Process and Structures for Open Innovation(Ppt)

MOOI Theme 3:

Processes and structures for open innovation

Prof. Henry Chesbrough, University of California, Berkeley & ESADE

Prof. Wim Vanhaverbeke,Hasselt University, ESADE & National University of Singapore

Dr. Nadine Roijakkers, Hasselt University

February 4, 2013

Processes and structures for OI:Overview Innovation: Overview

FindingsBoth vertical and horizontal integration work, depends on the businessDistinction between formal and informal organization. How OI is related to these forms?

ImplicationsKey actions to implement in an organizational structureSome organizational structures*

FINDINGS


Findings

Both vertical and horizontal integration works, depends on the business

Generally distinguishes between formal and informal organization. How OI is related to these forms

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Processes and structures Finding 1: Vertical and horizontal integration: Overview

Both vertically and horizontally integrated companies have moved forward with adopting open innovation concepts, but the resulting innovationprocesses are distinct: Horizontally integrated companies [..] because they leverage their market position and network of suppliers/clients to become the nexus of the evolving open innovation network[..]. In this way, these central companies are greatly increasing the number of ideas coming in [..]while greatly decreasing their R&D costs.

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Processes and structures Finding 1: Vertical and horizontal integration: Overview

Vertically integrated companies normally have a very strong core competency in their product development, and their competitive advantage is based on this. [..] These firms are not blessed with the same network of suppliers and clients as their horizontally oriented compatriots;[..]. Challenge these large R&D operations can produce too many ideas all trying to go down the product development funnel

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Structuring horizontal and vertical OIHorizontal OI: Standards? Precompetitive R&D?Vertical OI (Lego):We have made a cultural shift internally, where we have gone from considering our customers as necessary intermediaries for reaching our end users to see them as very important partners Mads NipperPartnerships with large customers like Wal-Mart, Target and Toys-r-us has proved invaluable to Lego.more shelf spaceinvolve both customers and some of the key suppliers in the development of new products.Lego invites up to 20 of their largest and most important customers very early in their development process in order to discuss what the new products should be and whether the pricing ideas are right.

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FindingsBoth vertical and horizontal integration works, depends on the businessGenerally distinguishes between formal and informal organization. How OI is related to these forms

ImplicationsElements to implement in an organizational structureSome organizational structures*

Formally structured organizations tend to be more bureaucratic and are characterized by institutionalized rules, [..], difficult integration across functions,[..].an informal organizational structure is characterized by openness in the system which is a necessary precondition for idea initiation in the innovation processAn informal organizational structure is positively related to the creation of open innovation by an organization. A formal organizational structure is negatively related to the creation of open innovation by an organization.

*Processes and structures Finding 2: Formal and informal structure:

Interactive poll 1What are the three most important general structural elements for stimulating Open Innovation?

Centralized OI decision-makingFlat hierarchyInformal way of working/communicatingHorizontal integrationProject-based organizationCross-functional teams/boundary spanning rolesEmpowerment in OI implementation

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implications*


Findings


Processes and structures Implication 1: Elements to implement in an organizational structure: Overview

Seven key actions in order to structure open innovation management and organize for OI:1. Delegation of Decisions to OI Teams. 2. Integration of R&D into the Business Units. 3. Co-Location of OI-Teams and Departments. 4. Central OI Teams. 5. Central OI Funds. 6. External Interface for Open Innovation. 7. Merger & Acquisition Department.

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Findings


Processes and structures Implication 2: Some organizational structures

Overview

View of company-wide needs & levrage across businessesBrings strategic growth optionsExperts in OI skills & IPCentral contact point internally & externallyNeed to work to be viewed as a business unit team memberAcceptance requires support from the top

OI generalist in each businessLack of OI expertise in each skillView of business specific needs and marketsSome leverage across businessesCommunity of Practice for OI skill developmentCentral contact point by businessViewed as a business unit team member*OI generalist in each businessLack of OI expertise in each skillView of business specific needs and marketsLack leverage across businessesDifferent OI practices by business diffcult to develop a community of practiceCentral contact point by businessViewed as a business unit team memberCentralizedDecentralizedHybrid form

Current OI management structure at P&GBert Grobben until recently Director Open Innovation Asia-Pacific (Singapore) in P&Gs new Innovation Center Global responsibility for particular technologies (Skincare)Managing Asia Pacific portfolio of Open Innovation partners and defining landscape and capabilities for building Best in Class Open Innovation and Connect & Develop approaches. cost innovation, strategic alliances & Academic, SME and MNC interactions.Businesses in P&G have their local OI-team which can tap into the major OI-centers around the world.

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Interactive poll 2What are the three most important specific structural elements for stimulating Open Innovation?

Delegation of Decisions to Innovation TeamsIntegration of R&D into the Business UnitsCo-Location of Teams and DepartmentsCentral Innovation TeamsCentral Innovation FundsExternal Interface for Open InnovationMerger & Acquisition Department

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ReferencesBlog, http://www.communitech.ca, April 2011 Dr. Sharan Kaur, International Journal of Business and Social Science, Vol. 2 No. 6; April 2011Wentz RC: Die Innovationsmaschine, Springer Berlin-Heidelberg 2007Snyder NT, Duarte DL: Strategic Innovation: Embedding Innovation as a Core Competency in Your Organization. Jossey-Bass, Hoboken, 2003Lafley AG, Charan R: The Game-Changer, Crown Business, New York 2008 Blog, Linda Beltz, organizational structures for open innovation, http://www.15inno.com/2011/09/02/organizationalstructures/Stephen Lindegaard: http://www.15inno.com/2010/03/12/legovertical/

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Q&A*

**Blog, http://www.communitech.ca, April 2011

*Blog, http://www.communitech.ca, April 2011

*Lego example : Stephen Lindegaard *Dr. Sharan Kaur, International Journal of Business and Social Science, Vol. 2 No. 6; April 2011

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Wentz RC: Die Innovationsmaschine, Springer Berlin-Heidelberg 2007Snyder NT, Duarte DL: Strategic Innovation: Embedding Innovation as a Core Competency in Your Organization. Jossey-Bass, Hoboken, 2003Lafley AG, Charan R: The Game-Changer, Crown Business, New York 2008

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Blog, Linda Beltz, organizational structures for open innovation, http://www.15inno.com/2011/09/02/organizationalstructures/

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Documents

Process and Structures for Open Innovation(Ppt)