(Article) Kanter, R. M. (1994). Collaborative advantage. Harvard Business Review, 72(4), 96-108.
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The first key insight is the alignment between human relationships and business alliances. According to the authors, alliances between companies begin, grow and develop (or fail) similarly to those between humans. Consequently, they cannot be managed solely by formal control mechanisms but require a lot of interpersonal connections and internal infrastructures that enhance learning and sharing and focus on maintaining good personal relationship between the CEOs and the people working together.
The second key insight is the fact that partnerships can begin in many ways and do not necessarily have to follow a formal procedure. Instead, it can start with a simple relationship between managers of two companies who get along well and then become more formal and involve everyone in the company.
The last key insight is the fact that the most successful alliances involve collaboration (creating new value together) rather than just an exchange (getting something back for what you put in). One way to do that is to incorporate a joint activity or project. This would help the partners learn to work together and provides a basis for measuring performance.
As managerial implications it can be suggested that when considering a collaboration companies conduct three evaluations to help get off a good start: an introspective, a chemistry and a compatibility analysis. A self-analysis makes sure that one knows his strengths and weaknesses and the industry in which he operates, this is even more relevant when you can evaluate the potential partner and avoid being easily dazzled. Furthermore, it is best to know ahead of time what the dissimilarities you might face are to decide how to handle them. A chemistry analysis highlights the advantages of personal relationships does not necessarily mean putting aside the financial and other strategic analysis. Relationships between C.E.Os. can make or break alliances so there must be a balance cause finding a way to leverage the connections is not always something you can learn but when achieved can be beneficial. A compatibility analysis is particularly important broaden the assessment to values and principles, strategic grounds and hopes for the future to make sure that the collaboration does not break off at the sight of first operational failure, this is better to keep in mind especially when considering lasting partnerships.
The first limitation concerns the managerial implication of self-analysis and compatibility. Employees at other levels of the organization may be less visionary than senior managers and less experienced in working with people from diverse cultures. They may not know the strategic context in which the collaboration makes sense and see only the operational aspects in which it does not. For a collaboration to be successful, employees must be effective. The second limitation is again a limitation of self-analysis. The respect that builds trust begins with an assumption of equality: all parties bring something valuable to the relationship and deserve to be heard. If a company or its managers do not have the necessary capacity to evaluate themselves this can create an imbalance in the relationship. This will lead to a failure of the collaboration.
Gnyawali, D. & Park, B-J. (2011). Co-opetition between giants: Collaboration with competitors for technological innovation. Research Policy, 40 (5), 650-663. https://doi.org/10.1016/j.respol.2011.01.009
Lee, S., Olson, D., & Trimi, S. (2012). Co‐innovation: convergenomics, collaboration, and co‐creation for organizational values. Management Decision, 50(5), 817-831. https://www.emerald.com/insight/content/doi/10.1108/00251741211227528/full/html?fullSc=1&fbclid=IwAR1KVKiBZukShhZMQK_D1-dWs3qZKP_8ft32u9SmcayfGE3ckQN1NnOt4qM
These articles also highlight the importance of collaboration and partnership in achieving success in business, The first one focuses on how large companies can benefit from collaborating with their competitors. It explains that in some cases, competing firms can work together to develop new products and technologies that benefit both companies. The second one focuses on the concept of co-innovation, which involves collaborating with customers, suppliers, and partners to create new products, services, and processes.
(Video) The Zinnovants “Do not innovate alone”
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The Zinnovants : Do not innovate alone
With this video we can learn that innovating by collaborating with others can allow you to multiply your forces to innovate with partners and also allows you to fill the gaps in your skills set or ressources. It’s true, but you have to follow some advice.
First, find the right partners (which complements our skills). Finding the right partners who complement our skills is crucial to achieving success in any endeavor. Partnering with others who complement our skills can bring many benefits, such as increased efficiency, better decision-making, …
Secondly, find a good way to collaborate to have a win-win situation. To create a win-win situation, it’s crucial to identify common ground and areas of mutual benefit.
Finally, manage conflicts and deal with unforeseen events. Conflict can arise from a variety of sources, including differences in opinion, competing priorities, and misunderstandings. To manage conflict effectively, it’s important to approach it with an open mind.
Regarding the implications, three have been identified. The first is that you have to find the right partner, the second is how you are going to work with that person and the third is that you have to learn to innovate together.
Regarding the first implication, it’s indeed ideal to find the right person to work with. A person with whom you share the same vision, who has complementary skills to yours and the same goal for the project. We can take the example of Steve Jobs who called on Wozniak to create the first Apple computer. Jobs had the vision of how a computer should be and Wozniak had the technical skills to create it.
To work well with someone, it is important to have good communication. This means sharing ideas, asking questions, giving good feedback,… It’s also important to define roles and responsibilities. From the beginning of the project, it is essential to define this so that everyone knows what is expected of them. Also set deadlines to avoid delays. So you have to agree on how you are going to work together. Who owns what, who does what and who decides on what, how and when ?
Finally, once everything is agreed, we still need to innovate together. Indeed, you have to know how to work together every day, manage conflicts and deal with the unexpected.
As soon as a conflict arises, it must be dealt with immediately so that the project continues as planned. Sometimes you have to be able to compromise to make it work for everyone
When the unexpected happens, you have to be flexible and adaptable and find creative solutions to problems.
The source we analyzed allowed us to establish some managerial implications. This allowed us to find 3 different limitations.
First, developing an innovation in a group can in some cases be negative for the creativity of each person. Indeed, working alone sometimes allows one to be more creative because one does not have to face the judgments of others. You stay focused on your own idea and try to develop it as best as possible. Sometimes by pushing our ideas further, we show our creativity by coming up with new ideas.
Secondly, when you have an innovation that requires confidentiality, working alone is the best thing to do. The fewer people who know about the project, the less likely it is to be leaked.
Finally, working alone allows you to go faster. In most of the projects we run, we spend a lot of time communicating and enabling good collaboration between all project stakeholders. That’s why in innovations that need to go very fast, working alone is the right solution since we save the time of communicating with other people and decisions can be taken much faster and without the consultation of other people.
To conclude, developing an innovation in a group is not always the best idea if the situation requires creativity, confidentiality and speed.
