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Syllabus and Supporting Materials

The Open Innovation MOOC by Frank Piller, RWTH Aachen University

What to Expect: Objectives and Structure of this MOOC .................................................................................. 3

If you never had a class about innovation management before ....................................................................... 4

Three Ways to Watch this MOOC ..................................................................................................................... 4

Part I: What is Open Innovation ....................................................................................................................... 5

1 Introduction: A Short History of Innovation Management .................................................................. 5

2 An Opening Case Study: Nivea ............................................................................................................ 5

3 Background: Cooperation & Networks for Research & Development (R&D) ....................................... 6

4 Different Shades of Openness ............................................................................................................. 7

(1) Openness of the organization for external inputs .............................................................................................. 7

(2) Openness of the output: Free revealing and sharing ......................................................................................... 8

5 Defining Open Innovation ................................................................................................................... 9

Part II: How Does Open Innovation Work ....................................................................................................... 10

6 Generating Insights & Ideas: Co-Creation with Customers at the Frontend of Innovation ................ 10

(1) Lead users as the fundamental idea of co-creation ......................................................................................... 10

(2) The Lead User Method: Identifying and working with lead users .................................................................... 11

(3) Netnography: Observing lead user contributions in online forums ................................................................. 11

(4) Ideation Contests: Creating infrastructures for co-creation ............................................................................. 11

7 Solving Technical Challenges: Broadcast Search in the Development Stage ...................................... 13

(1) Increasing the productivity of technical problem solving: The core idea of intermediary-facilitated crowdsourcing of technical challenges ............................................................................................................ 13

(2) Alternative scenarios to profit from broadcast search: Inbound and Outbound OI ......................................... 14

8 The Role of Intermediaries and Brokers for Open Innovation ........................................................... 15

Part III: How to Manage Open Innovation ...................................................................................................... 16

9 The Challenges of Implementing Open Innovation ........................................................................... 16

(1) Three Levels of Building Open Innovation Readiness ....................................................................................... 16

(2) The Evolution of Open Innovation Capacity Over Time.................................................................................... 16

10 The Participant (Solver) Perspective ............................................................................................... 17

11 Innovation in Open Business Ecosystems (Industry Platforms) ....................................................... 17

12 Conclusions: Different Dimensions of Openness for Innovation ..................................................... 18

Appendix: The Open Innovation Project Canvas ............................................................................................. 19

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Video Files

Download all: http://video2.wiwi.rwth-aachen.de/video/Prof.Piller/2/Korrektur/ (do not stream from this server!!)

(1) 01_An_introduction.mp4 1.3G (2) 02_An_opening_case_study.mp4 2.9G (3) 03_Background_Cooperation_for_R&D.mp4 2.1G (4) 04_Different_shades_of_openness_part_1.mp4 2.0G (5) 04_Different_shades_of_openness_part_2.mp4 3.1G (6) 05_Defining_open_innovation.mp4 1.5G (7) 06_Generating_insights_and_ideas_part_1.mp4 3.6G (8) 06_Generating_insights_and_ideas_part_2.mp4 593M (9) 06_Generating_insights_and_ideas_part_3.mp4 451M (10) 06_Generating_insights_and_ideas_part_4.mp4 2.2G (11) 07_Solving_technical_challenges_part_1.mp4 4.0G (12) 07_Solving_technical_challenges_part_2.mp4 3.5G (13) 08_The_role_of_intermediaries_and_brokers_in_open_innovation.mp4 1.9G (14) 09_What_are_the_challenges_of_open_innovation_part_1.mp4 2.2G (15) 09_What_are_the_challenges_of_open_innovation_part_2.mp4 1.4G (16) 10_The_participant_(solver)_side_of_open_innovation.mp4 1.7G (17) 11_Innovation_in_open_business_ecosystems.mp4 2.2G (18) 12_Conclusions_Different_dimensions_of_openness_for_innovation.mp4 1.5G

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What to Expect: Objectives and Structure of this MOOC Open innovation (OI) has become one of the main paradigms in innovation management. It builds on the idea that an innovating organization needs to capture external ideas, knowledge, and technologies to enhance its innovation process (inbound or outside-in OI). At the same time, organizations shall also utilize internal technologies and knowledge to provide it as an input for the innovation process of other companies (outbound or inside-out OI).

Successful innovators like Akzo Nobel, Siemens, or Procter & Gamble are championing open innovation as having the potential to become “the new project management principle for the 21st Century”. They belong to a select group of leading companies that have successfully adopted open innovation, and are demonstrating impressive results. But many others are moving slowly or stumbling along the way.

The objective of this video introduction is to provide a detailed overview of the background, opportunities, tools and methods of OI, but also of challenges of implementing OI in an established organization. We will focus on both OI with customers and (lead) users, i.e. OI at the frontend of innovation process to gather market insights, generate ideas and co-create concepts, and on OI in the development stage, i.e. using crowdsourcing for technical problem solving.

Overall, you will learn in this introductory video collection:

What is open innovation, and how is it different to other forms of cooperation in the innovation process?

