December 30, 2008
It was a great honor to speak at the event. The opening speaker was Hugo Lavados, the Minister of Economy for the Chilean government. I spoke last to allow for the uncertainty of arrival time and the risk of delay for my redeye flight from Los Angeles. (We need not have worried, as the LAN Chile flight arrived promptly at 6am).
Earlier, I posted a summary of open innovation readings for the seminar participants. The slides for the event have now been posted to the seminar website; naturally, all slides but my own are in Spanish.
The slides include the minister’s talk as well as an interesting talk by a representative of Minera Los Pelambres, Chile’s major copper mine. Not included is the talk by Dupont that I summarized earlier on this blog.
The summary of my qualifications, alas, embellishes things a bit. I am a collaborator of the famous Henry Chesbrough on open innovation but one of many (and one of two on the second Open Innovation book). Still, it was a pleasure to bring the discussion of open innovation to Chile, a country that has historically relied on natural resources (mining and farming) rather than industry for its economic growth.
Prof. Chesbrough himself has been spreading the open innovation message in Latin America, including a visit last June to Brazil. His presentation is on YouTube and his slides are posted to slideshare.net.
December 15, 2008
However, Google does not make it easy for others to build applications on top of Google Scholar, i.e. by providing APIs to allow third party access — the way they do for Google search or Google Maps.
Such APIs would allow new applications to be created to service the needs of scholars for finding and cross-referencing academic research. Apparently the Google engineers (or their bosses) are not persuaded that these APIs are worth doing.
There’s a thread on Google’s site where at least 30 people (mostly academics) have asked for it. I’m hoping others (i.e. blog readers) will comment there as well.
December 9, 2008
This is only indirectly related to the themes of this blog, but there is one bullet item on the list of recommended topics:
Innovation models (FLOSS [sic] based innovation, open innovation, user innovation, public domain innovation, standards and interoperability, appropriability, sustainability and competitive advantage, etc.).The workshop will be held July 2-3, 2009 and the deadline is March 31, 2009. For more information, see the workshop website.
December 1, 2008
The first was the User and Open Innovation Workshop held in August, sponsored by Harvard and MIT. While regular blog readers saw my many postings, you might not have seen the list of papers presented that I posted (with permission of co-organizer Karim Lakhani) to the OpenInnovation.net website.
The second was the Academy of Management symposium organized by Marcel Bogers. The symposium title was “User Innovation and Firm Boundaries: Organizing for Innovation by Users.” In addition to Marcel, there were four knowledgeable speakers: Allan Afuah, Lars Bo Jeppesen, Wim Vanhaverbeke and yours truly. In addition we had two great discussants: Frank Piller and Chris Tucci.
The session was mainly about user innovation: certainly that was the main focus of Marcel’s intro and Chris’ comments, as well as the three other papers: Allan’s talk on a user innovation life cycle model, Wim’s discussion of industrial lead users, and Lars’ talk on the role of users as complementers in game mods.
However, open innovation also made an appearance. In my talk I continued my efforts to try to integrate user and open innovation. As a discussant, Frank Piller did a great job of engaging those (and other) talks at a deep level.
The question of integrating these theories continued into our discussion period. Our first audience participant, Hank Chesbrough, asked about unifying the various theories and managing the complexity of the process. Also in the audience was Christina Raasch, who (with prompting by me) talked about her forthcoming paper on user innovation in sailboats.
Overall, with all the smarts in the room it was one of the best discussions I’ve ever heard at Academy. As Frank observed at the end, the topic (and in fact the session itself) were about co-creation, a theme that came through particularly strongly in Lars’ and Wim’s talks.
I’ve posted the slides that I have so far to the website. The ones that we have so far are great, and I’m still hoping to fill in the missing talks.
November 29, 2008
Nov 14, 2008 14:04 ETThis is the inventor of user innovation and one of his top PhD students — probably the two top user innovation researchers within hundreds of miles of InnoCentive.
Preeminent MIT and Harvard Academics Eric von Hippel and Karim Lakhani Join InnoCentive's Strategic Advisory Board
Professors' World-Renowned Expertise in Open Innovation to Help InnoCentive Drive Adoption Across Industries and Expand Its Global Network of Solvers
WALTHAM, MA--(Marketwire - November 14, 2008) - InnoCentive, Inc., the global innovation marketplace, today announced the appointment of two new members to its Strategic Advisory Board: Professor Eric von Hippel, head of the Innovation and Entrepreneurship Group at the MIT Sloan School of Management, and Karim R. Lakhani, an assistant professor in the Technology and Operations Management Unit at the Harvard Business School.
The addition of Professors von Hippel and Lakhani to the board will support InnoCentive's growing business and provide insight into the challenges businesses face that open innovation can address. Their guidance is expected to help InnoCentive raise awareness of the intellectual resources that can be tapped within the larger global community to drive innovation across industries.
I have one small quibble. The crowd sourcing model of InnoCentive is a two-sided market: one side for innovation and another side for buying. Thus, it’s more of an open innovation play than a user innovation.
Still, since von Hippel studied a broad range of external innovation for his 2005 book Democratizing Innovation, and Lakhani wrote the HBS case on InnoCentive, they are eminently qualified to help InnoCentive develop and implement its novel business model.
November 27, 2008
In the US, DuPont has released “StormRoom,” a way of armoring a closet or other interior room to provide safety in the event of a hurricane or tornado. The design requirements are severe:
FEMA has created a national standard [that] requires structures to withstand high wind loads and to resist a 12ft, 15lb, 2’x4’ building timber shot at the shelter at 100 mph. 100mph is how fast a 250+mph wind will carry the 2’x4’. …The DuPont™ StormRoom™ with KEVLAR® meets the national requirements for hurricane and tornado shelters.In the US, there are roughly 50 tornado deaths a year. Hurricane deaths are more variable, but one estimate put it at about 20 per year (although 2004 and 2005 had atypically high fatality totals).
In Latin America, DuPont has found a bigger pain point: the high murder rate in several countries. For example, Brazil has nearly 50,000 murders annually. The problem is large enough to be a concern of the middle class, beyond just the executives who are targets of kidnapping schemes.
Thus DuPont has unveiled Armura, a retrofit solution for passenger cars that uses Kevlar for door panels and SentryGlas laminate layer for windows.
