Open Innovation
Open Innovation
Open Innovation
Letizia Mortara, Johann Jakob Napp, Imke Slacik and Tim Minshall
A study conducted by the Institute for Manufacturing with sponsorship from Unilever
and the Cambridge Integrated Knowledge Centre (http://www-g.eng.cam.ac.uk/CIKC/).
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Acknowledgements
We would like to thank our sponsors, Unilever and the Cambridge Integrated Knowledge
Centre (CIKC), and the following organisations, which participated in our research:
Akzo Nobel, BAE Systems, BBC, BP, BT, CadburySchweppes, CIKC, Crown holdings,
Dow Cornings, EEDA, France Telecomm, Giesecke & Devrient, Goodman, GSK,
Henkel/Loctite adhesives, IRC, IXC - UK, Kodak, Mars, MBDA, Mercedes Benz F1,
Microsoft, NESTA, NHS Innovations, Nokia, NRP enterprise, Numico, O2, P&G,
PepsiCo, Philips, Rolls-Royce, SA partners LLP, Schlumberger, Shell, Unilever.
We would also like to thank Andrea Shuo An, James Anderson, Tzelin Loo and Dan
Schmidt for their contributions and acknowledge the editorial support of Fraser Pettigrew
and Sally Simmons (Cambridge Editorial Partnership Ltd).
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Contents
Acknowledgements ........................................................................................................... 3
Executive summary........................................................................................................... 6
Part 1: Introduction to Open Innovation...................................................................... 10
1 About this Report.................................................................................................... 10
1.1 What is open innovation?.............................................................................. 10
1.2 Aims.............................................................................................................. 11
1.3 Target readership .......................................................................................... 12
1.4 How to read this report ................................................................................. 12
1.5 Methodology ................................................................................................. 12
1.5.1 The companies and organisations involved .............................................. 12
1.5.2 What we did and how we obtained our results ......................................... 13
2 What Does Open Innovation Mean? ..................................................................... 15
2.1 The concept of open innovation.................................................................... 15
2.2 The open innovation environment ................................................................ 17
2.3 Open innovation against different backgrounds ........................................... 19
2.4 A global OI perspective ................................................................................ 20
2.5 Reasons for adopting OI ............................................................................... 21
3 Routes to Open Innovation .................................................................................... 24
Part 2: How to Implement Open Innovation................................................................ 32
1 Enablers and obstacles to OI ................................................................................. 32
1.1 OI culture ...................................................................................................... 34
1.2 Appropriate changes of procedures and structure......................................... 34
1.3 Skills for OI................................................................................................... 35
1.4 Motivation for OI .......................................................................................... 35
2 How to Build an Open Innovation Culture .......................................................... 37
2.1 Influencing company culture ........................................................................ 37
2.2 Sub-cultures of open innovation ................................................................... 40
3 How to Set Up Open Innovation Procedures ....................................................... 46
3.1 The OI implementation team ........................................................................ 46
3.2 Activities of the OI implementation team..................................................... 53
4 How to Acquire Open Innovation Skills ............................................................... 64
4.1 Training and skills......................................................................................... 65
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Executive summary
This report is the product of two years’ research within the Cambridge Open Innovation
Network (COIN), a network hosted by the Institute for Manufacturing (IfM) and funded
by Unilever and the Cambridge Integrated Knowledge Centre (CIKC). It has been written
to illustrate the challenges in implementing Open Innovation (OI) for top managers in
companies who are at the starting point of implementing an OI strategy.
The report was compiled from a series of interviews and workshops involving a total of
36 firms, structured to gather understanding of the following 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 for company
culture, structure, skills and incentives?
Our study showed that OI is an innovation in itself and therefore has to be managed
accordingly if it is to be implemented successfully. It offers different advantages to
different industrial sectors and has very different manifestations in corporations around
the globe. Employment models, factors influencing the selection of external partners for
collaboration, patterns of knowledge transfer, and models of interaction all vary in
different countries and these must be taken into account.
The companies reviewed cited no single outstanding reason for the adoption of OI.
Reducing the time to market for products, the availability of new technologies, and
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There are different routes that companies can take to OI, each determined by the strategic
origin and location of the impetus to adopt OI within the firm. The approach for most
companies is either a top-down strategically driven or a bottom-up evolutionary process.
This report focuses predominantly on the former model.
OI activities within a firm are usually either centralised in a core team or distributed
throughout different parts of the organisation. From our evidence, a top-down
strategically driven approach to OI often relies on the pre-existence of centralised OI
services and a core team to develop the OI strategy and support its implementation.
Our analysis of enablers and obstacles for OI reveals four main issues that companies
have to tackle on their way to implementation: culture, procedures, skills, and motivation.
OI culture For almost all the companies in our study, the shift towards an open approach
to innovation required the direct involvement of top management. This often translated
into a shift of culture, whereby working with other companies became accepted and
endorsed throughout the organisation.
OI procedures Moving people around within an organisation improves the intensity of
internal networks and increases cross-functional working. Independent OI teams working
within the traditional company configuration are a very popular choice for OI
implementation.
OI skills There is no ‘right’ blend of skills that is considered a definite enabler of OI, but
interestingly, the lack of an appropriate skills blend is an obstacle to its implementation.
This suggests that training is essential, rather than merely desirable, when preparing the
company for OI.
OI motivation Appropriate shifts of the incentive structure are essential to implementing
OI successfully.
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A company culture for OI can be influenced through structure, skills, incentives and
control, but there is no overall OI culture that can be created at a stroke for the whole
company. The starting point for change is most likely to be an OI implementation team,
which can seed the OI culture within the company. It is inevitable that different units in a
firm will have different sub-cultures of their own but it is possible to make use of these
cultures and find ways to support OI within them.
The report uses several case studies to examine how an OI implementation team can
establish OI procedures. The OI implementation team has to identify which different
functions within a firm need to be connected, and what tools are available or must be
found in order to accomplish this.
In acquiring OI skills, companies should not expect to train individual OI ‘masters’, but
should focus instead on individual professionals connected through the interaction of
different skills. A company needs internal competencies to be able to assess and review
external capabilities and opportunities.
From these four central issues (culture, procedures, skills, and motivation) a framework
for implementing OI is presented to show how an OI team could be embedded within a
company. The crucial role of top management is discussed. By demonstrating
commitment and support, top management holds the key to sway the opinion of those
who are less inclined to accept the new approach to innovation.
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This report only focuses on issues at the micro or internal level of the company. It should
be remembered that there are other issues on a macro level, including partnership
management, alliance management, trust building, and IP management.
The report concludes with a discussion of the limitations of the report and suggested
sources of further information.
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The first part of this report aims to give a general overview of what open innovation (OI)
means. It highlights the key points to keep in mind when reading the recommendations
for implementing OI in Part 2.
