Top Management in Open Innovation

MOOI Theme 2:

Top management in open innovation

Prof. Henry Chesbrough, University of California, Berkeley & ESADE

Prof. Wim Vanhaverbeke, Hasselt University, ESADE & National University of Singapore

Dr. Nadine Roijakkers, Hasselt University

January 7, 2013

Top Management in Open Innovation:Overview Innovation: Overview•Findings

1.Support from top management is important

2.Needs the right skills

3.OI managed top-down or bottom-up?

•Implications1. Top management has to be committed

2. Top management has to empower the OI Team

3. Create OI strategy aligned with corporate strategy• Have a CEO mandate

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FINDINGS

Top Management in Open Innovation:Overview Innovation: Overview•Findings

1. Support from top management is important

2. Needs the right skills

3. OI managed from the Top or Bottom up?

•Implications1. Top management has to be committed

2. Top management has to empower the OI Team

3. Create OI strategy aligned with corporate strategy• Have a CEO mandate

4

Top Management – Finding 1: Support from top management is important ovation: Overview•Findings

– Senior management support of an OI initiative is crucial to allocate resources and ensure there is both motivation and a mandate for culture change [Rutledge H., 2012]

– The support of top management is absolutely essential and we have it on a daily basis [Thoen, 2011]

– Senior leaders must understand and apply open innovation [Slowinski &Sagal, 2010]

– Executive-level leadership is required, as is constant focus to reinforcing the message, and a clear understanding of the stakes [Bingham &Spradlin, 2011]

– Top management support is instrumental in achieving OI rollout across the whole organisation [Mortara et al., 2009]

– Executive sponsorship needed (remove roadblocks and mandate participation) [Sloane, 2012]

– Link with Culture

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Top Management in Open Innovation Innovation: Overview

•Findings

1.Support from top management is important

2.Needs the right skills

3.OI managed top-down or bottom-up?

•Implications1. Top management has to be committed

2. Top management has to empower the OI Team

3. Create OI strategy aligned with corporate strategy• Have a CEO mandate

6

Top Management – Finding 2: Needs the right skills ovation: Overview•Findings

• Senior leaders must develop and support the necessary skills [Slowinski & Sagal, 2010]

• Link with skills development

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Top Management in Open Innovation Innovation: Overview

•Findings

1.Support from top management is important

2.Needs the right skills

3.OI managed top-down or bottom-up?

•Implications1. Top management has to be committed

2. Top management has to empower the OI Team

3. Create OI strategy aligned with corporate strategy• Have a CEO mandate

8

Top Management – Finding 3: OI managed top-down or bottom-upvation: Overview•Findings (1/5)

• Real change is possible when managed from the top [Bingham & Spradlin, 2011]

• Only CEO and board of director can drive the change needed to become a Challenge Driven Enterprise [Bingham & Spradlin, 2011]

• Occasionally, senior management sees the need for OI, but mostly it is launched at the department level [Sloane, 2012]

• …

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Top Management – Finding 3: OI managed top-down or bottom-upvation: Overview•Findings (2/5)

• TBX (O) approach [Lindegaard, 2011]

§ Top down: get executives on board and require personal commitment

§ Bottom up: Value creation begins with people. Involve and engage employees

§ X: across: middle management has focus on their own profit-and-loss responsibility

§ Outsiders: external partners will bring knowledge, skills, experience,..

§ 4 Ways to Open innovation [Mortara et al., 2009]

§ Top-down, strategically-driven, centralised activities (mature)

§ Top-down, strategically-driven, distributed activities

§ Bottom-up, evolutionary, distributed activities (mature)

§ Bottom up, evolutionary, centralised activities

• … 10

Top Management – Finding 3: OI managed top-down or bottom-upvation: Overview•Findings (3/5)

TBX (O) approach [Lindegaard, 2011]: You need to work with 3 + 1 organizational approaches.

§ Top down: § Get executives on board and make them personally commited to the

innovation activities. Without executive support, no change occurs

§ Bottom up: § Value creation begins with people, one by one, team by team. Nothing happens unless

you get employees engaged and involved.

§ X: across:§ The biggest challenges will come from middle management placed across e

organiation due to a narrow focus their own profit-and-loss responsibility

§ Outsiders: § External partners will bring knowledge, skills, experience, Include external resources as

you move towards OI

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Top Management – Finding 3: OI managed top-down or bottom-upvation: Overview•Findings (4/5)

4 Ways to Open innovation [Mortara et al., 2009]

§ Top-down, strategically-driven, centralised activities

§ Top-down, strategically-driven, distributed activities

§ Bottom-up, evolutionary, distributed activities

§ Bottom up, evolutionary, centralised activities

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Interactive poll 1• What are the three most difficult roles of top

management in implementing OI?

