Open innovation

The term open innovation and open innovation is the opening of the innovation process of organizations and thus the active strategic use of the outside world in order to increase the innovation potential. The open innovation concept describes the appropriate use of knowledge that penetrates and exits the company, using internal and external marketing channels to generate innovations. The term "Open Innovation" comes from Henry Chesbrough .

motivation

Gassmann and Enkel name the increasing competitive pressure due to globalization , shorter product life cycles and the resulting higher pressure to innovate as the main driving factors behind the need to optimize the innovation process and, as a result, to open it up. In many industries, the investments and other preliminary work required for the implementation of innovations overwhelm the resources of individual players, so that also for reasons of risk minimization, there is a need for innovation in conjunction with other providers, suppliers or customers.

Core processes

According to Gassmann and Enkel, open innovation can be broken down into three core processes:

(As a prerequisite, however, it should be noted that the company must have the ability to internalize external knowledge or to externalize internal knowledge. See tacit knowledge )

Outside-in process

The outside-in process is the integration of external knowledge into the innovation process. The know-how of suppliers, customers and external partners (e.g. universities) should be used to increase the quality and speed of the innovation process. Back in 1986, Eric von Hippel described the lead user methodology - that is, the inclusion of particularly progressive consumers in the development of new products. With the help of this instrument, which is still used today, the risk of innovation flops and the associated economic dangers of a company should be contained. In doing so, he developed an early method of the outside-in process.

The outside-in process makes it clear that the place where new knowledge is created does not necessarily have to coincide with the place where innovations arise.

Inside-out process

The inside-out process is the externalization of internal knowledge. Companies use this process, for example, to collect license fees for patents or innovations that they do not use for their business operations. One example of this is the plastic polytetrafluoroethylene , developed for space travel by the chemical company DuPont from 1938 , which is now used under the name Teflon for coating pans.

The inside-out process makes it clear that the place where knowledge or innovation is created does not have to correspond to the place where the innovation is used and implemented in new products.

Coupled process

The coupled process is a hybrid of the outside-in process and the inside-out process: the internalization of external knowledge in connection with the externalization of internal knowledge.

The creation of standards and the development of markets are the focus of the coupled process. The respective environment is to be actively integrated in the development of innovations, and the simultaneous externalization of this innovation is intended to build a market around the innovation (e.g. the release of the Solaris source code from Sun Microsystems ).

Demarcation

Closed innovation

Open innovation distinguishes itself from closed innovation , i.e. the understanding of innovation which, according to Schumpeter (1942), describes the exclusivity of an innovation as the essential pension of the innovator. Chesbrough sees the need for a change in knowledge management from a closed innovation model to distributed innovation activities that include other market participants in particular in sectors such as the pharmaceutical or software industry, which are characterized by short innovation cycles and in which the costs for product development are rising or the own market is no longer sufficient to cover this.

Principles of closed innovation

The following implicit rules can be understood as principles of closed innovation:

The organization always tries to find and hire the most intelligent employees on the market , because only employees belonging to the organization are involved in the innovation process.
The research , development and distribution of an innovation must take place internally.
The " time-to-market " of the innovation determines the success.
Only the organization's own ideas from internal research can contribute to success, provided that they also outperform the competitive ideas .
The intellectual property must never come to the competitors.

Closed innovation cycle

The associated with generation of knowledge , technological progress allows, ideally, the sales of a new product or a new service on the market . As a result, the organization generates sales that can be reinvested in research and development . Renewed research breakthroughs with innovation potential close the cycle.

The closed innovation process

Initial ideas that show innovation potential from an organizational perspective are further researched. Possible success candidates are then developed. A permanent selection of ideas ensures that only a fraction of them reach the market. No intellectual property gets out of or into the company during the entire process . On the one hand, only internal research results can pass into the development phase; on the other hand, the internally rejected ideas are withheld from the outside world. These can be accessed later if necessary, they are "stored".

Erosion factors of closed innovation

According to Chesbrough, the following erosion factors require an open innovation strategy : Firstly, there is an increasing tendency among intelligent, experienced and well-trained employees to change companies. These transfer the knowledge they have acquired between two or more companies . Second, there is a growing willingness to use risk capital . It helps small start-ups to compete with large companies within a short period of time. The third factor connects the first two: Internal research results often cannot be implemented immediately in development because they do not necessarily harmonize with the company's current business model. The ideas can often be implemented more easily externally than internally. This increases the likelihood that knowledge acquired by employees with an affinity for change will flow into a start-up that may possibly be financed by risk capital . In this way, intellectual property can migrate free of charge from companies with large research institutions to companies of all sizes in various economic sectors . Fourth, a change in the value chain can be observed: External suppliers show increased production capacity and an increased influence. The outsourcing of knowledge due to increased external production helps to ensure that ideas can flow away prematurely. Then the closed innovation cycle is broken.

