down, strategically-driven, distributed activities A company rom the energy sector has implemented OI within its blue sky research group. group. Te group selects projects rom prospective partners in areas that are mostly related to their core business. Te sources include start-ups, universities or even private individuals, operating in areas o breakthrough innovation. Another company company in the s ame sector is interested in new technologies, both those that could lead to new lines o activity and those relating to its core business. In order to i dentiy promising technologies, a small group o managers makes regular contact with potential partners to cultivate new business opportunities.
3. Bottom-up, evolutionary, distributed activities A large telecommunications provider has been moving or some time towards a more open approach to innovation. Tis entails setting up relationships with a series o external providers along the whole innovation chain. Tese developments took place as a result o the evolving nature nature o telecommunications telecommunications technologies and the consequent changes in the nature o the business. Te company selected preerential preerential partners rom its customers, major universities and government government agencies. It has also started working with lead users and start-up companies. Te company has gradually built up a
portolio o capabilities and ser vices to support open innovation during the last ten years. Tese include technology intelligence, licensing, technology transer, transer, spin-out management, management, suppliers and partnership services, strategic university partnerships and relationships relationships with consumers.
4. Bottom up, evolutionary, evolutionary, centralised activities Although we have not observed any real examples o this approach to OI, we believe it is theoretically possible. For example, a group o R&D managers might autonomously create a community o practice or the implementation o OI in their companies.
Case examples Te remainder o this report ocuses on the rst route to open innovation (top-down/strategically-driven/centralised). (top-down/strategically-driven/centralised). We took a close lo ok at how the OI implementation implementation teams involved set about encouraging OI adoption in t heir respective companies. Tis has enabled us to gather eedback on the various initiatives and to capture the evolution o the approach over a short period o time. Detailed case studies are provided in later sections o this report.
17
What does this mean or my organisation? •
•
Tink about your own company: where does OI oer an opportunity? What benefts do you expect rom implementing OI?
•
OI is an innovation itsel and thereore has to be managed rom the beginning to be successully introduced. Tink about your company: there are almost certainly examples o single OI activities that have been carried out or a long time although not explicitly called OI.
•
Determine where your company is placed within the OI implementation approach matrix.
•
18
OI can’t cure everything and has clear limits, depending on the industry in which you are doing business.
Decide whether a strategically-driven, centralised OI unit is the way orward or your company.
Enablers and obstacles to open innovation OI culture OI procedures OI skills OI motivation
o determine critical issues when implementing OI, we asked the companies participating in our workshops about the enablers and obstacles they had experienced. Te results are shown in Figures 7 and 8, where the number o stars indicates the approximate proportion proportion o companies who cited that enabler or obstacle as important. Tis analysis o enablers and obstacles reveals our main issues that companies have to tackle when implementing OI (Figure 9). A brie description o each is given here. Te ollowing our sections o this report describe them in more detail.
Support from top-management [Culture-related factor]
Create an OI culture [Culture-related factor]
Appropriate structural changes [Procedure-related factor]
Knowledge of the company [Skill-related factor]
Obtaining the right blend of skills [Skill-related factor]
Motivation of operatives [Motivation-related [Motivation-related factor]
Figure 7: Open innovation enablers 4 OI Culture
OI culture Internal cultural issues [Culture[Culture- + Motivation-related factor]
Lack of appropriate skills [Skill-related factor]
OI procedures
Operational diculties [Procedure-related [Procedure-related factor]
Lack of resources [Procedure-related [Procedure-related factor]
External cultural issues
OI skills
[Culture-related factor]
Figure 8: Open innovation obstacles 5
OI motivation Figure 9: Issues in the implementation o OI
OI culture Cultural change change is a major issue in the implementation o OI. Tis is readily understandable: adopting OI may well mean doing things dierently, dierently, sometimes in direct contradiction to behaviour that was allowed and endorsed in the past. For almost all the companies in our study, the shi towards an open approach to innovation required the direct involvement o top management. Tis oen translated into a shi o culture, whereby working with other companies became accepted and endorsed throughout the organisation. For one o the companies surveyed, or example, the intervention o top management had a positive eect, cascading throughout the organisation. Tis experience was shared by another company, where the CEO announced the open innovation policy very publicly (“Everyone (“Everyone realised that things had to change”). However, it was elt by others that important changes had to come rom the operational level “as they are the ones who need to deliver.” It was only aer operational sta were convinced o the need or change that the intervention o top management became signicant and rubberstamped the initiative, ensuring it would happen.
4, 5
20
Based on the responses o 26 managers at one workshop
OI procedures
OI motivation
What procedures procedures enable OI? Many have been observed. For example, moving people about within an organisation strengthens internal networks and increases cross-unctional working. Tis is an extremely important actor or complex organisations organisations where it is difcult or individuals to understand and contribute to the dierent aspects o the business. Increasing cross-unctional connections also gives people access to the contacts and networks o their colleagues.
As culture is an important element or supporting change, it is interesting to consider what incentives can be put in place to encourage people to adopt open practices.
Independent OI teams working within t he traditional company conguration conguration are a very popular choice or OI implementation. Tese teams typically include people rom R&D, marketing, supply chain management (procurement) and the legal department. o enable the OI team to work more reely, one o our companies suggested ring-encing the team’s budget and separating its nances and management rom R&D and the chie technology ofcer: “Tere should be the right balance between independence and integration.” Choosing the appropriate structure is another important step towards an open approach to innovation. Establishing some inrastructure and tools to support OI is also important. Some companies, or example, introduced intelligence gathering systems in order to keep abreast o new developments. Others established corporate venture capital unctions to invest in start-ups o potential strategic value.
An executive at one o the sur veyed companies, where the transition towards towards OI is still in progress, made the ollowing observation: “Although we generally recognise the importance o getting to know and use what is developed externally, there is not the cultural and practical background which enables and motivates the employees to be completely open. Tere are no ormal ways o career progression or someone who is an OI operative.” wo wo other companies have recognised and at least in part solved this problem. In the words o one: “Our entrepreneurial structure recognises the identication and the bringing inside o a technology.” Appropriate shis o the incentive structure are essential to i mplementing mplementing OI successully. successully. As this section has shown, the same issue can be an obstacle or an enabler: i you get it right, it can enable OI; i you get it wrong, it becomes an obstacle. Te next our sections deal with each o these issues in detail.
OI skills Tere is no ‘perect’ blend o skil ls to enable OI, however the lack o an appropriate appropriate skills blend is seen as an obstacle to its implementation implementation (see Figures 7 and 8). Tis suggests that training is essential, rather than merely desirable, when preparing the company or open innovation.
What does this mean or my organisation? •
You should be aware o the dierent enablers and obstacles to OI implementation.
•
Set up a clear action plan to deal with the our main issues – culture, procedures, skills and motivation.
•
Analyse where your company stands in relation to each o these issues and decide which to tackle frst.
21
How to build an open innovation culture Company culture Cultural archetypes OI sub-cultures OI and R&D
Company culture
N
obody knows i it is possible to plan cultural change since it is difcult, i not impossible, to demonstrate the eectiveness o such change. We have not, thereore, suggested any ormal plan or changing organisational culture in order to enable OI. Culture also exists at dierent levels, and changing the deepest levels (the basic underlying assumptions) assumptions) is very hard and takes a long time. Instead, as others have done beore (Martin and Siehl, 1983), we try to identiy and highlight those c ultural eatures, eatures, at the shallowest level o company culture, that encourage interaction with the external environment environment or the purposes o innovation. Changing these shallow eatures is easier than changing the deeper cultural levels. It is worth noting that changes can be directed rom the top only when a single culture already exists and cultural norms can be changed. op-down approaches are generally short-lived because they tend to produce over-compliance rather than acceptance.
Cultural archetypes Tere are our main archetypes o organisational organisational culture, summarised in able 2: Role, Power, Achievement and Support. Tese our kinds o cultures have dierent characteristics and are typied by certain organisational organisational structures. Groups or companies with a predominant predominant achievement and support culture might be expected to be more suited to the adoption o OI. For these cultures, appreciative methods o behavioural control seem more eective (see section on How to motivate employees, employees, p. 46)
Culture type
Description
Organisational structure
Internal control
Reaction to external contingencies
Most eective control methods
Role
Based on regulation, bureaucracy and logic. Characterised by job descriptions, rules, procedures. Emphasis on conformity to expectation.
Hierarchical control via impersonal regulations
Closure Separation
Regulative methods
Power
Regulated by a central power radiating throughout the organisation. Culture is dependent on politics, trust, empathy, empathy, and personal magnetism. Flexibility, Flexibility, adaptability and dynamism characterise this culture. Power resides with expertise. People are interested in the work itself and want to see it completed. Individuals feel they have a personal stake in the organisation. Assumes that people contribute out of a sense of commitment and belonging. Satisfaction comes from relationships, mutuality, belonging and connection.
‘Greek temple’ or hierarchy where each function (e.g. Finance) is a pillar, pillar, controlled by a small group of senior executives (the temple roof) Web or pyramid
Hierarchical control via direction and supervision
Conquest Confrontation
Self-control, personal accountability for delegated achievements Collaborative control with mutual accountability
Problem-solving Compromise
Achievement
Support
Table 2: Organisational culture types
24
Many approaches approaches have been taken to study the very complex theme o organisational culture and change. Tere are a number o models, rameworks and paradigms that could be used to investigate the cultural implications o implementing OI. Pheasey (1993) and Brown (1998), or example, review the core theories o organisational culture and rom these we have extracted some concepts around which to structure our research.
Organisations that focus on specic projects or tasks Matrix or market structure Cluster or clan, with no dominant individual or group
Dynamic connectedness Transformation
Appreciative methods
e r u t l u C
3. Functions that nd it difcult to be open
OI sub-cultures During our interviews or this research we observed that dierent company company unctions displayed quite distinct attitudes towards OI. Tey are shown diagrammatically in Figure 10 and described below. below.
