420 pages and 340,000 words, a book more like an academic paper. If you are interested in this topic but don't want to read such a thick book, I have made reading notes for you.
The main author, Henry Chesbrough, is Director of Innovation at Garwood Company, Haas School of Business, University of California, Berkeley.
It has been ten years since the concept of "open innovation" came into being, and quite a few large companies, including British Telecom (BT), Procter & Gamble, Philips, Lego and other companies, are actively learning and applying it. "Open Innovation".
The book is divided into four major chapters: 1. Open innovation: the new context ten years later, 2. Analysis of developmental innovation at different levels, 3. New application fields of open innovation , 4. Manage and organize open innovation.
In summary, this book introduces two major contents: 1. The trend and concept of open innovation, 2. The application and cases of open innovation in enterprises.
After the first decade of the 21st century, innovation began to shift from products to services.
Whether it is through user innovation or open innovation, it requires the introduction of technical knowledge across enterprise boundaries and the abandonment of the traditional vertical integration innovation model.
A core principle of open innovation is reflected in a sentence by Bill Joy:
Enterprises must expand their value chain from vertical to horizontal, from a closed linear system to an open one , the complex ecosystem has changed from competing with each other to embracing each other.
Define open innovation as a distributed innovation process based on the purposeful management of knowledge flows using monetary and non-monetary mechanisms, combined with each organization's business model. Open innovation emphasizes the purposeful inflow and outflow of knowledge through the boundaries of the company, and this inflow and outflow are to "leverage" external sources and commercialization paths of knowledge respectively. Use intentional knowledge inflows and outflows to accelerate internal innovation while, at the same time, expanding the external market for use of your innovations.
The center of the external innovation market is the transaction between economic (monetary) incentives and ideas and solutions. Social markets rely on “social-exchange” relationships and are largely based on non-monetary incentives for participants.
Contractual arrangements, non-equity alliances, strategic supply agreements, joint development agreements, etc. are a few examples used to establish an open innovation framework. Choosing a partner and selecting the right contractual arrangement are critical in determining the success of an R&D project.
The application subjects of "open innovation": 1. Within the organization (individuals, groups, teams, projects, functional areas, business units), 2. Organizational levels (companies, other non-enterprise organizations, strategies, business model), 3. Levels beyond the organization (external stakeholders, individuals, communities, and organizations), 4. Inter-organizational levels (alliances, networks, ecosystems), 5. Industry levels (industry development, cross-industry differences) ), 6. Regional innovation system (the region, the country, beyond the country), 7. Society (citizens, public policies).
Describe the five key dimensions and changes of the macro-implementation characteristics of open innovation: 1. Process: inward-looking, coupling, and outward-looking; 2. Internal change incentives: top-down, bottom-up Above, 3. Coordination: decentralized, centralized, 4. Method of selecting locations: “Go to key places”, “Come to me”, 5. Network: Type of partners.
Cooperating with technology partners may increase the probability of project success in the following aspects: 1. Being able to use scientific and technological knowledge to increase the speed of knowledge transfer, 2. Increasing knowledge transfer by frequently adding new scientific and technological elements 3. Increase the commercial value of knowledge transfer by increasing the speed of technology transfer and introducing the latest cutting-edge technology, 4. Use market knowledge to speed up knowledge transfer, 5. Increase the number of knowledge transfer, 6. Downstream open innovation The probability of business success cannot be improved by increasing the amount of knowledge transferred.
Useful knowledge is now widely distributed, and no one company has a monopoly on knowledge in its field. At the same time, the quality of R&D from small businesses, universities, and nonprofit institutions is getting higher and higher.
Open innovation is a company-centered paradigm that mainly solves how to use external knowledge to improve internal innovation, that is, to improve the company's economic performance.
User innovation is primarily about how individuals use innovation to solve their own needs, regardless of the impact on the company's success. Open innovation also requires enterprises to master the new ability to use knowledge and transform external knowledge and internal knowledge into economic benefits.
Research on open innovation analyzes how companies use external networks, communities, and ecosystems to create value through open innovation strategies.
Think of innovation as an ecosystem rather than something completely controlled within the company.
SMEs that have joined formal or informal networks are more innovative than other SMEs. Driving this positive association are the diverse relationships between members of these networks. Network relationships determine the innovation performance of small and medium-sized enterprises to a large extent and affect their strategic behavior.
Knowledge management capabilities and innovation management capabilities are the "promoters" of open innovation in small and medium-sized enterprises.
Innovators fail to successfully bring products to market because the companies implementing the innovation do not manage the ecosystem of market partners well. This business model can only succeed if each partner in the ecosystem aligns its innovation activities with its business model. Even without any product or service innovation, companies can make themselves more competitive by "cultivating" innovation networks and partners in the value chain.
Technology scanning is more important for incremental innovation, whereas knowledge introduction (patenting through licensing) is more relevant for radical innovation.
Small and medium-sized enterprises need to establish a new inward-oriented open innovation process to manage knowledge integration according to the "five-step model" proposed by Wallin & von Krogh: 1. Define the innovation process, 2. Determine the knowledge related to innovation, 3. Choose a correct integration mechanism, 4. Develop an effective governance mechanism, and 5. Balance the relationship between incentives and control.