The advantages of this solution over previous car armoring solutions are weight and cost. The solution adds 75 lbs. (90 kg) to a passenger sedan. In October 2008, DuPont Brazil unveiled solution. It offers the solution for BRL 16,000 or US $7,250 tailored for specific Toyota and Chevy models.
Using branch offices to find applications is not strictly open innovation. But it certainly is in the spirit of open innovation of decentralizing commercialization beyond the R&D lab or HQ marketing.
When I heard about Armura, it directly reminded me of Figure 4.3 (p. 77) of our 2006 book from the chapter on open innovation by RPI’s Gina O’Connor. Gina showed how (a decade ago) DuPont used an ad in Scientific American to solicit applications for its then new Biomax polymer based on renewable resources.
As I said in my own talk — prepared before the DuPont talk — DuPont is the exemplar of the vertically integrated firm of the late 19th or early 20th century. Our understanding of the development of DuPont and other such firms comes from Strategy and Structure and other books of Alfred D. Chandler, Jr. The “D” stands for Dupont., as his great-grandmother was raised by the DuPont family.
November 20, 2008
As a starting point, I want to mention that we have a full bibliography of open innovation research on our website; I try to update this about every six months. I’ve also previously summarized definitions of open innovation.
There are also three books written (or co-written) by Henry Chesbrough:
- Open Innovation (2003) was the first book: it created the open innovation paradigm and has guided all open innovation research and practice since then. This is the most often cited reference on open innovation, and it would be hard for anyone to be an expert in OI without owning this book (now in paperback).
- If Chesbrough’s first book was written for R&D managers, then Open Business Models (2006) was written for the business side of the house. Chesbrough said that he found the first book convinced the R&D managers but those who run the numbers needed more tailored arguments.
- Finally, Chesbrough, Wim Vanhaverbeke and I edited a 2006 book (Open Innovation: Researching a New Paradigm) with chapters from 15 innovation scholars. While primarily intended for an academic audience, this year I’ve used it in my MBA technology strategy class. My students seemed to be OK with reading Chapter 1, 3 (second half), 4, 5, 6. Other parts of the book will work if you are comfortable with academic jargon or can pick around it. (PDFs of the book manuscript are available online or it can be purchased).
Here are some of the original readings for the two other streams:
- User innovation. Eric Von Hippel’s 2005 book Democratizing Innovation is must reading (available for purchase or download), as it is up-to-date, lays out the current issues, and contains pointers back to the rest of the literature. The one emerging topic I would add is user entrepreneurship, as covered by Sonali Shah and Mary Tripsas in their 2007 journal paper.
- Cumulative innovation. The most readable are the 1991 Journal of Economic Perspectives article by Suzanne Scotchmer and a deeper, more probing examination in her 2004 book, Innovation and Incentives. The broadest and most up-to-date treatment is last year’s article in Organization Science by Fiona Murray and Sibohan O’Mahony.
There’s a lot more related research streams that could also be mentioned — university-industry relations, open source software, the role of communities, etc. Perhaps I can these cover these in a future posting, but for now I hope this provides a good starting point for anyone interested in open innovation and related work.
November 10, 2008
Open innovation has increasingly become an attractive way for companies to gain new inspiration from external sources. This area of research addresses the issues of how open companies should be and when, during the process, it pays to be open.Last month, the open innovation research group hosted a workshop entitled “Organizing for Internal and External Knowledge Creation and Innovation: Looking within or Searching Beyond?.”
I learned about the program today in an e-mail exchange with Keld Laursen, research director for the group (who participated in our 2005 open innovation panel and has published open innovation articles with Ammon Salter from UK data).
Keld said the group includes:
- Keld Laursen
- Jens Frøslev Christensen
- Lars Bo Jeppesen
- Thomas Ronde
- Francesco Rullani
- Toke Reichstein
- Serden Ozcan
- Christoph Hienert
There are other groups that focus on open innovation in Europe. However, this announcement appears to be evidence of increasing interest in open innovation, at least in Europe. CBS is one of Europe’s most prolific business research universities, and the university with the strongest innovation management focus (including with its DRUID conference.)
October 25, 2008
There is an online press release, but this is the email message that I got announcing the 2008 Sony Ericsson Content Awards:
Sony Ericsson is accepting entries for its 2008 Content Awards. These awards are open to anyone that has created a market-ready application, game, graphic or service for Sony Ericsson mobile phones. There are no limits on the number of entries and developers are encouraged to learn more and submit via the Content Awards 2008 Web site at www.sonyericsson.com/contentawards.The allowable content formats include Java, UIQ, Windows Mobile, Flash Lite and Project Capuchin. IT also includes themes, graphics and multimedia. Special mention is made of the Sony Ericsson X1, its first Windows Mobile phone.
Winners will receive the 2008 winner's symbol, and the winner of each category will get an exclusive "behind the scenes" two day workshop at Sony Ericsson's development site in Lund, Sweden, where they will be able to present their company and winning content to Sony Ericsson managers and decision makers.
In the past, Apple, Google and others have run programming contests to build interest in their new platforms. Sony Ericsson’s platform is hardly new, but I can certainly see how in this world of the BlackBerry, iPhone, gPhone and dominance of Nokia smartphones that it has a hard time getting attention.
Still, Google gave money and Apple gave cool computer or other electronics toys. I can see that meeting Sony Ericsson VIPs might tend to skew entries to more serious (or at least professional) content. Still, it seems like they could throw in a current-model phone to their top 5 finishers at fairly low cost. Also, at least for the US market, impressing SE execs isn’t going to do anything to get past the AT&T or T-Mobile control of the preloaded (ondeck) content.
Classifying this depends to some degree on SE’s intentions. This could be considered ecosystem development — encouraging third party development. It would be open innovation both if these third parties are going to sell (or give away) their software, or if SE hopes to procure software to install on its phone. It would be user innovation if the producers of this technology are phone owners rather than companies that already produce mobile phone software and/or content.
October 14, 2008
Food industry blogger Dan Mitchell is not impressed:
Kellogg Might Pay You a Paltry Sum for Your Ideas. Or Not.Mitchell’s point is that Kellogg wants these ideas cheap — it’s willing to pay a small amount (maybe) for some ideas and nothing for other ideas.