Some recent best practice studies on open innovation A review of the tools and measure to integrate external knowledge in the innovation process The opportunities and challenges connected with this strategy How to implement open innovation successfully What are future developments of open innovation?

By attending this video MOOC, you will become able to:

Initiate an open innovation initiative in your company Identify opportunities to profit from open innovation Develop the fundamental competencies a company needs to engage with its periphery for

collaborative innovation Prepare your company to benefit from open innovation Discover the risks and sources of internal resistance towards open innovation and develop

successful counter strategies

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If you never had a class about innovation management before This Open Innovation MOOC is not a general introduction into innovation management, but an advanced class. If you never had an innovation class before, please first watch our free and open Mini-MOOC: The TIM Bootcamp.

This series of short videos will introduce you into the topic and explains important definitions, concepts, and frameworks of innovation management.

http://frankpiller.com/inno-class-videos

Three Ways to Watch this MOOC Well, of course the best is to watch this MOOC from its start to the end, to get the full picture and see how the different items are connected. But I acknowledge that you may have not so much time, or are just interested in a few aspects. So here are three ways to watch this video:

A First Overview How to Benefit from OI in Practice The Theory of OI

1 Introduction: A Short History of Innovation Management 2 An Opening Case Study: Nivea 5 Defining Open Innovation 6.1 Lead users as the fundamental

idea of co-creation 7.1 Broadcast Search in the

Development Stage 9.1 Three Levels of Building Open

Innovation Readiness 11 Innovation in Open Business

Ecosystems 12 Conclusions

2 An Opening Case Study: Nivea 6 Generating Insights & Ideas: Co-

Creation with Customers (all sections) 7 Solving Technical Challenges:

Broadcast Search in the Development Stage (all sections) 8 The Role of Intermediaries and

Brokers for OI 9.2 The Evolution of Open

Innovation Capacity Over Time 10 The Participant (Solver)

Perspective 11 Innovation in Open Business

Ecosystems (Industry Platforms)

1 Introduction: A Short History of Innovation Management 3 Background: Cooperation & Networks

for Research & Development (R&D) 4 Different Shades of Openness 5 Defining Open Innovation 6.1 Lead users as the fundamental idea

of co-creation 6.4 Ideation Contests: Creating

infrastructures for co-creation 7.2 Alternative scenarios to profit from broadcast search: Inbound and Outbound OI 8 The Role of Intermediaries and

Brokers for OI 9.1 Three Levels of Building Open

Innovation Readiness 10 The Participant (Solver) Perspective 12 Conclusions: Different Dimensions of

Openness for Innovation

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Part I: What is Open Innovation

1 Introduction: A Short History of Innovation Management 01_An_introduction.mp4

This chapter motivates the MOOC and why we should study open innovation (OI). You will learn about four generations of innovation management, all building on a different understanding about the key priority in managing innovation in larger organizations. We argue that orchestrating an open innovation value chain is becoming the core of innovation management today.

Further information:

The book that inspired most of our recent discussion of open innovation: Chesbrough, Henry William. Open Innovation: The New Imperative for Creating and Profiting from Technology. Harvard Business Press, 2003. https://books.google.de/books/about/Open_Innovation.html?id=4hTRWStFhVgC

In the German speaking world, my book "Interaktive Wertschöpfung", co-authored with Ralf Reichwald, became a standard volume on the topic: Reichwald, Ralf, and Frank Piller. Interaktive Wertschöpfung: Open Innovation, Individualisierung und neue Formen der Arbeitsteilung. Springer, 2nd edition, 2009. https://books.google.de/books?id=YGGsd96GC9cC

A large blog about OI is OpenInnovation.net http://openinnovation.net/

My own articles on OI are here for download at Google Scholar. http://tinyurl.com/jps8jcu

2 An Opening Case Study: Nivea 02_An_opening_case_study.mp4

To provide a comprehensive example of a successful OI project, we start with the case of Beiersdorf, owner of the NIVEA brand and a worldwide leader in the cosmetics and skin care industries, to generate and commercialize new R&D through open innovation using external crowds and "netnographic" analysis. Beiersdorf has a rigorous R&D process that has led to many successful product launches, but are there areas of customer need that are undervalued by the traditional process? A novel online customer analysis approach suggests untapped opportunities for innovation, and different kinds of collaborative arrangements lead to their exploitation in R&D and the launch of a highly successful new product.

The case illustrates some typical characteristics of open innovation:

Extending innovation into the periphery of the organization. Utilizing existing knowledge and inputs from “unconventional” (non-representative) and

unobvious sources. Seeking out to lead users and user communities and integrating them into the innovation

process. Building a network of partners for problem solving, and “broadcasting” a problem to identify

new partners. Combining a variety of methods and tools along all stages of the innovation process. Not substituting internal R&D and market research, but complementing it.