Innovation can be brought into a company in many ways, for example by in-licensing
technologies developed by others, but a company can also contribute to others’
innovation processes by making available their internal innovation to other organisations
through, for example, joint ventures, licensing and spin-offs.
Open innovation differs from the ‘closed innovation’ approach adopted by companies in
the past, where firms relied only on internal resources to generate, develop, produce,
market, distribute and support innovation.
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1.2 Aims
This report sets out to answer the question, ‘I want to implement open innovation – where
can I start and what do I do?’ It provides an overview of existing approaches to
implementing OI, and outlines a starting point for the selection of an implementation
strategy to match your company’s demands.
It is important to note that the report focuses on the micro-level of the company dealing
only with internal issues (e.g. of structure and culture) and concentrating on how to set up
your company internally in order to embrace OI. In particular, we paid attention to the
cultural aspects of adopting OI (the inner circle in Figure 1). However, this report does
not tackle other cultural aspects, for example, how to work with different partners (such
as start-ups, universities or customers). The adoption of an OI strategy has many
repercussions, raising issues of intellectual property, partnerships with outside
organisations, and so on, but these are beyond the scope of the present document (see
Figure 1).
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Each section is prefaced by a blue box (Read this section if…) and concludes with a
green box (What does this mean to my organisation?). Case study examples illustrate the
findings in grey boxes. These boxes will guide you on ways to apply OI concepts to your
own company.
1.5 Methodology
The participating companies ranged in size and had varying expertise and experience in
OI. This mix of experience contributed to the understanding of issues associated with the
implementation of OI practice, from beginners (“Where do I start?”), and practitioners
1
Adapted from Alvesson and Berg, 1992
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who felt they were ‘immature’, to more experienced companies (“How can we improve
our OI practice further?”).
The principal people taking part in the research were R&D managers, in particular those
responsible for implementing OI or actively involved in it. The industries represented
included:
• Fast moving consumer goods (FMCG)
• Energy and oil
• Aerospace and defence
• Software and media
• Electronics and telecommunication
• Intermediaries (e.g. knowledge and service brokers)
• What does open innovation mean? Open vs. closed 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 for company
culture, structure, skills and incentives when implementing OI?
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This cycle was repeated with a further literature review, a second series of case-study
interviews and a second workshop involving 16 different companies. This second phase
consolidated our understanding of the structures and skills for implementing OI.
A final series of interviews with nine companies, a third literature review and a third
workshop concluded the process by defining company cultural issues and incentives in
OI implementation.
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With OI, and unlike closed innovation, company boundaries become permeable and
allow for the matching and integration of resources between the company and external
collaborators. In the closed innovation model, companies innovate relying on internal
resources only.
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Figure 3: A diagram illustrating an Open Innovation Process. The boundaries of the firm, represented by
the dashed lines of the funnel, are permeable and allow ideas and technologies (the grey circles) to pass in
and out of the firm. 2
The key feature of this diagram, and what distinguishes it from a closed innovation
process, is that the company’s boundaries become permeable (the dashed line in the
figure). Whereas in a traditional closed innovation process all the invention, research and
development is kept secure and confidential within the company until the end product is
launched, with OI the company can make use of external competencies (e.g. technology)
and even spin out by-products of its own innovation to outside organisations.
2
Adapted from Chesbrough (2003) and Docherty (2006).
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At the research phase, for example there is a lot of activity (the grey circles) going on
within the company. There are also ideas and technologies developed outside, either
collaboratively, or perhaps bought in. At the development phase, as research findings are
narrowed down to viable projects, it may be advantageous to invest in externally
developed intellectual property (IP) licenses for certain technologies to advance these
projects. This is inflow: the use of others’ capability to innovate.
At the same time other IP licenses that have emerged from the company’s own research
might be sold to other developers, either because they are of no strategic relevance to the
company’s own business, or because the company has no capacity or expertise to develop
them itself. Alternatively, the company might see the opportunity to create technology
spin-off companies to take on some of these projects. This is outflow: contributions made
to others’ innovation activities.
At the point of commercialisation there will be core products that may have come
through an entirely internal route from research to realisation, or with a variety of inputs
from outside. Even at this stage, however, the OI company could choose to in-source
market-ready products from outside, for example in co-branding exercises where it could
use its established brand profile to sell a new product from another company that
currently has no presence and credibility in the relevant market.
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• Remove obstacles to innovation use by allowing ‘time to absorb and learn about
the new practices’ (i.e. OI)
• Listen to complaints and concerns
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Electronics Strong need to adapt to growing demand from New technologies sought with increasing
and telecoms consumers and keep up to date with the rapid pace of speed to anticipate competition, follow fast
technology development. Importance of collaboration to moving markets and reduce costs.
create industry standards. Standards are both an opportunity to work
Reducing costs is a priority. openly and a ‘constraint’ for innovation.
Energy/oil Business is changing because of sustainability issues OI is opportunity for identifying new
(declining oil supplies, global warming) technologies to improve oil supply and ways to
change the industry and increase its
sustainability.
Aerospace Traditional engineering businesses. Long technology OI is a new concept, especially for defence
and defence lifespan and long lead times for their adoption. Strong companies who are wary of information leak.
confidentiality issues especially for defence. Strong However, OI activities exist in response to
influence of policy makers and government on technology complexity, and R&D and
innovation strategies. innovation costs.
FMCG Need to reduce time to market and to find new ideas to OI is an opportunity to innovate and increase
generate new products. Strong marketing influences competitive advantage. Most FMCG
innovation strategy companies are currently developing their OI
strategies (more formalised OI).
Software and Software companies have almost always been open Open source software, and internet 2.0 have
media due to the nature of their technology. revolutionised the innovation processes so
that users (customers) can themselves
contribute to innovation.
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For more on national culture issues, it is interesting to refer to other scholars’ work, such
as Trompenaars (1998).
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Figure 4: Advantages of open innovation, based on the responses of 26 managers at one workshop
The exploitation of internally developed technologies that are not of strategic relevance is
not seen as an important advantage. It is not usually part of anyone’s strategic aim, at
least from the perspective of those interviewed (R&D managers, in particular those
responsible for implementing OI or actively involved in it for supporting the core
business). For them, it can be more important if companies are creating an ecosystem or
if they want to recover the financial costs of R&D. A more important issue in exploiting
technologies (or brands) is to ensure that whoever uses them does so properly. For
example, if an FMCG company associates its brand name with somebody else’s business,
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they want to be absolutely sure that the association is not going to damage their brand’s
reputation.
According to other studies (Lichtenthaler and Ernst, 2006), cultural limitations, such as
the not-sold-here (NSH) syndrome, can impede the finding of alternative paths to market.
Few companies think OI is important simply because it influences ecosystems.