By Dan Mitchell
October 13th, 2008 @ 3:12 pm
Kellogg has never scrimped on research and development. Its W.K. Kellogg Institute for Food and Nutrition Research is considered to be among the best research facilities in the corporate world. The company spent $179 million on R&D last year.
But Kellogg can always use some new ideas. So it is asking you for yours.
To me, it looks like Kellogg is really looking to stimulate user innovation — the self-revealing that Eric von Hippel argues is essential for firms to learn what their users are thinking.
So Mitchell is right — no commercial firm in its right mind would sell its ideas for these kind of sums. But perhaps users — lacking other ways to commercialize their ideas — would be willing to share their insights in exchange for a nominal incentive payment.
Update Nov. 24: Kellogg's has posted a comment (below) that clarifies its position. Here’s the money quote:
Kellogg will work directly with the individuals and businesses whose proposals have intellectual property protection (patents or copyrights) to negotiate the appropriate compensation for these innovations.
September 12, 2008
Writing in the July 2008 issue of the Journal of Engineering Education, Charles M. Vest wrote:
IBM CEO Sam Palmasano [sic] says that we have now moved beyond multinational corporations to globally integrated enterprises. An emerging element of this evolving engineering context is "open innovation." Companies no longer look just within themselves for innovation, nor do they just purchase it by acquiring small companies. Today they obtain innovation wherever it is found-in other companies, in other countries, or even through arrangements with competitors. Working in this evolving context requires a nimble new kind of engineer and engineering organization.Vest’s column is a compilation of conventional wisdom about the state of engineering education in the US, with an admonishment that US universities (and firms) need to run scared in the 21st century. As an MIT alumnus, I was not a fan of Chuck Vest when he was MIT president (1990-2004), and this reads like something written by a bureaucrat rather than a visionary.
Still, it does provide additional visibility for open innovation. If even 10% of the people who read the article in JEE (or the August issue of the ASEE newsletter) would google "open innovation", they would learn a lot about open Innovation. After all, after the skeletal Wikipedia entry, this website is #2 on the hitlist, #3 is Chesbrough’s 2003 book, #4 is Vanhaverbeke’s EU website and #6 is Chesbrough’s Center for Open Innovation at Berkeley. (This blog is #7).
If I gained a new insight from Vest’s essay, it was making the link between open innovation and globalization, which I think is something that OI researchers have underemphasized. (I suspect globalization researchers like my friend Ken Kraemer take OI for granted). I had not seen the article by Palmisano in the May 2006 issue of Foreign Affairs, which provides more evidence of how even a modern MNC can’t do it all in-house. Of course, Chesbrough’s study of IBM’s transformation was one of the major motivations for his 2003 book.
September 5, 2008
EA spent $50 million and six years on the latest creation by Will Wright, founder of Maxis (later bought by EA) and creator of the original Sims series. The latter series has sold more than 100 million games.
Spore heavily depends on user-generated content (some would call this user innovation, others might call it open innovation) to create value. Players create their own species and then share them via Sporepedia, the ultimate catalog for virtual species. The user-generated characters will presumably fuel word-of-mouth marketing (more often called “viral” marketing).
The TV ad (appropriately enough on the Sci-Fi channel) and the product concept seem compelling, although I’m outside the target demographic for the game.
August 11, 2008
In Boston for the conference were Sonali Shah and Nik Franke who wrote in 2003 about sailplaning, canyoning, boardercross (extreme snowboarding) and handicapped cycling. On Tuesday, I finally got a chance to meet Christopher Hienerth, author of an interesting 2006 paper on “rodeo kayaking.”
On Tuesday, I heard a great paper on user innovation in sailboats. I really liked the paper for three reasons: it’s about sailboats (more later), it has 50 years of longtitudinal data on user innovation, and some great take-home messages applicable to all user innovation. The paper by Christina Raasch and Cornelius Herstatt of TU Hamburg-Harburg about the International Moth sailing class was presented by Raasch.
Readers should contact the authors for the paper, but let me highlight the five factors they found that influenced (positively or negatively) the degree of user innovation:
- Technological complexity: users withdraw from hulls due to new materials that are not practical for individuals to handle.
- Regulatory barriers: new sailboat one design “Moth Europe” limits modifications, reduces tinkering benefits, and penalizes innovation through exclusion, although a few innovators persist.
- Customer satisfaction. As innovators improve technology, this increases dissatisfaction with fixed class design, so user innovation returns and experiments resume.
- Technology maturity. At times there are breakthrough innovations that make experimentation attractive. For example, when below-water foils first appear they are a breakthrough. Foiling technology is breakthrough, but as the technology matures then there are declining returns to innovation and thus less experimentation.
- Market concentration, in this case the advent of a mass-produced standardized design. The dominant firm (Bladerider) doesn’t support experimentation, and then users split into pro-standardization and pro-innovation groups.
Photo credit: KiwiSpy.com
Update: The research was published as a book chapter: Christina Raasch, Cornelius Herstatt and Phillip Lock, “The Dynamics of User Innovation: Drivers and Impediments of Innovation Activities,” in Stephen Flowers and Flis Henwood, eds., Perspectives on User Innovation, London: Imperial College Press, 2010.
August 8, 2008
Authors presented 55 papers in 11 tracks (3-4 parallel tracks per session). Both these authors and the 28 (scheduled) research abstracts also did a brief introduction of their paper for the whole conference. To fit it all in, the workshop extended across 2½ days, with HBS picking up the sizable tab.
Given the strong European following of von Hippel and his user innovation paradigm — and the dominant European presence at the previous workshops — a few of the organizers wondered if any Americans would show up. They needn’t have worried. Sorting the registered participants by e-mail domain and home institutions shows 53 attendees from US institutions, counting the 10 from HBS and 6 from MIT.
However, another 84 were scheduled to attend from outside the US. (There were about 10 no-shows, mainly due to illness). As with previous years, there was a lot of opportunity to brush up on your German, with 19 from Germany, 16 from Austria and 3 of the 12 Swiss from Zürich. (Of course, home institution is not a proxy for nationality, particularly for EPFL which brought a Dutch, American and German participants)
Other highly visible countries were Denmark (9), UK (8), Japan (5) and Nederlands (3). There were also 2 each from Canada, France, Singapore and Spain, and 1 each from Australia, Belgium, Italy and Norway.
