Organizing for Open Innovation

Professor Charles Snow, Penn State University &

Fulbright-Hall Chair in Entrepreneurship

National University of Ireland, Galway May 4, 2012

When The Innovation Process Is “Closed”

Hold Creativity/Innovation Workshops Organize Innovation Tournaments Expand and/or Focus R&D Create Internal Venture Capital Committees Appoint and Empower Business Development Teams Acquire Other Firms

If You Have a Problem, Ask Everyone!

-- Title of a New York Times article (Dean, 2008)

InnoCentive

l  Spun out of Eli Lilly in 2001 l  First online marketplace for corporate R&D l  Seekers, Challenges, and Solvers l  Process: Seekers formulate and post challenges. Registered

solvers work on the challenges. Winning solvers get predetermined financial awards ($5,000 to $1 mil.)

l  InnoCentive has various programs that can be used for innovation, and it has mechanisms for protecting intellectual property rights.

P&G’s Connect and Develop Program

l  From R&D to C&D (from closed to open) l  7,500 internal R&D staff could be “connected” with 1.5 million

people of similar or greater talent l  Goal of 50% of innovations coming from outside the company l  Technology briefs are provided to networks of: government and

private labs, academic and other research institutions, suppliers, retailers, competitors, development and trade partners, VC firms, and individual entrepreneurs

l  70 P&G “technology entrepreneurs” who work out of six C&D hubs in China, India, Japan, Western Europe, Latin America, and the U.S.

User-Driven Innovation

l  Identify “lead users” (customers who are at the front of market trends and who expect benefits from new products)

l  Use lead users to help develop new products and as beta sites

l  Establish programs that enable lead users to become entrepreneurs (e.g., LEGO’s Ambassador Program, LEGO Architecture, LEGO Factory)

OpWin Global Network: Organized for Continuous Innovation

l  Three founding firms l  Principal Office l  Innovation Catalogue (Idea Bank) l  60 member firms collaborate with whomever

they want

Blade.org: A Collaborative Community of Firms

l  Launched by IBM and seven other Founding Firms in 2006

l  Capitalized on IBM’s reputation forged in the open source software ‘movement’

l  Grew to more than 200 member firms (mostly U.S. firms but some international)

l  Blade.org has a significant share of the blade server market

l  Blade.org ceased operations in June 2011

Blade.org: Purpose and Strategy

l  Purpose is to find applications for IBM’s bladecenter technology (a computer server technology)

l  Strategy is to invent new solutions via collaborative innovation projects and networks

l  Member firms are free to self-organize l  Website, IdeaBank, and nine technical committees

constitute the “commons” l  Principal Office serves as the Shared Services Provider

Collaborative Processes at Blade.org

Within 18 months, Blade.org firms developed more than 60 solutions through:

l  Bilateral Collaboration (with customers) l  Direct Collaboration (among two or more Blade.org

member firms) l  Pooled Collaboration (IdeaBank) l  External Collaboration (with outside firms)

Actor-Oriented Architectural Scheme

Actors who have the values and capabilities to self-organize Commons where resources are accumulated and shared Protocols, Processes, and Infrastructures that enable the actors to connect and collaborate