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Many of the activities that constitute OI may not be entirely new to companies, and some
of them may have been commonly performed for a long time. Typically, some individual
business units within a company might be considered to be very open in the way they
operate, while the company as a whole might not.
Open innovation aims at a strategic alignment of existing activities with new approaches
to open up the innovation process to the external world. There are different routes to OI,
each of which is determined by the strategic origin and location of the impetus to adopt it
within the firm.
In defining the routes taken by the companies who participated in our research, we have
used a classification derived from the available literature. This characterises companies’
OI implementation approach as either a top-down strategically driven or a bottom-up
evolutionary process (the vertical axis in Figure 5). The location of OI activities
(horizontal axis) is defined as either centralised (e.g. a single team/function/department to
look after the implementation of an OI approach) or distributed throughout different parts
of the organisation (e.g. functions/departments/activities innovating openly).
These new routes could be decided by the direct intervention of management or because
of environmental conditions.
• Management intervention implies a ‘conscious’ movement towards a new
organisational form and a consequent step change where ‘management, in view of
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Organisations can create centralised organisational forms that aim to innovate or look at
distributed forms, like, for example, it has happened for many R&D functions
(Gerybadze and Reger, 1999; Tirpak et al., 2006).
2 1
3 4
Mapping the organisations that participated in the third workshop according the criteria in
Figure 5, we can see how the companies we researched lie across the spectrum of routes
to OI.
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The different approaches usually lead to different levels of expertise and characteristics,
as shown in the OI strategy matrix in Figure 6.
Some companies (bottom left quadrant) have many, often distributed OI activities that
derive from a slow realisation that innovation can also be achieved with the help of
external resources. These companies came to OI by an evolutionary route and are now
attempting to rationalise the implementation of their activities.
2 1
3 4
Figure 6: The OI strategy matrix: general characteristics of the approaches taken by companies adopting OI
Other companies (top right quadrant) made a top-level decision to implement OI over a
short period, and these companies often set up a dedicated OI unit.
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From the evidence of our case studies, managers within large corporation are frequently
asked to take responsibility for the development of a strategy for the adoption of OI and
to manage its rollout. This top-down strategically driven approach to OI often relies on
the creation of centralised OI services and a core team to develop the OI strategy and
support its implementation.
Although links to all the routes towards OI are made throughout the rest of this report, we
will focus on the implementation of OI through a top-down strategically driven
centralised approach (top right quadrant). Taking a close view at what these OI
implementation teams did to encourage OI adoption in their respective companies has
enabled us to gather feedback on the initiatives taken and capture the evolution of the
approach over a short period of time.
A large US consumer electronic corporation has seen its business disrupted by new
software-based technologies. To maintain a prime position in the market, internal
competencies had to be integrated speedily with new and different competencies.
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Another company in the same sector is interested in new technologies, including those
that could lead to new lines of activity as well as those focused on its core business. In
order to identify promising technologies, a small group of core managers deals with
multiple potential partners to cultivate a range of new business opportunities.
Another company in the same sector is interested in new technologies, including those
that could lead to new lines of activity as well as those focused on its core business. In
order to identify promising technologies, a small group of core managers deals with
multiple potential partners to cultivate a range of new business opportunities.
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The Formulation division is significant within GSK. It employs around 1,600 people
based in ten countries. The division is responsible for drug formulation and delivery. The
drug delivery element has two aspects – first, how to get the drugs into the patient’s body
(tablets, inhalers, etc.), and second, to what part of the body.
About ten years ago, Formulation decided to develop some radically different drug
delivery systems. This was linked to the fact that manufacturing processes were in need
of review – many had been patented as long ago as the 1920s and 1930s.
There were some early challenges. GSK realised that it did not have all the resources in-
house to develop the required technologies. Consequently, it chose to form deep
partnerships with two outside partners. Early on, however, the limited experience of
working with external partners increased costs and relationship ran into severe
difficulties.
GSK used this experience and broadened its approach from a limited set of relationships
to a more distributed model where the company collaborated in a network with different
participants, pursuing various outputs that changed over time. As a result, the approach
evolved into one in which GSK put itself at the centre of a web or network of activities.
This was also a way of covering eventualities – a kind of risk diversification, minimising
the chances that none of the external collaborations would yield benefits.
In the evolved model, partner selection is central. GSK needs to identify what it is that
each contributor does best – i.e. what is the clear competitive advantage? While GSK
acknowledges that many other companies have great technologies, it does drug delivery
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profitably themselves (many partners in the same markets have not had such success and
rely on one hugely profitable product to cover the overall investment). The message is
that GSK does have something to offer. This includes the ability to push products and
technologies through to the market, advice on how the technology should be used, and
experience in developing technology in exchange for a limited share in IP benefits.
In order to take advantage of emerging technologies, GSK is now generally happy to look
outside and buy in what is needed. This lowers staff costs and often has time benefits. In
its collaborative model, GSK varies the types of partnership between the purely
transactional and those that are potentially deeper and more strategic (recognising that
transactional relationships are often simpler and less costly). Selecting the type of
relationship depends on the work concerned. Put simply, the choices are between
contracting out a process, doing it internally and licensing out GSK’s own technology to
another organisation. Each approach has different cost and value benefits but importantly,
the selection should be informed by understanding what it is that GSK does best.
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4. Make the best use of financial valuation tools. In the past, instinct pushed valuable
projects with bad discounted cash flow (DCF) projections, but GSK has become more
sophisticated and now uses probabilities to match financial business cases with related
risks.
5. Seek highly capable information brokers to scout for new ideas and welcomes
suggestions on how to improve this resource.
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The second part of this report builds on the concepts of open innovation introduced in
Part 1 and suggests ways in which OI can be implemented in your company.
Figure 7: Open innovation enablers, based on the responses of 26 managers at one workshop
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Figure 8: Open innovation obstacles, based on the responses of 26 managers at one workshop
Our analysis of enablers and obstacles for OI reveals four main issues that companies
have to tackle on their way to implementation (Figure 9).
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1.1 OI culture
Culture change is a major issue in the implementation of OI. This is readily
understandable: adopting OI may well mean doing things differently, sometimes in direct
contradiction to behaviour that was allowed and endorsed in the past.
For almost all the companies in our study, the shift towards an open approach to
innovation required the direct involvement of top management. This often translated into
a shift of culture, whereby working with other companies became accepted and endorsed
throughout the organisation. For one of the companies surveyed, for example, the
intervention of top management had a positive cascade effect throughout the
organisation. This experience was shared by another company, where the CEO
announced the open innovation policy very publicly (‘Everyone realised that things had
to change’). However, it was felt by others that important changes had to come from the
operational level ‘as they are the ones who need to deliver’. It was only after the
operational level had been convinced that the intervention of top management became
significant and rubber-stamped the initiative, ensuring it was going to happen.