The workshop has come a long way since the 20 attendees at the first workshop in Vienna and 60 last year at Copenhagen Business School. I am grateful that they opened up the workshop more broadly to those without direct MIT-HBS ties. The “open innovation” part of the conference was pretty small, but I suspect that was the self-selection of applicants to the formerly UI-only workshop.
Eric Von Hippel said he found the massive number of papers and participants energizing, as a way to stay on top of what’s going on in the field. However, my sense is that some people missed the intimacy of the smaller workshop (even 60), but were too polite to voice such anti-egalitarian sentiments in front of us newcomers.
If it were my conference (it’s not), I’d be seriously torn because there’s no way an invitation-only conference can identify all the interesting work, and a conference based on “Democratizing Innovation” should be fair in soliciting participation. However, the conference is clearly no longer a workshop, and it’s heading in the direction of the mega-DRUID conference.
Next year the conference is scheduled to be held in Hamburg in a room that only holds 120 people. Without the HBS sugar daddy, they’ll also have to charge a few hundred euros for meals. That will cut down on the participants — perhaps more like 90 Europeans, 25 Americans and 5 Asians.
August 6, 2008
Perhaps the most general talk was that by Mary Tripsas, who presented a broader typology of the phenomenon of users who become entrepreneurs, based on her 2007 paper with Sonali Shah (available free) in Strategic Entrepreneurship Journal.
Tripsas told the interesting story behind the story. They wrote a theory paper on user entrepreneurship for the leading theory journal, but it was rejected by reviewers who said “Why do we care? Users don’t start companies.”
After that rejection, they decided to augment their paper with some data. They investigated an obvious opportunity: parents who create kids stuff. They identified three categories of user entrepreneurs: those creating a new category (jogging strollers), those targeting an unmet niche need (e.g. car seats for low-weight babies), and incremental improvements on existing technologies.
Another example of user entrepreneurship was given by Lars Frederiksen, as part of his ongoing studies of the online user community hosted by Propellerhead Software to support its music editing and synthesis software. He presented a quote showing that users originally created complements for other reasons, and then realized over time that there was a business opportunity in it. (This is very similar to the market for PC freeware/shareware software that developed during the 1980s before the Internet.)
Sheryl Winston Smith also presented a paper that built on the user entrepreneurship ideas of the Tripsas & Shah paper, using examples from the medical equipment industry.
The fun thing about these examples is that the problem-solving usually came first: the users first wanted to fix something they saw broken (or make something possible that wasn’t previously possible) — then they created a business. Once upon a time, even Silicon Valley entrepreneurship was about solving unsolved (or seemingly unsolvable) problems, not about making a quick buck.
August 5, 2008
Meyer presented this as an open innovation story. A bunch of hobbyist-tinkerers around the world are pushing the technology forward, communicating their ideas using the state of the art technology (written letters). Meyer had great archival data backing up his paper. Among the best sources was the 1890 book Progress in Flying Machines by Octave Chanute on the industry state of the art. This seminal book was re-issued in 1997.
I would like to know more about the firms created by these tinkerers. From the brief presentation, this seemed to me as much a Scotchmer-style cumulative innovation story, going along with Alessandro Nuvolari’s papers on Cornish pumping engines of the mid-19th century. Rivals build upon each other, and because IP doesn’t block the cumulative innovation, the technology gets developed more quickly (unlike the mutual standoff of the triode a few decades later).
Given that both Meyer’s and Nuvolari’s examples are 100 years old, this raises a policy question. Has the world changed? Is IP more enforced? Are tinkerers more interested in making money?
I look forward to engaging with Meyer further and his stream of cumulative innovation/open innovation work. An earlier BLS paper documented collective invention research on steel and the PC industry.
With about 80 papers, it’s not possible for everyone to present their paper to the entire conference; instead, they are split across 11 tracks. To maximize the knowledge flow, organizers have used an interesting format: each presenter gets 5 minutes to sell his/her talk to the entire plenary, so that people can decide which of four parallel sessions to attend in the afternoon.
80% of my slides this morning are summarizing my afternoon talk, but after hearing Monday’s sessions, I decided to add a slide to add plug for open innovation (which has been conspicuously absent in name and theory here).
In particular, my new slide showed the table drawn from my EURAM talk last year comparing cumulative, open and user innovation. The comparison of these three models of cooperative innovation will be the focus of my talk next Monday at the Academy in Anaheim, during the user (and open) innovation symposium organized by Marcel Bogers of EPFL.
I felt a little awkward making such a blatant plug, but (I claim) my motives were pure. My hope was that the user innovation attendees would use the terms in commensurable fashion, and perhaps take an interest in the growing body of research on open innovation.
August 4, 2008
One of the first presentations was by two innovation heavyweights, Carliss Baldwin (of modularity fame) and Eric von Hippel (inventor of user innovation). Baldwin demonstrated a small amount of skepticism towards her co-author’s claims for user innovation, and in particular, von Hippel’s contention that “it will take over the world.”
The focus of their theoretical paper is on the creation of large complex systems. She began with the broad brush observation that producer innovation was the only game in town from 1750-1990, while interest in “free, open innovation” via user collaboration is a “newly important” way to realize such designs. The paper is set up as a contest as to which one will dominate. Due to her co-author’s perspective, Baldwin said “the answer had to come out one particular way.”
So who wins? The answer was: it depends. Each institution (innovation regime) has its own logic and strengths, and these interact with the technological profile of the artifact being innovated.
Baldwin presented a contingency model, with a theoretical framework mapping two dimensions of a technological cooperation: communication cost and design cost. Her 2-d rendering identified 9 distinct regions and outcomes.
She hinted at an even more complex solution: 4 dimensions, 15 outcomes. However, she concluded, “I don't want to be the author of that kind of model that no one will understand.”
Update 2:20 p.m. EDT: I sat in the 15 minute talk by Prof. Baldwin and got more details, below.