If you’d like to know more about this subject, we propose the paper “How to Find the Right Partner? By Tutuk Ari”. The text explain that the success of collaborative innovation is determined by alignment with partners and complementarity in profiles and characteristics.
Most of the criteria for partner selection can be allocated to two main clusters: “complementarity” and “compatibility”. Multiple case studies were conducted on collaborative innovation between two companies and one university to reveal the process of partner selection. The research found that complementarity, compatibility, and trust are the key factors considered in partner selection. Complementarity focuses on the knowledge and competencies possessed by the company and partners, compatibility on the aligned goals, appropriate policies, and values, and trust on the willingness to share knowledge and competencies.
(Arsanti, T. A., Rupidara, N. S., & Bondarouk, T. (2022). How to Find the Right Partner? Open Innovation Partner Selection Process. Administrative Sciences, 12(4), 165.)
And the second article is “Conflict Management for Effective Top Management Teams and Innovation by Guoquan Chen”. The article say that top management teams may be critical for developing organizations that can keep abreast of marketplace changes and innovate.
Several streams of strategy research have argued that conflict and diversity promote top management team effectiveness. 100 CEOs from different firms rated their team’s effectiveness and their organization’s innovativeness. The results showed that cooperative conflict management promoted productive conflict and top management team effectiveness, which in turn led to organizational innovation. Productive conflict focuses on finding a solution. It leads to a positive result that all team members can commit to, even if they don’t completely agree with it. With destructive conflict, an agreement isn’t reached, and no one benefits. These findings suggest that cooperative conflict management is crucial for effective top management teams.
(Chen, G., Liu, C., & Tjosvold, D. (2005). Conflict management for effective top management teams and innovation in China. Journal of Management Studies, 42(2), 277-300.)
(Article) King, A., & Lakhani, K. R. (2013). Using open innovation to identify the best ideas. MIT Sloan Management Review, 55(1), 41.
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The purpose of the article is to find the best open- innovation strategy options to identify the best ideas. There are 2 main strategies. The first is Opening the Idea-Creation Process. To increase idea generation, organizations set up innovation competitions. Companies ask their customers or external parties to present a certain type of innovation and the best ones win a prize. The second strategy is Opening the Idea-Selection Process. Such approaches usually take the form of approval competition like the TV show The Voice, where outsiders vote on which ideas should be selected. But you also have to know that companies can choose to use both strategies at the same time.
Most managers think that the best ideas will usually come from someone inside their company. However, asking questions of people outside the company can be very rewarding. According to the basic statistical principle, a big number of ideas increase the quality of the best ones. Moreover, we can also link this with the principle that the quality of the best ideas is often higher when the variability of these ideas is high.
Managers also tend to minimize the benefits of open innovation for two reasons. Firstly, they think that innovation contests organised for the purpose of idea generation hinder collaborative innovation. Secondly, they think that open innovation only works for very narrow technical problems. But, it has been found that contests can be adapted to encourage coopetition between different participants. A good example is Netflix. In order to create an algorithm to recommend films to its customers, 2 competitors of the contest merged to propose the winning solution. Then, concerning the second argument, it can be denied by the fact that there are many counter-examples like General Electric, e-Yeka, …
A big issue in the world of innovation is also the costs and the risks of change. In the traditional development pipeline, the company bears the risks by paying the idea generators for their efforts. However, in open innovation, the company pays once the design is complete. Idea generators bear the costs but also the risks of developing the concept. This reduces the number of participants in the contest, as not everyone can afford it.
One way to reduce costs is to provide tools to participants. Another way is to break the problem down into smaller pieces. This allows each participant to focus on the section of the work where they are specialised. This solution is used by NASA.
There may be disadvantages of using outside people. On the bright side, it allows businesses to transfer costs and risks to outsiders. Nevertheless, while outsiders may offer unique views on the idea’s value, their definition of value may not line with the company’s strategy.
Another limitation is the way in which the company contract with the idea’s generators. Traditionally, businesses hired outside consultants to help them develop new products. In open innovation, they don’t hire the expert, they only buy the idea. When you hire an idea generator, you may select who will own the future ideas up front. When you buy the idea, you face to “Arrow’s information paradox.” Arrow says that the worth of an idea cannot be judged until it is exposed. Once it’s revealed, the buyer possess it and can refuse to pay for it. Worry of unfair duplication of their ideas may dissuade the inventors from entering competitions.
For the third limit, the company launching open innovation can put in place mechanisms to limit the costs that idea generators have to bear but some of these costs cannot be reduced, such as the costs of coordination and the costs that result from international collaboration. Due to differences in culture, international knowledge collaboration raises the complexity of operations and decreases communication effectiveness.
References:
• Nambisan, S., Siegel, D., & Kenney, M. (2018, 4 juillet). On open innovation, platforms, and entrepreneurship. Strategic Entrepreneurship Journal, Volume 12, Issue 3,p. 354-368. https://onlinelibrary.wiley.com/doi/abs/10.1002/sej.1300?casa_token=sCgsRU-fSkoAAAAA:79mkRHaZ2r5PvQ3SqwHvNa3h-MWWbAzcvO5GnlW4dcLUZ4W8t694uL6LTb5bLzUcE5gNaoumevpMfYwj
• Chesbrough, H. (2020, août). To recover faster from Covid-19, open up : Managerial implications from an open innovation perspective. Industrial Marketing Management. https://www.sciencedirect.com/science/article/pii/S001985012030300X
Cheng, C. C. J., & Huizingh, E. K. R. E. (2014). When Is Open Innovation Beneficial ? The Role of Strategic Orientation. Journal of Product Innovation Management, 31(6), 1235‑1253. https://doi.org/10.1111/jpim.12148
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Our article is about open innovation, which encourages collaboration and, as the name suggests, openness.And it essentially says that companies should start looking outside for ideas and innovations. Our first key point is that open innovation activities improve innovation performance.
Innovation performance refers to the degree to which firms are successful in achieving the goals of new products or services. Three main types of open innovation activities can be observed.
a) Open innovation outside-in: We look for outside help. b) Open innovation inside-out: We will provide help for others, for outside. c) Coupled activities, which refer to collaborative activities between different actors in the innovation system and which combine outside-in and inside-out activities.
