An academic take on open innovation with a case study of Siemens

1. Open Innovation – The New
Paradigm in Knowledge
Creation
Ahamed Iqbal
Archana KC

2. Agenda
• Scope
• Innovation – Redefining Boundaries
• Knowledge Creation in Open Innovation
• Looking at Open Innovation through SECI Lens
• A Case in Point
• Lessons Learnt
• Conclusion

3. Scope
• The presentation is limited to exploration of knowledge
creation aspects in open innovation through technology
partnerships, crowdsourcing and spin-offs.
• The research is limited to knowledge creation and does not
elaborate on the knowledge transfer process involved in Open
Innovation.
• It is brief and does not look at the concepts of knowledge
creation, innovation and open innovation in detail.
• Nonaka’s SECI model is conceptually adapted to suit the
analysis.

4. Open Innovation – Redefining Boundaries
• Innovation is the key driving factor for companies to prosper, grow
and sustain a high profitability. There is a strong need to open up the
innovation process.
• Boundaries of innovation process breaks up due to mobility of
knowledge workers and the development of new financial structures
like venture capitals.
• OI is the new paradigm through which the firms use external ideas
as well as internal ideas, paths to market, for the firms to advance
their technology.
• Concept uniqueness derived from external venture handling,
external technology in-sourcing, utilization of external technology
base, license and through spin-offs.
Definition: Open Innovation(OI) is the use of purposive inflows and outflows
of knowledge to accelerate innovation and expand the markets for the
external use of innovation, respectively. (Chesbrough, 2006)

5. Knowledge Creation in Open Innovation
• Innovation process begins with knowledge, elaborates that
knowledge and produces knowledge as the final outcome.
• In open innovation, organizational diversity positively
influences collaborative knowledge creation.
• Collaborative knowledge creation in open innovation terms is
a source of creativity.
• Thus, a framework for analysis of open innovation in
knowledge creation terms becomes essential.
• SECI Model is used for this analysis

6. Technology Partnerships Crowd Sourcing Spin Offs
Socialization Potential partner
identification and relational
capital formation
Exploitation of the
wisdom of crowds by
connecting to the mass
with the brand identity
in form of competition
where requirements are
clearly elucidated.
Identification and
investment in
entrepreneurial ventures
or Start Ups
Externalization Interaction of knowledge
assets like shared resources,
best practices and dynamic
culture during the due
diligence process and post
partnering.
Results in formation of
unique culture,
development niche
technologies with the
monetary capital and
infrastructural support
from the investors.
Combination New Knowledge creation
and capture as a result of
the complex interaction of
inter organizational factors
New knowledge creation
as a result of problems
solved, applications
created, contents
created, ideas galore.
Internalization Resultant know how, best
practices, cultural impact
and increase in net
organizational knowledge.
Exploitation of the
resultant assets for
internal knowledge
cycle.
Acquisition of new
capabilities through
equity relationships with
start ups.
SECI lens of Analysis for OI
OI Types
SECIDimensions

7. Case in Analysis

8. OI in Siemens
• Opening labs and sharing knowledge with outside world
results in global synergies.
• Cost-effective collaborative path of knowledge creation.
• Key activities across automotive, healthcare and energy
domains.
• Integration of knowledge networks and internet.
• OI in Siemens is a success due to its world wide operations
and in house expertise.
The lab is our world The world is our lab

9. • Strives to use latest results of fundamental and applied research.
• 1000 cooperative projects with universities, research institutes and
industrial partners.
• Set up of “Centers of Knowledge Interchange” (CKIs) on the campuses with
a mutual collaborative benefit - issues explored beyond academic research.
OI in Siemens - Technology Partnerships
Partner/Vendor Domain/Industry Project Perceived Benefit
Denmark Technical
University (DTU)
Automotive (Electric
Vehicles)
Integration of electric cars
into power grids
Innovative technology
outsourcing projects
Energy Suppliers in
Germany and research
institutes in Netherlands
Clean tech (Energy ) Capture of carbon dioxide in
power plants
Collaborated benefits –
employment of scientists
Shanghai’s Tongji University Sustainable environment(
Infrastructure)
Development of a eco-city
model
Joint research, promote
talented individuals and
knowledge on future china
for Siemens
King Abdullah University of
Science and Technology
Material Sciences
( Healthcare)
A course in environmental
technology
Development of sustainable
solutions for green
technologies. Infrastructure
development

