Wie Innovationen in Zukunft entstehen

Univ.-Prof. Dr. Christopher Lettl

Horizon 2020 – ICT Kickoff Veranstaltung21. November 2013

What’s going on?

We are in the midst of a paradigm change.The manufacturer-active perspective is displaced by a user-active perspective.

Innovation center

R&D Lab

Innovation center

Users

(Source: Franke, 2009)

SLIDE 3

The new paradigm has many namesUser innovation, Web 2.0, Wikinomics, Crowdsourcing …

Common message

� there is much creativity and innovativeness

outside firms’ boundaries

� look outside the company!

(Source: Franke, 2009)

The consumer innovator force of

„90% of our customers just want to consume.

Perhaps 10% want to make their own stuff. 1% has the skills to make something

which is good enough for others to want to buy it.

Perhaps 1% is high, let us say 0.1 or even 0.01%,but with a customer base of 3.2 millionthat is still more than 3.000 people!

At the moment we have 150 designers at LEGO“

Paal Smith-Meyers, LEGO

PROCTER & GAMBLE‘s new model forinnovation: „Connect and Develop“

(Source: Huston/Sakkab, 2007)

Marketing

Manu-facturing

Lead users

Technology entrepreneurs

P&G

R&D

Purchasing

InnoCentive

NineSigma

YourEncore

Outcomes

Today more than 35% of newproducts come from outside.

45% of initiatives in NPD portfoliofrom outside.

R&D productivity increased by 60%.

Innovaton success rate has doubledwhile costs for innovation havefallen.

R&D investments as % of salesdown from 4,8% in 2000 to 3,4% today.

Share price doubled and portfolio of22 billion dollar brands.

Contrasting Principles of Closed andOpen Innovation

Closed Innovation Principles Open Innovation Principles

The smart people in our field work for us. Not all the smart people work for us. We need to work with smart people inside AND outside our company.

To profit from R&D, we must discover it, develop it, and ship it ourselves.

External R&D can create significant value; internal R&D is needed to claim someportion of that value.

If we discover it ourselves, we will get it to market first.

We don‘t have to originate the research toprofit from it.

The company that gets an innovation to market first will win.

Building a better business model is betterthan getting to market first.

If we create the most and the best ideas in the industry, we will win.

If we make the best use of internal ANDexternal ideas, we will win.

We should controll our IP, so that our competitors don‘t profit from our ideas

We should profit from others‘ use of ourIP, and we should buy others IP wheneverit advances our business model.

(Source: Chesbrough, 2003)

The Case

INNOCENTIVE.COM

FUßZEILESEITE 7

8

The (Business) Model:Broadcast Search

R&D-labs of companies Awards between

InnoCentive.com

300.000 independent scientists,200 countries

R&D labof a

company

Broker

Scientists withdifferent backgrounds

Solutions

Problem

Solution

$5,000 to $1 million

9

HHowhow succesfulow successful is search?Hio

► Companies invest from 6 month to 2 years into the problem solving

process

►Ø $30.000 for an award-winning solution

►Given duration for the solution process appr. 6 month

► 49 of 166 problems (29.5%) were solved (June 2001-December 2004)

► 75 awards

► Ø 240 individuals survey a specific problem

► Ø 10 submissions per problem

► Ø invested time: ~ 74 hours by a winner

~ 36 hours by a non-winner

(Source: Lakhani/Jeppesen, 2007)

How effective isbroadcast search at InnoCentive?