Independent OI teams working within the traditional company configuration are a very
popular choice for OI implementation. These teams typically include people from R&D,
marketing, supply chain management (procurement) and the legal department. To enable
it to work more freely, one of our companies suggested ring-fencing the team’s budget
and separating its finances and management from R&D and the chief technology officer
(CTO) – ‘There should be the right balance between independence and integration’.
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Choosing the appropriate structure is another important step towards an open approach to
innovation.
An executive at one of the surveyed companies where the transition towards OI is still in
progress made the following observation: ‘Although we generally recognise the
importance of 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. There are no formal ways of career progression for someone who is an
OI operative.’ Two other companies have recognised and at least in part solved this
problem. In the words of one: ‘Our entrepreneurial structure recognises the identification
and the bringing inside of a technology’. Appropriate shifts of the incentive structure are
essential to implementing OI successfully.
As this section has shown, the same issue can be an obstacle or an enabler: if you get it
right, it can enable OI; if you get it wrong, it becomes an obstacle. The next four sections
deal with each of these issues in detail.
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• Analyse where your company stands in relation to each of these issues and decide
which to tackle first.
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As others have done before (Martin and Siehl, 1983), we want to identify and highlight
those cultural features at the shallowest level of company culture that can encourage
interaction with the external environment for the purposes of innovation. Changing these
shallow features is easier than changing the deeper cultural levels.
It is worth noting that changes can be directed from the top only when there is a single
culture and norms are changed. Top-down approaches are generally short-lived because
they tend to produce over-compliance rather than acceptance.
Many approaches have been taken to study the very complex theme of organisational
culture and change. There are a number of models, frameworks and paradigms that could
be used to investigate the cultural implications of implementing OI. Pheasey (1993) and
Brown (1998), for example, review the pillar theories of organisational culture and from
these we have extracted some concepts around which to structure our research.
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Role, power, achievement and support cultures have different characteristics and are
typified by certain organisational structures. Groups or companies with a predominant
achievement and support culture might be expected to be more suited to the adoption of
OI. For these cultures, appreciative methods of behavioural control seem more effective
(see section 5.1).
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Reaction to
Internal Most effective
Culture Type Description Structure External
Control Control Methods
Contingencies
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These functions are intrinsically open since their role is to support OI activities where
people have been recruited specifically to promote and foster the interaction with external
partners in some way.
Examples:
• Formalised technology intelligence and scouting activities for monitoring
technological developments
• Corporate venture capital functions to support innovation activities
• Infrastructure to nurture a fertile ecosystem (e.g. science parks)
Since the R&D function seemed to be the most heavily involved in the implementation of
OI, our interviewing focused on understanding how people within these departments feel
about looking outside for resources to feed their innovation processes. We also asked for
examples of practical initiatives taken to stimulate R&D to embrace OI.
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We found that there are even differences between groups of R&D individuals. People in
blue sky research units were held together by a predominantly supportive culture, while
we recognised the traits of an achievement culture in the departments working closer to
market. These differences are reflected in the initiatives taken by the second group (the
OI implementation team) to support the efforts of the two types of R&D to become open.
According to Badawy (1988), research units with a more blue sky focus are
predominantly staffed by scientists, rather than by technologists. Collaborating with other
individuals with similar passions motivates scientists, and they appreciate access to new
stimuli. In these facilities the atmosphere was described as friendly and people were
mainly organised in teams. Their interest in research is one of the primary motivators for
the scientists but they also appreciate professionally oriented motivators such as greater
freedom, equipment, participation in professional associations and seminars (Badawy,
1988; Hebda et al., 2007).
Even when the company has not formally embraced OI, people in blue sky facilities
interact with scientists working in the same domains outside the company. They often
visit universities, participate in conferences, contribute to scientific projects with
university research groups, support academic research, and publish their own findings.
Hence it seems that a certain degree of openness is intrinsic to these types of research
facilities. However, barriers to openness can exist and scientists can sometimes be
discouraged from talking to people from outside for fear of compromising future
intellectual property (IP).
Applied R&D units typically focus their efforts on less speculative research and
technologies that are closely linked and bound to products and markets. These
technologists look at potential new products or solutions to current product or process
problems. They are usually more structured in their research and often organised in
project teams led by managers who have targets, deadlines, plans, budgets and constraints
stronger than those of colleagues in blue sky research units.
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Applied R&D units reflect the characteristics of the achievement culture. Technologists
are motivated by meeting targets and goals and appreciate monetary and career
compensation in return for their efforts (Hebda et al., 2007). These groups are less prone
to discuss their innovation activities with external parties unless it is strictly within a
‘safe’ context. Examples of typical interactions are contract research with universities or
suppliers.
Table 3 shows that even within R&D, differences in cultures can be observed among
groups of employees, while specific examples of how the OI implementation team sees
these different groups in five companies is shown in Table 4.
R&D
Research Applied R&D
• Mid- to long-term outlook • Short- to mid-term outlook
• Blue sky • Focus on incremental research
• Scientists • Experts in technology
• Enjoy technology • Problem-solving approach
• Supportive culture • Market/product focus
• Motivated by appreciative methods • Achievement culture
• Friendly environment • Motivated by appreciative and some
• Satisfaction in the technology itself and regulative methods
achieving expert status • Motivated by reaching targets, gaining
• Team-oriented people rewards and achieving an expert status
• Less career driven • Career driven
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How would you describe the culture in your How would you describe the culture in your
company’s research function? company’s development function?
FMCG1 • Technology focused • 33% of time invested in career planning
• Motivated by challenges • Career motivated, results driven
• Technical career path • Generalists rather than specialists
• Not such good communicators • More superficial than research people
• Ideas people • Good communicators
FMCG2 • Culture was transformed from supportive • Focused on growing and building existing
and relaxed to a more achieving one businesses/brands
• Maximise serendipity (based on • Validation, pressure testing, due diligence
reputation) of technology and relationship
• Keeping options open management with the provider
• Not aiming for failure
• Get deals done whatever the costs
• Understand the issues
• Long-term business need
FMCG3 • Underlying science research: mid to long • Source external technology and products
term is the underlying culture of that in short term speed up or enable
employees, but managed more and more delivery to market
by power culture regulators • Enter longer-term collaborations in order to
develop new products, introduce co-
developed products into market, or
develop or improve equipment
Electronic1 • People do not discuss a topic before it is • Prefer not to hand projects to a different
covered by patents unit, but want to take it to the end
• Do not have much time pressure so • In USA, prefer working with important
enough time for evaluation brands whereas in Europe they just want
to work with the best
• Work with supplier in joint and co-
development
Electronic2 • History of openness • Only open with suppliers
• Do not consider IP carefully • Some resistance to openness (not-
• Need support to put agreements in place invented-here syndrome)
• Long time span • Faster time scale (months)
• Not used to working with other companies • Can be resistant to help
• Often too relaxed
These results indicate that different groups need to be supported in a specific way. The
evidence does not suggest that there is one overriding open innovation culture that can be
created at one blow and applied to the whole company.
