August 22, 2011

Fall OI speakers at UC Berkeley

The Program in Open Innovation has replaced the Center for Open Innovation at UC Berkeley. It’s still headed by Henry Chesbrough (with Solomon Darwin holding the reins during his globetrotting) at the same location with the same website, but apparently it’s now bigger and better than ever.

The fall speaker series starts next week. The sessions will be held at the Haas School of Business on Mondays 2-4 p.m. with two speakers per session. As always, visitors are welcome — I know I’ve met some interesting people at these sessions.

With my move to Southern California, this may be the first time I’ve been unable to make it, but I look forward to the YouTube videos. Note: updated with last-minute substitution of October 10 speaker.

Date Speakers Topic
Aug. 29 Henry Chesbrough
Director of the Program in Open Innovation, Haas School of Business, University of California, Berkeley
John Wilbanks
Vice President, Science, Creative Commons
Role of IP
Sept. 12 Ron Resnick
President and Chairman, Intel, Mobile Wireless Group
Open Innovation in International Mobile Telecommunications
Oliver Alexy
Research Fellow, Imperial College, London
Open Innovation Intermediaries
Sept. 19 Jim Spohrer
Director of Services Research, IBM
Role of Universities
Esteve Almirall
Professor, ESADE, Barcelona, Spain
Open Cities
Sept. 26 Howard Atkins
(formerly) Chief Financial Officer, Wells Fargo Bank
Innovation in Financial Services
John Pramod
VP of Strategy and Innovation, McKesson
Open Innovation Strategy Challenges at McKesson
Oct. 3 Kal Patel
(formerly) President of Asia, Best Buy

Open Innovation in Retail Businesses
Aneesh Chopra
Chief Technology Officer, Office of Science and Technology Policy, the White House
Open Government
Oct. 10 Deepu Rathi
Director of Business Development, Cisco
Product Innovation
Joel West
Professor, KGI - Keck Graduate Institute
Solomon Darwin
Associate Director, Program in Open Innovation, Haas School of Business, University of California, Berkeley
Strategic Openness 

August 16, 2011

Another year of even more OI research

At #AOM2011 on Monday, I was reminded that the first OI session at Academy was the 2004 PDW that Hank Chesbrough and Wim Vanhaverbeke organized in New Orleans. Within 48 hours, I had expressions of interest for the academic book (both by authors and publishers) that the three of us then published with Oxford in 2006, with chapters that were also excerpted in the 2005 Showcase Symposium that I organized and chaired in Honolulu.

This week in San Antonio, I attended 2½ OI sessions (late to one) as well as a crowdsourcing session and some other sessions in innovation and entrepreneurship.

The first of those sessions — and the only panel discussion — was held Monday morning at 8am (6am PDT, ugh). Organized by Dries Faems and Alberto Di Minin, it was (appropriately enough) entitled “Organizing Open Innovation: Combining Value Creation and Value Appropriation.” Repeating from the initial 2004 OI session were Wim and I (Chesbrough is overseas) as well as two all-Italian teams.

It’s difficult to synthesize a 90 minute session in a blog entry — although discussant Juan Alcacer of HBS did a great job. But if anything held the papers together, it was this focus on value creation vs. (or with) value capture.

Brusoni & Prencipe

The dynamic duo of Italian innovation research, Andrea Prencipe and Stefano Brusoni, presented their conceptual paper about innovation coupling that attempts to answer the question: when is it best to be open and when is it best to be closed. The closed story is fortunately similar to those we’ve seen in proprietary platform research for years: firms promulgate proprietary platforms early in a technological regime when their end to end coordination is highly valued. (Prencipe/Brusoni call this “responsive”).

The fundamental concept behind the paper was that we need to consider how firms couple their organizational units — both the strength and the linkage of the units. Their propositions about the optimal coupling depended on the environmental ambiguity, complexity and uncertainty. (Alcacer quite reasonably asked: what about firm-specific factors that influence the decision, or external factors such as appropriability or munificence.)

Beyond the when closed (or open) idea is the unexpected corner of the 2x2: when firms have to be both closed and open. While Chesbrough (in the Chesbrough funnel) talks about combining open and closed strategy, I don’t recall anyone ever making a case that firms need a special competence in being able to shift between the two. (Both Alcacer and I felt the construct was reminiscent of the Tushman-O’Reilly concept of an ambidextrous organization.)