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Further information:

A full account of this case by the people behind this story: Bilgram, Volker, Michael Bartl, and Stefan Biel."Getting closer to the consumer–how Nivea co-creates new products, Marketing Review St. Gallen 28, no. 1 (2011): 34-40. http://link.springer.com/article/10.1007%2Fs11621-011-0005-5?LI=true#/page-1

Harvard Business School has an extended case study on OI at NIVEA. https://hbr.org/product/Nivea--A-/an/614042-PDF-ENG

3 Background: Cooperation & Networks for Research & Development (R&D) 03_Background_Cooperation_for_R&D.mp4

Partnering with external actors always has been a measure to overcome knowledge constrains in R&D. So even before we had OI, there was plenty of collaboration and networking for innovation. This chapter briefly covers this background and introduce into conventional measures for knowledge sourcing through formalized relationships to partners and outsourcing providers.

We will use the case example of the StreetScooter, an Electric Vehicle developed in a large network of partners coordinated by RWTH Aachen University, to illustrate this approach.

There are good arguments for "cooperate", i.e. developing new technologies in collaboration:

Obtaining necessary skills and resources via collaboration usually is faster than in-house development

Externally acquiring instead of building and owning necessary assets increases the capability of a firm to respond to market change

Close contact to other firms can enhance knowledge transfer and creation of new knowledge applicable in further development efforts

Joint implementation of technology development efforts characterized by uncertainty reduces individual firm's share in the associated risks and costs

At the same time, also "Make", i.e. developing new technologies internally, has several advantages:

Firm possesses all necessary technological knowledge and capabilities for developing the new technology

Avoid exposure of core technologies to potential competitors Maintain exclusive control over newly developed technology Control entire development process and its results Strategic and cultural reasons inside the company (importance of technology, strong emphasis of

own technological capabilities) Carrying out a development project alone may require a firm to stretch and challenge existing

capabilities as well as give way for new capabilities to be attained

Further information:

More information about the StreetScooter case is here: http://support.ptc.com/WCMS/files/161853/de/Streetscooter_-_From_Concept_to_production_-_Matthias_Breidenbach.pdf http://www.exzellenz.nrw.de/clusters/highlights/rwth-streetscooter/?L=1

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Why DHL/Deutsche Post acquired the project and how this university project becomes a future pillar in DHL's sustainability strategy. http://www.dpdhl.com/en/media_relations/press_releases/2014/deutsche_post_dhl_acquires_streetscooter_gmbh.html

A classical article about OI, but very much based on the conventional understanding of partnerships, is Laursen, K. & Salter, A. Open for Innovation: The role of openness in explaining innovative performance among UK manufacturing firms. Strategic Management Journal 27, no. 2 (2006): 131-150. https://www.researchgate.net/profile/Keld_Laursen/publication/227523154_Open_for_Innovation_The_Role_of_Openness_in_Explaining_Innovation_Performance_among_UK_Manufacturing_Firms/links/09e415098f8d3d6d35000000.pdf

4 Different Shades of Openness The two videos of chapter introduce two very different, but related perspectives on open innovation: (1) Openness of the organization for external inputs, as postulated, first of all, by Henry Chesbrough; and (2) Openness of the output and free revealing and sharing with others, as postulated by Eric von Hippel and other scholars.

(1) Openness of the organization for external inputs 04_Different_shades_of_openness_part_1.mp4

The first perspective regards OI as "the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively" (Source: Henry Chesbrough, 2006).

The core ideas of this view are:

Extending innovation into the periphery of the organization. identifying and trading Intellectual Property (IP) in form of knowledge and technologies. A managed process by an organization. Focus (in the discussion and literature) on inbound OI (“inflows” of knowledge, outside-in). Openness of search: Differentiating two forms of openness search: Direct and Indirect Search.

Further information:

In an article with my colleague Joel West, we compare these two perspectives of open innovation and show their differences and commonalities: Piller, F., & West, J. (2014). Firms, users, and innovation: an interactive model of coupled open innovation. In: Chesbrough, H. et al. (eds). New Frontiers in Open Innovation. Oxford University Press, 29-49. https://books.google.de/books?hl=en&lr=&id=cyjSBAAAQBAJ&oi=fnd&pg=PA29

Chesbrough, Henry. "Open innovation: a new paradigm for understanding industrial innovation." In: Open innovation: Researching a new paradigm, Oxford University Press: (2006: 1-12. https://books.google.de/books?id=lgZAyauTEKUC&pg=PT16

A good collection of different definitions of OI is here http://openinnovation.net/about-2/open-innovation-definition/

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(2) Openness of the output: Free revealing and sharing 04_Different_shades_of_openness_part_2.mp4

A very different understanding of openness comes from MIT's Prof. Eric von Hippel. Building on the notion of innovating users, who innovate to benefit from using the invention in their own domain, he writes in an article with Carliss Baldwin:

“An innovation is “open” in our terminology when all information related to the innovation is a public good—non-rivalrous and non-excludable. . . . It differs fundamentally from the recent use of the term to refer to organizational permeability—an organization’s “openness” to the acquisition of new ideas, patents, products, etc., from outside its boundaries, often via licensing protected intellectual property.” (Baldwin &von Hippel, 2011)

The understanding of open innovation according to von Hippel & scholars implies the following core concepts:

Original perspective is on user innovation: Innovating (and often frustrated) lead users who start to innovate to solve their own problems

Users share and freely reveal their innovation (“placing it into the commons”), today often in web-based communities or forums. They are not interested in IP, as they profit from the fact that other users improve and develop their inventions further.