Doing open innovation activities improves the performance of the four dimensions of innovation performance: The innovativeness of new products/services, the success of the new product/service, the customer performance and the financial performance.
Although open innovation is positively related to all four dimensions of innovation performance, the effect sizes do not seem to be equal. In fact, the strongest effects are for new service innovation and financial performance.
Concerning the implication, the manager is advised to really think about open innovation because we believe that it will allows them to transform to remain competitive in today’s world. Attract a larger panel of customers: every company wants to attract new customers, while retaining the ones it already has. Acquire new skills. Improve its reputation because the consumers are attracted to companies that know how to develop, innovate and live with the times. And also, manage research and development costs
Concerning the limitation, Open innovation can bring complexity by creating new problems for companies. Indeed, having new actors in the innovation process raises two major external issues: the management of intellectual property, and the compensation granted to the authors of innovations. Moreover, a company wanting to move to an open culture is also confronted to 3 major internal challenges: the management of confidentiality, the distribution of new functions between company departments, and the adaptation of the HR policy. So, companies have to anticipate the internal and external problems to do not let those negatively impact the innovation performance.
Our second key point is that open innovation has the strongest effects on new service innovativeness and financial performance. In order to focus on those 2 dimensions, a manager should, on one hand, focus on outside-in activities to improve the performance of new service innovativeness as it is favorably linked to radical innovations. The limitation of outside-in activities is the risk of the “not invented here” syndrome.
On the other hand, for the financial performance, a manager should focus on inside-out activities such as for example pharmaceutical companies that patent their “receipts” of vaccines in order to stay competitive. The limitation in this case is that often companies do not see the point in sharing their knowledge. Also, it can be seen as a loss of value as it requires a lot of time, meetings and organization.
The third key point concerns the impact of strategic orientation’s choice on business’ performance. It is defined as : “the strategic directions implemented by a firm to create the proper behaviors for the continuous superior performance of the business”. The article we have chosen describes 3 types of orientations, entrepreneurial orientation, market orientation and resource orientation.
Companies should choose the strategy that is best coherent with its own characteristics: culture, sector, market and so on. Companies who choose the orientation that is suited to them may gain a competitive advantage over their competitors. Finally, It may help firms build/reinforce a shared vision and culture.
A limitation that could be considered for these strategic orientations is the fact that they should not be considered as the only ones to strengthen the effect of open innovation on innovation performance.
references:
Barrett, G., Dooley, L., Bogue, J. (2021). Open innovation within high-tech SMEs: A study of the entrepreneurial founder’s influence on open innovation practices. Technovation, 103(5). https://doi.org/10.1016/j.technovation.2021.102232
Melo, J. C. F. D., Salerno, M. S., Freitas, J. S., Bagno, R. B., & Brasil, V. C. (2020). From open innovation projects to open innovation project management capabilities : A process-based approach. International Journal of Project Management, 38(5), 278‑290. https://doi.org/10.1016/j.ijproman.2020.06.006
Bertello, A., Bogers, M. L. A. M., & De Bernardi, P. (2022). Open innovation in the face of the COVID-19 grand challenge: Insights from the Pan-European hackathon ‘EUvsVirus’. R&D Management, 52(2), 178–192. https://doi.org/10.1111/radm.12456
Show lessde Man, A. P., & Duysters, G. (2005). Collaboration and innovation : a review of the effects of mergers, acquisitions and alliances on innovation. Technovation, 25(12), 1377‑1387. https://doi.org/10.1016/j.technovation.2004.07.021
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This article is a literature review of 45 large-scale empirical studies that tries to answer the question: “Is there a superior mode of collaboration in terms of strengthening the innovative capabilities of the partners involved?”.
Our first insight is that in ¾ of the firms reviewed, alliances increase the innovativeness of the firms. If the management of the firms involved is better equipped to manage alliances or the partners have an overlapping or similar knowledge base, this effect is enhanced.
Secondly, M&As have a neutral or negative effect on innovation. This is often caused by the “indigestibility” of the knowledge, that is not all of the knowledge of the merged company is useful to the acquirer. However, M&As result in higher R&D cost savings than alliances.
Finally, the article looks at circumstances that might affect this choice between alliances & M&As. First, success measures like patents are preferred than input. Geographical setting and time horizon do not seem to have an impact on both. As for the sectoral background, it matters only for alliances.
As for the implications, the first is that to innovate, managers should consider alliances before M&As unless they want to reduce R&D costs.
Our second implication is that when the alliance or M&A process is initiated, the manager must build the company’s capacity to manage the process based on its experience and ensure that it invests enough people, money and time. A thorough review of an organization’s history, mission, values, culture, and financial reports is necessary to obtain a proper assessment of the target company.
Our third implication is that the manager must ensure that the network effect is not overlooked. Three conditions will reinforce the innovativeness of the alliance network: a similar knowledge, the impact of the entire portfolio of relationships and the intensity of the collaboration.
We have found three limitations to this article. The first is that the success criteria are too limited in the context of innovation. Only using the number of patents, R&D input, R&D output, stock market reactions and financial revenues neglect a wide range of innovative practices in processes, services and platforms.
A second limitation is the fact that trust is at the core of the success of an alliance or an M&A but it is difficult to build it if it happens during a short amount of time or if competition is still present between the companies.
The last limitation is about the paradox of antitrust policies prohibiting alliances. Their goal is to drive innovation and limit competition. But we see here that alliances drive innovation. Managers should take into account the regulators in their decision making.
If you’d like to know more about this subject, we propose the paper “Business model innovation in alliances: Successful configurations” written by Bouncken and Fredrich in the Journal of Business Research, Volume 69, Issue 9 in 2016 as further reference, that shows us how companies can benefit from business model innovation in alliances.
This second paper “Reconciling the Dilemma of Knowledge Sharing: A Network Pluralism Framework of Firms’ R&D Alliance Network and Innovation Performance” written by Zhang, Jiang, Wu and Li in the Journal of Management, Volume 45 in 2019, that goes deeper into the implications of the network effects that exist between firms
– Bouncken, R. B., & Fredrich, V. (2016). Business model innovation in alliances : Successful configurations. Journal of Business Research, 69(9), 3584‑3590. https://doi.org/10.1016/j.jbusres.2016.01.004
– Zhang, J., Jiang, H., Wu, R., & Li, J. (2018). Reconciling the Dilemma of Knowledge Sharing : A Network Pluralism Framework of Firms’ R&D Alliance Network and Innovation Performance. Journal of Management, 45(7), 2635‑2665. https://doi.org/10.1177/0149206318761575
Show lessAppleyard, M. & Chesbrough, H. W. (2017). The dynamics of open strategy: from adoption to reversion. Long Range Planning, 50(3), 310-321.