User innovation is an institutional form that co-exists with producer innovation, although one may dominate for some class of problems. For example, Chandler documented that public corporations now dominate certain parts of the value chain through scale and scope, even though sole proprietorships, partnerships and family businesses have not gone away.
The model assumes that for an institutional form to survive, each party gets benefits behind its costs (benefits might be non-monetary). But in a free (non-coercive) society, no one will continue to participate if the benefits don’t exceed the costs.
There are four institutional forms that could produce such innovations: two types of producers (entrepreneurial, large firm) and two types of user innovators (single user, user community). With all possible combinations of institutional forms (other than the null set) this would make 15 possible outcomes.
To reduce the domain into a 4-space, the researcher reduced the innovation process to four stages (and thus four types of cost):
- Design: creating the instructions for the artifact
- Production: translating the instructions into a tangible artifact
- Communication: explain the artifact to others
- Transaction: the costs associated with exchange between parties (i.e. zero with individuals)
August 3, 2008
Before blogging on my own talk, I was waiting for the slides to get posted to allow people to follow along. Then I got buried. As of today, they have slides for all but one of the UIDP talks, including mine.
In my own talk, I began by summarizing a comparison of open innovation (Chesbrough), user innovation (von Hippel) and cumulative innovation (Scotchmer). This was based on my EURAM talk last year.
Next I noted the large body of research on the economics of university innovations, with work by noted economists like
- David Mowery (UC Berkeley) and his edited book on Bayh-Dole
- Marie Thursby (Georgia Tech) who studies university licensing
- Maryann Feldman (U. Georgia) and her book and various papers on university tech transfer
- Scott Shane (Case Western) and his book on academic entrepreneurs.
The familiar model is the university licensing model, epitomized by Bayh-Dole (well covered by the Mowery book) and tech transfer offices. This is quite consistent with open innovation. In a Chesbrough (or Teece 1986) sense, universities lack the resources necessary to directly commercialize their innovations — so they need to contract with private firms to realize the value of the innovations and bring them to market.
In this model, universities patent their technologies. They charge a fee for their innovations; for exclusive licensing or contract research, they effectively surrender rights to practice the associated innovations.
The other model, however, is the model of unmonetized spillovers. This corresponds to the Merton’s model of open science, as more recently elaborated by Paul David. This is best known as the way the DoD-funded Internet technologies got commercialized during the 1980s and 1990s. The idea is that if your research is being paid for, a university can allow spillovers, which greatly facilities the process of cumulative innovation.
My interest in this model was based on my own research on the commercialization of Claude Shannon’s information theory for deep space communications. (The paper will be published in the December 2008 issue of the Journal of Management Studies, as part of a special issue on “Research and Technology Commercialization”). As part of researching our book on the San Diego telecom industry, I found how MIT-trained electrical engineers (including Qualcomm founders Andrew Viterbi and Irwin Jacobs) helped NASA adapt Shannon’s theory to improve communication bandwidth with interplanetary space probes.
I didn’t mean to imply that the technology licensing model is dead, but instead to encourage participants to realize that each model has its role. Formal licensing is always going to be important in some industries (such as biopharma), but for other types of innovations, the spillover model can be more efficient. (Universities can often monetize this with donations from alumni entrepreneurs).
While at the conference, I heard an interesting wrinkle on the spillover model in the talk by Broadcom Chairman Henry Samueli. Samueli is a former UCI professor who’s giving naming grants to the engineering schools at both UCI and UCLA.
Broadcom spends about $1 million a year with universities: all their university grants are as gifts rather than research contracts, to reduce paperwork on both sides. Their goal is to identify prospective Ph.D. students to hire, but I imagine that the gifts also create considerable goodwill with the recipient universities for attracting other bright students.
August 1, 2008
Here’s a summary of the new series
The new Open Innovation Speaker Series is a bi-weekly series intended to provide both academic and managerial perspectives on open innovation and related subjects. The organizers are Henry Chesbrough, UC Berkeley and Siobhán O’Mahony, UC Davis. This series is sponsored by UC Berkeley’s Center for Open Innovation at the Haas School of Business, and the Graduate School of Management at UC Davis, with help from CITRIS at UC Berkeley’s College of Engineering. It is open to students, faculty, staff, and the general public. If you would like to join the mailing list for papers and other information, please email Siobhan O'Mahony. The speaker’s papers will be posted on this site as they become available.Of course, both Hank and Siobhán are my friend and co-author (respectively co-authors of a book chapter and article). Two other friends are also presenting in the Fall 2008 speaker series.
What I find deliciously ironic is that the talks are in the Hearst Mining and Minerals building. Mining was a cutting edge technology, vital to California’s economy, when Cal’s predecessor was founded in 1866.
Interestingly, most of the talks seem to be about the issues of how the organize innovation that is not (strictly) governed by an internal organizational hierarchy. Many of these examples of extra-organizational cooperation are the result of a change in business practice, but nearly all are happening today because the Internet and other ICT allow us to organized such efforts.
July 19, 2008
The article extensively quotes Henry Chesbrough and applies his ideas to explain what these three companies are doing with their $17 billion in annual R&D. One excerpt:
In fact, HP, IBM and Microsoft are all currently showing a strong move toward a favorite research concept of Chesbrough, "open innovation." As Chesbrough spells out in his book of the same title, open innovation calls for good ideas to come from both inside and outside the company. In turn, companies take the fruits of those ideas to market through internal as well as external paths.Of course, IBM was the major focus of the original 2003 Chesbrough book. Earlier this year, HP announced a push towards open innovation in its famed HP Labs. Meanwhile, Microsoft is pursuing a fairly standard (but well executed) university relations strategy.
The article concludes with more quotes by Chesbrough, in which he notes that firms risk disclosing too much information, but in general firm err too much in the opposite direction — not opening up enough. His recommendation? “[Y]ou can be more open without giving everything away.”
July 17, 2008
In a question on an earlier posting, christian said...
My comment is more in the form of a question than a comment. I do hope that is not an issue for you. In my own blog (youcollaborateglobally.blogspot.com) I have been focusing mainly on the collaboration aspect, at this point in time within the global enterprise. I however increasingly see a need for further collaboration and innovation across a companies eco-system, including suppliers and customers. Have you been looking into how using some of the web 2.0 tools to achieve this. How do we get it in place and how do we make it work? Many thanks in advance for your response.I have a couple of thoughts on this. First, of course there has been a lot of division of labor that has been enabled by information systems. The whole offshoring of PC industry component supply and assembly was only possible because of fax, then e-mail enabled detailed 7/24 communications between onshore designers and offshore manufacturers. Of course, Dell’s supply chain was an exemplar of such coordination.
