Innovation management open innovation management culture
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Corporate culture can be defined as the values, norms, attitudes and behavior patterns, that are shared within an organization [Herzog, 2011]. Corporate culture can be seen as the personality of a company that influences people's behavior within the organization, regardless of size and field of action
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Innovation management open innovation management culture
- 1. MOOI Theme 5: How to create a corporate culture where OI can thrive Prof. Henry Chesbrough, University of California, Berkeley & ESADE Prof. Wim Vanhaverbeke, Hasselt University, ESADE & National University of Singapore Dr. Nadine Roijakkers, Hasselt University April 1, 2014
- 2. 2 “Rome, …, wasn't built in a day. Likewise, open innovation is not something you can achieve overnight. It is not a single event, but a process and a culture that must grow over time. Rome did not build itself, either, and similarly, open innovation won't just happen. It takes work, commitment and patience to cultivate an effective program. It is a major initiative requiring focus, investment and time.” Kevin Stark, director, technology solutions, NineSigma Industry Week, October 12 2011
- 3. What is an open innovation corporate culture? Do we have the same understanding ? 1
- 4. Open innovation culture What is “corporate culture”? • Corporate culture can be defined as the values, norms, attitudes and behavior patterns, that are shared within an organization [Herzog, 2011]. Corporate culture can be seen as the personality of a company that influences people's behavior within the organization, regardless of size and field of action • OI and corporate culture? • Herzog (2011): cultural issues sparked by open innovation fit into three layers of firms’ culture. − Practices: these are the easiest to change and in the open innovation context include issues such as management support, freedom to express doubts, organizational risk- taking, and technological opportunism. 1. Organization's norms; “not-invented-here” and the “not-sold-here” syndromes (Chesbrough 2003, 2006). Harder to change. 2. Shared basic values in the organization which are the most difficult to change. 4
- 5. Open innovation culture Implications when moving from closed to open innovation? • Culture for closed innovation is not appropriate for OI • Starting OI entails a cultural shift, whereby working with other companies becomes accepted and endorsed throughout the organisation. • Resistance will lead to (cultural) barriers • How to overcome these barriers? What are the mechanisms and management tools to be successful? • Cultural changes usually take time: adapting to an OI culture may be one of the most difficult hurdles to take • An OI culture implies that OI is embedded in values and norms, practices and behaviors – OI culture is emerging at mature levels of OI implementation. • Implementation of OI culture is (thus) a slow, stepwise process – how do corporate crises help in speeding up this process? 5
- 6. Interactive poll 1 What are the three most important items in establishing an OI culture in a company • Commitment of and communication by top-management • Using informal networks to communicate the change to OI • Align individual rewards with OI requirements • Train managers and employees • Go for quick successes with OI • Focus on tearing down cultural barriers against OI • Provide processes and tools to implement OI • How the organization responds to failure 6
- 7. Culture as an enabler and an obstacle when implementing Open Innovation 2
- 8. Enablers: Benefits and Enablers of having Open Innovation SOURCE: Mortara, L, Napp, J., Sladk, I. And Minshall, T (2009), How to implement opn innovation, IfM, University of Cambridge.
- 9. Barriers: Barriers to Open Innovation SOURCE: Mortara, L, Napp, J., Sladk, I. And Minshall, T (2009), How to implement opn innovation, IfM, University of Cambridge.
- 10. 10 “The move from Closed Innovation to Open Innovation needs to be accompanied by a change in the underlying innovation culture. A different way of thinking and a different way of dealing with ideas and technologies is required to fully exploit the potential of Open Innovation” - Gali, 2011, p. 206 “…the biggest challenge was changing the culture, shifting the mindset from ‘only invented in P&G’ to ‘proudly found elsewhere’”. Chris Thoen (2009), P&G In the beginning…. the really good IP was being held back by the [P&G] businesses. This is when the 3/5 program was created. 3 years after the product is shipping into the market, or 5 years after the patent is issued, the patent would be made available to others…. Nothing was untouchable.” Martha Depenbrock, P&G, quoted in Chesbrough, Open Business Models 2006
- 11. 11 SOURCE: Mortara, L, Napp, J., Sladk, I. And Minshall, T (2009), How to implement opn innovation, IfM, University of Cambridge.
- 12. Culture as an obstacle when implementing OI Know-it-all, control-freak managers Rigid top-down approach SOURCE: Mortara, L, Napp, J., Sladk, I. And Minshall, T (2009), How to implement opn innovation, IfM, University of Cambridge.
- 13. Culture as an obstacle when implementing OI Lack of incentives to innovate SOURCE: Mortara, L, Napp, J., Sladk, I. And Minshall, T (2009), How to implement opn innovation, IfM, University of Cambridge.
- 14. Culture as an obstacle when implementing OI Failure seen as a weakness SOURCE: Mortara, L, Napp, J., Sladk, I. And Minshall, T (2009), How to implement opn innovation, IfM, University of Cambridge.
