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