– Allocate resources for OI initiatives

– Ensure there are incentives for a cultural change

– Continuous support from top management

– Top management should understand OI

– Top management’s role in achieving OI rollout across the organization

– Executive sponsorship (remove organizational roadblocks)

– Executive support for the development of the necessary skills

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implications

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Top Management in Open Innovation Innovation: Overview

•Findings

1.Support from top management is important

2.Needs the right skills

3.OI managed top-down or bottom-up?

•Implications1. Top management has to be committed

2. Top management has to empower the OITeam

3. Create OI strategy aligned with corporate strategy• Have a CEO mandate

15

Top Management – Implication 1: Commitmentvation: Overview• CEO must be deeply committed [Lindegaard, 2011]

• Top of organization must be committed in no uncertain terms and see it through to the end [Bingham & Spradlin, 2011]

• Demonstrating commitment and support, top management holds the key to sway the opinion of those who feel less inclined to accept the new approach to innovation [Mortara et al., 2009]

• Executives must not only understand but also buy into the value proposition [Sloane, 2012]

• Commitment from the top down helps building the culture for OI [Sloane, 2012]

• Leaders must promote innovation and an entrepreneurial culture across the organization by being personally involved in establishing and implementing clear and relevant ways to support innovation [Igartua 2010]

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Top Management in Open Innovation Innovation: Overview

•Findings

1.Support from top management is important

2.Needs the right skills

3.OI managed top-down or bottom-up?

•Implications1. Top management has to be committed

2. Top management has to empower the OI Team

3. Create OI strategy aligned with corporate strategy• Have a CEO mandate

17

Top Management – Implication 2: Top Management has to empower the OI Teamvation: Overview• Top management gives the fundamental push to establish an OI

implementation team [Mortara et al., 2009]

• Create and empower the CDE task force [Bingham & Spradlin, 2011]

• The innovation mandate should lay out the resources and authority given to the innovation team [Lindegaard, 2010]

• Innovation leaders must feel full support from executives [Lindegaard, 2010]

• Link with OI team

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Top Management in Open Innovation Innovation: Overview

•Findings

1.Support from top management is important

2.Needs the right skills

3.OI managed top-down or bottom-up?

•Implications1. Top management has to be committed

2. Top management has to empower the OI Team

3. Create OI strategy aligned with corporate strategy• Have a CEO mandate

19

Top Management – Implication 3: Align OI strategy with corporate strategy: Overview• Top management should understand and buy into the creation of a

tight link between innovation strategy and the overall corporate strategy [Lindegaard, 2010]

• Establish the CEO mandate [Bingham & Spradlin, 2011]

• Successful CEOs focus the organization on a small number of key initiatives and some choose a single theme or strategy that defines their administration

• A CEO mandate makes that everyone in the organization will understand the importance and commitment attached to this program by the CEO

• “Never launch without a mandate from the CEO. [Open Innovation] cannot succeed if it’s cordoned off in R&D. It must be a top-down, companywide strategy” [Huston & Sakkab, 2006].

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References– Bingham A & Spradlin D. (2011): The Open Innovation Marketplace

– Igartua, J. I., Garrigós, J. A., & Hervas-Oliver, J. L. (2010). How innovation management techniques support an open innovation strategy. Research Technology Management, 41-52.

– Lindegaard, S. (2009)/

– http://www.slideshare.net/StefanLindegaard/open-innovation-summit-stefan-lindegaard-presentation-2645946

– Lindegaard, S. (2010): The open innovation revolution

– Lindegaard S. (2011): Making Open Innovation Work

– Mortara, L. et al. (2009): How to implement Open Innovation

– Interview Rutledge H (Head of OI GSK) (2012)

– Sloane P (2012): A guide to open innovation and crowd sourcing

– Slowinski and Sagal (2010): Senior Management Roles in Open Innovation

– Interview Chris Thoen (P&G) by Shaugnessy (2011)

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Interactive poll 2

• What are the three most important actions for top management to maximize impact?

– Commitment

– Financial support

– Support to build culture for OI

– Good understanding of OI

– Establishment of OI-team

– Link between (open) innovation strategy and corporate strategy

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Q&A

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