Open Source Software development is a role model for open user innovation, providing also a different way to organize innovation among various actors (“commons based peer-production”, Y. Benkler).

Advancements in IT have lowered the cost for users to innovate dramatically: Innovation is democratized!

Recent developments in open source hardware, but also maker spaces and open source software, have emphasized this perspective of openness.

Further information:

In case you also want to download your fruit bowl from the internet, check Ronen Kadushi's website. http://www.ronen-kadushin.com/index.php/open-design/

You may then head to a TechShop to turn the file into a real object. Or check a local FabLab for this task. http://www.techshop.ws/locations.html http://www.fabfoundation.org/fab-labs

Baldwin, Carliss, and Eric von Hippel. "Modeling a paradigm shift: From producer innovation to user and open collaborative innovation." Organization Science 22, no. 6 (2011): 1399-1417. http://dspace.mit.edu/openaccess-disseminate/1721.1/76297

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5 Defining Open Innovation 05_Defining_open_innovation.mp4

To conclude the conceptual part of this MOOC, Chapter 5 provides our own definition of OI:

"The formal discipline and practice of leveraging the discoveries of unobvious others as input for the innovation process through formal and informal relationships (Note: It is the informal relationships that constitute the "innovativeness" of OI)."

So, we lean on Chesbrough's definition from the last section, but focus on novel forms, especially open indirect search, as explained in Chapter 4.1, to characterize the aspects that make OI novel – and hence different to the conventional forms of collaboration and networking in the innovation process – justifying a fancy new term. Free revealing and openly sharing knowledge, as postulated by von Hippel (Chapter 4.2), however adds an entire new dimension and makes the reuse of discoveries of unobvious others just so much more efficient … however, this is an add-on, not a requirement in my understanding of open innovation.

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Part II: How Does Open Innovation Work

6 Generating Insights & Ideas: Co-Creation with Customers at the Frontend of Innovation In this chapter, we start with open innovation at the frontend of innovation, i.e. the first stages of opportunity recognition, discovery, and ideation of the innovation process. A frequently used synonymous term for this is customer co-creation. The objective is to develop product or service concepts. We will differentiate three particular tools or methods of OI at the frontend, which all build on the fundamental insights that all customers are not equal: Some (a few) of them are lead users.

Our flow of arguments in this large chapter is as follows:

Conventionally, companies engage in market research to screen a “representatively” selected group of customers, either qualitatively or quantitatively. But the idea of co-creation is different: Instead of asking a representative group of customers for feedback, the idea is to interact with a few customers and users with special characteristics: with so called- lead users.

Lead users are “extreme” users that not just have problems with existing solutions, but engage in innovative activities to solve their own problems. As they “foreshadow” general demand, they are important sources of input for a firm’s innovation process.

Companies can either engage in discovering and transferring existing lead user inventions, or they can create an arena where they co-create with innovative users and customers.

Customer co-creation as a term describes this (Chesbroughtarian) understanding of open innovation with customers. Eric von Hippel again contrasts this view, suggesting that users don’t need “companies” to innovate – they (increasingly) can do this on their own.

I have described this perspective of customer co-creation in a number of further articles:

Piller, Frank T., Alexander Vossen, and Christoph Ihl. "From social media to social product development: the impact of social media on co-creation of innovation." Die Unternehmung 65, no. 1 (2012). http://papers.ssrn.com/sol3/Papers.cfm?abstract_id=1975523

Piller, Frank, Christoph Ihl, and Alexander Vossen. "Customer co-creation: Open innovation with customers." In: New Forms of Collaborative Innovation and Production on the Internet, edited by Wittke, V./Hanekop, H (2011): 31-63. http://www.oapen.org/download?type=document&docid=395250#page=33

(1) Lead users as the fundamental idea of co-creation 06_Generating_insights_and_ideas_part_1.mp4

Lead user innovations form the basis for new products and services of value to manufacturers. Lead users are users that: 1. Have needs that foreshadow general demand in the marketplace; 2. Expect to obtain high benefits from a solution to their needs. (Such users are more likely to innovate – “Necessity is the mother of invention!”); and 3. Have solution skills to transfer need into a feasible solution.

Further information:

A recent study of user innovation in different countries indicates how LARGE this phenomenon is: von Hippel, E., Ogawa, S., & de Jong, J. (2011). The age of the consumer-innovator. MIT Sloan Management Review, 53(1), 27-35. http://web.mit.edu/people/evhippel/papers/SMR%20art%20as%20pub.pdf

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Eric von Hippel has a comprehensive website with videos and tutorials on user innovation. http://evhippel.mit.edu/teaching/

MIT offers a great introduction MOOC into lead user innovation. Developed by Eric von Hippel, five videos introduce you into the idea of lead users and the role of lead users for entrepreneurship. https://www.edx.org/course/user-innovation-path-entrepreneurship-mitx-uinov8x

(2) The Lead User Method: Identifying and working with lead users 06_Generating_insights_and_ideas_part_2.mp4

The Lead User Method: Use specific search techniques to identify lead users in both own and analog markets, and work with lead users in concept generation workshops to co-develop concept alternatives.