On the specific question of tying information systems to the practice of open innovation, there was a good article by Mark Dodgson and colleagues about P&G using IS to enable OI in the special issue of R&D Managmeent back in 2006 (see DOI: 10.1111/j.1467-9310.2006.00429.x).
As for Web 2.0, sure technologies can enable a division of labor. (We’ll set side the question of what is “Web 2.0”).
I think the real question is, will it? Will they believe that the specialized investment will pay off? The best case is that everyone agrees on the same interfaces on both sides. So if AJAX is used by Google and Yahoo Maps on the website side, and IE and Mozilla and Safari on the client side, then there is less risk on both side for using the technology. However, if only one server (or client) uses the technology, then there's risk in writing code for the interface before knowing it will catch on.
Another related question is: will firms cooperate and share the revenues? Or will some (ala Microsoft) vertically integrate or otherwise try to capture the profits for themselves?
My thinking if the business issues can be solved, the technology is easy. But then I’m a former engineer turned manager turned business professor, so I’m probably biased.
July 15, 2008
One track — “Open Innovation” was run by Europe’s two leading open innovation scholars and their colleagues. I was unable to attend but co-organizer Vareska van de Vrande summarized what happened in the first (and thus far only) outside posting to this blog. They are currently producing a special issue of the International Journal of Technology Management for publication some time next year.
The other track — “Managing Open Innovation through Online Communities” — had more of an open source feel, and in fact there were lots of open source and user innovation researchers in the track. They imported open innovation keynote talks from two Americans, so Karim Lakhani and I each presented our respective thoughts on the theme.
The end result of the second track was an April 2008 special issue of the journal Industry & Innovation, a European innovation journal published at the Copenhagen Business School. The special issue (like the conference track) was organized by Linus Dahlander, Lars Frederiksen and Francesco Rullani, and neither would have happened without their tireless efforts.
Below is the table of contents for the issue:
- Linus Dahlander, Lars Frederiksen and Francesco Rullani, “Online Communities and Open Innovation: Governance and Symbolic Value Creation,” Industry & Innovation, 15, 12 (April 2008): 115-123. DOI: 10.1080/13662710801970076.
- Richard N. Langlois and Giampaolo Garzarelli, “Of Hackers and Hairdressers: Modularity and the Organizational Economics of Open-source Collaboration,” Industry & Innovation, 15, 12 (April 2008): 125-143. DOI: 10.1080/13662710801954559.
- Joel West and Siobhán O’Mahony, “The Role of Participation Architecture in Growing Sponsored Open Source Communities,” Industry & Innovation, 15, 12 (April 2008): 145-168. DOI: 10.1080/13662710801970142.
- Matthijs Den Besten and Jean-Michel Dalle, “Keep it Simple: A Companion for Simple Wikipedia?” Industry & Innovation, 15, 12 (April 2008): 169-178. DOI: 10.1080/13662710801970126.
- Eleonora Di Maria and Vladi Finotto, “Communities of Consumption and Made in Italy,” Industry & Innovation, 15, 12 (April 2008): 179-197. DOI: 10.1080/13662710801954583.
- Stephan Kaiser and Gordon Mller-Seitz, “Leveraging Lead User Knowledge in Software Development—The Case of Weblog Technology,” Industry & Innovation, 15, 12 (April 2008): 199-221. DOI: 10.1080/13662710801954542.
- Joel West and Karim R. Lakhani, “Getting Clear About Communities in Open Innovation,” Industry & Innovation, 15, 12 (April 2008): 223-231. DOI: 10.1080/13662710802033734.
The other paper is the one on sponsored open source communities that Siobhán O’Mahony and I have been working on for the past four years. The earlier conference paper has already been well cited, but we think the newer paper is a much more substantial (and useful) examination of the same subject.
June 30, 2008
The conference is the 6th meeting of the University-Industry Development Partnership; UIDP began with its first meeting in December 2006. It is the institutional successor of the University-Industry Congress which was convened from 2003-2006 to address increasingly expensive and contentious university-industry negotiations for IP licensing. Both are under the sponsorship of the National Academies’ Government-University-Industry Research Roundtable.
The two-day conference includes both nitty-gritty negotiating sessions to hammer out the organizational structure and big picture keynotes. Among the projects being launched by the UIDP is a process for streamlining IP negotiations using planned software dubbed “turbo negotiator.”
One interesting talk was one on how UCI has succeeded in its second try to act as an innovation hub for Orange County tech entrepreneurs; another was a keynote by Henry Samueli, former UCI professor and co-founder of Broadcom. I also had my own talk on open innovation and university innovations (check back later).
However, perhaps the posting of greatest general interest to those in university relations was the summary of U-I best practices offered by UIDP’s paid staff (i.e. executive director Anthony Boccanfuso). He listed three main points developed after considerable university-industry negotiations:
- A successful UI collaboration should support the mission of each partner. Any effort in conflict with the mission of either partner will fail. (Joel’s translation: all deals must be win-win)
- Institutional practices and national resources should focus on fostering appropriate long term partnerships between universities and industry. (It’s more than just the money)
- Universities and industry should focus on the benefits to each party that will result from collaborations by streamlining negotiations to ensure timely conduct of the research and the development of the research findings. (There is a finite window for commercialization)
Even though there are UIDP veterans present, participants still talk about the cultural gap between the two-sides in their expectation and mission. I think self-interest is as complete an explanation as culture — both sides are trying to maximize their returns in a zero-sum negotiation. (Growing the pie through massive adoption seems like a better options for both sides).
Photo credit: Photo of Beckman Center by Tele-Atlas via Google Earth.
June 23, 2008
It’s mainly about user innovation — not (to quote Jerry Seinfeld) that there’s anything wrong with that. After all, user and open innovation are two facets of the same process. But it recites a lot of the same open source/user innovation linkages that have been made for years, without, for example, talking about more direct linkages (and differences) between open source and open innovation.