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The OI implementation team is usually drawn from R&D managers who have a strong
technical background and business mindset coupled with a deep understanding of the
company. They are enthusiastic about embracing OI and provide the link with other
company functions that can support it. In most cases the companies observed have
created an implementation team that supports R&D units in becoming more open and
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They also provide links within the groups and facilitate the access to tools, skills and
resources (such as corporate venture funds).
Create safe spaces for their 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 for
working with start-ups, and guaranteeing that IP remains with the start-
up while the technology evolves.
Blue-sky R&D
Training: what to do and when, what to avoid. What does OI mean for
the company? And what does it mean for you/your job? Who can help
you?
5. Provide right pool of skills
Training is delivered in seminars, as part of personal development
schemes, through mentoring and tutoring, and with practical examples.
Access to experts who can mentor at each stage.
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The research function in the company is quite separate from the applied research
function, and scientists have a passion for technology. They have a history of openness
with university groups but because of their often relaxed attitude towards IP, the external
alliance group has to provide legal support for putting any agreements in place. To
support the researchers the external alliance group provides technological alternatives as
well as legal advice. Because of its longer-term perspective, contact with the research
function is less intense than it is with the applied research and development group where
the technologists can be more resistant to external contributions. To assist the applied
research group, external alliance managers spend significant time with them to encourage
trust and to understand their needs better.
With both the research and applied research functions the external alliance team has to be
reactive and respond to specific needs that arise. At the same time, they also take the
initiative by actively offering external solutions to challenges in the business units. Such
help is greatly appreciated, given the pressures on the R&D functions, especially if it is
timely and easy to implement. These groups can be very demanding, but the support is
worthwhile because of the dividends it can yield.
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OI in a food firm
Product
development
The adoption of OI in this company was strongly motivated by general trends in the food
industry. The starting point for the OI initiative was the long-term R&D function, which
was traditionally separated from 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
of the business.
Two employees were financed from the R&D facility budget and made responsible for
starting the OI implementation. The aim was to introduce OI practice into each stage of
the innovation process, developing best practice before the final OI rollout. The team of
two was responsible for the identification of researchers’ needs (both blue sky and
applied R&D) and scouting internally and externally for solutions. At this stage, they
managed the entire process, from selecting collaboration partners and involving internal
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Knowledge sharing networks led to the rationalisation of work and the exchange of
information. R&D teams in different regions were no longer in competition with each
other. The OI managers discussed specific benefits with each group in order to generate
acceptance and to convince them of the merits of the open approach. The blue sky R&D
site maintained a friendly, non-competitive and team-oriented attitude. They were happy
to contribute to the knowledge sharing networks out of the sense of personal satisfaction
conferred by the recognition of their expertise.
In contrast, staff working in the short-term R&D units were more competitive and career
driven. Initially sceptical about looking for technology outside, they warmed to the notion
after the first positive outcomes illustrated the potential for reducing time to market and
solving problems. The two OI managers relieved the R&D staff from tasks linked to
collaboration management (e.g. assessment of potential partners, negotiating agreements,
managing IP). They carried out scouting activities to find solutions to identified
problems. They were a clear focal point on all OI issues for both internal and external
contacts. The knowledge sharing networks facilitated an internal openness that led in turn
to an awareness that helpful ideas could in fact be found outside one’s own research
group.
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OI in an FMCG company
In this company, the OI implementation team has to be adaptable and able to gear its
offering to two different types of group, each of which needs different kinds of help. The
focuses, skills and motivations of each group are varied and contradictory. The OI
implementation team must have the flexibility to guide and respond to both groups: for
example, alerting the technical group to its tendency to dismiss ‘false negatives’ – ideas
that seem unimportant but are quite the opposite – and making sure that the career-
oriented R&D group is exposed to opportunities.
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Figure 12: Important internal links for open innovation, based on the responses of 26 managers at one
workshop
This ecosystem typically comprises corporate partners, venture capital firms, universities,
government institutes and industry players. Different partners are involved at different
points along the commercialisation funnel and gaining maximum value requires these
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Innovation is regarded as the key to creating new business and is also a key component of
the Alternative Energy and Biofuels division. This has a similar ecosystem with external
partners outside the traditional oil and gas industry.
Key capabilities in this area are the need to understand and assess business value,
developing new types of collaboration, and engaging in experimental technologies and
business models. BP has looked closely at best practice in forming partnerships,
particularly with respect to people issues, and encouraging more entrepreneurialism. A
mix of new and familiar people is the most effective strategy, together with a mindset
change towards a new way of operating.
The OI implementation team helps foster different activities to open up the innovation
process. Figure 13 shows the results of our survey of OI activities among the companies
we studied. No reliable conclusion about the scope of a company’s OI activities can be
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drawn from these results. For example, a company might illustrate its claim that it
participates in successful joint ventures with one example. However, this could be the
sole example of a joint venture in that company, demonstrating that while OI is working
in one discrete area, it is far from being part of the company’s overall strategy.
The company can use different tools and functions to focus on external activities, often
linked by the OI team (Figure 14). Again, a challenge for the OI team is to identify the
scope of utilisation of these tools. How effectively are they being investigated and used?
Are they being deployed throughout the organisation?
Figure 14: OI tools and functions, based on the responses of 26 managers at one workshop
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Company 1: The initial thinking behind the OI implementation was led by a partnership
between R&D and procurement. Afterwards the technical and brand teams worked
independently.
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• A defence provider has established a small number of very well resourced centres
bringing together the firm’s own researchers, university research groups and
selected other companies to focus on broad themes such as systems engineering.
Founded in 1891 as an electric light bulb manufacturer, the Philips company has gone
through several periods of expansion and streamlining in its product portfolio and areas
of interest. Over the years it has divested itself of many traditional product lines to
concentrate on growing markets. Paring down since 2000, Philips has also followed the
pattern of many traditional technology driven companies by becoming more market
oriented, designing its products and solutions around people – giving an accessible and
rewarding user experience that leverages Philips strong brand promise.
The company has progressively rationalised its core areas of expertise to reflect its brand
strap line, ‘sense and simplicity’. It currently focuses on three main areas: Health Care,
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Lighting and Consumer Electronics. Within these core areas, Philips concentrates on
worldwide brand development and emerging markets through internal and external
innovation and acquisition.
Internally its view of innovation and incubation has been changing over the years and its
three incubator centres are now considered an important strategic catalyst for growth.