- 15. Interactive poll 2 What are the two most important barriers in establishing an OI culture in a company • The know-it-all, control-freak managers • Rigid top-down approach • Lack of incentives to innovate • Traditional channels of communication • When failure is a sign of weakness 16
- 16. NIH and NSH 3 – it is about losing what you are and have now for building for the future –
- 17. Overcoming NIH / NSH syndromes Chesbrough (2003,2006) - Threat of being fired - Loss of capabilities - “Best practices are established by the best companies. How will we become industry leaders if we adopt other’s best practices?” - Rotate and cross-pollinate team members on a project basis - Engage outsiders to ensure fresh perspectives and new thinking - Encourage team members to regularly interact with the wider community (e.g., conferences). - Formalize regular competitor reviews and environmental scanning to stay abreast of them - Consider open innovation models, competitions (e.g., Netflix Prize), and outside collaborations to institutionalize a meritocratic approach to new ideas. - Teach team members about the causes, costs, and remedies for NIH NIH-syndrome WHAT CAN WE DO ABOUT IT?
- 18. Overcoming NIH / NSH syndromes Chesbrough (2003,2006) - Unwillingness to undertake extra-organizational knowledge transactions - Loss of IP - Risk that licensee / spin-off may become very successful - It is actually a way to boost morale among R&D-employees (us through licensing or spin-off) - Communicate positive experiences with external monetization of technologies - Establishing an appropriate incentive system to fight the NSH syndrome. - Use it or loose it policy : technologies are shelved because business units may insist “on vetoing any external use of the technology”. - Better to license than to face competition without licensing income NSH-syndrome (resistance against external commercialization of technology) WHAT CAN WE DO ABOUT IT?
- 19. 10 steps that companies should follow to create and cultivate a successful open-innovation program Source: K. Stark (2011) 4 – it is about losing what you are and have now for building for the future –
- 20. How to create an appropriate culture for OI 1 CREATE A LIST OF STRATEGIC AND BUSINESS NEEDS
- 21. How to create an appropriate culture for OI DEFINE THE COMPANY’S CORE COMPETENCIES 2
- 22. How to create an appropriate culture for OI INITIATE SCOUTING (new partners & technologies) 3
- 23. How to create an appropriate culture for OI DEVELOP AN IP STRATEGY 4
- 24. How to create an appropriate culture for OI BROADEN OUTREACH TO ADDITIONAL STAKEHOLDERS such as customers and employees 5
- 25. How to create an appropriate culture for OI LET EVERYONE KNOW THAT THE COMPANY IS “OPEN” TO INNOVATION The role of OI portals 6
- 26. How to create an appropriate culture for OI TRANFORM EXISTING RELATIONS 7
- 27. How to create an appropriate culture for OI BUILD A KNOWLEDGE BASE & MEASURE PROGRESS 8
- 28. How to create an appropriate culture for OI COLLABORATE WITH PEER ORGANIZATIONS 9
- 29. How to create an appropriate culture for OI CREATE ACCOUNTABILITY 1 0
- 30. Interactive poll 3 What are the three most important of the 10 steps that companies should follow to create and cultivate a successful open-innovation program? • Create a need list • Define the company’s core competencies • Initiating scouting • Develop an IP strategy • Broaden outreach to additional stakeholders • Let everyone know that the company is "open" to innovation. • Transform existing relationships into strategic relations • Build a knowledge base • Collaborate with peer organizations 31
- 31. Q&A 32
- 32. References (1/2) •Chesbrough, H. (2003). Open innovation ; The new imperative for creating and profiting from technology, Harvard Business School Press, Harvard : Boston. •Chesbrough, H. (2006). Open innovation Business Models; How to thrive in the new innovation landscape, Harvard Business School Press, Harvard : Boston. •Coppolino, A. (n.d.). Open innovation and creativity: conceptual framework and research propositions. Unpublished manuscript, University of Messina. •Grimaldi, M. (2012). Assessing and managing intellectual capital to support open innovation paradigm. World Academy of Science, Engineering and Technology •Herzog, P. (2011). Open and closed innovation: Different cultures for different strategies, 2nd edition, Gabler Verlag, Germany 33
- 33. References (2/2) • Ihl, C., Piller, F., & Wagner, P. (2012). Organizing for open innovation - aligning internal structure and external knowledge sourcing. Informally published manuscript, RWTH Aachen University. • Mortara, L, Napp, J., Sladk, I. And Minshall, T (2009), How to implement opn innovation, IfM, University of Cambridge. • Mortara, L., Minshall, T, 2011. How do large multinational companies implement open innovation? Technovation, 31 586-597. • Piller, F. (2010). Open innovation readiness. TIM-Group at RWTH Aachen University, 34
- 34. We acknowledge contributions of ESADE MSc students Silvia García, José Miarnau, Marc Rovira, Nahikari Zuasti, Alandra Stadler, Sanna Gräno, Johannes Papp, Maximilian Almayer-Beck 35
Editor's Notes
- “How to implement OI”, University of Cambridge
- “How to implement OI”, University of Cambridge
- Mortara
- The know-it-all, control-freak managers. By this approach, middle management has total authority on decision-making and bringing solutions to current problems. Employees in the bottom of the pyramid are there to obey and keep on doing their repetitive tasks. This approach belongs to the past, and is no longer valid in innovative companies. This type of culture is blocking people to do their best and the company is ignoring potential ideas and solutions. b) Rigid top-down approach. Very related with the previous statement. Rigid top-down and hierarchical cultures typically ignore those at the bottom, as well as they ignore feedback, which may lead to creative or innovative solutions. Building a culture where OI can thrive tries to involve everyone in the project.