Reena Jana is down on the article because some of the trends seem stale. I think that might be a little unfair, because she can get her work published online in 24 hours (and in paper within a week) while a journal of McKinsey probably has a lead time like months or even a year.
The article gets the concepts of open innovation out to an audience that might not know much about it, and also mentions two of the three open innovation books and von Hippel’s latest user innovation book. I think if someone had read one of the dozens of previously-published open innovation articles, there might not be a lot that’s new. Apparently this is one of the few free articles on the website, intended to generate interest in the Quarterly’s premium content (like last summer’s article on user-generated content).
May 10, 2008
I rushed home from a trade show in Las Vegas to be able to hear the seminar. Firms sourcing innovations from universities is certainly open innovation, and it’s something I’m interested in studying someday in a future paper.
The panel included representatives from HP, Genentech and two from UCSC. The first speaker was Lou Witkin of the new HP Labs Open Innovation Office, who moved over after 15 years in HP Lab’s University Relations office. (It was nice to hear that Lou had heard of the book and of course had already met with Henry Chesbrough.) The other speaker was Anna Williamson, a biz dev manager for Genentech who formerly sat on the other side of the table at UC Berkeley.
The two veterans gave a good sense of both why firms get involved with universities and how to make it work. Slides were not available and I was not allowed to tape the event, but I was able to take some notes.
Witkin, in particular, offered a number of specific pointers as to both the motivations and mechanics of making university-industry relations work. One of the most interesting slides was on “The Partnership Continuum”, which mapped a transition of university-industry engagement from career fairs up to sponsored research and major donations. (This slide and some other material also appeared in a January 2008 talk by Wayne Johnson, then VP of HP’s University Relations).
Universities are part of a larger economic ecosystem, which works best if the partnerships are open, collaborative and organized around win-win principles. While American universities are often admired by their European counterparts for strong industrial relations, Witkin said such collaboration is quite common in other countries (such as Brazil and China) where government is more cooperative with industry. He cited John Kao’s book Innovation Nation as a good source for information on how other countries are doing.
Both Wiktin and Williamson emphasized the importance of establishing long-term relationships that span specific projects. Longer-term master agreements reduce the transaction costs that can cause negotiations to take months or even years. Implicit within their comments is that sometimes it can be difficult to negotiate an agreement with major universities.
In fact, universities are creating increasing pressure to view technology transfer not as a way to help business and society, but primarily to capture revenues for the university. In talking with leading academics in the technology management field last week, it was clear that I’m not alone in worrying that the pendulum has swung too far. Talk is that some large firms have shifted from the US and Europe to Russia and other less developed countries, where the negotiations are quicker and less contentious.
Williamson talked about the business reasons why Genentech wants a fairly open hand with known terms in pursuing business opportunities based on licensed technology. Then, with her former University of California hat on, she noted that universities are reluctant to grant such unrestricted licenses for fear that the partner will tie up the technology and not follow through.
Witkin referred to an article on his work with UC Berkeley in improving licensing negotiations, co-authored with Beth Burnside, vice chancellor of research for UC Berkeley. The article, “Forging Successful University-Industry Collaborations,” appeared in the March-April 2008 issue of Research-Technology Management. Another party interested in improving this process is BASIC (Bay Area Science and Innovation Consortium), which has published a series of reports on improving industry-university collaboration and specific contributions local research universities can make to industry.
UCSC sponsored the event as part of its ongoing campaign to build friends for its hoped-for business school here. Plans call for the school to be located in the proposed 70 acre NASA Research Park, which would include Carnegie Mellon, Santa Clara, De Anza College and perhaps SJSU. The incredibly valuable land — at the intersection of three freeways and only a couple of miles from Google, Yahoo, Cisco and other tech companies — will someday be reused after the 1994 closure of the Navy’s Moffett Field dirigible base (later ASW base).
UCSC’s plans are ambitious and optimistic, at least if the long tribulations faced in creating the UCSD business school are any indication. But it seems better than even money that some time in the next decade, UCSC will be offering degree-granting business courses at this prime NASA site.
May 2, 2008
The book is at #23,227 on the Amazon best seller. By comparison, the paperback version of Chesbrough’s 2003 book is #52,871 on Amazon overall (although that’s five years after the hardback came out).
However, the best selling book on open innovation (#12,804 overall) is Chesbrough’s 2006 book. In discussing his two HBSP books, Chesbrough said that if the 2003 book was to introduce open innovation to R&D managers, the 2006 book was intended for finance and other business types.
The Amazon subrankings are a little odd. Chesbrough’s 2003 book is #10 on “Books > Science > Technology > Innovations,” which makes sense. His later book is also #10, on “Books > Business & Investing > By Publisher > Harvard Business School Press > Strategy Planning”; more strangely, it’s #1 “Books > Science > Technology > Nanotechnology”. Our 2006 book is #1 in “Books > Professional & Technical > Engineering > Mechanical > Automation,” which is equally strange.
The hardback did much better than Oxford expected, so I have high hopes for the paperback.
April 4, 2008
International Journal of Open Source Software & Processes
An Official Publication of the Information Resources Management
Association - New in 2009
Published: Quarterly (both in Print and Electronic form)
MISSION OF IJOSSP:
The International Journal of Open Source Software and Processes (IJOSSP) aims to publish high-quality original research articles on the large field of open source software and processes. The primary mission is to enhance our understanding of this field and neighbouring areas by providing a focused outlet for rigorous research employing a multitude of approaches.
COVERAGE OF IJOSSP:
IJOSSP adopts an inclusive approach in its coverage. Therefore papers from software engineering, management, sociology and other areas, as well as different research approaches are welcome. Possible topics include, but are not limited to:
- Characteristics of open source software projects, products and processes
- Case studies of open source projects, their participants and/or their development process
- Communication and coordination in open source projects
- Open source adoption and quality
- Open source software development processes
- User-centered innovation processes
- Economics of a distributed innovation process
- Motivation of participants in open source projects and other distributed development efforts
- Business models for open source and other community-created artifacts
- Evolution of both open source software artefacts and open source communities
- Legal issues of open source software
- Implications of open source software for functional areas like public administration or teaching
- Usage and adoption of open source software in different application areas and/or countries
- Economic analyses of open source
- Open science and open knowledge
- Customer co-creation and user participation in (software) design
- Open source software and processes research methods, tools, and data repositories
SUBMITTING TO IJOSSP:
Prospective authors should note that only original and previously unpublished manuscripts will be considered. Interested authors should consult the journal's guidelines for manuscript submissions. To ensure the high quality of published material, IJOSSP utilizes a double-blind peer review process. Upon receipt of the manuscript, an associate editor and two reviewers are selected from the Editorial Review Board of the Journal. Final decision regarding acceptance/revision/rejection will be based on the reviews received from the reviewers.