10. • A broadened research horizon
for Siemens to tap resources
with internet as a platform.
• Innovation Jam – moderated
discussions to allow flow of
new ideas.
• Internal resource accumulation
with emergence of e-brokers.
• Idea generation contests –
new impulse plans to result in
spin –offs.
OI in Siemens - Crowdsourcing
InternalExternal
Osram Idea contest
Sustainability
Idea contest
TechnoWeb 2.0
E-broker
K - Sharing
Source : Siemens CT Open Innovation

11. OI in Siemens - Spin Offs
Founders
•Professional
assistance – legal,
organizational,
financial
Siemens
•Revenues from
implementation of
programs even if
products are not related
to core business.
Partners
Investors
•Access to
innovative
technologies and to
Siemens global
network
• A step after university
collaboration;
• Siemens acts as a VC and a
technology – knowledge
provider;
• Knowledge acquisition model
– for tech start ups, off the
core business model;
• K Creation across verticals –
financial/business expertise,
management enterprise, IP
management, cultural
learnings.
Logo image source : www.siemens.com

12. SECI lens of Analysis for OI

13. Technology Partnerships Crowd Sourcing Spin Offs
Socialization Siemens has university
partnerships, tech
outsourcing partners and
corporate ventures
Siemens is involved in internal
crowdsourcing by creating
knowledge networks –
Techno web and organizing
company wide idea
generation competitions.
Establishment of CKI in
universities
Externalization Partnerships offer more
benefits than technology
benefits. Employment to
students, and research
facilities to institutions
A triple beneficial spin off
with assured returns, high
level innovation and
superior value systems in
startups.
Combination Technoweb acts as a
knowledge network –
resulting in creation of
explicit knowledge by
tapping tacit sources
E brokers are formed to solve
issues with external problem
solvers and to arrive at
innovative options
Internalization Siemens Technology
Accelerator acts as a
internal think tank with
accumulated knowledge
Internal knowledge base
grows exponentially.
Technoweb directs to experts,
not answers.
Siemens acts as a VC and
derives direct monetary
returns. Also indirectly
through licensing, patents
etc
SECI lens of Analysis for OI - Siemens
OI Types
SECIDimensions

14. Observations /Lessons Learnt
• OI is not a means for innovation ; it is a compliment.
• Various knowledge creation activities in OI is schematically
classified under the framework.
• OI provides wider opportunities for knowledge asset
interaction and hence knowledge creation.
• Nonaka’s SECI model serves as the foundation for research in
knowledge creation.
• Siemens has a high success rate in collaborations with
universities, technology institutes and research houses.
• Siemens exploits new breakthrough technologies with OI,
away from their core business areas.

15. References
• Fischer, M. M. (2000). Innovation, Knowledge Creation and Systems
of Innovation. The Annals of Regional Science .
• Gassmann, O., & Enkel, E. (n.d.). Towards a Theory of Open
Innovation:Three Core Process Archetypes.
• Siemens AG. (2010). Pictures of the Future - The Magazine for
Research and Innovation. www.siemens.com.
• Nonaka, I. (1994). A Dynamic Theory of Organizational Knowledge
Creation. Organization Science, 5(1)
• Chesbrough, H.W. (2006). Open Innovation: The New Imperative for
creating and Profiting from Technology. Boston: Harvard Business
Press
• Popadiuk, S. & Choo, C. W. (2006). Innovation and Knowledge
Creation: How are these Concepts Related? International Journal of
Information Management. 302-312.

16. References
• Chateneier, E.D. et Al ( 2009). The Challenges of Collaborative
Knowledge Creation in Open Innovation Teams. Human Resource
Development Review, 8(3).
• Wadha, A. & Kotha, S. (2006). The Knowledge Creation Through
External Venturing: Evidence from the Telecommunications
Equipment Manufacturing Industry. Academy of Management
Journal, 49(4), 819- 835.
• Elmquist, M. , Fredberg, T. & Ollila, S. (2009). Exploring the Field of
Open Innovation. European Journal of Innovation Management,
12(3)
• Chief Technology Office, Siemens AG. (2010). Retrieved March 2011,
from http://www.siemens.com/entry/cc/en/:
http://www.slideshare.net/heisss/crowd-sourcing-and-knowledge-
networking

17. THANK YOU