Chesbrough argues that ideas can no longer be stockpiled under these circumstances. There is a risk of relinquishing them with no proceeds . Most start-ups fail , but there are always some that successfully go public or are bought up by a company. This breaks the cycle described above: there is no need to reinvest in the research department of the company that financed the research associated with the groundbreaking idea .

The following example from the 1990s reveals how the closed innovation cycle is broken. Despite the lack of its own research facilities, the company Cisco Systems offered competition to the company Lucent Technologies, which has since been dissolved . The latter was able to use the research resources of the renowned Bell Labs . Cisco pursued an open innovation strategy. The company invested in start-ups , the founders of which were often former employees of Lucent Technologies. To date, Cisco has acquired over 160 companies.

Open source

The open source development of products can be understood as an extreme form of open innovation.

West and Gallagher see two common core elements between open source software development and the open innovation concept: First, the rights to use the technology are shared. In the special case of open source , there are basically no costs for this. Second, technology is developed collectively. The focus is on the synthesis of external and internal knowledge. In addition, open innovation always strives to implement a business model . The management of intellectual property is understood as a means of pursuing the business model. Open source is not always the basis of a business model.

Crowdsourcing

Crowdsourcing can be understood as a subset of open innovation. With crowdsourcing, however, the services of an undefined number of people (crowd) are specifically used to generate ideas or implement them. These can be paid and unpaid services. The process is typically carried out via the Internet, as there is often a large number of idea providers. This means that many different solutions or ideas can be agglomerated in a short time.

Problems arising with crowdsourcing relate, for example, to the systematic evaluation of the often large number of suggestions. There is a risk that specialized knowledge will not be recognized and valued.

There is also the problem of the exploitation of intellectual property . To get around this, most crowdsourcing-based internet platforms require consent to transfer the intellectual property.

Implementation of open innovation

Netnography , crowdsourcing and web-based innovation studies are essential approaches to involve users and consumers in new product development. Netnography is a method to harness the innovative power of online communities. Crowdsourcing describes an open group of Internet users who work on a defined task via a virtual platform and thus create value interactively.

The integration of open innovation in the business model varies in practice. As a result of its research, the American Productivity and Quality Center (APQC) developed eleven methods that form the basis for an open innovation approach in the company.

Strategies

1. Needs-based focus

The company defines business area-related fields in which there is a need for innovation. These fields must be known so that the open innovation approach can be harmonized with the corporate strategy.

2. Cooperation with internal and external organizations

The company encourages cooperation with companies in the supply chain as well as external companies and academic institutions, as well as with the competition.

3. Positioning the company and maintaining key relationships

To create an atmosphere that is as typical as possible for startups, the company puts together small teams, but at the same time guarantees the security of the group. The formation of incubation centers enables the development of common prototypes.

4. Developing a new relationship with intellectual property

The use of license agreements is an alternative to the complete ownership of patents and intellectual property. This is made possible by cooperation with academic institutions and reduces development costs. These license agreements can also contain period-dependent exclusive rights .

Personnel and functions

5. Creation of an open innovation-related department

In practice, there are departments with a maximum of 50 employees who bear full responsibility for all open innovation projects. These departments supply the business areas with potential innovations and have to be integrated into the company with interfaces to all departments.

6. Acquisition of project team members with the necessary skills

The right staff for an open innovation department is usually recruited in -house from the R&D departments. The competencies to build networks and high communication skills are an important factor.

Processes

7. Inclusion of all stakeholders and process optimization

It is necessary to adapt the company processes that enable new ideas to be promoted and checked, as well as to make them marketable within a short period of time. This requires shortened product development phases and minimal loss of information at key points. All stakeholders must be involved in the relevant phases.

8. Exploration and targeted search for new ideas

Selected employees take on the task of observing and evaluating market developments, competitors, trends and ideas. The connection of these market observers in their respective business area is an essential component for successful assessments.

9. Acquisition and collaboration with stakeholders and inventors

In practice, among other things, innovation competitions are organized by companies and thus offer the acquisition of external innovations. In return, the company offers services as well as know-how or price tenders for the most highly rated innovations.

10. Establishing the measurement of open innovation

It is necessary for the company to evaluate its open innovation department. In addition to sales and profit figures, potential cost savings are also documented for the evaluation. The number of open innovation projects / ideas in the different process phases, as well as the conversion rates of the ideas, is another factor in assessing success.

11. Change of management: commitment to open innovation

Communicating the benefits of open innovation within the company must be addressed to all stakeholders. The active involvement of external sources must become part of the corporate culture. Clarification is required about the most common internal resistance. "Not invented here" (of English. (To) invent (invent) ) is the most common and may acquire for the company and the employees not be a problem.

