July 19, 2008

Open innovation and "The New Face of R&D'

Computerworld magazine recently published an article entitled “The new face of R&D: What's cooking at IBM, HP and Microsoft,” in which open innovation plays a prominent role.

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

IT enabling open innovation

I'm promoting an off-topic comment to be a new article.

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

Open innovation and online communities

Last year, there were two tracks on open innovation at the European Academy of Management (EURAM 2007) meeting outside Paris.

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.
I was fortunate enough to have two papers in the special issue. One was the paper on communities (mentioned earlier in this blog) in which Karim Lakhani and I built upon the intersection of our two talks: the under-emphasis of community as a construct and level of analysis in open innovation research, and the importance of precision when defining and applying that construct.

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.