This strategy guarantees a continuous stream of new product introductions, which
accounted for 56% of the company’s growth in 2006. The three incubator funds (one for
each core business area) finance new business ventures within the company – that is, new
ideas that cannot find a place within existing businesses. These units report directly to the
main board of management in line with the three core sectors.
3
‘A conceptual and operational process for moving a new-product project from idea to launch’.
www.stage-gate.com; http://www.ifm.eng.cam.ac.uk/service/events/info/roadmapping.html
4
Business-to-business, business-to-consumer.
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More recently, ventures have been concentrating on organic growth. If they are
successful they may be ‘spun up’ and become new businesses within Philips, receiving
100% of their funding from the sector from which they originate. If they do not
contribute to growth or are not consistent with Philips’ core areas they may be ‘spun out’
by looking for external funds or trade sale.
Entrepreneurial and intrapreneurial spirit is a key part of this process. Philips believes
that managers should be willing to take personal risks by going into the incubator,
requiring their commitment when there is no guaranteed route back into the corporation.
On the other hand, they are personally rewarded with share equity when ventures are
successful. To make the incubator system more attractive, managers are given high
degrees of freedom and mentorship.
Philips has to date created about 20 millionaires through this process – a good incentive
for corporate employees who feel like trying their hand at entrepreneurship with rather
less risk than in the real world.
Philips’ incubation organisations have been able to adapt and reorganize themselves to
support the overall company strategy for growth. Elements were addressed that reflect
not only internal organisational tradeoffs but also the framework in which Philips
interacts with the outside world to foster open and closed innovation.
Company A has reorganised its research infrastructure as a tool for OI. Its former R&D
campus has become a Science Park where individual high-tech companies, either spin-
offs from the business itself or independent companies from outside, can share the
premises and the sophisticated technical infrastructure.
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The list of residents is continually expanding, including some who could be seen as direct
competitors of the parent company. However, the site accommodates only small and
start-up companies, and does not include manufacturing facilities.
The design of this OI tool took shape progressively. Initially the company planned to
move its R&D facility, but after some thought concluded that the site provided an
opportunity to blend in with the local infrastructure. This was also the view of the local
authority, which saw the status of the company as an opportunity for the local
development of business and innovation.
The campus needed a new operational business model and this was created by virtue of
strong links with the local authority, the university and the local infrastructure. The
process of reorganisation began with the involvement of a charismatic leader who had
strong links in the region, high networking capabilities and who knew the company very
well.
Currently the ecosystem is monitored through periodical reviews of the campus residents
carried out by an external consultancy.
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much of the park is occupied). Other suggested measures of performance are the
amount of venture capital invested in the area and an assessment of the park’s
effect on regional development of science and innovation.
Kodak’s business has changed dramatically in recent years. As well as migrating from
traditional film-based technology to new digital methods, it also diversified into a variety
of imaging related markets, including consumer and commercial printing and display
technologies. Kodak embraces an open approach to innovation and set up Kodak
European Research in Cambridge (UK) to identify opportunities and possible partners of
strategic importance in the European, African and Middle Eastern Regions (EAMER).
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need. Cambridge was chosen as the best location to position the technology outpost
because of its networking potential and convenience.
KER staff were chosen according to scientific skill sets in order to create a community
with complementary technical expertise and with sufficient technical depth to be able to
progress the work of the centre and interact with external experts. Experience working
with external groups was also considered, but more important was the attitude and
enthusiasm for working in an open innovation centre.
It was evident that every country in EAMER had to be approached independently. The
method of approach moves in four steps from ‘scan’ (looking for previously unidentified
information) to ‘target’ (focusing on information of identified relevance). Tools have
been produced to support each of the phases.
KER decided to develop a series of documents that would act as ‘country guides to
technology and innovation’ in collaboration with visiting international students recruited
through IAESTE – an international association that supports the professional technical
training of undergraduate students by seconding them to companies in countries other
than their own. The guides were assembled with a ‘scan’ perspective (searching beyond
already identified technologies and interests) entirely through Internet searches, following
a clear set of aims, objectives and templates (see figure below).
A scouting trip was organised with the scope of capturing information as well as setting
up social networks and links. Follow-up with interesting research contacts was then
organised.
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Technology
Spin-outs
IP out-licensing
Ideas &
Technologies
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It is a rare, if not non-existent, person who possesses all the ideal skills for OI. However,
skills can be pulled together by creating cross-functional teams to which different
members contribute all the required attributes.
One skill that it is possible and advantageous for all team members to have is ‘skill zero’
– the skill of knowing where all the relevant skills reside. In other words, team members
should be aware of who possesses which skills, and how to outsource them.
Technological skills are of relatively lesser importance when it comes to obtaining the
right technology. The OI unit should be centrally responsible for linking different skills
together and for providing training to fill gaps or improve certain skills.
From our case studies we compiled a set of skills that fall into four categories:
introspective, extrospective, interactive and technical (see Table 6).
• Introspective skills allow for the organisation’s assessment of the
value of each gap or opportunity coming from inside
• Extrospective skills allow the assessment of the value of each
interaction from the perspective of the other party and review
capabilities and opportunities coming from outside
• Interactive skills are communication skills that convey internally and
externally the value of any relation with the external world
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We also identified a broad set of personal attributes, including motivation, the ability to
learn, sociability, a techno-business mindset, systems thinking, leadership, balance
between ego and empathy, an entrepreneurial mindset, lateral thinking, vision,
adaptability and flexibility.
Introspective Extrospective
Strategic insights e.g. understand fit with Behaviour analysis e.g. analytical, personal.
internal strategies. Strategic insight e.g. understand fit with
Legal/IP skills e.g. understand IP implications, partners’ strategies.
ability to draw up contracts
Interactive
Communication/collaboration e.g. communicate needs internally and to partners, resolve
conflicts, language skills, network building
Negotiation e.g. understand buying and selling tactics.
Technical
Technological e.g. understand principles of technology being exploited.
Portfolio management
Financial e.g. understand and set budgets.
Analytical e.g. evaluation of risk, financial analysis, problem solving
Delivery of training and skills is often made easier by a clear framework that clarifies
what OI is and what it implies. One of the most popular choices is the WFGM process
adopted by Air Products and described by Witzeman et al. (2006). Although not the only
possible solution, this simple process – Want Find Get Manage – clarifies
communication and enables differentiation of the stages through which each project
passes. Training is made easier and confusion avoided by relating specific examples to
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the phases. Table 7 relates different skills and training to the WFGM framework. Each set
of questions could be used to guide the creation of teaching materials and learning
objectives for a tailored training course.
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What would my organisation Who could have already What would this deal mean for our What are the problems for our
innovate in? acquired information on organisation? What does the party in respecting the
What wouldn’t fit the innovation external ideas? proposed partnership mean for our agreement?
processes? Where can I find internal organisation in strategic and
What are the current innovation repositories and tools for financial terms?
processes? discovering new options in Are there legal implications for us?