Good sources to learn more about this method include:

A classic article describing the benefit of working with lead users is: Von Hippel, Eric, Stefan Thomke, and Mary Sonnack. "Creating breakthroughs at 3M." Harvard Business Review 77 (1999): 47-57. http://web.mit.edu/people/evhippel/papers/HBR%2099%20LU%20pub%20version%203M.pdf

The Open User Innovation Channel on YouTube as an old, but still very insightful collection of six videos describing a lead user project in detail: https://www.youtube.com/channel/UCked7zgMEQnUVaiM2dZK5wg

In case you understand German, I co-authored this booklet explaining the practice of the lead user method. http://www.hhl.de/fileadmin/texte/publikationen/forschungspapiere/CLIC_briefing_notes/cbn020.pdf

(3) Netnography: Observing lead user contributions in online forums 06_Generating_insights_and_ideas_part_3.mp4#

Netnography: Qualitative, empathic and non-obtrusive online observation of user dialogues in online communities, identifying explicitly verbalized and implicitly existing needs, wishes experiences, motivations, attitudes, and perceptions of users.

Good sources to learn more about this method include:

Netnography has been developed by marketing professor Robert Kozinets, and this is his classic article on the subject: "The field behind the screen: Using Netnography for marketing research in online communities." Journal of Marketing Research 39, no. 1 (2002): 61-72. http://www.nyu.edu/pages/classes/bkg/methods/netnography.pdf

Deborah L. Roberts and Frank T. Piller: Finding the Right Role for Social Media in Innovation. MIT Sloan Management Review. Spring 2016. http://sloanreview.mit.edu/article/finding-the-right-role-for-social-media-in-innovation/

(4) Ideation Contests: Creating infrastructures for co-creation 06_Generating_insights_and_ideas_part_4.mp4

While the previous two methods of customer co-creation are based on the idea of open direct search, ideation contests are a typical form of indirect search, or crowdsourcing, which Jeff Howe (2006) defined as follows:

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"Crowdsourcing represents the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call. This can take the form of peer-production (when the job is performed collaboratively), but is also often undertaken by sole individuals“

Ideation Contests: Web-based contest to generate ideas and concepts, using crowdsourcing to broadcast a specific task to an open network of potential contributors. The skill of hosting an idea contest it to balance between the contest situation to foster creativity and effort of participants and collaborative mechanisms to iterate, comment, and improve ideas among contributors.

Good sources to learn more about this method include:

A very comprehensive list of examples of ideation contests and related crowdsourcing sites has been complied by Yannig Roth. http://www.tiki-toki.com/timeline/entry/52997/Crowdsourcing-by-Worlds-Best-Global-Brands/

The core idea of crowdsourcing is well described in Howe's original article. http://www.wired.com/2006/06/crowds/

A very good, but abstract and difficult article on the theory of crowdsourcing is Afuah, Allan, and Christopher L. Tucci. "Crowdsourcing as a solution to distant search." Academy of Management Review 37, no. 3 (2012): 355-375. https://www.researchgate.net/profile/Christopher_Tucci/publication/267027676_Crowdsourcing_As_a_Solution_to_Distant_Search/links/54416fff0cf2a6a049a584a0.pdf

In an early article, we have described in depth the design factors of ideation contests. Not too much has changed in the last ten years. Piller, Frank T., and Dominik Walcher. "Toolkits for idea competitions: a novel method to integrate users in new product development." R&D Management 36, no. 3 (2006): 307-318. https://www.researchgate.net/profile/Dominik_Walcher/publication/227502183_Toolkits_for_Idea_Competitions_A_Novel_Method_to_Integrate_Users_in_New_Product_Development/links/0deec52c55435db815000000.pdf

Recently, a number of studies looked into the quality of user generated ideas in ideation contests, as contrasted to internally developed ideas. Two good sources are: Nishikawa, Hidehiko, Martin Schreier, and Susumu Ogawa "User-generated versus designer-generated products: A performance assessment at Muji" International Journal of Research in Marketing 30.2 (2013): 160-167. http://www.sciencedirect.com/science/article/pii/S0167811612000730 Poetz, M.K. and Schreier, M., 2012. The value of crowdsourcing: can users really compete with professionals in generating new product ideas? Journal of Product Innovation Management, 29(2); 245-256. http://onlinelibrary.wiley.com/doi/10.1111/j.1540-5885.2011.00893.x/abstract

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7 Solving Technical Challenges: Broadcast Search in the Development Stage In this chapter, we turn to the development stage. Open innovation platforms for technical problem solving connect organizations with technical needs with potential "solvers“, using again the crowdsourcing (or "indirect search") approach we have seen in the last chapter. Lakhani established the term "Broadcast Search" for this kind of intermediary-facilitated crowdsourcing of technical challenges: A "seeker" broadcasts a (technical) problem to an undefined (and generally large) network of "solvers" in form of an open call.