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The article gives insights on the motivations and challenges that organizations face when they choose to adopt an open strategy as innovation has become more open the past few years.
Firstly, we have highlighted three key insights regarding this paper. The first one is that the choice of adopting an open strategy is more dynamic and less static, meaning that companies who choose for a closed strategy where they have more control of their IP rights can change their strategy overtime towards an open strategy and vice versa. Then, there are different factors that could influence a company to change its strategy. Concerning a change from a closed to open strategy, it could be a result of a company’s failure to provide enough consumer surplus to induce purchase. Another possibility would be the change from an open to closed strategy. Here, two types of factors appear critical to the change: firm-driven factors, i.e. when a company has gained enough internal technological prowess to maintain quality and has built a strong relationship with his clients, and market-driven factors, i.e. if the market has become sufficiently large and the influx of new consumers decreases, the benefits of an open strategy diminish, and the company prefers a closed strategy. Aside from these strategies, the authors mention hybrid strategies where the company can maintain control but leaves some openness to allow for a variety of features (internal versioning) or the company gives some stability to the customers and releases control over its IP rights (external versioning). Finally, the paper highlights two essential competencies to support the pursuit of open strategy: technological prowess, i.e. the ability of a company to allocate its knowledge to a current innovation, and organizational processes, i.e. provide appropriate organizational support at all levels of the organization and clearly define the processes.
Secondly, we thought of three managerial implications. The first one would be that managers should consider the arrival rate of new customers into the market addressed by the open initiatives to choose their strategy. In a small market where there are a lot of new customers arrivals, the manager should focus on value creation for the new arrivals. However, when the market has grown and the flow of new arrivals reduces, it could be interesting to switch to a closed strategy and focus on value capture with the current customers. A second implication would be that if the company’s preferences and customers’ preferences are different regarding the strategy, then the manager should choose a nuanced strategy by relaxing the binary choice between open and closed (e.g. what Microsoft did when they launched Xbox). Finally, if the company wants to pursue an open strategy overtime, we advise the manager to ensure that they have a shared need with the client for an ecosystem and to provide organizational support (e.g. alignment with the goals of the company, launch an independent business unit, etc.).
Thirdly, we highlighted 4 limitations. The first one is related to the 3rd key insight. As soon as a firm is in an open strategy, it is very likely to increase its technological prowess. In consequence, this would push the firm to withdraw from the open strategy and return to a closed one, which could mean a higher profit for the firm. It also raises the question of how sustainable an open strategy is on the long term. The second limitation says that switching strategies could be more difficult for small business because building strong relationships with clients and deciding the right timing could be complicated (e.g. as opposed to Google and Android). The third limitation is that, in fine, the closed strategy could be more profitable. The firm could indeed benefit from higher profits induced by intellectual property and high barriers to competition. Finally, the last limitation is related to the paper itself as it only considers 2 actors; the firms and customers. However, other actors could influence the choice of the strategy such as policy-makers, competitors, etc. In other words, the whole ecosystem wasn’t considered.
Some further readings could be interesting to keep on learning about the subject :
Chesbrough, H., & Crowther, A. K. (2006). Beyond high tech: Early adopters of open innovation in other industries. R & D Management, 36(3), 229-236. https://doi.org/10.1111/j.1467-9310.2006.00428.x
Gegenhuber, T., & Dobusch, L. (2017). Making an impression through openness: how open strategy-making practices change in the evolution of newt ventures. Long Range Planning, 50(3), 337-354. https://doi.org/10.1016/j.lrp.2016.09.001
Pittz, T., Intindola, M., Adler, T., Rogers, S., & Gard, C. (2018). Collaborating smartly: The role of open strategy in absorptive capacity. Journal of Small Business Management, 57(4), 1595-1615. https://doi-org.proxy.bib.ucl.ac.be:2443/10.1111/jsbm.12430
(Article) Andrew, J. P., & Sirkin, H. L. (2003). Innovating for cash. Harvard Business Review, 81(9), 76-83.
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In the paper written by James Andrew and Harold Sirkin the issue raised is the fact that the majority of new products do not generate a financial return, despite the fact that companies are very involved in innovation. As we all know, new products and “cool” products is not enough to sustain success.
The goal is not to be innovative but to be an innovative enterprise in order to generates cash.
The paper provides us three approaches to innovation. The author described an innovation approach as “a broad management framework that helps companies turn ideas into financial returns”.
The three approaches are:
– Integrator: Manage all the steps necessary to generate profits from an idea. The capital needed is high and it is suitable when speed-to-market is not critical, technology is proven, customer tastes are stable, and innovation is incremental.
– Orchestrator: Focus on some steps and link with partners to carry out the rest. The investment is medium, and it is best used when there is a mature supplier/partner base, intense competition (a need for constant innovation), when strong substitutes exist and when technology is in early stages
– Licensor: License the innovation to another company to take it to market. The capital needed is low. It’s recommended to use this approach when there is strong intellectual property protection, when the importance of innovator’s brand is low, and the market is new to the innovator.
Finally, not that there are different level of investments, so the companies have to analyze the cash flows, risks, and returns before the development of new products.
An important idea that we must remember is that there is no black box algorithm that tells the best strategy to use. However, a manager can try to find a good solution by assessing 3 factors. First, the manager must find answers to different question relative to the industry. The first quest concerns the physical assets needed to enter the industry. (For example, how heavily will we need to invest in factories?). The second question concerns the supply chain. Are partners working with competitors? Are they complexe or unsophisticated?) The third question is relative to the importance of brands. (Will our brand provide a permanent or temporary Advantage? And finaly the intensity of rivalry. (What strategies will rivals use to respond to our entry?)
The second main factor is the nature of the he Innovation. Indeed, the characteristics of the product plays an essential role in the choice of strategy. By instance, the product life potential life cycle indicates the window available to recoup the investment and gives clues about whether we should choose a short term or a long-term strategy. Other innovation characteristics to take into account are the product’s complements and the infrastructure needed for its functioning.