- c) Lack of incentives to innovate. Some cultures do not encourage employees to be creative, or even worse; they discourage personnel to do so. An OI culture needs to empower employees in their workplaces and incentivize innovation by rewarding good use of new practices.
- d) Traditional channels of communication. Formal and traditional communications such as email do not stimulate collaboration among employees. Instead, an OI culture is based on sharing and discussing ideas in forums or groups. A good way to facilitate this is by sharing information and knowledge (through technology such as Dropbox or Google Drive) and let them work together on projects or experiments.
- e) When failure is a sign of weakness. Traditional organizations look down on failure and treat it as a sign of weakness. An OI culture has to encourage employees to think different about failure and let them face it.
- “How to implement OI”, University of Cambridge
- “How to implement OI”, University of Cambridge
- Create a needs list. This is a process that should involve senior innovation leadership, research and product-development leaders, as well as people from the business units. Together, they should create a prioritized list of critical strategic and business needs that can become the starting point to initiate the search for new innovations.
- 2. Define the company's core competencies. What knowledge, expertise and technology are unique to your organization? In what areas do you lead your industry (and in what areas do you lag)? Knowing these answers makes it easier to be honest about where you don't have expertise, and therefore can benefit from external innovation.
- 3. Initiate scouting. The fastest way to realize impact from open innovation is to scout for new partners and technologies against the identified needs. This can be through a formal request-for-proposals (RFP) process, or through more informal outreach. Build a scouting team to lead the effort, and identify experts and potential development partners who can help with ideation. Remember that messaging in the RFP requires great care and precision; it's important to "get to the root" of your challenge to find the best partners, who may be from unrelated industries. Innovation partners can be particularly helpful with this messaging process.
- 4. Develop an IP strategy. Companies' standard policies related to intellectual property need to be modified to encourage open innovation. Develop a strategy that facilitates the open discussions and collaboration that will enable your company to move forward and collaborate with outsiders. At the same time, your policies must describe upfront, and in a clear way, "who owns what."
- 5. Broaden outreach to additional stakeholders. For instance, many companies actively engage customers to identify and define their next products (such as Hallmark Cards' use of contests to enable consumers to create new greeting cards). Others leverage their internal "brain trust" to tap into knowledge and expertise that may be hidden across the organization. For example, AkzoNobel, a Netherlands-based Global 500 leader in coatings and specialty chemicals, developed a companywide networked innovation program to help drive strategic innovation across its business units. By issuing internal, cross-business searches, they are able to uncover new solutions and pools of talent not previously considered.
- 6. Let everyone know that the company is "open" to innovation. Keep every suggestion alive, both from internal and external sources. Being open to any idea from any source can pay off in surprising ways. Examples of open-innovation portals to encourage new partnerships with external technology providers abound from companies in food and beverage (Innovate with Kraft), consumer products (Unilever Working with Us) and automotive (Johnson Controls).
- 7. Transform existing relationships. Turn the tables on conventional thinking and engage your suppliers and vendors, elevating them to strategic partners. Put agreements in place that guarantee confidentiality in the open exchange of ideas and be open to sharing long-term goals. Your suppliers are on the front lines of where their industry is headed. Move discussions out of the back room and work on building more strategic, trusted relationships.
- 8. Build a knowledge base. This happens typically in Year Two of a company's push to open innovation and shows why it is a long-term process. You can't do this at the beginning. Create a repository of best practices and see what kind of metrics you can develop to measure progress. Create mentors in the organization based on who has been able to achieve a track record of success. This also is part of transforming the corporate culture that simply takes time and experience.
- 9. Collaborate with peer organizations. Be the company to articulate the big challenges facing your industry and be willing to take a leadership role in addressing those challenges. Executed correctly, this is an opportunity to work with competitors and deal with industry-wide issues like regulations, safety and sustainability.
- 10. Create accountability. This should be a positive, incentivizing part of the program. Celebrate and showcase successful outcomes from collaborative innovation projects. Highlight them as big things, and celebrate individual and team achievements. You need to demonstrate that the company highly values this collaboration, both internally and externally.