Our flow of arguments in this important chapter is as follows:

Using the crowdsourcing mechanism (an open call or "indirect search") to either find new partners (with different pre-knowledge) or to find existing solutions in form of technologies for a given technical challenge of a company

In general this method is utilizing special platforms and intermediaries who broker between “seekers” and “solvers” (solution providers)

The idea is to supplement contract research and R&D alliances: these forms of partnering and networking are still important conventional methods of technology & innovation management. At the same time, OI is not about reducing R&D staff or new dimensions of outsourcing: On the contrary: It is about generating capacity to focus on those tasks where the organization is best!

These forms are building entirely on traditional IP regimes – however, in a world without IP, knowledge transfer obviously would be more efficient (=> open source software, open hardware).

We start the chapter with a case study from our own project experience, and continue in the second section with an overview of the different applications of broadcast search. Here, we also touch Outbound OI, i.e. out-licensing of internal technologies to external partners. We show how responding to such "requests for proposals (RFP)" can become a novel and highly efficient form of technology transfer.

(1) Increasing the productivity of technical problem solving: The core idea of intermediary-facilitated crowdsourcing of technical challenges 07_Solving_technical_challenges_part_1.mp4

The case describes a project of a German industry association, FVA, who used NineSigma.com , an open innovation intermediary that connects “Seeker” firms posing scientific problems ("Requests for Proposals (RFP)" or "challenges") with external solution providers (“solvers”) who submit solutions. Seekers that judged solutions acceptable rewarded the solvers with cash prizes and assumed the associated intellectual property (IP) rights.

The case introduces into this novel way of broadcasting innovation tasks to a large community of solvers with a very diversified variety of knowledge. It will also provide us the background to discuss the idea of crowdsourcing for technical problems.

Further information:

We have described the case on more detail here in a WhitePaper: Frank Piller and Rick Wielens: Open innovation in the machinery industry: How a German consortium of SMEs in the drivetrain industry benefited from crowdsourcing

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of technical problems. Whitepaper 2012. http://www.ninesigma.com/File%20Library/White%20Papers%20and%20Reports/FVA_white-paper-v2.pdf

A classic study on using crowdsourcing to solve technical R&D challenges, with much great performance data, is Jeppesen, L.B.; Lakhani, K. (2010). Marginality and Problem-Solving Effectiveness in Broadcast Search. Organization Science 21: 1016-1033. https://dash.harvard.edu/bitstream/handle/1/3351241/Jeppesen_Marginality.pdf?sequence=2

More on the challenges and details of this approach, using again the case of the FVA, provides Lüttgens, D., Pollok, P., Antons, D., & Piller, F. (2014). Wisdom of the crowd and capabilities of a few: internal success factors of crowdsourcing for innovation. Journal of Business Economics, 84(3), 339-374. http://link.springer.com/article/10.1007/s11573-014-0723-7

(2) Alternative scenarios to profit from broadcast search: Inbound and Outbound OI 07_Solving_technical_challenges_part_2.mp4

This section explains systematically how an organization can benefit from the idea of crowdsourcing technical problems – both as a solution seeker and as a solution provider (solver).

Inbound OI: Request for Proposals (problem broadcasting): The Seeker Perspective

Examples of these services are at Ninesigma, Innocentive, Yet2.com, or Special Chem. Explore their websites for more case studies and examples. http://www.ninesigma.com/open-innovation-services/technology-search-rfp http://www.innocentive.com/innovation-solutions/premium-challenges http://www.yet2.com/pages/tactical-targeted-search http://www.specialchem.com/open-innovation/index.aspx

A good in-depth introduction into this method provide the following articles:

Spradlin, Dwayne. "Are you solving the right problem?." Harvard Business Review 90, no. 9 (2012): 84-92. https://hbr.org/2012/09/are-you-solving-the-right-problem

Sieg, Jan Henrik, Martin W. Wallin, and Georg Von Krogh. "Managerial challenges in open innovation: a study of innovation intermediation in the chemical industry." R&D Management 40, no. 3 (2010): 281-291. http://onlinelibrary.wiley.com/doi/10.1111/j.1467-9310.2010.00596.x/abstract?

Boudreau, K. J., & Lakhani, K. R. (2013). Using the crowd as innovation partner. Harvard Business Review, 91(4), 60-69. http://www.inventorsnetwork.org/wp-content/uploads/HBR-Using_the_Crowd_as_an_Innovation_Partner.pdf

Outbound OI: Responding to RFPs: The Solver Perspective

The focus of this MOOC has been on Inbound OI, this means the acquisition of external ideas, knowledge, or technologies to complement a firm's internal capabilities. But whenever there is someone getting input, there also has to be someone providing this input. We will talk more about the solver / participant perspective in Chapter 10, but already here touch Outbound OI, i.e. out-licensing of internal technologies to external partners:

Inbound OI is supplemented by outbound open innovation: The facilitation of purposive outflows of knowledge to expand an organization's markets for external use of innovation (commercialization of technological knowledge in form of out-licensing, spin-offs) to recipients not obvious to the organization.