Competitive advantages for companies

The open innovation approach offers the possibility of a change of perspective on the product, as well as a cost and time reduction, adjustment to the market and the degree of novelty. The necessary customer knowledge is to be seen in addition to that of the company. Fundamentally, open innovation offers four market advantages.

Optimization of the time-to-market

Open innovation makes it possible to accelerate the value creation process for new products compared to the competition. The aim is to cover the existing market demand with a market offer in the shortest possible time.

Optimizing the cost-to-market

The company is guaranteed to reduce the costs incurred for research and development. This effect is particularly noticeable in developments that are more far-reaching than the pure generation of ideas (e.g. in-house development of prototypes). In addition, marketing costs are reduced as customers share their opinion within their social networks.

Optimization of the fit-to-market

Fit-to-market is understood as the market acceptance of a product by buyers. With the open innovation approach, it is possible to capture a high level of information about needs and to satisfy them with given solution information. In this regard, there is a more profitable compatibility between product properties and user needs.

Optimization of the new-to-market

New-to-Market describes the degree of innovation of a product perceived by customers. Since the open innovation approach is closely oriented towards market needs and the process is influenced by customer needs, a mostly functionally new innovation can be achieved that enables expansion into new markets.

Further areas of application

In addition to the manufacturing industry, open innovation is used in the financial sector, with institutes offering their own and products from other companies - including those of competitors. These partnership concepts for the sale of third-party innovations were adapted by the manufacturing industry and have now become a de facto standard in the financial sector under the term Open Architecture . With this approach, providers of financial products achieve more independent advice and better customer acceptance. The customer divides the added value into a network of companies for products and services. The linear value chain of the closed innovation approach gives way to dynamic, customer needs-oriented value creation that is generated within a so-called “ business ecosystem ” or open innovation ecosystem.

The adaptation and use of suitable business open innovation approaches to solve societal challenges by the state and society is referred to as open societal innovation (OGI) in the sense of the seafaring definition .

Open innovation has also found its way into science. The Ludwig Boltzmann Gesellschaft uses this concept in its project “Talk to you!” And in spring 2016 also started a “Lab for Open Innovation in Science”, over the course of which 20 scientists get to know this concept. On a Facebook page, the Ludwig Boltzmann Society provides information about the lab, the participating people and teachers and about international examples in the field of open innovation in science.

literature

Julien Penin, Caroline Hussler, Thierry Burger-Helmchen: New shapes and new stakes: a portrait of open innovation as a promising phenomenon. In: Journal of Innovation Economics. n ° 7, 2011, pp. 11-29.

A. Brem: The Boundaries of Innovation and Entrepreneurship - Conceptual Background and Essays on Selected Theoretical and Empirical Aspects. Gabler, Wiesbaden 2008.

A. Brem, KI Voigt: Innovation Management in Emerging Technology Ventures - The Concept of an Integrated Idea Management . 2007.

Viktor RG Braun: Barriers to user-innovation & the paradigm of licensing to innovate. Dissertation . Technical University of Hamburg-Harburg, 2007.

HW Chesbrough, W. Vanhaverbeke, J. West (Eds.): Open Innovation. Researching a New Paradigm. Oxford University Press, Oxford 2006.

A. Gerber: Antennas must be on reception. Open communication is crucial for the success of open innovation. In: science management. 4/2008, pp. 20-29.

A. Gerber: Creating value together. Science as a strategic partner for business. In: Communicating Science. 4/2009, pp. 2-13.

Johann Herzberg: State modernization through open innovation: problem situation, theory formation, recommendations for action . (= Series of publications by the Deutsche Telekom Institute for Connected Cities (TICC) at the Zeppelin University Friedrichshafen. Volume 4). epubli / Georg von Holtzbrinck publishing group, Berlin 2012

E. v. Hippel : Democratizing Innovation. MIT Press, Boston, Mass./ London 2005.

U. Klotz: From Taylorism to »Open Innovation« - innovation as a social process. In: D. Streich, D. Wahl (Hrsg.): Innovative ability in a modern working world. Campus-Verlag, Frankfurt / New York 2007, pp. 181–193.

C. Raffl, J. von Lucke, O. Müller, HD Zimmermann, J. vom Brocke: Handbook for open social innovation . (= TOGI series of publications. Volume 11). ePubli GmbH, Berlin 2014, ISBN 978-3-7375-2027-0 .

R. Reichwald, A. Meyer, M. Engelmann, D. Walcher: The customer as an innovation partner. Gabler, Wiesbaden 2007.

R. Rohrbeck, K. Hölzle, HG Gemünden: "Opening up for competitive advantage - How Deutsche Telekom creates an open innovation ecosystem" . In: R&D Management. Vol. 39, 2009, pp. 420-430.