Introspective Who are the people involved in technology and the market? Are there people/tools to help in
innovation in my organisation? negotiating deals? What are the
Where can I find information? ‘preferred ways’ for our organisation
Are there tools in my company to to deal with external partners (e.g.
support innovation? Are there licensing in, co-operating in long
people in other functions who could term research projects)?
support us?
Look for external trends in market How to scan for new What would this deal mean for the What are the problems for our
and technology (tools and opportunities in technology other organisation? What does the party in respecting the
techniques to review the state of the and marketing proposed partnership mean in agreements?
Extrospective art) How do I learn more about strategic and financial terms? Who is responsible in that
What ideas seem to work in current interesting development? How How to understand the other centre?
and future scenarios? Are there can I evaluate who will be a people’s motivation and drivers from
gaps that could offer an opportunity ‘good partner’? their behaviour
for our company?
How to contribute to other How to acquire the needed How to negotiate People and relationship
colleagues’ innovation processes information during our social How to communicate with the party management
How to develop creative ideas with activity (e.g. at a conference, How to communicate the value of
others in your organisation, bringing meeting) the deal to the rest of our
Interactive together market and technological How to communicate the value organisation and gain support
aspects How to communicate our of the scouting findings
ideas to the rest of the
organisation? (e.g. writing a
proposal, business idea)
Preparing business cases for new Scouting briefs preparation What legal knowledge is required for Portfolio and project
ideas Scouting for identified needs each type of deal? management
Technical Strategic insight Preparing scouting reports to How to manage IP Public relations
Market insight highlight the value of the Financial valuation tools Problem solving
Technical Insight scouting finding Business models
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OI skills training
One of the companies we surveyed has organised an internal ‘OI academy’ for training
employees in all functions, particularly those in R&D and supply chain operations.
Training is delivered in a variety of ways: in e-learning format, at residential seminars,
through personal development schemes, via mentoring and tutoring, and through specific
examples of how the theory applies to them.
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Companies are often pushed to think that OI can be an opportunity to outsource research
to SMEs and universities. The companies who attempt such a radical change usually
restructure, ask people to move department, change their working practices and make
some researchers redundant. The decision to reduce R&D capabilities might save costs in
the short term, but in the long term, the loss of internal skills and technical capability
might jeopardise the company’s ability to access external technology and to appreciate its
value for the company.
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Regulative methods: i.e. setting a rule and a Appreciative methods: i.e. giving a sense of what
measurement for judging a behaviour behaviour is/is not considered positive and acceptable
Pros Pros
• Performance is measured. Measures must be ‘people- • High sense of total accountability that precludes game
proof’ and targets difficult, with rewards tied to them playing. Large flow of information
Cons Cons
• There is no such thing as ‘people-proof’ measures. • Little control over subordinates; goals are difficult to
People use numbers to cover their back; loss of valid access; low-growth-need employees will not respond;
information and unwillingness to take risks risk of losing track
• Predetermined plan – management seeks to impose it • Situations are met as they arise. Management is a
• Management is seen to be focused on goals mutual adjustment between organisation and situation
• Narrow specialised purpose is emphasised • Management is seen as a process focused on
• Management relies on techniques and extrinsic maintaining balance in a field of relationships
motivation • General values or norms inform behaviour
• Development is seen to require more sophisticated • The source of control is seen to be within people;
techniques and greater rationality intrinsic motivation
• Development is seen as a process of increasing
understanding of the context, extent and depth of the
situation
5
Adapted from Cammann and Nadler (1976).
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One contributor to our research survey said: ‘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) confirm that people can be suspicious of anything coming from external sources
because of previous negative experiences, lack of experience or motivation, or an
incentive system that focuses on and strongly rewards internal technological
development.
NIH can also be the result of people striving for cognitive organisation and reduction of
insecurity, or for positive individual and social identity. Diffuse NIH syndrome often
results in faulty evaluations of external opportunities, neglect or less thorough use of
external resources, and exaggeration of the potential of internally developed ideas.
Our interviewees suggested that setting a good example and demonstrating with facts that
other people’s technologies, opportunities and ideas have potential and practical benefit
could reverse the distrust of external assistance. Involving people in the decision-making
process and informing and integrating them early are effective ways of fighting NIH
syndrome, according to past studies (Lichtenthaler and Ernst, 2006). For example, one
company held a workshop to devise a strategy for innovation that involved a mix of
employees, some resistant to change and others with more enthusiastic views. The direct
participation in the process contributed to a higher degree of success in the
implementation of the changes, and even the less progressively minded participants
became infected by the new ideas.
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The traditional approach to innovation and resistance to open ideas can be the result of
education. ‘People like to be in control’, said one company. They have learnt to be good
project managers, but they ‘think in project, not in portfolio terms’. OI might provide
alternative ways of completing projects and reducing times, but it might entail
compromise of other elements (e.g. quality). Some find it difficult to compromise on
original aims and objectives.
Cultural limitation can affect not only OI but also innovation itself, where people are
used to dealing with ‘tidy’ operational approaches such as ‘lean manufacturing’ or Six
Sigma6. It is difficult for 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 of our contributors. ‘Our corporate culture tends to assume that A +
B = C. The business of innovation is not really like that. It is more iterative.’
‘Although we generally recognise the importance of getting to know and use what is
developed 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 formal ways of career progression for someone who is an open innovation operative.’
6
Six Sigma, is a strict quality-driven business management system that involves lengthy implementation.
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Company 1 ‘Our entrepreneurial structure recognises the identification and the bringing
inside of a technology. The incentive/reward system used to be regulated by the number
of patents filed. Not everyone could be a ‘superstar’ because it meant patenting a lot.
Now, the new OI culture and structure provide the opportunity for everyone to be a
superstar because no one cares anymore where the innovation comes from.’
Company 2 has a two-year management training scheme for research staff during which
researchers are seconded to a strategic technology venture for a six-month spell. This is
recognised as a visible step in their career progression.
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In the previous sections we have discussed four separate aspects of the implementation of
open innovation: culture, structure, skills and motivation. In each section we present
specific findings that are relevant for companies implementing an OI strategy (Figure
15).
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The oval in Figure 16 represents the OI team, which is made up of experienced managers
who have been asked to take charge of the implementation strategy. These managers have
a strong technical background and business mindset coupled with a deep understanding
of the company. They are enthusiastic about embracing OI and they provide the link with
other company functions that support it. These managers realise that a change of mindset
and of company culture is needed if the company is to embrace OI.
The framework diagram depicts the organisation of the OI team’s overall activity. It also
captures the relationship of the OI team with the rest of its organisation, including top
management, different group subcultures, and individuals’ personal perspectives.
Cultural influences relative to the specific groups are listed in the boxes. We will now
look in more detail at each group within the organisation.