Finally, the last main factor a company should consider before picking a strategy are the risks. They fall in four categories. The first risk is relative to the technical performance of the product. Can the product actually work and perform like it promises? The second risk is that the product might not attract the customer even it is performant. The breakthrough or the incremental improvement may not be thrilling enough for consumers, and they may not buy it. Substitutes represents the tird risk, obviously the more substitutes on the market the less margins there will be. Finally, the fourth element that will risk profile is the magnitude of the investments that need to be done in order to commercialize the product.
Once this assessment is done, there are a few advices a manager must keep in mind First, we must consider the composite picture and be mindful not to focus on one dimension of the framework. The goal of this broad perspective is to match the innovation’s needs for commercial success with the marketplace conditions. Moreover, as said above choosing the right strategy is not a backbox process and it must be seen as more of a “best guess”.
Secondly it is not enough to get a sense of which strategy to adopt toward an opportunity, The firm’s internal skills must also match the approach. If there is not a good match between the organization and the approach, or if the company can’t use the desired approach, managers have two options. They can either use a less-attractive strategy to take the product to market. Or, they can invest funds and time in order to develop the skills needed for implementing the optimal strategy.
The biggest limitation is that they don’t have a blackbox to help the manager to choose the right approach to launch a product on a market. That’s what they actually let the reader understand further in the article. However, we can note that they give us a path to do it like we have seen in the previous section with the four factors a company can use to analyze the industry. But no tools have been proposed to clearly chose one aspect or to analyze the innovation or the risk dimension. So, there is clearly a room for freedom and companies cannot be sure they have chosen the best approach even if they apply the few advices present in this article.
Another big limitation is that they suggest only 3 approaches. There is no other approach proposed. In fact, in reality it exists way more than 3 approaches. Furthermore, if your company identifies itself that some aspects fit more in the Integrator and others in the licensor but not really in the orchestrator approach, the manager has then to freeride and choose by himself where the company will situate to adapt one approach.
Finally, we have to keep in mind that it is only theory and even if for some companies these approaches might be working it might not be the case for every single company.
Further resources:
– Jalalabady, F. Sameri, A. Reece, EM. (2018). Product development: from concept to market. US National Library of Medicine, National Institute of Health. Online article from: https://www.ncbi.nlm.nih.gov/pubmed/30357046
– Yoon, E. Lochhead, C. (2020). 5 Ways to stimulate cash flow in a downturn. Harvard Business Review. Online article from: https://hbr.org/2020/04/5-ways-to-stimulate-cash-flow-in-a-downturn?referral=03759&cm_vc=rr_item_page.bottom
Show less"(Article) Gassmann, O., Enkel, E., & Chesbrough, H. (2010). The future of open innovation. R&D Management, 40(3), 213-221."
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1. Key Insight
Open Innovation is based on these different streams of research organised into nine different perspectives : (1) The spatial perspective leads to research on the globalisation of innovation. (2) The structural perspective shows that the division of labour has increased in innovation. (3). The user perspective. (4) The supplier perspective. The downstream side of innovation has been less intensively researched, but has a strong impact on innovation. (5) The leverage perspective (6). The process perspective. There are three essential processes in the openness of the innovation process: outside-in, inside-out and coupled. (7). The tool perspective. (8) The institutional perspective. Open innovation can be seen as a private-collective model of innovation. (9). The cultural perspective. Openness of the innovation process starts with a mindset.
The question is how far open innovation will go and how long it will last. A genuine paradigm shift is irreversible and differs from trends in fashion and science in its long-term impact. (1). Industry penetration: from pioneers to mainstream. (2). R&D intensity: from high to low technology. (3). Size: from large companies firms to SMEs. (4). Open innovation is also encouraged by a parallel trend in innovation processes. (5). Structure: from autonomy to alliances. (6). Universities: from ivory towers to knowledge brokers. (7). Process: from amateurs to professionals. (8). Content: from products to services. (9). Intellectual property: from protection to inalienable property.
2. Implications
First of all, in order to be able to switch to open innovation practices, the innovation processes will have to evolve in parallel. While back in the 80’s and 90’s the stage-gate process was dominant, mainly for new product developments. Managers now have to adopt an interactive probe and learn process. But what’s the difference and what are the pro’s and cons of this evolution?
So, the stage-gate process is composed of 5 stages, each separated with different quality assessment gates. The Gates go as follows; first a SCOPING gate (where the feasibility of the project is assessed) then the BUSINESS CASE CREATION (where the business is simulated) then a DEVELOPMENT stage ( where the focus lies on design) the fourth stage is TESTING AND VALIDATION ( here, the product is tested in labs) and finally the LAUNCH PHASE ( where the product is put on the market). The main advantages of this method is that it helped structure the process and provide a clear schedule to follow. The decision -making happens more fluently and risk is minimized.
But, at the end of the 90’s. Lynn found out that some high-tech companies, who launched products in a discontinuous and less structured way, operated with a different process. This is where the Probe and Learn process found birth. The process happens as follows; first there is a PROBE stage (where a product is brought as an experiment into the market) then there is a STUDY THE MARKET RESULTS stage, next you LEARN from that experiment and you ITERATE with other experiments. This way of processing innovation can be compared with the Lean Startups method used nowadays in many companies.
So that’s the first implication, in order to surf on the wave of open innovation, processes needed to be adapted and will continue to evolve in the future, back in the days we talked more about Probe and Learn, now we talk about Lean Startups.
3. Limitations
For open innovation to truly become a main paradigm, more SMEs have to adopt an open innovation strategy. Given that they represent a large portion of enterprises and not enough of them have actually opted for this shift.
Why is that? SMEs face number obstacles that stop them from actually going for an open strategy
Loss of revenue
Licensing is an important strategy for organizations knowledge oriented. It allows them to secure a revenue. Losing that revenue would be quite difficult for them as they do not have the resources of big compagnies and they rely on that revenue to survive.
Furthermore, companies have tax incentive with patenting. Policies encourage IP protection through tax benefits.
You may gain scale but you still need to find the right partner
Another obstacle is the difficulty to find the right partners
Simply deciding to choose an Open Innovation strategy is not enough to make it successful. Organizations still need to find the right partner for them. When collaborating, they need to make sure that objectives of each party involves align.