A. Sänn: Quality instead of quantity . In: Innovation Manager. Vol. 16, 2011, pp. 66-67.

Thomas Söbbing: Open Innovation and Crowdsourcing - The Legal Risks of Open Innovation Processes. In: IT Legal Adviser. Dr. Otto-Schmidt Verlag, 2011, pp. 206-208.

V. Vemuri, V. Bertone: Will the open Source Movement Survive a Litigious Society? In: Electronic Markets. Vol. 14, No. 2, 2004, pp. 114-123.

D. Walcher: The ideas competition as a method of active customer integration. DUV, Wiesbaden 2007.

L. Zhao, F. Deek: User Collaboration in Open Source Software Development. In: Electronic Markets. Vol. 14, No. 2, 2004, pp. 89-103.

Web links

www.iao.fraunhofer.de (PDF; 4 MB), study: Managing Open Innovation in large firms. The Garwood Center for Corporate Innovation at the University of California, Berkeley (USA) and the Fraunhofer-Gesellschaft have made a representative survey of how large companies apply open innovation.

Individual evidence

↑ ^a ^b ^c ^d ^e ^f ^g ^h Open Innovation. The New Imperative for Creating and Profiting from Technology . Harvard Business School Press, Boston 2003.

^ ^A ^b O. Gassmann, E. Enkel: Open Innovation. The opening of the innovation process increases the innovation potential ( memento of the original from February 22, 2014 in the Internet Archive ) Info: The @1@ 2 archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. . (PDF; 172 kB). In: magazine leadership and organization (zfo). Vol. 75, 3/2006, pp. 132-138

↑ E. v. Hippel: Lead Users. A source of novel product concepts. In: Management Science. Vol. 32, 1986, pp. 791-805

↑ ^a ^b R. Reichwald, F. Piller, C. Ihl: Interactive added value: Open innovation, individualization and new forms of division of labor . 2nd Edition. Gabler (under Creative Commons license), Wiesbaden 2009

↑ n-tv news: Cisco boss Chambers leaves after 20 years . In: n-tv.de . ( n-tv.de [accessed on July 5, 2018]).

^ Henry Chesbrough, Wim Vanhaverbeke, Joel West: OPEN INNOVATION: Researching a New Paradigm . Oxford University Press, Great Clarendon Street, Oxford OX2 6DP United Kingdom 2006, ISBN 978-0-19-922646-7 , pp. 82-83, 89-91, 101 .

↑ ^a ^b Noble, CH; Durmusoglu SS; Griffin, A .: Open Innovation. New Product Development Essentials from the PDMA. John Wiley & Sons, Inc., Hoboken, New Jersey 2014.

↑ M. Bartl: Open Innovation. The open handling of knowledge changes innovation management. In: Open Journal of Knowledge Management. March 29, 2010.

^ Charles H. Noble, Serdar S. Durmusoglu, Abbie Griffin: Open Innovation: New Product Development Essentials . Ed .: PDMA. John Wiley & Sons, Hoboken, New Jersey 2014, ISBN 978-1-118-77077-1 , pp. 321-338 .

↑ ^a ^b ^c ^d ^e R. Reichwald, F. Piller, C. Ihl: Interactive added value: Open innovation, individualization and new forms of division of labor . 2nd Edition. Gabler (under Creative Commons license), Wiesbaden 2009

^ Daniel Fasnacht: Open Innovation in the Financial Services . Ed .: Springer. Springer Berlin Heidelberg, Berlin, Heidelberg 2009, ISBN 978-3-540-88230-5 , see "The Open and unlimited Product Architecture", p. 103 , doi : 10.1007 / 978-3-540-88231-2 ( springer.com [accessed May 4, 2020]).

^ Daniel Fasnacht: Open Innovation Ecosystems: Creating New Value Constellations in the Financial Services . Ed .: Springer (= Management for Professionals ). 2nd Edition. Springer International Publishing, Cham 2018, ISBN 978-3-319-76393-4 , pp. 134 , doi : 10.1007 / 978-3-319-76394-1 ( springer.com [accessed May 4, 2020]).

↑ Crowdsourcing Research Questions in Science - Open Innovation in Science. In: www.openinnovationinscience.at. Retrieved June 17, 2016 .

^ The Program - Open Innovation in Science. (No longer available online.) In: www.openinnovationinscience.at. Archived from the original on June 17, 2016 ; Retrieved June 17, 2016 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.

^ "Lab for Open Innovation" course of the Ludwig Boltzmann Society | PROFIL.at. In: profil.at. March 17, 2016, accessed June 19, 2016 .

↑ Open Innovation: Training program started. In: futurezone.at. Retrieved June 19, 2016 .

↑ Security check required. In: www.facebook.com. Retrieved June 17, 2016 .

[Chesbrough-1] ↑ ^a ^b ^c ^d ^e ^f ^g ^h Open Innovation. The New Imperative for Creating and Profiting from Technology . Harvard Business School Press, Boston 2003.