1. Functions designed to be open Tese unctions are deliberately set up to support OI activities with people recruited specically to promote promote and oster interaction with external partners. Tese unctions are thereore also intrinsically open. Examples include: •
Formalised technology intelligence and scouting activities or monitoring monitoring technological developments
•
Corporate venture venture capital unctions to identiy and support new businesses with technologies o potential uture relevance
Tese departments experience the strongest cultural clash with an OI approach. In one company, or example, the R&D unction elt threatened by the changes taking place. As part o the move towards greater openness the role o the procurement department had signicantly shied, rom providing raw materials in response to R&D directives, to taking a more active part in the i nnovation nnovation process. As a result, the R&D department elt threatened by a perceived reduction in their inuence on decision making. In some cases R&D also eared becoming redundant i innovation and new technologies were brought in rom outside.
Inrastructure designed to nurture a ertile ‘ecosystem’ (e.g. science parks)
2. Functions instrinsically open Blue sky research only exists in some companies. People People within such unctions assert that they have always been open (e.g. they work with partners in universities and other research centres) and thereore have not needed to change their way o working to comply with an OI approach.
1. Functions designed to be open
OI implementation team
Technology intelligence & scouting
3. Functions that nd it dicult to be open
2. Functions intrinsically open
Blue sky research
Applied research and development
Legal department Functions covered by this report
Corporate science parks and incubators
Corporate ventures
Marketing
Product development
HR
Finance
Procurement
Other functions
Figure 10: Company unctions and their dierent attitudes attitudes towards open innovation
25
R&D Blue sky research • Mid- to long-term outlook
Applied R&D • Short- to mid-term outlook
•
Focus on new potentially disruptive technologies
•
Focus on incremental research
•
Scientists
•
Experts in technology
•
Enjoy technology
•
Problem-solving Problem-solving approach
•
Supportive culture
•
Market/product Market/product ocus
•
Motivated by appreciative methods
•
Achievement culture
•
Friendly environment
•
Motivated by appreciative and some regulative methods
•
Satisaction in the technology itsel and achieving expert status
•
Motivated by reaching targets, gaining rewards and achieving an expert status
•
Career driven
• •
Team-oriented Team-oriented people peop le Less career driven
Table 3: Attitudinal dierences within R&D
OI and R&D Te unction most heavily involved in the implementation o OI is generally R&D. Our interviews thereore ocused on understanding understanding how people within R&D departments eel about going outside the company or innovation resources rather than relying on internal ones. We also asked or examples o practical initiatives to encourage R&D to embrace OI. We ound there were dierences between the various groups involved in R&D. Tose in blue sky research units predominantly displayed a ‘supportive’ culture, while we ound more o an ‘achievement’ ‘achievement’ culture in the departments working closer to market (see able 2). Tese dierences are reected in the various initiatives taken by the OI implementation team to help these two types o R&D to become more open. According According to Badawy B adawy (1988), research units with a more blue sky ocus are predominantly predominantly staed by scientists, rather than by technologists. Coll aborating with other individuals with similar passions motivates scientists, and they appreciate access to new stimuli. In these acilities the atmosphere atmosphere was described as riendly and people were mainly organised in teams. Interest in their research is one o the primary motivations or scientists but they are also motivated by the level o reedom they have to investigate science and technology, technology, the equipment provided, provided, and their ability to participate in proessional associations and seminars (B adawy, adawy, 1988; Hebda et al., 2007). Even when the company has not ormally embraced OI, people in blue sky acilities will interact with other sscientists cientists working in the same domain. Tey oen visit universities, participate in conerences, contribute contribute to scientic projects with university research groups, support support academic research, and publish their own ndings. Hence it seems that a certain degree o openness is intrinsic to these types o research acilities. However, barriers to openness can still exist and scientists can sometimes be discouraged rom talking to external people or ear o compromising uture intellectual property.
26
Applied R&D units typically ocus their eorts on less speculative research and technologies that are closely linked and bound to products and markets. Tese technologists look at potential new products or solutions to current problems. Tey are usually more structured in their research and oen organised in project teams led by managers who have targets, deadlines, plans, budgets and constraints stronger than those in blue sky research units. Applied R&D units display characteristics o an achievement culture (see able 2). echnologists are motivated by meeting targets and goals and appreciate monetary and career compensation in return or their eorts (Hebda et al., 2007). Tese groups are less prone to discuss their innovation activities with external parties unless it is strictly within a ‘sae’ context. context. Examples o typical interactions are contract research with universities or suppliers. able 3 captur c aptures es the dierences in culture observed between blue sky research and applied R&D unctions. Specic examples o how the OI implementation team sees these dierent groups groups in ve companies are shown in able 4. Tese results indicate that dierent groups need to be supported in dierent ways. Tey also demonstrated that a denitive open innovation culture culture cannot be created overnight and applied to the whole company. An OI implementation group is in a good position to identiy dierences and to judge how best to s eed an OI culture within dierent company company unctions. Such a group can be established as a dedicated unit with a specically open culture. It It can then develop links b etween dierent company sub-groups sub-groups and introduce the culture to them.
e r u t l u C
Cultural characteristics and obstacles encountered when supporting OI
FMCG 1
How would you describe the culture in your company’s company’s blue sky research unc tion? • Technology ocused • •
FMCG 2
FMCG 3
Electronics 1
Electronics 2
Motivated by challenges Technical career path
How would you describe the culture in your company’s company’s applied R&D unction? • 33% o time invested in career planning •
Career motivated, results driven
•
Generalists rather than specialists
•
Not such good communicators
•
More supericial than research people
•
•
•
Ideas people Culture was transormed rom supportive and relaxed to a more achieving one
Good communicators Focused on growing and building existing businesses/brands
•
Maximise serendipity (based on reputation)
•
•
Keeping options open
•
Not aiming or ailure
Validation, pressure testing, due diligence o technology and relationship management with the provider
•
Get deals done whatever the costs
•
Understand the issues
•
Long-term Long-term business need Underlying culture is ‘supportive’ looking at mid to long-term innovation, but managed more and more by targets
•
Source external technology and products that in short term speed up or enable delivery to market
•
Enter longer-term collaborations in order to develop new products, introduce co-developed products into market, or develop or improve equipment Preer not to hand projects to a dierent unit, but want to take it to the end
•
•
•
People do not discuss a topic beore it is covered by patents
•
•
Do not have much time pressure so enough time or evaluation
•
In USA, preer working with important brands whereas in Europe they just want to work with the best
•
Work with supplier in joint and co-development Only open with suppliers
•
History o openness
•
•
Do not consider IP careully
•
•
Need support to put agreements in place
Some resistance to openness (not-invented-here (not-invented-here syndrome)
•
Long time span
•
Faster time scale (months)
•
Not used to working with other companies
•
Can be resistant to help
•
Oten too relaxed
Table 4: Descriptions o the dierent cultures cultures within the two dierent kinds o R&D unction, gained rom our interviews with OI implementation implementation teams in ve companies
27
What does this mean to my business?
Company culture can be inuenced by structure, skills, incentives and control – discussed in more detail in the ollowing sections: • •
•
•
28
A complete OI culture or the whole company cannot be created overnight. Te starting point or change could be the OI implementation team, which should seed the OI culture within the company. company. Accept that dierent units will have dierent sub-cultures and make use o these cultures within an OI approach. Identiy groups with particular sub-cultures and fnd dierent ways to support OI within them.
How to set up open innovation procedures The OI implementation team Case studies Activities o the OI implementation team
The OI implementation team
he dedicated OI implementation team is usually ormed rom R&D managers who have a strong technical background and business mind set, coupled with a deep understanding o the company. Tey are enthusiastic about embracing OI and provide support or the company’s interactions with the outside world. Tey also provide links between company groups groups and acilitate access to tools, skills and resources (such as corporate venture venture unds). In most companies we observed the principal role o the implementation implementation team is to help R&D units to become more open. Tey also generally desi gn the OI i mplementation mplementation rollout.
Te role o the OI team varies according to the culture and perspective o the company group they are dealing with. Figure 11 illustrates the general approaches taken by OI teams when dealing with the dierent R&D groups. groups.
Case studies Te table opposite provides an overview o di erent approaches approaches taken by OI teams to support the adoption o open innovation in various unctions within their companies. Te ollowing pages present individual case studies.
Open innovation implementation team OI team provides:
Blue sky research
Figure 11: The role o the OI implementation team
30
Applied R&D
s e r u d e c o r P
Support Supp ort oered oered by by OI team Case study exam examples ples 1. Oer services to create a space where scientists can interact saely and reely with other experts B l u e s k y R & D
A p p l i e d R & D
•
Create sae spaces or researchers to work with external partners. For example, one company set up ‘master agreements’ that created a legal umbrella protecting scientists and researchers within certain universities. Other examples include providing insurance liabilities or working with star t-ups, and guaranteeing that IP remains with the start-up while the technology evolves.
•
The OI implementation team oten provides scouting and due diligence services or researchers to identiy potential partners.
•
Personal development development and assessment schemes can use modiied personal targets: in some cases external collaboration is explicitly identiied as a criterion or bonuses. Bonuses can be team-based to support team spirit and reduce personal competition. Also, criteria can be adapted to link blue sky research to market needs, obliging blue sky researchers to make links and connections with other company unctions. Career development paths can oer the possibility o sabbaticals in universities, or experiencing the entrepreneurial entrepreneurial spirit through temporary secondments secondments in spun-o businesses.
•
Encourage OI practices that help to achieve targets, such as on time delivery, time to market and costs. Promote Promote external collaboration by communicating new values rom the top.