Knowledge is a crucial asset for SMEs and patenting is a very important strategy. Many SMEs fear losing their competitive advantage if they go for an Open Innovation strategy and share their knowledge to potential competitors.
Managerial complexity + Coordination costs
Furthermore, the shift from a closed to an open business model comes along with increasing complexity for managers and increases the costs of coordination of internal and external resources. Finding the right balance between technological knowledge revealing and resources sharing represents a critical task for successful open innovation strategies. An additional challenge comes from the alignment of partners’ incentives while retaining technology control. Managers have to keep every stakeholder happy and make sure their goals are a match.
Rigidity and knowledge lock in
In addition, the evolution of alliances inside a focused business model exposes SMEs to the risk of remaining locked-in to the development of specific technological knowledge and not being able to move away from a nonscalable business model. They could find themselves locked in to the available technological knowledge. This would result in an adaptability loss which is one of the strength of SMEs.
Loss of focus
Finally, search strategies aimed at exploring new solutions that involve multiple partners in the early stages of technology development can result in distraction of resources, lack of focus, and failed attempts to find synergies between the new project and the core business of the company. This loss of focus could to lead rising search cost and low return on R&D investments.
Let’s now look at our second limitation which relates to the Intellectual Property system. Given that the IP system has been there for a quite some time, it is well established and gives strong incentives to protection strategies.
Patent system:
Tax incentive
As said before, enterprises have tax benefits when they patent an innovation.
Policies are favoring protection
Given that the IP system is as established, policy makers often favor protection by for example extending the length of patent (e.g. pharmaceutical products) or IP rights (e.g. Mickey)
Way to monetize knowledge
For many enterprises, licensing is an important source of revenue.
Other alternative if patents are too expensive: i-depot
4. Further References (Sev)
Huizingh, E. K.R.E. (January 2011). Open innovation: State of the art and future prospects. Technovation. Elsevier, Volume 31, Number 1, pages 2-9.
de Araújo Burcharth, A. L.; Praest Knudsen, M.; Alsted Søndergaard, H. (March 2014). Neither invented nor shared here: The impact and management of attitudes for the adoption of open innovation practices. Technovation. Elsevier, Volume 34, Issue 3, Pages 149-161.
Show lessPisano, G. P., & Verganti, R. (2008). Which kind of collaboration is right for you. Harvard business review, 86(12), 78-86.
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This article deals with the topic of collaboration and the tools that help managers make the right decisions about the collaborations their company performs. Potential partners and ways to collaborate with them have both increased a lot. However, selecting the best options remains quite difficult. Indeed, companies that choose the wrong mode risk falling behind in the race to develop new technologies, designs, products and services.
The first key insight is the importance of participation in collaboration. Collaboration networks differ significantly in the degree to which membership is open to anyone who wants to join. How open or closed should your firm’s network of collaboration be? The second key insight is about the importance of governance in collaboration within the company (hierarchical vs. flat). Who should decide which problems the network will tackle and which solutions will be adopted? The third key insight is the fact that a company’s strategy must be consistent with its type of collaboration.
The managerial implication of the first key insight is that the manager should try to make the best decision for his company and its objectives. It is therefore essential for them to understand when it is necessary to have a large or a small number of problem solvers and thus to position oneself in an open or closed network. Firstly, by using a closed mode, it follows that the manager should identify the knowledge domain from which a potential solution to his problem would come. Then, the manager should identify the people competent in this knowledge domain. In the open approach, it is not necessary to identify the areas of knowledge where the solution could come from. It also follows that it is not necessary to identify the potential people capable of solving your problem. In fact, once a problem is posed, the open network makes it possible to attract a large number of potential solutions from different problem solvers. For the second managerial implication, if the manager thinks that the governance of his organization is hierarchical, he must make sure that it has the necessary capacities and knowledge to define the problem and evaluate the proposed solutions. Indeed, this type of governance requires a good understanding of the technologies and markets concerned (thus an ability to understand the needs and requirements of users), to define the system configuration in order to coordinate the work of the various collaborators. On the other hand, an organization can also have flat governance, in which case the manager must ensure that the organization does not have the necessary breadth or capacity because the advantage here is the ability to share (burden of innovation) with others the costs, risks and technical challenges of innovation. The challenge will therefore be to get the contributors to converge to a profitable solution for the company. For the third key insight, the manager must ensure that the choice of collaboration is always in line with the organization’s strategy in relation to the rapidly changing environment and current technologies. In order to develop an effective collaboration approach, it is important for a company to have a clear understanding of the adopted strategy.
Regarding the limits, your collaboration level will depend on your company. Indeed if your company’s competitive advantage is based on a secret trade, then it is likely that you will not move towards collaboration. Because you have to trust your employees, and this is often easier internally. Therefore, not every creative mode is suitable for every project. Some projects are by their nature or size dedicated to certain modes. Small projects where all the necessary knowledge is already present do not require collaboration for their creation. Finally, if you want to attract talents in your collaborative projects. you must be known enough and offer them something in return or nobody will apply.
Further references:
(article) Prusak, L. (2011). Building a collaborative enterprise. Harvard Business Review, 89(7-8), 94-101.
(article) Nidumolu, R., Ellison, J., Whalen, J., & Billman, E. (2014). The collaboration imperative. Harvard business review, 92(4), 76-84.
(article) Henttonen, K., Hurmelinna‐Laukkanen, P., & Ritala, P. (2016). Managing the appropriability of R&D collaboration. R&d Management, 46(S1), 145-158.
Show lessEmden, Z., Calantone, R. J., & Droge, C. (2006). Collaborating for new product development: selecting the partner with maximum potential to create value. Journal of Product Innovation Management, 23(4), 330-341.
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The process presented is divided in 3 key phases. The first phase is called the technological alignment. It will give managers an idea about possible opportunities. They need to ensure that the partners have either an innovative technology or a specific expertise (technological capability), that the partners complement one another (resource and market knowledge complementarity) and that they share some overlapping knowledge to assess the value of the potential partner’s competencies. The second phase of strategic alignment exists to assess if the strategies of the partners are compatible on two main points: the motivations and purpose of each partner need to correspond. However, they do not have to be the same but only to be compatible. Finally, the third phase is about relational alignment. Firstly, as the collective behaviors and the decision process are shaped by the organizational culture, those of the potential partners have to fit together. Secondly, a propensity to adapt is also needed for the success of the collaboration. Finally, both firms need to have a long-term orientation to ensure success and accept to make some short term sacrifices.
