OpenUp2Innovate

Special Episode: How Open is Innovation?

Four master’s students from the University of Southern Denmark present the Paper "How Open is Innovation? A Retrospective and Ideas Moving Forward" by Linus Dahlander, David M. Gann and Martin W. Wallin, written in 2020 and published in 2021.

What’s it about?

This paper analyses the last ten years of innovation and openness, draws lessons, evaluates criticism and further papers, and concludes by preparing us for another ten years of Open Innovation.

What has affected open innovation?

Technological development has had a significant impact on how companies can benefit from Open Innovation (Artificial Intelligence, Cloud Services, Robotics and APIs). These technologies allow companies to change their business model. All this is related to the vast amount of data that is constantly being generated. Data openness could build bridges across organizations, but only a tiny part of data is used to this end. Some organizations, such as Google, Facebook or Amazon, are just very good at monetizing with data, but handling a lot of information might lead to privacy violations and other issues.

Dark side of open innovation

It enables collaboration and value creation for some, but it could also lead to exploitation and value destruction for others.

Among the technologies that impacted Open Innovation are APIs and login services. They can facilitate interactions at a big scale, and they are part of a rapidly growing market, and for this reason, some companies focused their business models on them. But in some cases, this led to scandals and bad situations. The case of Cambridge Analytica, which is very well known, had issues due to an excessive collection of data.

Some issues can also be found in the volume of ideas generated through crowdsourcing. Aligning the company's strategy with the crowds that generate ideas could be challenging because of the attention deficit. Technology comes to help in this case too. To cope with this, companies use different methods, one of which is Artificial Intelligence, even though the limitation of AI is the ability in evaluating brand new ideas, because of the way AI algorithms are trained.

Crowdfunding

It has gained a considerable importance in the past ten years. We all know its power to find funds for early-stage ideas, but we should also consider that crowdfunding can generate only a tiny amount of funding compared to VC funds. Nevertheless, its importance is linked to funding-generation and, most importantly, to knowledge generation for the team. When a team posts a content in a crowdfunding platform, they manage to collect information about their potential customers.

And this links to information and data collection.

Importance of data

More than it was ten years ago, it is now clear that data has huge importance for businesses, but it is still not easy for every company to implement strategies based on data. Some very-well-known big tech companies, such as Amazon, Facebook and Google, made their business models around data, but this is not yet the case for smaller organizations.

It must also be understood that companies are still struggling to effectively share data with big corporations due to the fear of an unbalanced flux of information, such as the case of the German automotive industry and Google Maps.

Therefore, one future research topic for Open Innovation researchers could be to understand the balance between revealing data and capturing value from data.

How can open innovation adapt to these changes and change the game itself?

When people adopt idea-sharing mindsets, open innovation can change traditional industry boundaries.

For instance, the article highlights Tesla, who is shaping the battleground for the new automotive industry.

They have acknowledged that they cannot drive the electric market forward alone. In fact, Tesla has revealed intellectual property to seek the advancement of electric vehicle technology to accelerate electric vehicles' market size.

Ultimately, their ambition would be to improve their cars and stay ahead of the competition, and so they engage in an open, collaborative culture to gain inputs from the masses.

Furthermore, with this approach, Tesla states that they are willing to cooperate with electric car companies to compete against the fossil car market.

How does technological development impact organizations?

Platforms are essential for today's organizational development and facilitate how organizations create and capture value. And their impact is not surprising. Platforms minimize barriers of distance and connect people and create a network effect. This provides a space where information and ideas can flow. 

And successful platforms providers to grow larger and larger.

Are there any concerns?

It is difficult not to acknowledge the power that large IT corporations have. They even own open-source platforms, with code that is designed to be publicly accessible. Microsoft now owns “Github”, “IBM” owns “Red Hat”. And while these large collaborations claim novel commitment and intentions, it makes one reflect on how open open source really is.

Can there be too much innovation, or can there be too much openness?

Yeah, we need to reconsider how much openness is appropriate and at the end of the day, it will be a trade-off that should be handled carefully. The amount of openness goes hand in hand with patenting. 

This can be a barrier to adopting open innovation. There are many reasons that patents are a barrier to open innovation. The article highlights over-valuing internal ideas and fear of being the one revealing the new commercial blockbuster to potential competitors.

Many companies still have a "no patent - no talk" mindset and therefore miss out on the benefits of broad and distant. They might miss out on business opportunities: What values do patents have, if they lay unused in a drawer? The pharmaceutical company “Bayer” employs 7.000 scientists, holds thousands of patents, many unused. And yet only two employees are responsible for licensing out.

OPEN INNOVATION - the bigger picture and societal shift in openness

Current tensions between nations make it harder to cooperate across borders, e.g. USA CHINA TRADE war. https://www.bbc.com/news/business-45899310

In China, the CTO of “Aliba” said that we live in the data age and that data could be processed better outside the company. 

The current crisis gave open innovation a boost, exploration and collaboration among different institutes which did not cooperate before. 

The challenge is to carry this momentum into a post covid world.

Why is it so important that we carry the momentum?

The importance of this momentum comes from the more significant problems we have to solve, such as climate change. These problems, which are not tangible, have high complexity and abstraction levels following Rittel and Webber, are called wicked problems.

In the 2010 paper the focus was on company-specific problems. But companies can have a significant impact on their environment. Yet, another trend can be detected: We see a concentration in capabilities of research due to the high cost of research equipment. A consequence of this is a more multidisciplinary team. 

This results in hotspots of research.  The power of this hotspot is the knowledge and motivation in one place. The downside of this concentration is the downfall of collaboration among institutes.

Other challenges OI might face in the future

Define the value of open innovation overestimates their contribution to a project, so it is a challenge to measure OI scrutiny. A second challenge is that organizations have to place OI either in the periphery or at the core of their business: Substitute vs complementarity.

The speakers:

Bolgac Gülen

Alessandro Pisanu

Carl Brockhausen

Steffen Henriksen

Literature:

Dahlander, Linus & Gann, David & Wallin, Martin. (2021). How open is innovation? A retrospective and ideas forward. Research Policy. 50. 10.1016/j.respol.2021.104218.

Rittel, H.W.J., Webber, M.M. Dilemmas in a general theory of planning. Policy Sci 4, 155–169 (1973). https://doi.org/10.1007/BF01405730