10

Former probelms posted by seeker-company

Given duration of solution processProblem complexity

Former problems posted by seeker-company

Explanation of likelihood forproblem solution

-1.638**

(0.628)

2.305**

(0.739)

0.049

(0.333)

-1.897ˆ

(1.134)

0.626ˆ

(0.376)

-1.697**

(0.536)

-0.418

(0.449)

0.566

(0.413)

Model 5

ˆsignificant at 10%

*significant at 5%

** significant at 1%

*** significant at 0.1%

Different scientific interests attracted

Award-value

Seeker-company experience

General-orientation of the problem solver

Type of solvers attracted

Number of submissions

Size of problem solver basis (Log)

Problem solving community

Type of solution

Control-variables

Log Pseudolikelihood -50.59Wald‘s Chi Square 44.29***Df 19Pseudo R Square 0.39

Generalist orientation of theproblem solver

Diverse scientific interestsattracted

- Logistic regression(1=solved / 0=unsolved)

- Data for n=166 problems

- Data for scientific interestsof the problem solver

(Source: Lakhani/Jeppesen, 2007)

11

► Web-based questionnaire for those problem solvers who submitted a

solution

► N= 993; n=337; rate of return: ~34%

► Questions regarding the problem solving process and motivation

► Data for scientific interests of problem solver at InnoCentive.com

Explanation of likelihood for an award-winning problem solution (1)

(Source: Lakhani/Jeppesen, 2007)

Explanation of likelihood for an award-winning problem solution (2)

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6

Control variables

Solution type0.18

(0.410)

0.183

(0.411)

0.238

(0.422)

0.237

(0.423)

0.292

(0.438)

0.33

(0.446)

Zeit, Lösung zu entwickeln0.003*

(0.001)

0.004**

(0.001)

0.004**

(0.001)

0.004**

(0.002)

0.004*

(0.002)

0.004*

(0.002)

Motivations

Gewinn des Preisgeldes0.307

(0.187)

0.386*

(0.185)

0.426ˆ

(0.241)

0.470*

(0.220)

0.503*

(0.214)

Career | Social Motivations-0.258

(0.188)

0.463*

(0.220)

0.464*

(0.220)

0.371ˆ

(0.214)

0.398ˆ

(0.221)

Intrinsische Motivation0.566**

(-0.182)

0.599**

(-0.218)

0.625**

(-0.203)

0.668**

(0.22)

Deveating other solution providers-0.417ˆ

(0.228)

-0.400ˆ

(0.234)

Dissatisfaction in job-0.074

(0.264)

-0.126

(0.265)

Freie Zeit vorhanden0.513*

(0.237)

0.559*

(0.234)

Expertise

Generalist orientation-0.315ˆ

(0.172)

Problem-Distanz vom Feld der eigenen Expertise

0.398*

(0.197)

Robuster Standardfehler

in Klammern

ˆsignifikant auf 10%

* signifikant auf 5%

** signifikant auf 1%

*** signifikant auf 0.1%

Log Pseudolikelihood -98.544 -96.706 -93.276 -93.251 -88.174 -85.627Wald‘s Chi Square 6.36* 11,81* 22.40*** 22.05*** 26.59*** 32.14***Df 2 4 5 6 8 10Pseudo R Square 0.0270 0.0451 0.0790 0.0793 0.1294 0.1545

Problem distance to owndomain

Intrinsic Motivation

Winning the Award

Time to develop solution

Free time available

13

Is broadcast search efficient?

Did not use previously developed solution

Used previously developed solution

n=40 winning solvers

Source of solution-information

27.5 %

72.5%

Sometimes the solution is build on previous work. Was your submission to this challenge based on:

A. A solution you had already developed in your own work with:1 - No modifications, 4 - Minor modifications, 7 - Major modifications;NA - This was not based on any of my previous work

B. An existing solution that you knew about that could solve the challenge with:1 - No modifications, 4 - Minor modifications, 7 - Major modifications;NA - This was not based on anyone else’s work

(Source: Lakhani/Jeppesen, 2007)

Implications for R&D

� New role

� New competencies

� New incentives

� Complementarity

FUßZEILESEITE 14

A changing reality

The way it was: Producer-Innovators and “Robinson Crusoe”

Users

The way it increasingly is:Innovation communities

producer

users

�

�

�

�

��

�

�

�

�� users

�

�

�

producer

�

��

�

�

�

��

(Source: Franke, 2009)

