Shaping the Future of Open Innovation

Prof. Sabine Brunswicker, Purdue University7th Innovation Summit, European Parliament, December 7, 2015

Open Digital InnovationShaping the Future of Open Innovation

RESEARCH CENTEROpen Digital Innovation

OPEN INNOVATION

A FAD OR

A PHENOMENON?

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

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

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 PracticesNon-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)

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 Innovation Modes

Median = 5%

0% 20% 40% 60% 80% 100% 120%

25 percentile: 0% 75 percentile: 20%

Share of projects completed in 2013 with free revealing

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 Innovation Modes

Emerging Open Innovation Modes

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 Innovation Modes

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 Innovation Modes

Emerging Open Innovation ModesTHE VARIETY OF OPEN INNOVATION MODES CAN BE CLASSIFIED INTO FOUR MAJOR ARCHETYPES

Markets/ Contracts

Open InnovationPartnerships

Open Innovation Platforms (Contest)

Open InnovationCommunity

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 HighDiversity of

sources

Source: Bagherzadeh & Brunswicker (2015), see also Felin & Zenger (2014)

Bilaterial Multiple actors

Digitally transformed

Emerging Open Innovation ModesTWO 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)

Emerging Open Innovation ModesOUR 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)

The Shift Towards Greater Access and Less ControlINDEED, INNOVATION ARCHITECTURES BECOME INCREASINGLY UNBOUNDED AND OPEN; EVEN APPLE SUPPORTS GENERATIVE AND OPEN DEVELOPER COMMUNITIES

Internet

ISP

T

T T

Phone

WiFi

EndusersystemHandset

Distribution

GUI

Shop

OS APIs

Audio-Dateiformat

A A

A

Millions of songsThousands of Apps

AssemblyC

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

The Shift Towards Greater Access and Less ControlINDEED, INNOVATION ARCHITECTURES BECOME INCREASINGLY UNBOUNDED AND OPEN; EVEN APPLE SUPPORTS GENERATIVE AND OPEN DEVELOPER COMMUNITIES

Internet

ISP

T

T T

Phone

WiFi

EndusersystemHandset

Distribution

GUI

Shop

OS APIs

Audio-Dateiformat

A A

A

Millions of songs

Thousands of Apps

AssemblyC

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

SAMSUNG“ It is actually Open Source Software that is ‘eating’ the world…”(VentureBeat, Dec 7, 2015)

“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)

The Shift Towards Greater Access and Less ControlOPENSTACK, A OSS CLOUD SOFTWARE SOLUTION IS DEVELOPED FOLLOWING PRINCIPLES OF OPEN SOURCE SOFTWARE; MULTIPLE COMPETING VENDORS PARTICIPATE IN IT

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

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

THE IRONHACKS Creating Value from Open Governmental Data

Creating Value from Open Governmental Data

an app with a mashup – simple, yet has impact…the app makes open data ‘social’

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

Introduction

FINAL SLIDE WITH “WEB” AND NEW MODELS OF INNOVATIONThe GRAVITY IS SHIFTING …

..citizen-centric and crowd-based ecosystems

Lifecycle-orientedInnovation Ecosystems

Lifecycle-oriented innovation ecosystemsFEDERATING LIFE-CYCLE ORIENTED ECOSYSTEMS REQUIRES GENERATIVE RESPONSES TO AT LEAST THREE TENSIONS

Data

Know-ledge

Technology

Con-tinued Value Creati

onLifecycle-oriented

Innovation Ecosystem

Competition versus Collaboration

Stability versus Change

Knowledge Sharing & Protection

IdeationSolutio

n development

Innovation lifecycle and continued value creation

Proto-type &

test

CitizenApplication 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 ZonesTransparency as

Design Choice

Source: Brunswicker & Majchrzak (forthcoming)

‘Federating’ Openness in Ecosystems

A Challenge

Transparency as a Design Choice for Federating Innovation

Ecosystems

Federating Open Innovation through TransparencyTHERE 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

Federating Open Innovation through TransparencyIN OUR RECENT RESEARCH WE SHOW THAT THE DESIGN OF PERFORMANCE TRANSPARENCY MATTERS

Source: Brunswicker & Almirall (forthcoming)

Federating with TransparencyTRANSPARENCY OF THE SOLUTION MAY ALLOW REMIXING OF IDEAS, SOLUTIONS, AND MAY TRIGGER INNOVATION

Matlab OSS Programming Contest

Source: Gulley (2006)

But how to put the policies for open innovation 2.0Openness

…in policy design?

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)

Open public policy innovationIT IS ALREADY HAPPENING ……..ARE ALSO OBSERVING A NOVEL ERA OF PUBLIC POLICY DEVELOPMENT

Aufbruch Bayern

Stockholm Congestion Tax

Source: Brunswicker & Almirall (forthcoming)

But how to put the policies for open innovation 2.0Not just greater accountability

. transparency for better policy design

ABOUT ME AND RCODIMY RESEARCH CENTER FOR OPEN DIGITAL INNOVATION ASPIRES TO SHAPE THE FUTURE OF INNOVATION THROUGH SCIENTIFIC USER-INSPIRED RESEARCH

www.purdue.edu/opendigital

LET’S EXPLORE NEW 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

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) –12Submission 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