Four key areas of open innovation in small and medium-sized enterprises: 1. IT-driven small and medium-sized enterprises organize outsourcing activities involving a large number of "outsiders", 2. The importance of various networks in the process of open innovation , 2. The mutual influence between intellectual property cluster management and open innovation management of small and medium-sized enterprises, 4. The internal dimensions of open innovation management of small and medium-sized enterprises.
Keywords: Organizational structure adjustment
For many companies, open innovation itself is an innovation.
Companies decide to experiment with open innovation primarily because of role models from other companies, rather than because of an obvious need.
The transition from closed to open innovation implies some kind of organizational change that often spans different stages.
In large companies, the starting point for transition is adjustments at the organizational structure level. Establishing an independent open innovation department (or responsibility) is an important change trigger and can send change signals to other departments.
Companies managing open innovation ecosystems must confront the tensions inherent in maximizing value creation and value capture, as well as the degree of calibration of business models within the ecosystem, Conflicts in the value capture process.
Managing the “journey” from closed to open innovation means making multiple organizational changes at multiple levels of the enterprise.
"Demonstrative events" have gradually become an important driving factor for people to accept open innovation, especially in terms of "institutionalizing" changes.
Keywords: strategic alliances
In order to cooperate with the innovation efforts of external partners, companies often implement a series of strategies to manage relationships with external partners, including: alliances, networks, Communities, consortiums, ecosystems, platforms, etc.
Stakeholders who are key participants in innovation activities include: intellectual property department, corporate venture capital department, new project incubation department, strategic alliance department, etc.
Coupled open innovation enterprises need to implement specific mechanisms, such as strategic alliances, joint ventures, R&D alliances, networks, ecosystems, platforms, etc.
Keywords: technology licensing and joint venture investment
If companies realize that they do not need to have all the capabilities internally, they will purchase technology and technology licensing rights.
Mergers and acquisitions and technology licensing purchases are widely used tools to acquire complementary knowledge and then implement convergence strategies.
The goals of large enterprises in open innovation have evolved from purchasing technology license rights to corporate mergers and acquisitions, joint ventures, cooperative development agreements, multi-party collaboration, and obtaining funding for government development plans.
In open innovation research, researchers have identified various mechanisms that can help companies manage the conscious inflow of knowledge: searching for knowledge, purchasing knowledge products, university research courses, funding start-ups in their industry, or working with start-ups in their industry. Intermediaries, suppliers, and customers cooperate and use confidentiality agreements. Later research found other mechanisms such as crowdsourcing, competition, contests, communities, buy-in or buyback of R&D projects, etc.
Keywords: innovative strategic cooperation intermediary
When companies seek help from intermediaries and conduct external knowledge searches, they often have to go through four stages: determining direction, searching, screening, and signing.
The open innovation literature analyzes a variety of open collaborations, ranging from equity-based alliances, mergers and acquisitions, agreement R&D to informal joint R&D. Other forms of open collaboration include cross-licensing, venture capital, and collaboration with lead users.
Keywords: Hard facilities and soft facilities
The infrastructure of open innovation can be divided into “hard facilities” (university research laboratories, new venture business incubators) to “ "Soft Facilities" (an online platform for innovation competitions and technology search activities).
There are open innovation infrastructures designed specifically to attract partners to a location. The most well-known open innovation park is the high-tech park (Doppen) established around Philips' former R&D base. Another example is the Cowarts Technology Park. The technology park is Unilever's research and development base and is currently being developed and managed in a joint venture with a property development company. The opposite approach to choosing a location for open innovation is to “go where it matters.” For example, setting up an office somewhere specifically can give priority to obtaining funds from public institutions.
The impact of open innovation on corporate performance is not fully understood.
The company uses an open innovation ecosystem to jointly create value in order to increase the value of its products to potential customers.
In the initial stages of a project, when project development is still in the "fuzzy front-end" stage, it is beneficial to form a collaborative team with external partners. In the project planning stage, projects tend to rely more on internal decision-making and support from the company's top management. Excessive reliance on external partners often brings noise to the decision-making and planning process. During the project implementation phase, the participation of external partners can help solve problems in the project in a timely manner or even in advance. During the project termination phase, the final results of the project are handed over to the target customer (the company's business unit).
Open innovation from the inside out can play many important roles in a company’s innovation process. A role viewed as creating more options for future business. By spinning off projects that don’t fit well with the current business model, the inside-out venture capital process can intersect internally and search for more alternative business models from the outside. Another role is the potential for financial gain if the venture is successful. However, over time, the weight of this possibility diminishes compared to other characters. The third role is to attract and retain key talent in the organization.
The implementation of open innovation can be evaluated through four levels, not just economic performance: 1. Implementation, integration and institutionalization, 2. Partner dynamics, 3. Economic performance, 4. Operational efficiency.
Unilever appoints vice president of open innovation and Philips appoints director of open innovation.
"Living labs" have emerged in some European countries. All partners work together to test, design, and develop a certain concept and/or technology in real-life situations, using "fair practice" Institutions + private enterprises + individuals" work together to create new user-centered products and services.
Brightstar, the new corporate project incubation department of British Telecom (BT). BT Innovation and Design: Provide strategic innovation and technology vision for BT through close collaboration with other departments of the company and strong cooperative relationships with third-party organizations.
The World Wildlife Fund (WWF) established an incubator.