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Mortara, Napp, Slacik, Minshall, 2009
OI teams have to balance their relationship with top management. They can be
involuntarily affected by power games, politics and changes at the top. In situations of
political turmoil, the OI team may need to review its strategy frequently, win more
support and balance relationships with key senior individuals in order to guarantee
continuation of funding and corporate commitment to their programme of action.
6.2 Sub-cultures
Many sub-cultures can exist within large multinational companies (Martin and Siehl,
1983; Badawy, 1988; Hebda et al., 2007) and different perspectives can be seen even
within the same function (e.g. R&D). In order to support change and motivate people
within diverse groups – for example, scientists and engineers – different approaches need
to be adopted. See section 3.2 in Part 1 of this report.
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Individual perspective
In one of the FMGC companies observed, project managers like to be ‘in control’ of their
development project. They have developed over time as project managers with targets
and deliverables: ‘they think in project terms not in portfolio terms.’ They are also
carrying the legacy of a previous mentality change from the 1970s when the company’s
R&D strategy was open but too chaotic and was consequently changed to a closed
approach in which each project needed to be managed from A to Z. For these managers
OI means abandoning old projects on which they have worked for a long time and which
should deliver innovation in the long term. R&D-staff, who are supposed to develop and
implement an OI strategy, are afraid of losing their jobs because they fear that their
competencies might be replaced by outside innovations.
The OI team has to balance all these perspectives in the development of an OI rollout
strategy. The team itself should be able to count on a full set of skills and provide access
to the right skills at the right time in its function as a support group.
6.4 Approaches to OI
The various approaches observed in our case studies and workshops are summarised in
the following key points (see also Figure 16).
Provide the right skills pool To enable successful interactions with the outside world, a
particular set of skills is required. It is very unlikely that all these skills will be found in
single individuals. Within modern multinational companies, however, the OI
implementation team is likely to have a well-stocked pool of senior managers to draw on.
The skills required fall into four categories, introspective, extrospective, interactive and
technical (detailed in Table 6 in section 4, Part 2).
Provide training on what to do, when to do it, and what to avoid. Teach new ways of
thinking about what OI means for the company, while spelling out what OI will mean for
each person and job.
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Manage OI strategy Frequent reviews are needed to update the OI rollout strategy and
adapt it to the needs of different 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, facilitate and lubricate the internal works of
innovation. Create knowledge-sharing platforms typically initiated by natural leaders who
can involve others and communicate their enthusiasm.
This approach also follows 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. If the change is imposed through regulation and punishment,
adoption is not substantiated by real cultural change. A good fit with the users’ values is
needed (Klein and Sorra, 1996). It is important to recognise that the same implementation
methods might not fit or suit all organisations.
One of our interviewees said that OI implementation consultants often seem to ignore the
cultural characteristics of the company when suggesting new approaches. This supports
what Schein (1992) suggests: some organisational devices will be countercultural for
some organisations, but not for others.
Personal belief in OI and career strategy Change management needs leaders and
champions who can enthuse others about the importance of change (Tushman and
O’Reilly III, 2002). This requires a strong personal belief in the benefits of adopting OI.
The path for OI adoption can be long and difficult with many obstacles along the way. In
order to provide consistent support, OI team members need to find personal motivation in
the task and see it as part of their own overall career strategy.
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The friendly face of the company Internally, OI teams show that there are real and
successful people behind OI implementation. Externally, they are the brokers of
relationships with prospective partners.
Next steps
• There will be different issues with different partners (universities, start-up
companies, customers, etc.)
• This report only focuses on issues at the micro or internal level of the company,
but there are other issues on a macro level: partnership management, alliance
management, trust building, IP management, etc.
• Suggestions for further reading and resources for OI implementation are in
section 8.
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The companies participating in our study came from different sectors and the
interviewees themselves were of different nationalities. In this study we did not consider
any cultural issue beyond the company itself. For example, we did not take into account
national and industry influences, the importance of which is acknowledged in the
literature. From our interviews across sectors, it was clear that OI means different things
to different industries. However, common to all the companies was recognition that OI
represents an opportunity for them to improve their innovation capability and confront
their 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.
Another aspect that we have not examined in depth in this report is the role of OI within
the innovation processes of the firm; for example, we have not distinguished between
radical and incremental processes. Every company has a business focus on which most
decisions depend. Open innovation could represent an opportunity to test and enter new
business trajectories (i.e. expanding current businesses or finding new ones). Companies
can often produce examples of when this has happened, but in general these remain
exceptions rather than the norm, as most resources are directed towards the core business
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8 Further Resources
As companies face pressure from increased competition, shorter product life cycles and
growing product complexity, many find they need to change the way they develop new
technologies, products and services. In many sectors there has been a trend away from a
largely closed to a more open model of innovation as companies realise they can no
longer afford to rely solely on their own R&D and need to acquire ideas from others.
Within this environment start-ups can be an important source of ideas for larger
companies. Technology-based start-ups typically lack the strategic and operational
rigidities that sometimes stifle innovation in established firms. On the other hand, start-
ups have limited resources and often struggle to access the complementary assets they
need to bring their ideas to market.
Intelligence helps to shape the technology strategy of firms, influencing areas such as
development and technology acquisition.
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Intelligence comes from external sources but it may also be contained within the
organisation – explicitly or tacitly – if it has already been acquired by an internal party.
Firms need to be able to find and use this information quickly and easily, as well as
acquiring the information they need from external sources.
Researchers created a three-level model comprising the framework, system, and process
of acquiring technology intelligence (TI). The model was tested through case studies of
technology intelligence systems in technology-based companies.
7
Adapted from Kerr et al., 2006.
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Technology intelligence systems include the four modes described in Figure 17. Each
mode needs to be supported by the appropriate people, processes and infrastructure.
Recent work (Mortara et al., 2009a and 2009b) has been directed to understanding how to
implement and to expand the coverage of TI activities.
8.4 Links
• http://blog.openinnovation.net
• http://www.openinnovation.eu/
• http://www.openinnovation.net/
• Centre for Open Innovation, Berkeley:
http://openinnovation.haas.berkeley.edu/Home_COI.html
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9 References
Alvesson M, Berg P O. (1992): Corporate culture and organizational symbolism. Berlin,
de Gruyter.
Cammann C, Nadler D A. (1976): Fit your control systems to your managerial style.
Harvard Business Review 54(1): 65–72.
Chesbrough H. (2003): Open Innovation: The New Imperative for Creating and Profiting
from Technology. Boston, Harvard Business School Press.
Katz R, Allen T J. (1982): Investigating the Not Invented Here (NIH) Syndrome – a Look
at the Performance, Tenure, and Communication Patterns of 50 R&D Project Groups. R
& D Management 12(1): 7–19.
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