Cassiman & Valentini

The two middle papers were empirical ones. Bruno Cassiman and Giovanni Valentini did a large-N study following up on the Cassiman and Veuglers (2006) Belgian CIS study. After selecting only firms that are innovation active, they they compared the innovation performance of firms that bought innovation (inbound OI), sold innovation (outbound OI), both or neither.

Following directly from Chesbrough (2007), the prediction would be the firms that do both would be the most successful: reducing their costs and incrementally increasing their revenues.

Alas, that’s not what happened — according to their econometrics thus far. With various controls and outcome measures — most about new products divided by some control — the buy/sell were consistently the worst. In at least one formulation, the buy-only and sell-only cases were twice as efficient as the other two cases.

We all scratched our heads over this one. As Cassiman noted, there is a theoretical (and well understood) complementarity of make vs. buy, but perhaps not of sell vs. buy. Some people wondered whether it’s a short-term effect: that over time such firms will be more successful.

Or it could be another manifestation of the finding of Dries Faems and colleagues (2010) that OI can raise costs more than revenues. Certainly the presumption of rationality does mean we expect firms to accurately estimate a priori the returns from a hybrid strategy, particularly early in a new bandwagon like OI.

As I sat there, I worried strongly about the endogeneity of the buy/sell decision — not from a methodological standpoint, but a theoretical one. (Easy for me to say, since I don’t try to do carefully controlled large-N econometric studies). Like other small countries, almost all the local companies are SMEs. We know that there is great variation among SMEs — some really good companies and some really struggling ones. Without having a better sense of why firms are pursuing (this unusual) strategy, I’d be cautious about trying to interpret the finding.


Next up was Wim Vanhaverbeke of Hasselt, Leuven Gent and Esade. (He’s holding more permanent faculty positions simultaneously than most people hold in their career.)

Wim has gone from a big firm SMJ-kinda guy to focusing on OI in SMEs. Of course, the first paper on this subject was van de Vrande, de Jong, Vanhaverbeke and de Rochemont (2009).

He gave us a taste of his in-depth study of OI in 10 small and young(ish) companies — but only a taste as he tried to cram a 45 minute talk into 15 minutes. His paper also keyed of Chesbrough (2007), in this case on the centrality of the business model.

He claimed his study was of low-tech OI but several of the examples were very high-tech approaches in low-tech industries. Exhibit A was Quilts of Denmark, using rocket science to make a better quilt. QOD collaborated with Outlast to leverage NASA-licensed material to make Temprakon, a quilt that was warmer for cold bodies and cooler for warm bodies.

Three of the most interesting observations were confirming observations about SME strategy and showing their direct application to OI SME strategy. First, OI collaboration between firms depends on strong individual-level ties. Second, cooperation is easiest between two companies of the same size — i.e. the small firms have trouble working with larger firms.

Finally, the OI-practicing SMEs don’t have some grand a priori strategy, but instead are pursuing a discovery-driven growth strategy (cf. McGrath & MacMillan, 1995).


Finally, academia’s most beloved open innovation blogger presented his own work tying together open innovation with open standards and open source, among other topics. This week’s paper — on a concept I call “strategic openness” — is a much more theoretical piece than the earlier West 2007)

The central motivation of the paper was the analysis of Simcoe (2006) on the inherent OI tradeoffs of value creation vs. value capture: not just that they are traded off, but that firms care about the product of the two, i.e. the total profit. Related arguments were made by West 2003 (in control vs. adoption) and West & O’Mahony 2008 (control vs. collaboration).

I got some very useful feedback at the session. I’ll be blogging more about this paper in a future article.


I had read Juan Alcacer but never met him. Far from being an open innovation advocate, he nonetheless was a great discussant — and not just because he liked my paper or that we both joked about Google’s announcement that morning of the Motorola purchase.

He saw all of the papers saying something about fundamental principles of open innovation — particularly the Cassiman presentation, which was testing a central tenet of OI. I was linking OI to strategy and competition, while Prencipe was examining the antecedents of OI. Wim has wonderfully rich and multi-dimensional data about how open innovation works in small companies.


This was a great session. The value was not just the people in the front of the room, but the great group of people in the room — all the top OI minds in Texas this week.

It was enough for me to tell my wife that it’s worth coming back to AOM next year — despite their price gouging strategy. (Alas, the rest of the conference was downhill from there).


Cassiman, Bruno and Reinhilde Veugelers. 2006. “In Search of Complementarity in Innovation Strategy: Internal R&D and External Knowledge Acquisition,” Management Science, 52 (1): 68-82. DOI: 10.1287/mnsc.1050.0470

Chesbrough, Henry. 2007. “Why companies should have open business models,” MIT Sloan Management Review, 48 (2): 22-28.

