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Shaping the Future of Open Innovation

Dr. Sabine Brunswicker's presentation about the future of open innovation as presented at the 7th European Innovation Summit of the European Parliament: A Pact for Innovation. December 7th, 2015 in Brussels, Belgium.

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Shaping the Future of Open Innovation

  1. 1. Prof. Sabine Brunswicker, Purdue University 7th Innovation Summit, European Parliament, December 7, 2015 Open Digital Innovation Shaping the Future of Open Innovation RESEARCH CENTER Open Digital Innovation
  2. 2. OPEN INNOVATION A FAD OR A PHENOMENON?
  3. 3. Executive study 2013 UC Berkeley and Fraunhofer ▪ Study among the largest firms in Europe and US ▪ Firm criteria: >1000 employees and >250 million USD in sales ▪ Key informants: CEO, COO, or CTO at headquarter ▪ Data collection October– December 2012 ▪ 125 datasets Adoption of open innovation Abandonment Open innovation experience Management support Intensity 78% practice open innovation in 2013 No firm has abandoned open innovation Median of 5 years 71 % have increased management support 82 % have increased open innovation activity Open Innovation – Not a Fad but a Phenomenon Source: Chesbrough & Brunswicker (2013), Chesbrough & Brunswicker (2015) THE OPEN INNOVATION EXECUTIVE STUDY in 2013 ALREADY SUGGESTED THAT OPEN INNOVATION IS NOT A FAD BUT A PHENOMENON
  4. 4. IN OUR ONGOING OPEN INNOVATION EXECUTIVE STUDY 2015 WE LEARN MORE ABOUT THE PARTICULARITIES OF MANAGING OPEN INNOVATION IN LARGE FIRMS  Study among the largest firms in Europe and US  Firm criteria: >1000 employees and >250 million USD in sales  Organizational & Project level analysis  Data collection: January 2015 to August 2015  Current responses: 121 firm- level data, additional project level data Executive Study 2015 Purdue & Berkeley Adoption of open innovation Abandoning open innovation Financial support Expenditures Human resources Open Innovation – Not a Fad but a Phenomenon ~78% of firms (94 firms) practice open innovation today (n=121) ~ 2.5% of firms adopting open innovation have abandoned it ~61 % have increased the financial investment ~22 % have increased the financial investment by more than 50% ~72% invest less than 20% of the total expenditures for innovation in open innovation ~53% allocate more than 5 full-time employees to open innovation
  5. 5. LARGE FIRMS ACCESS EXTERNAL KNOW-HOW WITH AND WITHOUT DIRECT FINANCIAL COMPENSATION Source: Global Open Innovation Executive Survey 2015; n=76 firms Emerging Open Innovation Modes 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Pecuniary Inbound Open Innovation Practices Non-pecuniary Inbound Open Innovation Practices Median = 25% Median = 20% 25 percentile: 5% 25 percentile: 10% 75 percentile: 50% 75 percentile: 50% Share of projects completed within the last 2 years with inflows of knowledge (inbound)
  6. 6. FREE REVEALING – NON PECUNIARY OUTBOUND INNOVATION – IS RATHER RARE; 50% OF FIRMS FREELY REVEAL IN MORE THAN 5% OF THEIR PROJECTS Source: Global Open Innovation Executive Survey 2015; n=73 firms Emerging Open InnovationModes Median = 5% 0% 20% 40% 60% 80% 100% 120% 25 percentile: 0% 75 percentile: 20% Share of projects completed in 2013 with free revealing
  7. 7. FIRMS ARE NET TAKERS Source: Global Open Innovation Executive Survey 2015; n=73/76 firms Median = 5% Free knowledge sharing with external partners Free access external knowledge Median = 20% 0% 20% 40% 60% 80% 100% 120% 25 percentile: 0% 75 percentile: 20% 25 percentile: 5% 75 percentile: 50% Share of projects completed in 2013 with free inflows/ free revealing Emerging Open InnovationModes
  8. 8. Emerging Open Innovation Modes
  9. 9. INDEED, EXISTING WORK ON OPEN INNOVATION DISCUSSES A VARIETY OF OPEN INNOVATION ‘MODES’ IP Licensing Informal networking Publically funded R& D consortia External R&D services Open Innovation Intermediaries Open innovation „modes“ University grants Supplier awards Crowdsourcing User co-creation Idea competition Source: Chesbrough & Brunswicker (2014); Enkel & Gassmann (2009); Van de Vrande et al (2009) Emerging Open InnovationModes
  10. 10. WE ALSO LEARN THAT FIRMS ‘COMBINE’ DIFFERENT MODES IN ORDER TO SOLVE ONE PARTICULAR INNOVATION PROBLEM Open call to the crowd  Call for solutions in the area of Powering your Home Crowd’s solutions  4000 idea submitted  23 partnerships  USD 200 million investment by GE Source: www.ge.com, Chesbrough (2012) California Management Review Large Crowd Bilateral Partnership Emerging Open InnovationModes