Concerning the implications, you have to be careful about three aspects to select a good partner for your co-development alliances. First, do not approach the co-development like any other kind of partnerships. When firms collaborate for new product development, they do so with several different types of organizations. Moreover, co-development implies both integration and a certain level of competitiveness between the partners, and each party contributes to a significant portion of the end solution. Secondly, the order in which the constructs are practiced is important. First, develop a mutual understanding of technologies and their implications in the market, then stablish a team to develop the initial co-development project specifications and finally, determine financial and legal feasibility of co-development project and create organizational acceptance. To conclude, do not forget to combine the 3 essential phases. By the technological alignment with a partner, you maximize the transfer and integration of know-how and create technological synergies. But, trust the significance of strategic and relational alignments, because they allow to ensure the transfer of the know-how and the collaboration, as well as the sustainability of the partnership.
With regard to limitations, we have identified two main ones in our article. The first one is that finding a partner who matches all the criteria is not always enough. In some cases, even if a company has taken care to ensure that each of the steps described above in finding a good partner are successfully completed, the partnership may prove to be complex. Firstly, it is impossible to know for sure that our partner will not deviate from the collaboration to obtain a greater personal advantage. Secondly, we operate in a VUCA environment where the future is uncertain and change is omnipresent. The partnership may therefore work for the best in the situation where the deal was made, but it may degenerate if unexpected external elements are added (ex : coronavirus crisis). The second limitation is that this type of partnership does not only include those who decide to join forces. Indeed, suppliers, competitors, customers, and other stakeholders are all impacted by the deal. It is therefore necessary to think further and analyze the case of each of the stakeholders before starting a collaboration for the development of a new product.
Further references :
Hu, Y., McNamara, P., & Piaskowska, D. (2017). Project suspensions and failures in new product development: Returns for entrepreneurial firms in co-development alliances. The Journal of Product Innovation Management, 34(1), 35-59. doi:http://dx.doi.org.proxy.bib.ucl.ac.be/10.1111/jpim.12322
Gattringer, R., Wiener, M., & Strehl, F. (2017). The challenge of partner selection in collaborative foresight projects. Technological Forecasting and Social Change, 120, 298. Retrieved from https://search-proquest-com.proxy.bib.ucl.ac.be:2443/docview/1936519378?accountid=12156
Bhaskaran, S. R., & Krishnan, V. (2009). Effort, revenue, and cost sharing mechanisms for collaborative new product development. Management Science, 55(7), 1152-1169. Retrieved from https://search-proquest-com.proxy.bib.ucl.ac.be:2443/docview/213194453?accountid=12156
Show less(Article) Poetz, M. K. & Schreier, M. (2012). The value of Crowdsourcing: Can users Really Compete with professionals in Generating New Product Ideas? 29(2), 245-256.
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Key Insights
A. Firstly, the article defines the concept of crowdsourcing by the act of generating ideas of new products or services, or ideas of improvements for existing products or services by collaborating with end users.
B. Afterwards, this paper tries to differentiate the two main types of users input. On the one hand, there are user needs not yet fulfilled by currently commercialized products. This kind of information is called “needs-based information”. On the other hand, the second type of user input named “solution-based information”, which relates to consumers directly proposing potential ways to solve their revealed needs.
C. Finally, in order to understand how effective crowdsourcing is compared to traditional idea generation processes, the article explains the results of a case study confronting professionals and end users. Their ideas are judged on the criteria of novelty, customer benefit and feasibility.
Implications
A. The optimal solution should be a combination of the two extremes. In order to be properly innovative on the current markets, innovation should lie in a combination of crowdsourcing and usage of professional techniques and knowledge. First, managers should focus on gathering new ideas from their users, that could bring effective customer benefit. Secondly, they should rely on their skilled teams of professionals to transform these ideas into feasible products that can be commercialized.
B. There exist different types of crowdsourcing based on the targeted skillset. Therefore, management teams have to identify beforehand which type of user input they expect in order to discover which type of audience they target through their crowdsourcing. Two types are particularly highlighted in this paper. On the one hand, User Innovation which consists in making a call to the wide crowd in order to help you develop a project. One famous example is the open source operating system Linux. On the other hand, Innovation Tournaments which can be illustrated with the concept of “hackathons” in which people competing against each other are experts in the domain related.
Limitations
A. The first limitation concerns the minimum knowledge required to innovate in a certain field. Indeed, it can be a real barrier to propose ideas in certain industries in which the theoretical and technological background required is so huge that the organizations can only rely on experts to manage their products.
B. Another factor influencing the effectiveness of crowdsourcing methods is the willingness of the crowd to share their findings. As a matter of fact, the crowd is not always inclined to share those ideas.
Further References
A. Estellés-Arolas, E., Gonzàlez-Ladrón-de-Guevara F. (2012). Towards an integrated crowdsourcing definition, Journal of Information Science, 38(2), 189-200.
B. Wilmot, R. (2015). Crowdsourcing Innovation: Changing the world one idea at a time. Tedx Talks. Online video (10 min).
Dahlander, L., & Gann, D.M. (2010). How open is innovation?. Research Policy, 39(6), 699-709
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These authors tried to find the magic recipe for a culture that best supports innovation. In order to find it, they
studied in detail 4 companies who received the prize of “the best culture supporting innovation”. In the
beginning of the article, they tried to define the word “culture” and found 164 different definitions in the
literature. They decided to use this definition: “a pattern of shared basic assumptions that the group learned as
it solved its problems of external adaptation and internal integration, that has worked well enough to be
considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel
in relation to those problems”
The first key insight that resorted from this paper is that social innovation precedes technical innovation.
Technical innovation regarding products or services proposed by the firm is possible only if social innovation
(innovations regarding the firm’s culture and the different relationship within the firms that constitute its
hierarchy) has been done beforehand. For a manager, an implication regarding this key insight is to be
“ambidextrous”. That means to be able to exploit current and existing social innovation possibilities while,
simultaneously, dealing with new and different opportunitiesthat can have a positive impact for the company’s
culture in the future. A limitation to this managerial implication is that it seems to be unrealistic to ask all the
stakeholders to develop a chameleon attitude such that they’re able to adapt permanently to change of culture.