•
Provide inrastructure inrastructure that helps achieve personal targets.
•
Identiy needs and scout or external solutions.
•
Set up small intrapreneurial, intrapreneurial, cross-unctional teams that are empowered to do ‘everything’ as long as they achieve their targets.
•
Create conditions to encourage use o external resources, e.g. cutting R&D budget to encourage outsourcing o research.
•
Act as internal gatekeepers gatekeepers listening to problems, connecting the right people, acilitating and lubricating the internal cogs o innovation.
•
Be the riendly ace o the company (internally and externally).
•
Develop career paths that include business unit hopping to enhance knowledge sharing.
4. Provide internal k nowledge sharing platorms
•
Provide reerence ramework that helps to create a common OI language.
•
Exchange technical ideas in problem-solving sessions. Online acilitation o knowledge exchange (e.g. (e.g. through virtual meetings attended by people in dierent locations on democratically chosen themes). Disseminate positive examples o success where a solution has been ound through such exchanges and personally credit the people involved. Platorms are typically initiated by natural leaders who can involve others and can communicate their enthusiasm.
5. Provide right pool o skills
•
Training: what to do and when, what to avoid. What does OI mean or the company? And what does it mean or you/your job? Who can help you?
2. Oer services and create conditions that help to achieve market-driven targets
3. Provide links between unctions
I n g e n e r a l
•
Training is delivered in seminars as part o personal development schemes, schemes, through mentoring and tutoring, with practical examples. Provide access to experts who can mentor at each stage.
Table 5: How dedicated implementation teams promote OI culture in dierent companies
31
CASE STUDY OI in a multinational consumer electronics company Open innovation implementation team
Research
Applied R&D
A multinational consumer electronics company has created a group o eight experienced business managers, all highly qualied technically, who are responsible or developing a more open approach to innovation by supporting external alliances with universities, private companies, research institutions and government. government. This ‘external ‘external alliance alli ance group’ is a clear point o entry to the company, accessible and well connected internally. The group maintains relationships internally and externally, acting as a catalyst to enable relationships and collaborations to fourish. It has access to a broad set o skills and services, including business and legal intelligence. intelligence. Support rom top management has been undamental to the creation and unctioning o the external alliance group, whose rst suggestion on how to operate was: ‘Do not spend too much time buried in your oce!’ Listening to the needs o all the unctions and adapting the approach to suit each dierent group has been o primary importance. The research unction in the company is quite separate rom the applied R&D unction. Research scientists have a passion or technology and a history o openness with university groups. However, because they oten take a
32
Business unit
relaxed attitude towards IP, the external alliance group provides legal support or any agreements. agreements. The external alliance group also suggests technological alternatives as well as legal advice. The group has more intense contact with the applied research and development group where there is greater resistance to external contributions and where technologists have a shorter time perspective than the research scientists. To assist the applied research group, external alliance managers spend signicant time with them to encourage trust and to understand their needs better. With both the research and applied research unctions the external alliance team has to be reactive and respond to specic needs that arise. At the same time, they also take the initiative by actively oering external solutions to challenges in the business units. Such help is greatly appreciated, appreciated, given the pressures on business units, especially i it is timely and easy to implement. These These groups can be very demanding, but managing to nd a complementary technology or a good partner can have a very high impact.
s e r u d e c o r P
CASE STUDY OI in a ood rm Open innovation implementation team
Recognises, employs and builds key skills
Product development Underlying science research
New business development
The adoption o OI in this company was strongly driven by general trends in the ood industry. The starting point or the OI initiative was the long-term R&D unction, which had traditionally been separated rom the company’s production processes. The new CTO wanted to encourage this R&D unit to link its research more closely to the overall needs o the business. Two employees were nanced rom the R&D acility budget and made responsible or starting the OI implementation. implementation. The aim was to introduce OI practice into each s tage o the innovation process, developing best practice beore the nal OI rollout. The team o two was responsible or the identication o researchers’ needs (both blue sky and applied R&D) and scouting internally and externally or solutions. At this stage, they managed the entire process, rom selecting collaboration partners and involving internal experts to evaluate technology, to setting up non-disclosure agreements agreements or signing contracts via the legal department. Knowledge sharing networks led to the rationalisation o work and the exchange o inormation. R&D teams in dierent regions were no longer in competition with each other. The OI managers discussed specic benets with each group in order to generate acceptance and to convince them o the merits o the open approach. The blue sky R&D site displayed a riendly, non-competitive and team-oriented attitude. They were happy to contribute to the knowledge sharing networks, gaining personal satisaction rom the recognition o their expertise. In contrast, sta working in the shorter-term R&D units were
more competitive competitive and career driven. Initially sceptical about looking or technology outside, they warmed to the notion ater the rst positive outcomes outcomes illustrated the potential or reducing time to market and solving problems. The two OI managers relieved the R&D sta rom tasks linked to collaboration management (e.g. assessment o potential partners, negotiating agreements, managing IP). They carried out scouting activities to nd solutions to identied problems. They were a clear ocal point on all OI issues or both internal and external contacts. The knowledge sharing networks acilitated an internal openness that led in turn to an awareness that helpul ideas could in ac t be ound outside one’s own research group. Cultural drivers or long-term innovation •
Introduction o new indicators or perormance measurement on which the whole department’s bonuses are based
•
New perormance indicators induce a more market driven culture: (technology delivered on time or implemented implemented in products, eicient knowledge sharing, collaboration with external parties)
Cultural drivers or product development unctions •
Promotion o internal communication by introducing knowledge sharing networks. Researchers worldwide have regular telephone conerences on problems and ongoing research. When problems problems are solved with the help o the network, the contributors are acknowledged in company newsletters.
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CASE STUDY OI in an FMCG company Open implementa implementation tion facilitation services
Needs!
Technical group
In this company, the OI implementation team has to be adaptable and able to gear its oering to two types o group, each o which needs dierent dierent kinds o help. The ocuses, skills and motivations o each group are varied and contradictory. Members o the technical group tend to be ocused on their technologies and the challenges these provide. They are ideas people and may be less good as communicators. Members o the R&D group are oten ocused on their
34
Applied R&D
careers and are results driven. They tend to be generalists rather than specialists. The OI implementation team must have the fexibility to guide and respond to both groups: or example, alerting the technical group to its tendency to dismiss ‘alse negatives’ – ideas that seem unimportant but are quite the opposite – and making sure that the career-oriented career-oriented applied R&D group is exposed to suitable opportunities.
s e r u d e c o r P
Activities o the OI implementation team Te OI implementa i mplementation tion team must li nk many unctions together. From our workshops and interviews we identied which internal groups were most aected by the implementation o OI (Figure 12). Te number o stars reects the proportion o companies companies that said each group was important to the process. Te OI implementation team helps oster dierent activities to open up the innovation process. Figure 13 shows the results o our survey o OI ac tivities among the companies we studied. No reliable conclusion about the scope o a company’s company’s OI activities can be drawn rom these results. For example, a company company might illustrate its claim that it participates in successul joint ventures ventures with one example. However, However, this could b e the sole example o a joint venture in that company, demonstrating that while OI is working in one discrete area, it is ar rom being part o the company’s overall strategy. Te company can use dierent tools and unctions to ocus on external activities, oen linked by the OI team (Figure 14). Again, a challenge or the OI team is to identiy the scope o utilisation o these tools. How eectively are they being investigated and used? Are they being deployed throughout the organisation?
Co-development Joint ventures Mergers & acquisitions Informal relationship Contract research & development In-licensing Out-licensing Co-branding Incubation of start-ups Spin-o business
Figure 13: Range o company OI activities 7. MNCs engage in almost all the activities, although the intensity o involvement may vary.
Involvement of R&D
Cross-functional project teams
Involvement of top management
Sponsorship of selected universities
Involvement of Procurement
Technology/market/competit Technology/market/competitor or intelligence
Involvement of Legal/IP lawyers
Corporative venturing units
Involvement of Marketing
Institutionalised networks of practice
Involvement of Finance
Blue sky research department
Involvement of Service and Support
Science parks/incubators
Involvement of HR
Figure 12: Company groups most important or implementing open innovation6. Involvement o R&D and top management were mentioned by all the companies.
Figure Figure 14: OI tools and unctions 8. The The majority o MNCs have organised cross-unctional teams and work in close collaboration with universities
Case studies Te case studies on the ollowing pages illustrate a variety o approaches approaches taken by MNCs when attempting to implement open innovation.