The brain• Computer “brain” within Lego brick

Movement• 3 stepper motors

Sensors• Light• Touch• Temperature

Teaching• Kid-friendly, graphical

programming environment• Programs downloaded from

PC via infrared

Price ~ $200

Mindstorms robot kit

The Mindstorms Experience

Lego Mindstorms user communities grew rapidly

- without company involvement -

Robots become widely available

August 1998

800

700

600

500

400

300

200

900

Nov1997

Jun1998

Feb1999

Oct1999

Jun2000

Jan2001

Aug2001

Apr2002

100

Lego robots announced

January 1998

Members

Within 3 weeks of commercial introduction users had improved it significantly

The rules

Robots follow 7 meter “track” of tape• Light sensors detect tape • Internal software tells robot how to

move

Fastest time around track wins

About one dozen participants

The results

Winner (below left)• Used hacker-developed LegOS software• Time under 10 seconds (73 cm/s)

Second place (below right)• Used program based on LEGO firmware• Time of 25 seconds (28 cm/s)

Ability to rapidly sample sensors was the key

(Source: Italian Lego Users Group(http://www.itlug.org/) Contact Mario Ferrari [mario.ferrari@edis.it])

LEGO was not sure how to respond –for several years

(Source: BCG interviews)

“There was almost a full year without a word from Lego: Neither acknowledgement of what was going on nor threats towards the hackers.”

David Baum, Lego hacker

“Lego executives simply didn’t know what to do …”

Internal Lego executive

Today, LEGO is creating links to innovating fans

“LEGO DesignByMe”Website links youngfans who wantto share their designs

Top innovators from “Adult Fans of Lego”participate in LEGO factory product development teams

For NXT Mindstorms Robot product line:• Lego adopts key existing AFOL

innovations• Lego asks a few AFOL members to join

R&D team

The Threadless Innovation & Business Model

The community is „the heart and soul“ of Threadless.

(Source: Lakhani, 2008)

SpineConnectInnovative collaborative communities also exist in high-tech markets.

• International community of leading spine surgeons

• Exchange and collaborate on difficult and unusual cases – and new treatments

(Source: http://syndicom.com/physicians/spineconnect)

Attractive

Attractive vision

Attracting competent actors of diverseexpertise

Self-selection

Development Testing

Gatekeeping & Recomposition

Meritocracy

Social control

Transparency of tasks

Modularproblem-

architectureProtocols

- Collectively developed -

Shared goals, norms & values- Collectively developed -

Peer-to-peer interaction

Peer-review

Knowledge accumulationvia commons

Transparency of contributions

ICT-Infrastructure

Mix ofIntrinsic & extrinsic rewardsICT-Infrastructure

as enabler

Peer-production indecentralized networks

Relational contracting

Generalizedreciprocity

Summary and Conclusions

� Innovation is becoming more and more democratized.

� This shift creates rich opportunities for producer firms,but also major challenges.

� ICT as enabler.

� Major implications for R&D.

� New role of managers!?

© Institut für Strategie, Technologie und Organisation

� Entwicklung von innovativenKonzepten, um bestehende Problemeoder Kundenbedürfnisse zu adressieren

� Anwendung der „Design-Thinking“-Methode

� Interdisziplinäre Studententeams

� Output: Mehrfach getestete Funktionsmodelle oder Prototypen

25

Interessiert an der Umsetzung vonOpen Innovation in Ihrer Organisation?

In unseren Lehrformaten entwickeln wir mit Praxispartnern neue Produkte, Services oder Geschäftsmodelle!

Produkt & Service Innovation Business Model Innovation

� Entwicklung von Geschäftsmodellen

� Systematische Anwendung von state-of-the-art Methoden zur Analyse und Konzeptualisierung

� Praxiscoaches

� Output: Projektbericht und Kompetenzenvermittlung

In Kooperation mit

Nadine Mosernadine.moser@wu.ac.at+43-1-31336-5479

Markus Deimelmarkus.deimel@wu.ac.at+43-1-31336-5970