Faems, Dries, Matthias de Visser; Petra Andries, and Bart van Looy. 2010. “Technology alliance portfolios and financial performance: Value-enhancing and cost-increasing effects of open innovation,” Journal of Product Innovation Management, 27 (6): 785-796. DOI: 10.1111/j.1540-5885.2010.00752.x

McGrath, Rita Gunther and Ian C. MacMillan. 1995. “Discovery-Driven Planning,Harvard Business Review, July-August, pp. 44-54.

Simcoe, Tim. 2006. “Open Standards and Intellectual Property Rights,” in Henry Chesbrough, Wim Vanhaverbeke, and Joel West, eds., Open Innovation: Researching a New Paradigm. Oxford: Oxford University Press, pp. 161-183.

van de Vrande, Vareska, Jeroen P.J. de Jong, Wim Vanhaverbeke, Maurice de Rochemont. 2009. “Open innovation in SMEs: Trends, motives and management challenges,” Technovation, 29 (6-7): 423-437. DOI: 10.1016/j.technovation.2008.10.001

West, Joel. 2003. “How Open is Open Enough? Melding Proprietary and Open Source Platform Strategies,” Research Policy, 32 (7): 1259-1285. DOI: 10.1016/S0048-7333(03)00052-0

West, Joel and Siobhán O’Mahony. 2008. “The Role of Participation Architecture in Growing Sponsored Open Source Communities,” Industry and Innovation, 15 (2): 145–168. DOI: 10.1080/13662710801970142

August 2, 2011

Developing country developing open source

Over the weekend, I flew to Johannesburg, South Africa for a conference on open source software hosted by the School of Business and Economic Sciences at the University of the Witwatersrand (WITS). I was invited to give the opening keynote, and spoke about my current study integrating prior work on open IT strategies. (More on that later).

The conference featured both local and international speakers; the former were a mixture of faculty, few graduate students and one practitioner.

One interesting panel had an argument (between two friends) over conflicting IP goals of South African government policy. IT consultant Derek Keats complained that a 2008 Intellectual Property Rights from Publicly Financed Research and Development Act (a more centralized twist on Bayh-Dole) would make it difficult or impossible for SA academic researchers to give away IP to open source projects.

Meanwhile, Prof. Robert Vivian argued that a government mandated preference for OSS was arrived at via unconstitutional means. (I noted my conclusion based on a decade of OSS research: the best procurement policy is to mandate a fair price comparison between OSS and proprietary software — one that tends to allow buyers to use the threat of switching to reduce lock-in rents but avoid the disruption of actually switching.)

Among the international speakers, Sebastian von Engelhardt of Friedrich-Schiller-University talked about his 2009 survey of 6,000 German software developers and IT consultants. He worried that those that used OSS might have a harder time getting capital or growing than those that developed proprietary software, but generally found the two types were similar except that the OSS firms tended to be smaller and younger.

Not all the papers were about open source software. Alessandro Rossi of University of Trento summarized a series of papers on how Wikipedia activity changes after an article is tagged as having a major problem. For example, if a WikiSimple article is tagged as having readability problems, the readability quickly goes up — but the rate of other changes goes down.

Marcel Bogers (@bogers) summarized antecedents to open innovation in prior research such as evolutionary economics, transaction cost economics, social network theory and the resource-based view. My personal favorite was a paper by Maradona Gatara on mobile crowdsourcing in Kenya.

The workshop closed with the big gun — economist Richard Langlois of U. Conn. Summarizing a forthcoming book chapter, he noted the dramatic parallels between early radio and early PCs: assembly was cheap while the components were valuable, hobbyists played an important role, the business quickly shifted to the importance of software.

The main difference is that during World War I, the US nationalized radio patents to facilitate ship-to-shore communication, and then spun them off after the war to create the Radio Corporation of America.

Disputing The Electronic Century by the late Alfred Chandler, Langlois concluded that the large RCA R&D labs were not a spur to innovation but a drag on innovation — because RCA wasted its resources trying to find new areas rather than improve existing technologies. Vertical integration and control by RCA (and Columbia) prevented the sort of modular innovation that became commonplace in the PC industry.

This was the first of what (funding permitting) may become an annual conference. Meanwhile, the local representative of Nine Sigma was handing out flyers promoting the “4th SA Innovation Summit” on 30 August. The summit is dedicated to “change, revolution, transformation, metamorphosis, breakthrough” and proudly proclaims that “we are anti-red tape.”