6, 7, 8
Based on the responses o 26 managers at one workshop
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CASE STUDY Involving multi partners at BP BP applies science and technology to its three core businesses (exploration and production; rening and marketing; alternative energy) to derive measurable value as quickly as possible. In response to changes in the R&D environment environment (rom largely in-house R&D pre-1990 to the present state o collaborative networks) and the energy marketplace, marketplace, BP has set up an ecosystem o innovation partners to bring in complementary external skills and resources. This ecosystem typically comprises corporate partners, venture capital rms, universities, government government institutes and industry players. Dierent partners are involved at dierent points along the commercialisation commercialisation unnel. Gaining maximum value rom these partnerships requires such collaborative links to be managed eectively (regarded (regarded as a key skill). Particular emphasis is placed on long-term partnerships with leading universities worldwide as a key method to gain access to world-class knowledge and networks and to stimulate thinking. Moving to a wider network approach to innovation is not without problems. Resistance was encountered rom those who preer to work with traditional par tners. Another challenge was the need or dedicated expertise to manage partnerships. Additionally, organising exposure to new technologies technologies outside BP’s ocus and working with uture (and culturally very dierent) energy innovators required new skills o relationship management, development development and commercialisation. commercialisation. In particular, particular, working with innovators outside the oil and gas industry (such as technology
36
start ups, entrepreneurs entrepreneurs and government departments) necessitated a deep understanding o each par tner’s needs and culture, and signicant time was needed to develop an honest and open relationship. Partnering is a key capability in itsel. Innovation is regarded as the key to creating new business and is also a key issue or BP Alternative Energy Energy (AE) which hosts all o BP’s interests and investments in developing new energies such as wind, solar, biouels, hydrogen power, and carbon capture and storage. Alternative Alternative Energy has a similar ecosystem with external partners outside the traditional oil and gas industry, which includes the ‘AE Ventures business’, which orms a key strategic bridge between BP and the ast-moving external clean energy innovation community. community. This business, which works closely with the global venture capital industry, invests directly in innovative, low-carbon technology companies companies as well as helping to commercialise BP-unded clean energy research. Key capabilities in this area are the need to understand and assess business value, developing new types o collaboration, and engaging in experimental experimental technologies and business models. BP has looked closely at best practice in orming partnerships, particularly with respect to people issues, and encouraging more entrepreneurship. A mix o new and amiliar people has been ound to be the most eective strategy, together with a mind set prepared to change to a new way o operating.
s e r u d e c o r P
CASE STUDY Cross-unctional teams: FMCG company A structured OI approach started with the R&D department. Marketing and sales are now involved in the innovation process, improving internal communication, communication, encouraging better internal strategic alignment and cross-unctional development. Cross-unctional teams are needed in order to bring all the necessary skills to the innovation process. process. Examples o cross-unctional activities include: •
Building relationships with suppliers: working together, procurement and research unctions can leverage supplier innovation and direct it to ulil the company’s company’s needs. Tools have been developed to acilitate this approach.
•
Technology Technology push process: this is cross-unctional, with decision makers at all levels in the organisation, varying rom case to case. The process is as ollows: 1. Identiication o opportunities 2. Identiication o internal sponsor/business owner or the opportunity 3. Identiication o stakeholders (i.e. people with relevant expertise) 4. Technical easibility evaluation 5. Business case in this speciic area 6. Opportunity evaluation.
CASE STUDY Partnership with universities and other organisations Company 1: A deence provider has established a small number o very well resourced centres bringing together the rm’s own researchers, university research groups and selected other companies to ocus on broad themes such as systems engineering. engineering. Company 2: A leading European supplier o industrial power generation systems aces the challenge o continuing to deliver new products to all its target market segments cost eectively, given the intensive level o R&D involved in their production. In addition, the company’s company’s revenues are
increasingly drawn rom services associated with the core product. To ensure the eciency and eectiveness o its R&D spend, the rm has implemented a number o OI initiatives, including the establishment o laboratories embedded in universities, the ormation o regional competence centres to draw together expertise around a particular theme, the management o a range o risk/reward sharing partnerships with suppliers, and the ormation o a corporate venturing unit.
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CASE STUDY Incubation at Philips Founded Founded in 1891 as an electric light bulb manuacturer, manuacturer, the Philips company has gone through several periods o expansion and streamlining in its product portolio and areas o interest. Over the years it has divested itsel o many traditional product lines to concentrate on growing markets. markets. Paring down since 2000, Philips has also ollowed the pattern o many traditional technology-driven companies by becoming more market-oriented, designing its products and solutions around people and building strong brands.
and liestyle strategies. The incubator makes use o knowledge across the entire organisation. Using a traditional Stage-Gate9 process, the incubator gathers ideas internally (about 70%) and externally (about 30%) and selects potential new business ideas using investment criteria that mirror those o global venture capital companies. Criteria include: •
The company integrates technologies and design into people-centric solutions, based on undamental customer insights and the brand promise o ‘sense and simplicity’. It concentrates on worldwide brand development development and emerging emerging markets through internal and external innovation and acquisition. Internally its innovation and incubation strategy has been changing over the years, and its three incubator centres – Healthcare, Liestyle and Technology – are now considered an important strategic catalyst or growth. The three incubator unds nance new business ventures within the company – that is, new ideas that cannot nd a place within existing businesses. These ventures ventures report directly to the main board o management in line with the three core sectors. This strategy guarantees a continuous stream o new product introductions, which accounted or 56% o the company’s growth in 2006.
Process example within one line o business The Liestyle incubator ocuses on undamental market needs and trends that are aligned with consumer growth
Innovation funnel
Ideation
Start-ups IP licence
Predevelopment
Development
Unique technology and/or application with clear market insight
•
Adoption o the solution at the end user’s discretion
•
Recurring revenue business models – e.g. B2B, B2C 10
•
Clear discriminator and control points
•
Intrapreneurial Intrapreneurial team
•
Substantial attainable market
•
Consistency with Philips’ consumer consumer strategy values
Initial ventures capitalised on internal R&D and developing intellectual property rights (IPR) o the shel, turning old ‘things’ into new businesses and creating additional value. More recently, ventures have been concentrating on organic growth. I they are successul they may be ‘spun up’ and become new businesses within Philips, receiving 100% o their unding rom the sector rom which they originate. I they do not contribute to growth growth or are not consistent with Philips’ core areas they may be ‘spun out’ by looking or external unds or trade sale. Entrepreneurial Entrepreneurial and intrapreneurial spirit is a key part o this process. Philips believes that managers should be willing to take personal risks by going into one o the incubators, requiring their commitment when there is no guaranteed route back into the corporation. On the other hand, they are personally rewarded with share equity Acquisitions when ventures are successul. To make the incubator system more attractive, managers are given high degrees o Pilot Product reedom and mentorship. trials release Philips’ incubation organisations have been able to adapt and reorganise themselves to support the overall company strategy or growth. Elements were addressed that refect not only internal organisational trade-os but also the ramework in which Philips interacts with the outside world to oster open and closed innovation.
Businesses
Technology, ideas
Incubation
Ideation
Pre-seed
Seed
IP Licence partnering
9
Beta
Growth
Spin out
‘A conceptual and operational process or moving moving a new-product project rom idea to launch’. www.stage-gate.com; http://www.im.en g.cam.ac.uk/ servi ce/events/i no/roadmappi ng.html
10
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Alpha
Business-to-business, business-to-consumer.
s e r u d e c o r P
CASE STUDY Technology intelligence at Kodak: Identiying opportunities and threats Kodak’s business has changed dramatically in recent years. As well as migrating rom traditional lm-based technology to new digital methods, it also diversied into a variety o image-related markets, including consumer and commercial commercial digital printing and display technologies. technologies. Kodak embraces an open approach to innovation and set up Kodak European Research (KER) in Cambridge, Cambridge, UK to identiy opportunities and partners o strategic importance in the European, Arican and Middle Eastern Region (EAMER). The primary elements o KER’s strategy are to: •
search out dierentiated and relevant science and technology o excellence, and other opportunities emerging rom universities, universities, research institutes and early stage companies in the region
•
identiy and investigate user preerences preerences and aspects o consumer dierentiation in the region
•
identiy and establish relationships with strategic regional partners
•
participate in local, national and regional research unding opportunities
Cambridge was chosen as the preerred location to establish the new European Research Centre ater an exhaustive search and assessment o possible locations rom across Europe. The selection was made based on several criteria including networking potential, practicality o the location, quality o higher education inrastructure, the cluster o relevant high-tech early stage companies and the entrepreneurial entrepreneurial environment (VCs, angels, and startups). The KER team was constructed rom a diverse range o researchers researchers rom other Kodak R&D acilities, complemented complemented
by new sta recruited locally. Key skills included technical expertise in relevant science and technology areas, experience o working with external groups and aptitude to network eectively. It was evident that every country in EAMER had to be approached separately. The method o approach moves in our steps rom ‘scan’ (looking or previously unidentied inormation) to ‘target’ (ocusing on inormation o identied relevance). Tools have been produced to support each o the phases. KER decided to develop a series o documents that would act as ‘country guides to technology and innovation’ in collaboration with visiting international early stage researchers researchers recruited primarily through IAESTE – an international association which supports students in gaining proessional technical training by seconding them to companies in dierent countries (www.iaeste.org). (www.iaeste.org). The guides were assembled with a ‘scan’ perspective (searching beyond already identied technologies and interests) entirely through internet searches, searches, ollowing a clear set o aims, objectives and templates. templates. KER also decided to work together with intermediaries (e.g. regional development agencies, technology transer organisations, consultants, venture capitalists) in order to increase the number o contacts rapidly. This strategy allowed them to be selective and to deploy a l imited amount o resources in identiying key sources in the external environment. For key regions a scouting trip was organised with the aim o capturing inormation as well as setting up local networks and links. Follow-up Follow-up with relevant contacts was then organised.
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CASE STUDY Setting up a Science Park to enable the creation o an ecosystem Company A has reorganised its research inrastructure to support OI. Its ormer R&D campus has become a Science Park where individual high-tech companies, either spinos rom the business itsel or independent companies rom outside, can share the premises and the sophisticated technical inrastructure. inrastructure.
Currently Currently the ecosystem is monitored through periodic reviews o the campus residents carried out by an external consultancy. •
Inrastructure management An independent organisation is in charge o running the campus inrastructure, inrastructure, including the construction o new buildings, acility and park management, and attracting new residents. It is also responsible or promoting interaction between the campus residents. This is encouraged both inormally, through the technical and recreational inrastructure shared by all residents (e.g. sports acility, shops, canteens, nursery, etc.), and ormally, through internal technical colloquia and conerences. conerences. A business club supports companies in the presentation o their technological oers with a commercial perspective. An external venture group specialises in corporate spin-outs.
•
Measurement o the park’s park’s perormance The inrastructure managers are currently evaluated mainly on their capability to manage the buildings (i.e. how much o the park is occupied). Other suggested measures o perormance are the amount o venture capital invested in the area and an assessment o the park’s eect on regional development o science and innovation.