The role of leadership is not only to inspire but also to create and transform the culture of the company in
order to have a culture supporting the innovation objectives of the firm. For a manager, that implies that he
needs to know what’s the culture now and so to review the existing culture. Then, a second essential thing is
to take the strategy and the structure of the company into account in order to create the right culture that will
fit with the goals of the company in terms of innovation. Another thing is also to realize that transforming the
culture takes a lot of time and energy and that it is personal so that means that it is specific to your company.
Sometimes, when the leadership creates or transform the culture there is a feeling with the employees that it
comes only from above and they are not integrated in the process. So, these employees will not be motivated
and invested in their work. The culture will maybe not fit with their own values, so it can create problems (living
the company). That’s why communication is really important.
If you put the innovation into the culture, it will be a value, and an automatism in the work of your employee.
However, pay attention to letting your employee express this “non-negotiable dimension of the work” freely.
You should motivate and push some other values that will help this innovative culture to have an effective
innovative company such as authorise and reward the risk taking. Then when you think about implementing
that innovative culture in order to have an innovative company, do not push this innovation too much, you
don’t want to have employees thinking about innovation all day long and being stressed about finding “the big
new idea”.
Further references :
• Mulgan, G. (2012). The theoretical foundations of social innovation. In Social innovation (pp. 33-65).
Palgrave Macmillan, London.
• Barsh, J., Capozzi, M. M., & Davidson, J. (2008). Leadership and innovation. McKinsey Quarterly, 1,
36.
• Sciulli, Lisa M. “How organizational structure influences success in various types of innovation.”
Journal of Retail Banking Services, Spring 1998, p. 13+. Academic OneFile, Accessed 28 Apr. 2018.
• The Four Behaviors Of Innovative Leaders | Forbes (Video)
Aarikka-Stenroos, L., & Ritala, P. (2017). Network management in the era of ecosystems: Systematic review
and management framework. Industrial Marketing Management, 67, 23-36.
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In this paper, they explain ecosystems are becoming more and more important in the network
Show lessmanagement. The organization try to create value by using a network of partners. To manage the network as
well as possible thy explain that is important to have a global/holistic vision of the network. They have to
consider the entire ecosystem and not just the individual actors, so we have to past from a hierarchic model to
and collaborative. We need to have this collaborative system because they are more and more
interdependencies in the ecosystems such as the need of trust, collaboration, coordination…
To have an efficient network management, we need to use the digital technologies. The artificial
intelligence or the data analytics can be helpful for the organization because they can offer real time
information.
The network management have also to be flexible, like that if they are an evolution in the ecosystem,
it is easier to adapt the network management to the new data. In conclusion, we have to change the mind and
we have to want change our approaches and technologies to have a successful network management.
We identified three elements as managerial implications.
Firstly, cross-functional teams benefit the ecosystem because it helps to have a better knowledge
transfer. The challenge is that you need to know to whom ask for help in the project. That is also why the third
implication is important. To get to know the other members and thus learn who to call for which challenge.
Secondly, digital platform to enhance communication and thus collaboration. Communication is key
in a lot of situations when trying to do something including more than one person (understands each other’s
needs and objectives to be on the same line of thoughts). To have good communication, we need the right
platform to do it. It can for example be monthly events to have everyone communicate on their current projects.
But it can also be a digital platform which makes it easier to communicate. If it takes less effort, people with
communicate more.
Finally, foster culture of experimentation, learn from both success and failures. A challenge in
teamwork and especially teamwork with unknown people from different companies and thus who have
different agendas, is the fear of failure and the difficulty to trust. That’s why it is important to experiment with
little projects with others to build trust to eventually include the others in more important collaborations.
About the limitations, we identified three main limitations to managerial implications/key issues.
The first limitation is that adopting the ecosystem concept and switching from competition to
collaboration might not be possible for all firms. For example, some fields like the pharmaceutical field, have
strict regulations that prohibit collaboration between competitors. They must focus on their own capabilities
and resources to compete. And it can also be tricky to instore trust and transparency with competitors.
The second limitation is that it can be challenging to map the ecosystem of dynamic and changing
markets with many partners. For example, let’s take the medical field again, there’s a lot to consider, patients,
2
doctors, regulators, healthcare structure, … It’s a complex ecosystem and it can be time and resource
consuming to focus on the partners of the ecosystem.
The last limitation is that, more obviously, smaller businesses with limited resources might struggle to
take into consideration the whole ecosystem surrounding them. Indeed, it might mean investing in technology,
talent, and infrastructure which companies with less resources might not be able to do.
As further references, we chose 3 articles, each one related to a part of the analysis.
The first article (1) discusses how digital technologies within business ecosystems can facilitate
collaboration between ecosystem members by improving communication, coordination and cooperation. The
authors conclude by emphasizing the importance of openness, transparency and trust between ecosystem
members to enable effective and successful collaboration.
The second article (2) explores how innovation ecosystems can foster the creation of breakthrough
innovations through the use of cross-functional teams. The results suggest that fostering of the creation of these
radical innovations requires the establishment of cross-functional teams with diverse and complementary skills.
The last article (3) examines the challenges faced by SMEs in participating in innovation ecosystems,
due to their limited resources. The authors highlight that SMEs are more likely to engage in innovation activities
and derive benefits from innovation ecosystems if they have a high absorptive capacity and adequate institutional
support
References
(1) Sánchez-Barrioluengo, M., Di Minin, A., & Palacios-Marqués, D. (2019). Digital technologies and
ecosystem collaboration: Unpacking the hype. Journal of Business Research, 98, 365-376.
(2) Möller, K., Rajala, R., & Westerlund, M. (2019). Innovation ecosystems and cross-functional teams: creating
radical innovations. R&D Management, 49(1), 49-60.
(3) Ferrer, G., Estébanez, R. P., & Barroso, C. (2021). Overcoming resource constraints to participate in
innovation ecosystems: The role of absorptive capacity and institutional support in SMEs. Journal of
Business Research, 131, 501-512.