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When responding correctly to "requests for proposals (RFP)", an organization can realize a novel and highly efficient form of technology transfer. This is an especially interesting option for universities, research institutes, and other technology providers.

Further information:

A handbook for researchers who want to utilize OI has been provided by a Swedish Innovation Agency. http://innovationskontorvast.se/ikv/wp-content/uploads/2013/08/IKV-Blue-Paper-Open-Innovation-1.0.pdf

NineSigma has a nice guide how to write a compelling proposal: http://www.ninesigma.co.jp/proposalsubmissionE.pdf

We have written an entire book about this subject (however, in German only): Piller, Frank & Dennis Hilgers (ed.): Praxishandbuch Technologietransfer. Symposion Publishing, 2013 (Chapter 3). http://www.dgm.de/dgm/images/Praxishandbuch_Technologietransfer.pdf

8 The Role of Intermediaries and Brokers for Open Innovation 08_The_role_of_intermediaries_and_brokers_in_open_innovation.mp4

A central actor, as already mentioned in the previous chapters, is intermediaries and brokers for open innovation. We call them Open Innovation Accelerators (OIA), intermediaries, consultancies, and agencies helping their clients to accelerate an open innovation project by providing dedicated tools, methods, access to an established community of solvers or participants, but also education and process consulting. With more than 180 players, the market for OIAs is getting complex and difficult to navigate.

The chapter provides a first orientation how these intermediaries can be structures (quite similarly, indeed, as this MOOC): Some are focuses on market (need) information, others on solution (technical) information. At the same time, some utilize the logic of an open call (indirect search) to crowdsource the challenge of their clients; others use a more conventional direct search to find relevant input on behalf of their clients.

Further information:

In a market report with Kathleen Diener, I tried to understand better how this market of OIAs work. The full report is here. http://tim.rwth-aachen.de/download/OIA-Survey-2013_preview.pdf

A summary with some important graphs is here. http://www.innovationmanagement.se/2013/10/14/brokers-and-intermediaries-for-open-innovation-a-global-market-study/

A good report on open innovation intermediaries is been provided by Cambridge University. http://www.ifm.eng.cam.ac.uk/uploads/Resources/Reports/oi_intermediaries.pdf

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Part III: How to Manage Open Innovation

9 The Challenges of Implementing Open Innovation According to our research and experience from many projects, the successful implementation of OI demands not just tools and methods to acquire external knowledge and ideas for innovation. In addition, firms also need to establish internal capabilities to bring these inputs into practice. Many companies are still failing in exploiting external input internally. These firms lack "open innovation readiness". This is where this chapter starts. We will discuss the drivers and components that define an organization's open innovation readiness. Open innovation is an ongoing process that requires a company to approach innovation in a fundamentally different way, both externally and internally.

(1) Three Levels of Building Open Innovation Readiness 09_What_are_the_challenges_of_open_innovation_part_1.mp4

Implementation of open innovation is still at the beginning. There are a few large pioneers and best practice companies, but many pilots and trials (without permanent implementation of OI). We discuss three levels of OI Readiness:

Company level: Internal organizational and management practices; Corporate innovation culture Project level: Project and community management Individual level: Skills and capabilities, organizational behavior

Further information:

Our own experiences with implementing OI have been reported in this article, where we describe the problem, but also discuss a method to overcome these problems in larger detail: Lüttgens, D., Pollok, P., Antons, D., & Piller, F. (2014). Wisdom of the crowd and capabilities of a few: internal success factors of crowdsourcing for innovation. Journal of Business Economics (ZFB), 84(3), 339-374. http://link.springer.com/article/10.1007/s11573-014-0723-7

One of the core problems of OI is "Not invented here". A good review is here. Antons, D. and Piller, F.T., 2015. Opening the Black Box of “Not Invented Here”: Attitudes, Decision Biases, and Behavioral Consequences. The Academy of Management Perspectives, 29(2), pp.193-217. http://amp.aom.org/content/29/2/193.short

(2) The Evolution of Open Innovation Capacity Over Time 09_What_are_the_challenges_of_open_innovation_part_2.mp4

To conclude, building open innovation readiness includes:

To acknowledge: Open innovation is a proven mechanism in thousands of projects. It works!! (If you pick the right problem and the right method).

To make open innovation a permanent part of the innovation management toolset of an organizations, you need to …

o create networking & search capability; o create dedicated structures and processes (formalization helps!); o create an open culture (incentives help)

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Open innovation is no quick fix – luckily, as otherwise it could not become a source of competitive advantage

Good articles on the implementation challenge of OI in established companies include:

Chiaroni, Davide, Vittorio Chiesa, and Federico Frattini. Unravelling the process from Closed to Open Innovation. R&D Management 40, no. 3 (2010): 222-245. http://onlinelibrary.wiley.com/doi/10.1111/j.1467-9310.2010.00589.x/abstract

Boudreau, K. J., & Lakhani, K. R. (2009). How to manage outside innovation. MIT Sloan Management Review, 50(4), 69-76 http://sloanreview.mit.edu/article/how-to-manage-outside-innovation/

10 The Participant (Solver) Perspective 10_The_participant_(solver)_side_of_open_innovation.mp4

This chapter turns briefly to the other side of OI: The perspective of the participants (solvers) contributing to the OI endeavors of an organization. We start this case by the story of Threadless.com, a Chicago-based t-shirt company that turned the idea of crowdsourcing into a very profitable business model.