The list o residents is continually expanding, including some who could be seen as direct competitors o the parent company. However, the site accommodates only small and start-up companies, and does not include manuacturing acilities. The design o this OI tool took shape progressively. Initially the company planned to move its R&D acility, but ater some thought concluded that the site provided an opportunity to blend in with the local inrastructure. This was also the view o the local authority, which saw the status o the company as an opportunity or the local development development o business and innovation. The campus needed a new operational business model and this was created by virtue o strong links with the local authority, the university and the local inrastructure. The process o reorganisation began with the involvement o a charismatic leader who had strong links in the region, high networking capabilities and who knew the company very well.
What does this mean to my business?
40
•
Tink about activities within your company: which activities already exist and how are they currently connected?
•
When you think o setting up an open innovation unit, defne the unctions that should become connected and the activities that the unit should be responsible or.
•
I you have outlined the unctions and the activities, decide how the OI unit needs to perorm its activities. What do you already have and what will you have to create?
How to acquire open innovation innova tion skills sk ills Skills or OI A ramework or training and skills The risk o losing skills
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Skills or OI
A ramework or training and skills
I
Delivery o Delivery o training and skills is oen made easier by a clear ramework that claries what OI is and what it implies. One o the most popular choices is t he WFGM process adopted by Air Products and described by Witzeman et al. (2006). Although not the only possible solution, this simple process: Want FindGetManage claries communication and enables dierentiation o the stages through which each project passes.
t is rare or one person to possess all the ide al skills or OI. Instead, relevant skills can be pulled together by creating cross-unctional teams to which dierent members contribute contribute all the required attributes. attributes. One skill that it is possible and advantageous advantageous or all team members to have is knowing where to go or the ski lls required. eam eam members need to be aware o who possesses which skills, and how to outsource them. Te OI unit should be responsible or bringing dierent skills together and or providing training to ll gaps or improve certain skills. From our case studies we ound that skills all into our categories which we have termed introspective, extrospective, interactive and technical (see able 6). •
Introspective skills enable organisations to assess internal gaps and opportunities
•
Extrospective skills allow companies to review external capabilities and opportunities and to understand the viewpoint o other organisations
•
Interactive skills are communication skills that convey the value o any relationship with the external world to both internal and external participants
•
echnical sk ills include all the technological, marketing, inancial, commercial, management and business skills and tools needed to support the three categories above.
Want = dene what we want and how we can innovate Find = nd technologies and partners and understand them Get = negotiate the agreement with the external partner Manage = manage the relationship throughout the collaboration raining is made easier and conusion is avoided by relating specic examples to the phases. able able 7 relates dierent skills and training to the WFGM ramework. Each s et o questions could be used to guide the creation o teaching materials and learning objectives or a tailored training course. Knowledge o the company company is a valuable asset. Moving employees around to acquire experience o dierent unctions also improves the intensity o internal networks and increases cross-unctional working. Tis is an extremely important actor or complex organisations organisations in the FMCG sector s ector,, or example, where it is difcult or every individual to understand how they relate to all the dierent aspects o the business.
We also identied i dentied a broad set o desirable personal attributes, including motivation, the ability to le arn, sociability, a technobusiness mind set, systems thinking, leadership, balance between ego and empathy, empathy, an entrepreneurial mind set, lateral thinking, vision, adaptability and exibility. exibility.
Introspective – understand ourselves Strategic insights e.g. understand t with internal strategies Legal/IP skills e.g. understand IP implications, ability to draw up contracts
Extrospective – understand our partners Behaviour analysis e.g. analytical, personal. Strategic insight e.g. understand t with partners’ strategies.
Interactive Communication/collaboratione.g. communicate Communication/collaboratione.g. communicate needs internally and to partners, resolve conficts, language skills, network building Negotiation e.g. understand buying and selling tactics.
Technical Technological e.g. understand principles o technology being exploited. Portolio management Financial e.g. understand and set budgets. Analytical e.g. evaluation o risk, nancial analysis, problem solving
Table 6: The OI skills set
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s l l i k S
Introspective
Extrospective
Want
Find
Get
•
What would my organisation innovate in?
•
•
•
What wouldn’t it the innovation processes?
Who could have already acquired inormation on external ideas?
•
What are the current innovation processes?
•
•
Who are the people involved in innovation in my organisation?
Where can I ind internal repositories and tools or discovering new options in technology and the market?
What would this deal mean or our organisation? What does the proposed partnership mean or our organisation in strategic and inancial terms?
•
Are there legal implications or us?
•
Are there people/tools to help in negotiating deals? What are the ‘preerred ways’ or our organisation to deal with external partners (e.g. licensing in, cooperating in long term research projects)?
•
What would this deal mean or the other organisation? What does the proposed partnership mean in strategic and inancial terms?
•
Where can I ind inormation?
•
Are there tools in my company to support innovation? Are there people in other unctions who could support us?
•
Look or external trends in market and technology (tools and techniques to review the state o the art)
•
•
•
Interactive
Technical
•
How to scan or new opportunities in technology and marketing
•
How do I learn more about interesting developments? How can I evaluate who will be a ‘good partner’?
What ideas seem to work in current and uture scenarios? Are there gaps that could oer an opportunity or our company? How to contribute to other colleagues’ innovation processes How to develop creative ideas with others in your organisation, bringing together market and technological technological aspects How to communicate our ideas to the rest o the organisation (e.g. writing a proposal, business idea)
•
How to acquire the necessary inormation during social activity (e.g. at a conerence, meeting)
•
How to communicate the value o the scouting indings
•
Preparing business cases or new ideas
•
Scouting bries preparation
•
Strategic Strategic insight
•
•
Market insight
Scouting or identiied needs
•
Technical Insight
•
Preparing scouting reports to highlight the value o the scouting inding
Manage •
What are the problems or our party in respecting the agreement?
•
What are the problems or our side in respecting the agreements?
•
Who is responsible in that centre?
•
People and relationship management
•
How to understand the other people’s motivation and drivers rom their behaviour
•
How to negotiate
•
How to communicate with the other party
•
How to communicate the value o the deal to the rest o our organisation and gain support
•
What legal knowledge is required or each type o deal?
•
Portolio and project management
•
How to manage IP
•
Public relations
•
Financial valuation tools
•
Problem solving
•
Business models
Table 7: A checklist o questions to guide training and skill development or OI, using the Want FindGetManage ramework
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The risk o losing skills Some companies see OI as an opportunity to outsource outsource research to SMEs and universities. Te companies who attempt such a radical change usually restructure. restructure. Tis may involve asking people to move department, changing their working practices and making some researchers researchers redundant. Te decision to reduce R&D capabilities might save money in the short term, but in the long term, the loss o internal skills and technical capability may jeopardise the company’s company’s ability to access external technology and to appreciate its value or the company.
CASE STUDY OI skills training One o the companies we surveyed has organised an internal ‘OI academy’ or training employees in all unctions, particularly those in R&D and supply chain operations. Training Training is delivered in a variety o ways: in e-learning ormat, at residential seminars, through personal development schemes, via mentoring and tutoring, and through specic examples o how the theory applies to them. Residential courses provide an opportunity or experts to mentor trainees on specic problems encountered in adopting an OI approach. They also enable the OI implementation team to get to grips with the diverse realities o a multinational organisation, increase their understanding o other perspectives, and perect their own training programmes. Simply by meeting other employees at the courses the trainees are encouraged to see that they are not alone in their attempts to embrace a dierent way to innovate, and that colleagues in other groups and the OI team itsel are there to lend support. Another option is to oer secondments to other organisations, organisations, such as technical consultancies or university research institutes, where trainees can gain rst-hand experience o the world outside their own company.
What does this mean to my business?
44
•
Do not just rely on training single OI ‘masters’
•
Focus instead on developing links between several individuals who can provide a range o dierent skills
•
Be aware that a company needs internal competences to be able to assess and review external capabilities and opportunities
How to motivate employees Overcoming the NIH syndrome Reward systems and career paths
that involved a mix o employees, some resistant to change and others with more enthusiastic views. Te direct participation in the process contributed to a higher degree o success in the implementation implementation o the changes, and even the less progressively minded participants became inected by the new ideas.
Overcoming the NIH syndrome
he companies in our study were all very much in agreement that the not-invented-here (NIH) syndrome generates strong resistance to open innovation. innovation. NIH is dened as ‘overemphasis on internal technologies, ideas or knowledge’ (Clagett, 1967; Katz and Allen, 1982). Tat is, pe ople do not value ideas or technologies that are not generated rom within their own company.
Te traditional approach to innovation and resistance to open ideas can be the result o education. ‘People like to be in control’, said one company. Tey have learned to be good project managers, but they ‘think in project, not in portolio terms’. OI might provide alternative ways o completing projects and reducing times, but it mi ght entail compromise o other elements (e.g. quality). Some nd it difcult to compromise compromise on original aims and objectives.
One contributor to our survey said: ‘Over-protecting ‘Over-protecting the work done internally implies not doing thorough due diligence work on what others have achieved. It implies a poor analysis.’ Past studies (e.g. Cohen and Levinthal, 1990; Lichtenthaler and Ernst, 2006) conrm that people can be suspicious o anything coming rom external sources because o previous negative experiences, lack o experience or motivation, or an incentive system that ocuses on and strongly rewards internal technological development.
Tere is an analogous orm o cultural limitation when companies have already established external partnerships – notinvented-there invented-there (NI) syndrome – reerring to the difculty o introducing introducing and trusting t rusting new collaborators when there are l ongestablished relationships with others.
NIH can also be the result o people s eeking greater security or wanting a more positive individual or organisational identity. identity. NIH syndrome oen results in poor evaluations and neglect o external opportunities and exaggeration o the potential o internally developed ideas.