  11. 11. Emerging Open Innovation Modes THE VARIETY OF OPEN INNOVATION MODES CAN BE CLASSIFIED INTO FOUR MAJOR ARCHETYPES Markets/ Contracts Open Innovation Partnerships Open Innovation Platforms (Contest) Open Innovation Community Medium to high- powered incentives High-powered, cooperative Moderate incentives Low to moderate incentives Usually high (and externally owned) Negotiable Varied Varied Incentives Control over IP Know- how sharing Limited Strong Limited (Problem) Strong and multidimensional Low Low High High Diversity of sources Source: Bagherzadeh & Brunswicker (2015), see also Felin & Zenger (2014) Bilaterial Multiple actors Digitally transformed
  12. 12. Emerging Open Innovation Modes TWO PROJECT (PROBLEM) DIMENSIONS MATTER IN ORDER TO MAKE THE RIGHT CHOICE Complexity of the Problem Hiddenness of Solution Knowledge • A large number of highly interdependent tasks & knowledge areas • Difficult to decompose • Little knowledge about the sources or locations of solution knowledge • “Holy grail problems” Source: Mehdi Bagherzadeh (2015), Felin & Zenger (2014), Nickerson & Zenger (2004)
  13. 13. Emerging Open Innovation Modes OUR ANALYSIS OF OUR SURVEY DATA SHOWED, AN ASSOCIATION BETWEEN DIFFERENT PROBLEM TYPES AND OPEN INNOVATION MODES Problem Complexity Hiddenness of Knowledge High Low Low High Open Innovation Platforms (Contest) Markets/ Contracts Community Type 1 Type 3 Type 2 Type 4 Open Innovation Partnerships Source: Bagherzadeh & Brunswicker (2015)
  14. 14. The Shift Towards Greater Access and Less Control INDEED, INNOVATION ARCHITECTURES BECOME INCREASINGLY UNBOUNDED AND OPEN; EVEN APPLE SUPPORTS GENERATIVE AND OPEN DEVELOPER COMMUNITIES Internet ISP T T T Phone WiFi Enduser system Handset Distribution GUI Shop OS APIs Audio- Dateiformat A A A Millions of songs Thousands of Apps Assembly C C C C Hundreds of components Hardware interface BIOS Betriebs- system iTunes Design Source: Baldwin (2011) Closed IP External supplier Complementor Open Source Closed Standard Open Standard Legend
  15. 15. The Shift Towards Greater Access and Less Control INDEED, INNOVATION ARCHITECTURES BECOME INCREASINGLY UNBOUNDED AND OPEN; EVEN APPLE SUPPORTS GENERATIVE AND OPEN DEVELOPER COMMUNITIES Internet ISP T T T Phone WiFi Enduser system Handset Distribution GUI Shop OS APIs Audio- Dateiformat A A A Millions of songsThousands of Apps Assembly C C C C Hundreds of components Hardware interface BIOS Betriebs- system iTunes Design Source: Baldwin (2011) Closed IP External supplier Complementor Open Source Closed Standard Open Standard Legend
  16. 16. SAMSUNG “ It is actually Open Source Software that is ‘eating’ the world…” (VentureBeat, Dec 7, 2015)
  17. 17. “One of the challenges in Open Innovation right now in our organization or any other high tech organization is to figure out how we or they can [work] with open source communities” (Participant in Open Innovation Study)
  18. 18. The Shift Towards Greater Access and Less Control OPENSTACK, A OSS CLOUD SOFTWARE SOLUTION IS DEVELOPED FOLLOWING PRINCIPLES OF OPEN SOURCE SOFTWARE; MULTIPLE COMPETING VENDORS PARTICIPATE IN IT
  19. 19. The Shift Towards Greater Access and Less Control Source: Global Open Innovation Executive Survey 2014/2015 Purdue University & UC Berkeley ; n=56 IP Allocation Over Technological Solutions Successful Projects (n=32) 19% 50% 31% 17% 37% 46% SELECTIVE OPENNESS SEEMS TO BE PAY OFF Successful Projects (n=32) Unsuccessful Projects (n=24) Completely retaining legal ownership rights Selective retaining legal ownership rights Completely waiving legal ownership rights
  20. 20. introduction  Initiative to create openness in Government to ensure public trust and establish a system of transparency, public participation, and collaboration (President Obama, 2009). WHAT IS OPEN GOVERNMENT AND OPEN DATA? The Open Data Movement is here… just search Open governmental data play an increasing role in open innovation
  21. 21. THE IRONHACKS Creating Value from Open Governmental Data
  22. 22. Creating Value from Open Governmental Data
  23. 23. an app with a mashup – simple, yet has impact…the app makes open data ‘social’
