How Open is Innovation?

Special Episode: How Open is Innovation?

Four master’s students from the University of Southern Denmark
present the Paper "How Open is Innovation? A Retrospective and
Ideas Moving Forward" by Linus Dahlander, David M. Gann and
Martin W. Wallin, written in 2020 and published in 2021.
What’s it about?

This paper analyses the last ten years of innovation and
openness, draws lessons, evaluates criticism and further
papers, and concludes by preparing us for another ten years of
Open Innovation.
What has affected open innovation?

Technological development has had a significant impact on
how companies can benefit from Open Innovation (Artificial
Intelligence, Cloud Services, Robotics and APIs). These
technologies allow companies to change their business model. All
this is related to the vast amount of data that is
constantly being generated. Data openness could build bridges
across organizations, but only a tiny part of data is used to
this end. Some organizations, such as Google, Facebook or Amazon,
are just very good at monetizing with data, but handling a lot of
information might lead to privacy violations and other
issues.
Dark side of open innovation

It enables collaboration and value creation for some, but it
could also lead to exploitation and value destruction for others.


Among the technologies that impacted Open Innovation are APIs
and login services. They can facilitate interactions at a big
scale, and they are part of a rapidly growing market, and for
this reason, some companies focused their business models on
them. But in some cases, this led to scandals and bad situations.
The case of Cambridge Analytica, which is very well known,
had issues due to an excessive collection of data.


Some issues can also be found in the volume of ideas generated
through crowdsourcing. Aligning the company's strategy with the
crowds that generate ideas could be challenging because of the
attention deficit. Technology comes to help in this case too. To
cope with this, companies use different methods, one of which is
Artificial Intelligence, even though the limitation of AI is
the ability in evaluating brand new ideas, because of the way
AI algorithms are trained.
Crowdfunding

It has gained a considerable importance in the past ten years. We
all know its power to find funds for early-stage ideas, but we
should also consider that crowdfunding can generate only a tiny
amount of funding compared to VC funds. Nevertheless, its
importance is linked to funding-generation and, most importantly,
to knowledge generation for the team. When a team posts a
content in a crowdfunding platform, they manage to collect
information about their potential customers.


And this links to information and data collection.
Importance of data

More than it was ten years ago, it is now clear that data has
huge importance for businesses, but it is still not easy for
every company to implement strategies based on data. Some
very-well-known big tech companies, such as Amazon, Facebook and
Google, made their business models around data, but this is
not yet the case for smaller organizations.


It must also be understood that companies are still struggling to
effectively share data with big corporations due to the fear of
an unbalanced flux of information, such as the case of the
German automotive industry and Google Maps.


Therefore, one future research topic for Open Innovation
researchers could be to understand the balance between
revealing data and capturing value from data.
How can open innovation adapt to these changes and change the
game itself?

When people adopt idea-sharing mindsets, open innovation can
change traditional industry boundaries.


For instance, the article highlights Tesla, who is shaping the
battleground for the new automotive industry.


They have acknowledged that they cannot drive the electric market
forward alone. In fact, Tesla has revealed intellectual property
to seek the advancement of electric vehicle technology to
accelerate electric vehicles' market size.


Ultimately, their ambition would be to improve their cars and
stay ahead of the competition, and so they engage in an open,
collaborative culture to gain inputs from the masses.


Furthermore, with this approach, Tesla states that they are
willing to cooperate with electric car companies to compete
against the fossil car market.
How does technological development impact organizations?

Platforms are essential for today's organizational development
and facilitate how organizations create and capture value. And
their impact is not surprising. Platforms minimize barriers of
distance and connect people and create a network effect. This
provides a space where information and ideas can flow. 


And successful platforms providers to grow larger and larger.
Are there any concerns?

It is difficult not to acknowledge the power that large IT
corporations have. They even own open-source platforms, with code
that is designed to be publicly accessible. Microsoft now owns
“Github”, “IBM” owns “Red Hat”. And while these large
collaborations claim novel commitment and intentions, it makes
one reflect on how open open source really is.
Can there be too much innovation, or can there be too much
openness?

Yeah, we need to reconsider how much openness is appropriate and
at the end of the day, it will be a trade-off that should be
handled carefully. The amount of openness goes hand in hand with
patenting. 


This can be a barrier to adopting open innovation. There are many
reasons that patents are a barrier to open innovation. The
article highlights over-valuing internal ideas and fear of being
the one revealing the new commercial blockbuster to potential
competitors.


Many companies still have a "no patent - no talk" mindset and
therefore miss out on the benefits of broad and distant. They
might miss out on business opportunities: What values do patents
have, if they lay unused in a drawer? The pharmaceutical company
“Bayer” employs 7.000 scientists, holds thousands of patents,
many unused. And yet only two employees are responsible for
licensing out.
OPEN INNOVATION - the bigger picture and societal shift in
openness

Current tensions between nations make it harder to
cooperate across borders, e.g. USA CHINA TRADE war.
https://www.bbc.com/news/business-45899310


In China, the CTO of “Aliba” said that we live in the data
age and that data could be processed better outside the
company. 


The current crisis gave open innovation a boost, exploration
and collaboration among different institutes which did not
cooperate before. 


The challenge is to carry this momentum into a post covid world.
Why is it so important that we carry the momentum?

The importance of this momentum comes from the more significant
problems we have to solve, such as climate change. These
problems, which are not tangible, have high complexity and
abstraction levels following Rittel and Webber, are called wicked
problems.


In the 2010 paper the focus was on company-specific problems. But
companies can have a significant impact on their environment.
Yet, another trend can be detected: We see a concentration in
capabilities of research due to the high cost of research
equipment. A consequence of this is a more multidisciplinary
team. 


This results in hotspots of research.  The power of this
hotspot is the knowledge and motivation in one place. The
downside of this concentration is the downfall of collaboration
among institutes.
Other challenges OI might face in the future

Define the value of open innovation overestimates their
contribution to a project, so it is a challenge to measure OI
scrutiny. A second challenge is that organizations have to
place OI either in the periphery or at the core of their
business: Substitute vs complementarity.
The speakers:

Bolgac Gülen


Alessandro Pisanu


Carl Brockhausen


Steffen Henriksen
Literature:

Dahlander, Linus & Gann, David & Wallin, Martin. (2021).
How open is innovation? A retrospective and ideas forward.
Research Policy. 50. 10.1016/j.respol.2021.104218.


Rittel, H.W.J., Webber, M.M. Dilemmas in a general theory of
planning. Policy Sci 4, 155–169 (1973).
https://doi.org/10.1007/BF01405730