Cultural limitation can aect not only OI but also innovation itsel, when people are used to dealing with ‘tidy’ operational approaches such as ‘lean manuacturing’ or Six Sigma 11. It is difcult or such organisations to play and try to innovate when so much has been invested in rigorous standardisation processes. ‘A cultural identity cannot change quickly,’ said another o our contributors. ‘Our corporate culture tends to assume that A + B = C. Te business o innovation is not really like that. It is more iterative.’ iterative.’
Our interviewees suggested that setting a good example and demonstrating that other people’s technologies, opportunities and ideas have real potential and practical benet could reverse the distrust o external assistance. Involving Involving people in the decision-making process and inorming and integrating them early are eective ways o ghting NIH syndrome, according to past studies (Lichtenthaler and Ernst, 2006). For example, one company company held a workshop to devise a strategy or innovation innovation
Tere are two main methods o motivating employees, regulative and appreciative. Te rst is based on rules and the second on appreciating certain behaviours. able 8 examines the pros and cons o each.
Regulative methods
Appreciative methods
Pros
Pros
•
Perormance is measured. Measures must be ‘peopleproo’ and targets diicult, with rewards tied to them
Cons •
There is no such thing as ‘people-proo’ ‘people-proo’ measures. People use numbers to cover their back; loss o valid inormation and unwillingness to take risks
Characteristics •
Predetermined Predetermined plan – management management seeks to impose it
•
Management is seen to be ocused on goals Narrow, Narrow, specialised purpose is emphasised Management relies on techniques and extrinsic motivation Development is seen to require more sophisticated techniques and greater rationality
• •
•
•
Cons •
11
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Six Sigma, is a strict quality-driven business management system that involves lengthy implementation.
Little control over subordinates; goals are diicult to access; low-growth-need low-growth-need employees will not respond; risk o losing track
Characteristics •
•
• •
•
Table 8: Motivation methods – pros and cons
High sense o total accountability that precludes game playing. Large low o inormation
Situations are met as they arise. Management is a mutual adjustment between organisation and situation Management is seen as a process ocused on maintaining balance in a ield o relationships General values or norms inorm behaviour The source o control is seen to be within people; intrinsic motivation Development Development is seen as a process o increasing understanding o the context, extent and depth o the situation
n o i t a v i t o M
Reward systems and career paths In general, a company’s approach to rewarding, promoting and motivating is based on closed innovation practices. For example, people are usually judged (and promoted) on the basis o how many patents they le. In the same ‘closed’ mind set, going round establishing networks and collaboration leads can be seen as having a ‘jolly good time’ while others are ‘working hard in the lab’. ‘Although Although we generally recognise t he importance o getting to know and use what is developed externally, externally,’ said one interviewee, ‘there is not the cultural and practical background which enables and motivates the employees to be completely open: there are no ormal ways o career progression or someone who is an open innovation operative.’ Generally, Generally, making employees eel part o a group is a positive motivator towards accepting OI approaches.
CASE STUDY Rewarding openness Company 1 ‘Our entrepreneurial structure recognises the identication and the bringing inside o a technology. The incentive/reward system used to be regulated by the number o patents led. Not everyone could be a ‘superstar’ because it meant patenting a lot. Now, the new OI culture and structure provide the opportunity or everyone to be a superstar because no one cares any more where the innovation comes rom.’ Company 2 has a two-year management management training scheme or research sta during which researchers are seconded to a strategic technology venture or a six-month spell. This is recognised as a visible step in their career progression.
ry to present OI as a ‘cool’ and positive development, not threatening or likely to complicate people’s working lives. Te OI team’s role should be seen to improve people’s work and perormance rather than making things more difcult. Introduce examples o success stories that help to answer the question, question, ‘What’ ‘What’s in it or me?’ Be aware that there the re may be conict c onict between OI-adopters and non-adopters. non-adopters. Research into culture has shown that those working in a ‘support’ or ‘achievement’ based culture (see p. 24, able able 2) preer ‘appreciative’ methods o control. On the other hand, groups characterised by a ‘role’ or ‘power’ culture, work well with ‘regulative’ methods o control.
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What does this mean to my business? •
• •
48
Overcome NIH syndrome by °
involving people in the decision-making process
°
improving internal communication communication
°
setting a good example
°
establishing adequate reward systems
Sometimes targets are not the best approach Make sure the motivational approach matches the people involved – not everyone responds in the same way
How does this all ft together? A ramework Top management Functions and sub-cultures Individual sta The OI implementation team
his report ocuses on organisations that have moved towards OI via a top-down, strategically driven, centralised approach approach and have established a dedicated OI unit (see Routes to OI, p. 14).
In the previous sections we discussed our separate aspects o the implementation o open innovation: culture, structure, skills and motivation, presenting specic ndings that are relevant or companies implementin implementingg an OI strategy. Now we will look at how these our aspects t together and relate to dierent groups groups within the organisation. organisation.
Procedures Culture
Skills
Functions and sub-cultures Many sub-cultures sub-cultures can exist within large multinational companies (Martin and Siehl, 1983; Badawy, Badawy, 1988; Hebda et al., 2007) and dierent perspectives can be seen even within the same unction (e.g. R&D). In order to support change and motivate people within diverse groups – or example, scientists and engineers – dierent approaches approaches need to be adopted (see p. 27).
Individual sta Motivation
Figure 15 (opposite) provides an integrative integrative ramework or understanding understanding the implementation o OI. In the central green box is the OI team, which is made up o experienced managers who have been asked to take charge o the implementation strategy. strategy. Tese managers have a strong technical background and business mind set coupled with a deep understanding o the company. Tey are enthusiastic about embracing OI and they provide the link with other company unctions that support it. Tese managers realise that a change o mind set and o company culture is needed i the company is to embrace OI. Te ramework depicts the OI team’s scope o activity. It also captures captures the relationship o the OI team with the rest o the organisation, including top management, dierent company unctions and subcultures, and individual sta. Cultural inuences relative to the specic groups are listed. We will now look in more detail at each group within the organisation.
Top management op management gives the undamental push to establish an OI implementation team, and its support is instrumental in achieving OI rollout across the whole organisation. Oen, by demonstrating commitment and support, top management holds the key to sway the opinion o those who eel less inclined to accept the new approach to innovation.
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OI teams need to manage their relationship with top management careully. Tey can be aected by power games, politics and changes at the top. In situations o political turmoil, the OI team may need to review its strategy requently, requently, win more support, and balance relationships with key senior individuals in order to guarantee continuation o unding and corporate commitment to their programme o action.
Change will inevitably impact on individuals. Personal preerence, preerence, career history and trajectory can all inuence an individual’s attitude towards the adoption o OI. Sometimes, when there is not enough encouragement to take risks, there can be a simple ear o ailure. All these issues could maniest themselves in not-invented-here not-invented-here syndrome (NIH) (Lichtenthaler and Ernst, 2006). On the other hand, the eeling o not being alone can give a sense o community and a new drive or individuals to be part o the project. Te OI team has to balance all these perspectives in the development o an OI rollout strategy. strategy. Te team itsel should be able to count on a ull set o skil ls and be able to provide access to the right skills at the right time in its unction as a support group.
CASE STUDY Individual perspective In one o the FMGC companies observed, observed, project managers like to be ‘in control’ o their development project. They have developed over time as project managers with targets and deliverables: ‘They think in project terms not in portolio terms.’ They are also carrying the legacy o a previous change in the 1970s when the company’s R&D strategy was open but chaotic and was consequently changed to a closed approach in which each project needed to be managed rom A to Z. For these managers OI means abandoning old projects on which they have worked or a long time and which should deliver innovation in the long term. R&D sta, who are supposed to develop and implement an OI strategy, are araid o losing their jobs because they ear that their competencies competencies might be replaced by outside innovations.
TOP MANAGEMENT
Strategy
Budget
Issues… Level of involvement Internal politics Effects of personnel change
Commitment
OI Implementation Team Provides…
Involvement, training and support
COMPANY FUNCTIONS/SUB-CULTURES Issues… Identifying varying needs and concerns Tailoring training for different functions
INDIVIDUAL STAFF Issues… Fear of change/failure Implications Implications for career progression Creating supportive group feel
Figure 15: An integrative ramework encompassing the issues involved in OI
The OI implementation team Te various approaches approaches used by t he teams we studied in our case studies are summarised in the ollowing key points. Provide the right skills pool A particular set o skills is required to enable successul interactions with the outside world. It is very unlikely that all these skills wi ll be ound in single individuals. Within modern multinational companies, however, the OI implementation implementation team is likely to have a good p ool o senior managers to draw on. Te skills required all into our categories, introspective, extrospective, interactive interactive and technical (detailed in able 6 on p. 42). Provide training on what to do, when to do it, and what to avoid. each new ways o thinking about what OI means or the company, company, while spelling out what OI will mean or individual people and roles.
delivery o training is oen assisted Reference framework Te delivery o by a ramework that claries what OI is and what it implies. A good example is the WantFindGetManage model (see pp. 42-43). Frequent reviews are needed to update Manage the OI strategy Frequent
the OI rollout strategy and adapt it to the needs o dierent groups. In particular, alignment with top management is required to ensure commitment, budget and support. Provide support and internal openness Act as internal gatekeepers who listen to problems, connect the right people, acilitate and lubricate the internal working o innovation. Create knowledge-sharing platorms typically initiated by natural leaders who can involve others and communicate their enthusiasm.