  24. 24. INNOVATE WITH OPEN DATA: Create a novel, cool, and performative mash-up embedded in a website that helps users to solve their problem PURDUE IRONHACK OUTPEFORM OTHERS AND LEARN FROM OTHERS: IronHacks is about competition but you get also feedback and learn from others’ work HACK VIRTUALLY BUT ALSO MEET PHYSICALLY: We offer a training on open data (tonight), using the required API, and have training in coding tools. GAIN & FAME IN MULTIPE WAYS: Improve your score on the way, gain reputation, learn (GitHub) and win prizes. WHAT IS AN IRONHACK? AT PURDUE WE LAUNCHED IRONHACK TO INVOLVE STUDENTS IN CIVIC INNOVATION; THEY HACK IN 3 CYCLES: HACK, BREATHE, LEARN, AND ITERATE! Creating Value from Open Governmental Data
  25. 25. Introduction FINAL SLIDE WITH “WEB” AND NEW MODELS OF INNOVATION The GRAVITY IS SHIFTING … ..citizen-centric and crowd-based ecosystems
  26. 26. Lifecycle-oriented Innovation Ecosystems
  27. 27. Lifecycle-oriented innovation ecosystems FEDERATING LIFE-CYCLE ORIENTED ECOSYSTEMS REQUIRES GENERATIVE RESPONSES TO AT LEAST THREE TENSIONS Data Know- ledge Technol ogy Con- tinued Value Creation Lifecycle-oriented Innovation Ecosystem Competition versus Collaboration Stability versus Change Knowledge Sharing & Protection Ideation Solution develop ment Innovation lifecycle and continued value creation Proto- type & test Citizen Application developers Application platform owner Service providers Tripartite Socio-technical infrastructure for Generative Responses Service integrator Software vendor Build & Produce Launch & improve New Roles and Norms Virtual Trading Zones Transparencyas Design Choice Source: Brunswicker & Majchrzak (forthcoming)
  28. 28. ‘Federating’ Openness in Ecosystems A Challenge
  29. 29. Transparency as a Design Choice for Federating Innovation Ecosystems
  30. 30. Federating Open Innovation through Transparency THERE ARE AT LEAST TWO DIMENSIONS OF ‘DESIGNED’ TRANSPARENCY: PERFORMANCE AND SOLUTION TRANSPARENCY Performance transparency describes the process of making an innovator’s performance (evaluation by the market) transparent (e.g. via rank orders, top 20 list etc.) Solution transparency transparency describes the process of making an innovator’s solution transparent (e.g. ideas, views, solution, etc.) Market/Performance Transparency Solution Transparency
  31. 31. Federating Open Innovation through Transparency IN OUR RECENT RESEARCH WE SHOW THAT THE DESIGN OF PERFORMANCE TRANSPARENCY MATTERS Source: Brunswicker & Almirall (forthcoming)
  32. 32. Federating with Transparency TRANSPARENCY OF THE SOLUTION MAY ALLOW REMIXING OF IDEAS, SOLUTIONS, AND MAY TRIGGER INNOVATION Matlab OSS Programming Contest Source: Gulley (2006)
  33. 33.  But how to put the policies for open innovation 2.0 Openness …in policy design?
  34. 34. PROCESS TRANSPARENCY CREATES MORE EFFECTIVE POLICIES AND REDUCES UNCERTAINTY IN POLICY MAKING Open Public Policy Innovation Agenda setting Analysis Policy creation Implementation MonitoringVisibility of Citizen Knowledge Visibility of Decisions Visibility of Actions Policy Development Cycle Online collaboration platforms Sentiment analysis Opinion mining Embedded systems Policy intelligence toolsAgent-based simulation Source: Brunswicker & Almirall (forthcoming)
  35. 35. Open public policy innovation IT IS ALREADY HAPPENING ……..ARE ALSO OBSERVING A NOVEL ERA OF PUBLIC POLICY DEVELOPMENT Aufbruch Bayern Stockholm Congestion Tax Source: Brunswicker & Almirall (forthcoming)
  36. 36.  But how to put the policies for open innovation 2.0 Not just greater accountability . transparency for better policy design
  37. 37. ABOUT ME AND RCODI MY RESEARCH CENTER FOR OPEN DIGITAL INNOVATION ASPIRES TO SHAPE THE FUTURE OF INNOVATION THROUGH SCIENTIFIC USER-INSPIRED RESEARCH www.purdue.edu/opendigital
  38. 38. LET’S EXPLORENEW PATHS TO CREATE IMPACT WITH OPEN INNOVATION „If you’re not failing every now and again, it’s a sign you’re not doing anything very innovative.“ Woody Allen
  39. 39. Training session & Survey (6- 8pm) Hacking phase 1 Evaluation phase 1 Hacking phase 2 Evaluation phase 2 Hacking phase 3 Evaluation phase 3 21 days Oct. 28 Nov. 5-8, done by 8 pm Nov. 2 (8am) - 5 submission at 8 pm Nov. 9 (8am) –12 Submission at 8pm Nov. 12-15, done at 8pm Nov. 16-19, final submission by 9pm Nov. 19-22, done at 9pm Work hard, be creative Work hard, be creative Work hard, be creative, compete Check out scores Check out scores Wait… Final winner Dev- eloper Expert/user panel The IRONHACK PHASES Milestones/ metrics Nov. 22 (12-2pm) Creating Value from Open Governmental Data Completing the post survey (before Nov. 22) THE IRONHACK PROCESS IS STRUCTURED IN THREE STAGES

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