But Threadless also is one of the companies that really take care of its contributors, perfectly balancing between extrinsic and intrinsic motivations that drive participation in open innovation.

Further information:

A great article on the participant side is Füller, J., 2010. Refining virtual co-creation from a consumer perspective. California Management Review, 52(2), pp. 98-122. http://cmr.ucpress.edu/content/52/2/98.abstract

Also these authors provide a very nice overview between money markets and social markets: Boudreau, K. J., & Lakhani, K. R. (2009). How to manage outside innovation. MIT Sloan Management Review, 50(4), 69-76 http://sloanreview.mit.edu/article/how-to-manage-outside-innovation/

In case you want more information about Threadless, check our classic article: Piller, F.T. and Susumu, O., 2006. Reducing the risks of new product development: the case of Threadless. MIT Sloan Management Review, 47(2), pp. 65-71. https://www.researchgate.net/profile/Frank_Piller/publication/239860362_Reducing_the_Risks_ofNew_Product_Development/links/0deec533712f7e2c86000000.pdf An updated version of this article is here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1688018

11 Innovation in Open Business Ecosystems (Industry Platforms) 11_Innovation_in_open_business_ecosystems.mp4

This chapter extends the discussion into a new, very recent development: Open business models and business ecosystems (industry platforms). We see that OI can also been seen on the level of business model: Making openness not a productivity driver, but the core of the business model,

The idea is to create a business ecosystem: a platform operator is orchestrating a multisided market of actors (different customer groups, complementors, infrastructure providers) who co-create value for the ecosystem. The advent of smart products (a core idea of the "Internet of Things") brings this

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development into many industries today --- open innovation thinking becomes a core element of value creation.

In such an economy, we even more need to know how to make strategic decisions about openness, revealing knowledge, incentives, and sharing the fruits of innovation.

Further information:

CapGemini has a good consulting report on the upcoming innovation system based on smart prodcuts (from which I also took some of the core figures of this chapter) https://www.de.capgemini-consulting.com/resource-file-access/resource/pdf/capgemini-consulting-industrie-4.0_0.pdf

Gawer, A., & Cusumano, M. A. (2014). Industry platforms and ecosystem innovation. Journal of Product Innovation Management, 31(3), 417-433. http://onlinelibrary.wiley.com/doi/10.1111/jpim.12105/abstract?

12 Conclusions: Different Dimensions of Openness for Innovation 12_Conclusions_Different_dimensions_of_openness_for_innovation.mp4

This chapter reflects on the entire course and provides some concluding remarks. First, we have seen that there are plenty of tools for open innovation (not all have been subject of this course):

“Broadcast Search” for Technical Problem Solving Internal broadcasting of problems (Siemens TechnoWeb) Innovation Jams (large scale corporate ideation events) Lead User Method (Searching for LUs) for novel need areas Lead User Method to find technical solutions in analogue fields Netnography to generate insights Firm-owned Communities like LEGO, Dell, OpenIDEO Ideation Contests for new ideas / concepts Ideation Contests to test / further elaborate concepts Toolkits for user innovation for development of user-specific variants (LEGO Factory) Open Innovation Ecosystems in form of two-sided market (Threadless, Phoneblocks)

Secondly, there a different dimensions of openness for innovation:

Openness (scope) of search: Breadth and width of (direct) search Mechanism of Search: Openness of contributor base / pre-assumption about source: direct and indirect

search (broadcast search) Openness of outcome: “free revealing” (OSS) versus IP Openness within collaboration: Open for collaboration, governance model, span of control Openness of business ecosystem (platform): Who can join on which level under which conditions? How are

gains and risks being shared? Openness of corporate culture: No-NIH, absorptive capacity, open culture

I hope that you got some initial understanding of open innovation and a framework to discover more of this paradigm on your own. I am looking forward to hearing from you!

piller@time.rwth-aachen.de | @masscustom |open-innovation.com

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Appendix: The Open Innovation Project Canvas The idea of the OI Project Canvas is to provide a template supporting the setup of an open innovation or co-creation project. It allows you to describe, design, challenge, and pivot your OI initiative. The objective of using the canvas is to consider all important issues and to get an understanding of the different aspects of an OI project – before you launch it! Use it also to document existing OI initiatives and case studies.

The tool originated from our workshops and executive seminars. Here, we often ask participants to develop a prototypical OI application in their own context --- and want to prevent that they forget to consider important issues.

Tips and tricks when using the canvas

Start with the problem statement, along with the performance criteria. Then move quickly to potential contributors and participants.

Try to balance between your own view and the perspective of relevant participants: Incentives should become aligned!

You may use additional notes to go into more detail – the canvas should provide an aggregated picture of the core issues & questions.

Think in alternatives! Fill several canvas templates for alternative setups (e.g. which participants can you reach with which channel?)