Tis approach is supported by psychological theories, which state that those who perceive new practices as congruent with their values are likely to take them on board and become enthusiastic about them. I the change is imposed through regulation and punishment, adoption is not substantiated by real cultural change. A good t with the users’ values is needed (Klein and Sorra, 1996). It is important to recognise that the same implementation implementation methods mig ht not t or suit all organisations. organisations. One o our interviewees said that OI implementation consultants consultants oen seem to ignore the cultural characteristics o the company when suggesting new approaches. Tis supports what S chein (1992) suggests: some organisational devices will b e counter cultural or some organisations, but not or others.
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Personal belief in OI and career strategy Change management needs leaders and champions who can enthuse others about the importance o change (ushman (ushman and O’Reilly III, 2002). Tis requires a strong personal belie in the benets o adopting OI. Te path or OI adoption can be long and difcult with many obstacles along the way. In order to provide consistent support, OI team members need to nd personal motivation in the task and see it as part o t heir own overall career strategy.
Te friendly face of the company Internally, OI teams show that there are real and successul people behind OI implementation. Externally, Externally, they are the brokers o relationships with prospective partners.
CASE STUDY The Journey at Unilever The principle o exploiting other people’s people’s ideas and vice versa has been alive or many years in Unilever’s Unilever’s business model. Examples go back a long time and include: 1 Disruptive innovations : Back in the 1980s Unilever’s Unilever’s spin out business Unipath used in-house technology around antibody recognition systems to invent the home pregnancy stick that the world uses today. Throughout Throughout the 1990s, an aggressive out-licensing and cross-licensing strategy strategy allowed the company to expand and orm relationships to deliver urther ‘disruptive innovations’ such as the electronic based conception and contraceptive aides, ClearPlan and Persona. These were developed developed in collaboration with partners such as Cambridge Consultants.12 2 Reinventing its relationships relationships with raw ingredient ingredient providers: Closer to its core business, many o its product development groups started to consider their raw-material suppliers as strategic partners. For example, the improvements in the perormance o the laundry enzymes ound in Persil or OMO products are down in part to the new methodologies developed between Unilever and its suppliers or the screening o new enzymes. The techniques required to do this are a marriage between Unilever’s understanding o what stains are relevant on what materials and the supplier’s understanding o how to optimize the reagents. 3 Allowing Unilever technologies to get to to market market through the business channels o its par tners:In tners: In 1991, The Pepsi Lipton Tea Partnership (PLTP) North American joint venture was established making Lipton the leading ready-to-drink tea brand in the United States, and with urther expansions across the globe in 2003 and 2008 it has enjoyed strong double-digit volume growth. 13 4
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Pushing the boundaries o scientic understanding: In 2000 Unilever invested in the establishment o a new world-leading research research group within the Department o Chemistry at Cambridge University. University. The result is the Unilever Centre o Molecular Inormatics which ocuses on devising new methods or the understanding o molecules and their properties and to allow novel in-silico experimentation 14.
But this was never enough. In 2003, coincidentally at the same time as Henry Chesbrough published his book, Unilever made the principles o Open Innovation a key part o its R&D strategy. strategy. It established dedicated roles to ensure that its internal projects were talking to the right partners, at the right time, in the right way. In 2006, the then CEO o Unilever, Patrick Cescau, summed up the mind set when he stated that “Unilever is open or business in Open Innovation. We want to collaborate with the best minds to make the dierences that no single rm could make alone. We would would rather work with someone who has the answer today than hold out in the hope we can eventually come up with it ourselves tomorrow. “ 15 Since then, Unilever has broadened out the type o partner it works with, adopted the WANT-FIND-GET-MANAGE WANT-FIND-GET-MANAGE workfow and created a leading edge capability in sourcing its new enablers enabl ers through ‘technology intelligence’ and idea brokerage. In addition, it increasingly sees open innovation as ‘not just another way o doing the R&D but o doing business.’ Examples include: 1 Tapping into the world o Venture Venture Capital. Capital. Unilever started providing unding and management skills to start-up and early stage, consumer-acing and technology-based technology-based businesses across Europe (Unilever Ventures)16 and investing in technology-driven technology-driven companies and unds that aim to improve personal and planetary health (Physic Ventures Ventures17) 2 Innovating with Biotech Biotech start-ups start-ups or product specic projects: Examples in this space includes Phytopharm; Unilever are collaborating on a research and development programme to bring new weight management management products to market based on natural extracts rom the Hoodia plant 18. 3 Co-branding with its development partners: Style Tech is the world’s rst-ever metal core toothbrush, created and co-branded in partnership with leading automobile designers Pininarina; designers o Ferrari, Maserati and other luxury cars. 19
When it comes to their top secret recipes, Guinness and Marmite have something in common; both have yeast as a key ingredient. Marmite’s traditional recipe is a blend o dierent brewers’ yeasts but or the limited edition MarmiteGuinness launched in 2007, 30% o the mix comes rom a strain o yeast exclusive to Guinness. The result is a subtle, but distinctive Guinne Guinness ss favour, favour, without the alcohol. 20 4 Creating new ecosystems ecosystems and routes to market: market: A long-standing challenge or its Indian business has been reaching the millions o potential consumers in small remote villages where there is no retail distribution network, no advertising coverage, and poor roads and transport. The solution was Project Shakti, launched in partnership with non-governmental organisations, banks and government. Women in sel-help groups across India are invited to become direct-to-consumer sales distributors or Hindustan Lever’s soaps and shampoos. The company provides training in selling, commercial knowledge and bookkeeping to help them become micro-entrepreneurs. 21 This was so successul it was augmented by i-Shakti where the Shakti entrepreneurs run kiosks with internet access to allow armers to check the prices at their local markets and seek advice on cultivation. Unilever believes that its long-term growth goes hand in hand with ensuring a sustainable uture or the planet and its people. Increasingly it is nding that it can only achieve its objectives i it nds more sustainable ways o doing business – what it describes as ‘doing well by doing good’. 22 This was seen as an important actor in the ormation o an alliance between Unilever and Starbucks. In the press release announcing this deal, Gerry Lopez (President, (President, Starbucks Global Consumer Products) is quoted as saying:
“Unilever’s “Unilever’s industry-leading innovation and commitment commitment to social responsibility with brands like Ben & Jerry’s are well-aligned with our values and vision or the business. This relationship will enable us to introduce exciting new products and extend the Starbucks Experience to a larger base o consumers.”23 Moving orward, the most recent CEO, Paul Polman has recognised that the key to accelerating the rate o innovation in Unilever will be about “increasingly “increasingly tapping into open innovation, increasingly broadening the denition o the business models, increasingly creating separate structures within and outside the organisations to attract the creativity and the startup mentalities and risk environment needed to get ideas to blossom” 24 These activities, as well as those o Unilever’s competitors, show clearly that OI is becoming not an option but a must or all true innovators in the area o Fast Moving Consumer Goods. 12
http://www.cambridgeconsultants.com/cs_unipath.html
13
www.unilever.com/mediacentre/pressreleases/2007/UnileverPepsicotoexpand.aspx
14
http://www-ucc.ch.cam.ac.uk/ino/
15
Patrick Cescau, Group Chie Executive, Unilever, 6th World Conerence on Detergents, Montreux, Montreux, 10 October 2006
16
http://www.unileverventures.com/About-Us-content-8/
17
http://www.physicventures.com/
18
http://www.phytopharm.com/phytopharm-and-unilever-enter-into-a-licence-and-jointdevelopment-agreemen development-agreement-or-hoodia-go t-or-hoodia-gordonii-extract/ rdonii-extract/
19
http://www.unilever http://www.unilever.com/brands/h .com/brands/hygieneandwel ygieneandwelbeing/healthyliving being/healthyliving/articles/brush-u /articles/brush-up-onp-onyour-dental-hygiene.aspx
20
http://www.unilever.co.uk/ourbrands/cookingandeating/articles/marmite_guiness.asp
21
http://www.econom http://www.economist.com/specialr ist.com/specialreports/displaysto eports/displaystory.cm?sto ry.cm?story_id=E1_JJNRNV ry_id=E1_JJNRNV
22
http://tinyurl.com/le68aa
23
http://www.starbucks.com/ http://www.starbucks.com/aboutus/pr aboutus/pressdesc.asp?id=898 essdesc.asp?id=898
24
http://www.norolknetwo http://www.norolknetwork.com/images rk.com/images/articles/2859 /articles/2859/unilever_oi_jan_09.pd /unilever_oi_jan_09.pd
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What does this mean to my business? Next steps
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•
Tere will be dierent issues with dierent partners (universities, start-up companies, customers, etc.).
•
Tis report ocuses on internal company issues. Tere are other issues external to the company: partnership management, alliance management, trust building, IP management, etc.
•
Suggestions or urther reading and resources or OI implementation are in the resources section at the back o this report.
Related topics and resources
Managing partnerships between start-ups and established rms Start-ups can be an important source o ideas or larger companies seeking innovation outside their own organisation. echnologyechnologybased start-ups typically lack the strategic and operational rigidities that sometimes stie innovation in established rms. On the other hand, start-ups have limited resources and oen struggle to access the complementary assets they need to bring their ideas to market.
Cambridge Open Innovation Network A project unded as part o the EPSRC Cambridge Integrated Integrated Knowledge Centre to investigate the skills required to implement open innovation, with particular emphasis on the role o universities as partners. Please contact im Minshall or more inormation:
[email protected] [email protected] http://www.im.eng.cam.ac.uk/ctm/teg/ http://www.im.eng.cam.ac.uk/ctm/teg/openinnova openinnovation.html tion.html
Bringing together start-ups and established rms in mutually benecial partnerships seems an obvious solution. Research shows that making such partnerships work can be problematic. problematic. However, there are ways to increase the chances o success. Te web site below provides access to resources that support support the development o successul partnerships.