EDITORIAL ADVISORY BOARD
Paul David, Stanford University, USA & The University of Oxford, UK
Brian Fitzgerald, University of Limerick, Ireland
Joachim Henkel, Technische Universitaet Muenchen, Germany
Eric von Hippel, MIT Sloan School of Management, USA
Georg von Krogh, ETH Zurich, Switzerland
Karim Lakhani, Harvard Business School, USA
Jesus Gonzalez-Barahona, Universidad Rey Juan Carlos, Spain
Jean-Michel Dalle, Universite Paris-Dauphine (Paris IX), France
Ernesto Damiani, University of Milan, Italy
Joe Feller, University College Cork, Ireland
Scott Hissam, Carnegie Mellon, USA
Greg Madey, University of Notre Dame, USA
Dirk Riehle, SAP Labs LLC, USA
Gregorio Robles, Universidad Rey Juan Carlos, Spain
Walt Scacchi, University of California - Irvine, USA
Sebastian Spaeth, ETH Zurich, Switzerland
Ioannis Stamelos, Aristotle University of Thessaloniki, Greece
EDITORIAL REVIEW BOARD
Ioannis Antoniadis, Aristotle University of Thessaloniki, Greece
Evangelia Berdou, University of Sussex, UK
Cornelia Boldyreff, University of Lincoln, UK
Andrea Capiluppi, University of Lincoln, UK
Carlo Daffara, Conecta Research, Italy
Marina Fiedler, Ludwig-Maximilians-Universitaet Munich, Germany
Daniel German, University of Victoria, Canada
Stefan Haefliger, ETH Zurich, Switzerland
Israel Herraiz, Universidad Rey Juan Carlos, Spain
Nicolas Jullien, TELECOM Bretagne, France
Sandeep Krishnamurthy, University of Washington, USA
George Kuk, Nottingham University Business School, UK
Jan Ljungberg, Gothenburg University, Sweden
Bjoern Lundell, University of Skoevde, Sweden
Martin Michlmayr, Hewlett-Packard, Austria
Sandro Morasca, Universita degli Studi dell'Insubria, Italy
Gustaf Neumann, Vienna University of Economics and BA, Austria
Bulent Ozel, Istanbul Bilgi University, Turkey
Barbara Russo, Free University of Bolzano/Bozen, Italy
Suleyman Sowe, Aristotle University of Thessaloniki, Greece
Megan Squire, Elon University, USA
Brian Still, Texas Tech University, USA
Stefan Strecker, University Duisburg-Essen, Germany
Giancarlo Succi, Free University of Bolzano/Bozen, Italy
Frank van der Linden, Philips Medical Systems, The Netherlands
Andreas Wiebe, Vienna University of Economics and BA, Austria
Donald Wynn Jr., University of Dayton, USA
April 1, 2008
There are many problems with the story’s claimed implications. The title implies that Boeing would be better off vertically integrated. The story is about how Boeing vetted its contractors but not their subcontractors, but the latest problems are due to a center box made by two of Boeing’s three main contractors.
Finally, open innovation is about finding the most innovative or efficient technologies, inside or outside the firm. The global source of Boeing and Airbus are about cooperating with host country desires to transfer technology and spread aircraft manufacturing revenues. For example, Japan’s ANA was the 2004 launch customer for the Dreamliner.
I don’t know what to call this, but it does not appear to be part of an open innovation strategy.
March 6, 2008
On Wednesday, an online newsletter published a column “Open innovation – hype v reality”. The column by Richard Hudson mentions this website, but was keying off an OECD-sponsored symposium held last week in Copenhagen.
The symposium has a series of presentations published online, keynoted by Yves Doz, a well-known INSEAD strategy professor. So I thank Hudson for pointing out this workshop (that I hadn’t heard about).
Hudson offers his own definition of open innovation
open innovation is what happens when big companies collaborate on a large scale with outsiders – university researchers, suppliers, small tech start-ups – to get new products or services to market.
It’s not the same as the definitions provided by open innovation researchers — including that of Henry Chesbrough and a few of my own — but it’s certainly compatible with it.
About the only major difference is that Hudson assumes open innovation is only possible by big companies. I suppose the argument is that small companies don’t have the option to vertically integrate, so it’s not really interesting to study what is normal for small companies. A plausible argument, but many of the open innovation strategies for big companies (such as managing communities or value networks) also apply to small companies.
Eventually he gets around to the criticisms:
But the case for open innovation – however defined – is mixed.
Some of the benefits: getting new ideas, finding hot new partners or employees, killing the “not invented here” syndrome, conducting some early market research, pre-selling before the product launch – and, of course, saving money.
But there are costs, too. A company can lose control of its own technology, as it leaks out to partners. It can make it less likely, rather than more, that a new product is genuinely new and original. It’s hard on employee relations; is it a prelude to outsourcing or bypassing? And collaboration can be anything but efficient.
The risk of not having uniqueness is certainly something we all acknowledge: IBM used open innovation to shipped the IBM PC, but many of us (including some authors) consider it a blunder to have ceded control to the Wintel monopoly.
The evidence for the charge of incrementalism is non-existent: many firms have a problem creating slightly improved products, whereas a true OI approach allows search for the most innovative technologies out there.
As for the rest — scaring employees and mismanaging collaboration — of course there are no silver bullets. Much as us strategy profs like to teach great strategies, success is often determined by execution, not strategy formulation; if you don’t believe that, check out Mark Hurd’s bonus.
So while it’s certainly healthy to weigh the pros and cons of any innovation strategy, I don’t think this week’s column has challenged the viability of open innovation.