Further reading
http://www.im.eng.cam.ac.uk/ctm/research/projects/alliances.html
Harnessing External echnology or Innovation. Witzeman S, Slowinski G, Dirkx R, Gollob L, ao J, Ward S, Mirtaglia S, (2006). Research echnology Management 49(3): 19 –27.
Technology intelligence Keeping abreast o new developments in technology is essential to support innovation. For those taking an ‘open’ approach, technology intelligence can also help to identiy potential partners and collaborators. collaborators. Intelligence helps to shape the technology strategy o rms, inuencing areas such as development and technology acquisition. echnological echnological inormation has become an increasingly important advantage or technology-based companies acing shorter technology lie cycles and a more globally competitive business environment. environment. Companies have dedicated progressively more resources to the development o bespoke technology intelligence systems, realising that intelligence activities are important assets or business success. Intelligence comes rom external sources but it may also be contained within the organisation – explicitly or tacitly – i it has already been acquired by an internal party. party. Firms need to be able to nd and use this inormation quickly and easily, as well as acquiring the inormation they need rom external sources.
Open Innovation: he new i mperative or creating and proiting rom technology. Chesbrough H. (2003). Harvard Business School Press, Boston, MA, USA. he Era o Op en Innovation. Chesbrough Chesbrough H. (2003). MI Sloan Management Management Review 44(3): 35–41.
Open Innovation in Practice. Kirschbaum R. (2005). Research echnology Management 48(4): 24–28. Choosing Governance Modes or External echnology echnology Sourcing. van de Vrande V, Lemmens C, Vanhaverbeke W. (2006). R&D Management 36(3): 247–363. Primer on ‘Open Innovation’: Principles and Practice. Docherty M. (2006). Vision PDMA (Product Development and Management Association) (April): 13–17.
IM Education and Consultancy Services Te IM is available to provide advice and education concerning open innovation through its Education and Consultancy Services unit, which disseminates IM research outputs outputs to industry and governments.
Researchers at the IM have created a three-level model comprising the ramework, system and process o acquiring technology intelligence (I). Te model was tested through case studies o technology intelligence systems in technology-based companies. Further work (Mortara work (Mortara et al., 2009a and 2009b) has been directed to understanding understanding how to implement and to expand the coverage o I activities. http://www.im.eng.cam.ac.uk/ctm/in http://www.im.eng.cam.ac.uk/ctm/intelligence.html telligence.html
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Reerences
Alvesson M, Berg P O. (1992): Corporate culture and organisational symbolism. symbolism. Berlin, de Gruyter. Badawy M K. (1988): How to prevent creativity mismanagement. mismanagement. Research Management 29(4): Management 29(4): 28–35. Brown A D. (1998): Organisational Culture. Culture . London, Pitman. Cammann C, Nadler D A. (1976): Fit your control systems to your managerial style. Harvard Business Review 54(1): 65–72.
Lichtenthaler U, Ernst H. (2006): Attitudes to externally organising knowledge management tasks: a review, reconsideration reconsideration and extension o the NIH syndrome. R & D Management 36(4): Management 36(4): 367–386. Martin J, Siehl J. (1983): Organisational Culture and Counterculture: An Uneasy Symbiosis. Organisational Dynamics 12(2): 52–64.
Chakravarthy Chakravarthy B, Gargiulo M. (1998): Maintaining leadership legitimacy in the transition to new organisational orms. Journal orms. Journal o Management Studies 35(4): 437–456.
Minshall H W, Mortara L, Elia S, Probert D. (2008): Development Development o practitioner guidelines or partnerships between start-ups and large rms. Journal rms. Journal o Manuacturing echnology Management 19(3): Management 19(3): 391–406.
Chesbrough H. (2003): Open Innovation: Te New Imperative or Creating and Profting rom echnology . Boston, Harvard Business School Press.
Mortara L, Kerr C I V, Phaal R, Probert D. (2009a): A toolbox o elements to build technology intelligence systems. International Journal o echnology Management 47(4): Management 47(4): 322-345
Clagett R P. (1967): Receptivity to Innovation – Overcoming NIH . NIH . MI.
Mortara L, Kerr C I V, Phaal R, Probert D (2009b): echnology intelligence practice in UK technology-based companies. International Journal o echnology Management 48(1): 115-135.
Cohen W M, Levinthal D A. (1990): Absorptive capacity: a new perspective on learning and innovation. innovation. Administrative Science Quarterly 35(1): 128–152. Docherty M. (2006): Primer on ‘Open Innovation’: Principles and Practice. Vision PDMA (Product Development and Management Association) (April): 13–17. Dunord R, Palmer I, Beneviste J, Craword J. (2007): Coexistence o ‘old’ and ‘new’ organisational practices: ransitory phenomenon or enduring eature? Asia eature? Asia Pacifc Journal o Human Resources 45(1): 24–43. Gerybadze A, Reger G. (1999): Globalization o R&D: recent changes in the management o innovation in transnational corporations. Research Policy 28(2–3): 251–274. Hebda J M, Vojak B A, Price R L. (2007): Motivating echnical Visionaries Visionaries in Large American Companies. IEEE ransactions on Engineering Management 54(3): Management 54(3): 433–444. Katz R, Allen J. (1982): Investigating the Not Invented Here (NIH) Syndrome – a Look at the Perormance, enure, and Communication Patterns o 50 R&D Project Groups. R & D Management 12(1): Management 12(1): 7–19. Kerr C I V, Mortara L, Phaal R, Probert D R. (2006): A conceptual model or technology intelligence. International Journal o echnology Intelligence and Planning 1(2): Planning 1(2): 73–93.
Pheasey D C. (1993): Organisational Cultures: ypes and ransormation. ransormation. New York, Routledge. Schein E H. (1992): Organisational Culture and Leadership . San Francisco, Francisco, Jossey-Bass Inc. irpak M, Miller R, Schwartz L, Kashdan D. (2006): R&D Structure in a Changing World. Research echnology Management 49(5): 19–26. rompenaars F, Hampden urner C. (1998): Riding the waves o culture – understanding diversity in global businesses . Burr Ridge, IL, Irwin Proessional Pub. ushman M L, O’Reilly III C A. (2002): Implementing strategic change. Winning through innovation: a practical guide to leading organizational change and renewal. Boston, MA, Harvard Business School Press. ushman M L, O’Reilly III C A. (2006). Ambidextrous (2006). Ambidextrous Organizations: Managing Evolutionary and Revolutionary Change. Managing Innovation and Change. Sage Publications Inc. Witzeman S, Slowinski G, Dirkx R, Gollob L, ao J, Ward S, Mirtaglia S, (2006): Harnessing External echnology echnology or Innovation. Research echnology Management 49(3): 19–27.
Klein J K, Sorra J S. (1996): Te challenge o innovation implementation. Academy implementation. Academy o Management 21(4): Management 21(4): 1055–1080.
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The authors Dr Letizia Mortara is a Research Associate at the Institute or Manuacturing’s Centre or Technology Management. Her current research interests include open innovation and technology intelligence. intelligence. Letizia has a rst degree in industrial chemistry gained at the University o Bologna in Italy. Ater spending three years working as a process/product manager in the chemical industry, she moved to the UK where she gained her PhD in processing and process scale-up o advanced ceramic materials at Craneld University.
Johann Napp joined the Centre or Technology Management as a doctoral researcher in January 2007. He is researching researching the eld o external Corporate Venture Venture Capital (CVC) investments, that is equity investments o large corporations in entrepreneurial ventures which originated outside the corporation. Prior to starting his PhD in Cambridge, Johann studied mechanical engineering at Hamburg University o Technology in Germany, conducted research at Imperial College on medical mechatronics, mechatronics, and held internships at companies including Porsche AG, Beauort Capital and Körber AG.
Imke Slacik spent Slacik spent six months at the Centre or Technology Technology Management in 2008 to carry out research in open innovation and corporate cultures. cultures. Ater graduating in May 2008 in industrial engineering and management at the Hamburg University o Technology in Germany, Imke joined McKinsey & Company. Company.
Dr Tim Minshall is a Senior Lecturer at the Centre or Technology Management and coordinator o the Technology Enterprise Group. His research interests are grouped around open innovation, unding o innovation and university-industry technology transer. transer. He is also a non-executive non-executive director o St John’s Innovation Centre Ltd, Cambridge. Tim was also a member o the startup undraising team, and then Programme Director or Research and Business Creation at the University o Cambridge Entrepreneurship Centre. Beore moving to Cambridge in 1993, he worked as a plant engineer, engineer, teacher, consultant and reelance writer in the UK, Japan and Australia.
The IM The Institute or Manuacturing (IM) provides a unique environment or the creation o new ideas and approaches or modern industrial practice. Part o the University o Cambridge’s Department o Engineering, it brings together expertise in management, economics and technology to address the ull spectrum o industrial issues. The IM has over 240 people working across a range o specialist areas, integrating research and education with practical application in industry. A team o industrial practitioners helps companies o all sizes to apply research-based improvement techniques via a programme o consultancy and education services. This work brings benefts to both parties. Industry receives practical solutions based on the latest applied research; the IM gains live eedback to help set the agenda or new research and an income stream to assist in unding uture research activities.
The Centre or Technology Management The Centre or Technology Management (CTM) is one o several research centres within the IM. CTM ocuses on helping managers to make the most appropriate use o current and uture technological resources. It aims to provide comprehensive support to managers, based on an integrated understanding o science, engineering and business management. CTM disseminates its research through its annual Technology Management Symposium, through courses and workshops and through its extensive network o industrial partners and commissioned projects.
Institute or Manuacturing Department o Engineering 17 Charles Babbage Road Cambridge CB3 0FS United Kingdom Tel: +44 (0)1223 766141 Fax: +44 (0)1223 464217 Email: i
[email protected] www.im.eng.cam.ac.uk
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