Research questions revolving around OI in ICT industry.

1. Sarantis Pispilis
28/07/2013
Dissertation: Coupled process of Open Innovation
Strategy as a Value Creation Tool in the ICT sector.
Current state of the Art
The formulation of the so-called'open strategies', integrates the balance between value creation with the
need to capture value [Chesbrough and Appleyard, 2007]. As a result, the innovative firm has to find
the 'right degree of openness', shifting from the question "how do we create and protect innovation" to
the question "how can we find a way to generate value and capture the greatest possible amount of that
value, regardless of whether others take part in the value chain" [Stoyanov, 2008].
By developing 'open strategies' the innovative firm may use three types of processes, namely the
"outside-in" (inbound), the "inside-out" (outbound) and the "coupled" (bi-directional) innovation
processes [Gassmann and Enkel, 2004]. The latter, which consist the dissertation topic is a process that
by definition entails porous boundaries and is defined as "linking outside-in and inside-out by working
in alliances with complementary companies during which 'give and take' are crucial for success" .
Although the concept of 'coupled processes' is gaining an increasing importance in the innovation
process and it is widely recognized in the open innovation literature [West and Bogers, 2011], there is
little evidence [Clark et al. 2012; Livieratos et al., 2012; Grotnes, 2009] on how growth strategies based
on coupled processes are put into practice. Furthermore, they are neither deeply understood nor
properly outlined. In other words, there is relatively little evidence on how 'open strategies'
emphasizing on coupled processes are 'translated' into practice, leading thus to a lack of a relevant
analytical framework.
Developments in internet Technology and social networking technologies allow companies to interact
with numerous sources and predict an unprecedented level of richness. Companies are able to draw
their customers, suppliers or other partners in the heart of their product development through on line
idea management or community participation in product development (Chesbrough and Prencipe,
2008).The coupled process of open innovation, where according to Enkel et al.(2009) companies
cooperate to co-create innovative products or services, is a process that is very common in the ICT
industry. It is in the ICT industry nature to be open. Companies are willing to share their IP with their
competitors and common standards are formed that apply to all the companies in that industry.

2. Sarantis Pispilis
28/07/2013
Discussion in brief on tentative topics-research questions
Open innovation strongly focuses on peer production through communities (Lakkhani et al., 2008;
Reichwald and Piller, 2009), consumers, lead users, universities or research organizations and partners
from other industries. According to Enkel and Gassman study in 2008 the category of companies
especially within the electrical, electronic, IT, and other high-tech industries (ICT), the number of joint
R&D projects comprises almost 50% of all R&D projects within a company. When company size taken
into account, the coupled process is popular in companies of all sizes that have substantial resource
allocation. In addition the companies that apply coupled process could also be sub categorized in those
who used this process to make profit or not (Lee et al, 2010).
The table below displays the characteristics of coupled open innovation and the characteristics of the
companies that use coupled process.
Characteristics
Coupled process
standard setting (pre dominant design)
combining outside-in
and inside-out
processes
increasing returns
(mobile industry through
multiplying technology
integrating external
knowledge and
competencies and
externalizing own
knowledge
alliance with
complementary partners
complementary products
with critical interfaces
relational view of the
firm
SMEs clearly have taken up a more open approach towards innovation. An important question in this
respect is: what drives SMEs to open up the innovation process? According to Van de Vrande et al
(2009) survey on a database collected from 605 innovatve SMEs in the Netherlands, open questions
allowed respondents to reveal their motives why their company is moving in the direction of an open
innovation model. The results indicate that open innovation in SMEs is mainly motivated by market-
related targets. SMEs make use of several open innovation practices at the same time to serve
customers effectively or to open up new markets, with higher-order objectives to secure revenues and
to maintain growth.

3. Sarantis Pispilis
28/07/2013
According to (Mortara and Minshall 2011), on how do MNCs implement Open innovation practices
from a sample of 43 cross-sector MNCs, in the majority of cases, examples of activities for both
inbound and outbound processes (coupled process) were observed.
The managerial and organizational barriers to open Innovation are very diverse, but the main barrier to
open Innovation in SMEs is related to the organizational and Cultural issues which arise when SMEs
start to interact and Collaborate with external partners. Within their limited resources, SMEs must find
ways to achieve production economies of scale, to market their products effectively, and to provide
satisfactory support services. Collaborating with other organisations is one method.
SMEs are flexible and more innovative in new areas, but can lack resources and capabilities. Large
firms may be less flexible but will tend to have stronger resources to develop inventions into products
or processes, and these resources act as complementary assets in attracting SMEs to collaborate with
them (Barney and Clark, 2007).
At the exploration stage, SMEs are most likely to use external partnerships so they can concentrate on
retaining high levels of internal competence in a limited number of technology areas (Narula, 2004),
though they show a preference for networking with public research institutes and universities because
of the fear of giving away their technology to competitors (Tidd and Trewhella, 1997). But at the
exploitation stage, SMEs attempt to create value by entering into supplier–customer relations with large
firms (Luukkonen, 2005), outsourcing agreements or strategic alliances with other SMEs.
While alliances with large firms have often benefited SMEs, they can also oblige SMEs to share their
technological competence with the large firms, leading to increased flexibility for the large firms, thus
negating a major comparative advantage of the SMEs. As a result, as SMEs gain opportunities to
collaborate with large firms, they lose opportunities to compete against them (Narula, 2002). SMEs
may also be required to produce a cheap product to meet the large firms’ lowest specifications, thus
delaying further innovation on the part of the SMEs.
All in all the mechanisms by which open innovation creates value have not been absolutely codified,
many research results have described the positive influence of strategic alliances on SMEs’
performance (Kogut et al., 1992; Lee, 2007) and innovativeness (Rothwell, 1991), confirming strategic
alliances (coupled process) as important avenues for SMEs seeking to profit from value networks.
It is very interesting to study what open innovation strategies each company promotes, what motives
are behind them, how those strategies are chosen and what effect they have on the business model of
the company. By looking at each company’s open innovation strategies separately we can draw very
useful conclusions on what determines a successful open innovation strategy in order to create general
guidelines for other firms that want to adopt a more open approach to their innovation processes with a
minimum amount of risk. In addition the study of these strategies can help us grasp the philosophy
behind the operations and the corporate culture of each firm, which determine them to a great extent.

4. Sarantis Pispilis
28/07/2013
A very successful example of intergrating coupled process in the ICT sector is Ericsson. Coupled
process is expressed by strategic cooperations and alliances with companies which help to create the
standards on which the telecommunications industry operates today. We can see that in order to
combine internal and external ideas Ericsson is using platforms like Ericsson Labs, Ericsson Business
Labs etc which lead to an appropriate business model in order to capture the value of innovations like
Chesbrough (2012) describes. These platforms indicate that Ericsson has adopted the philosophy that
not all people work for them and that they need to work with smart people from inside and outside our
company (Chesbrough, 2003a).
Ericsson is taking part in many standardization initiatives in the telecom industry. Cooperating in order
to innovate is not something new for this company. One of these cooperations is the 3GPP ecosystem.
In 1998 more than 300 companies, even though they competed in the market, decided to cooperate in
order to create the standards for new generation telecommunication networks. This is a very
characteristic case of a coupled process of open innovation. Through that cooperation, standards like
the EDGE, HSDPA and LTE were introduced in the market and they have become the dominant
standards in this industry, creating significant growth opportunities for the future that will benefit all
the participant companies. The main reason why this specific cooperation is a success is the clearly
defined IPR policy. This means that the firms that participate in the 3GPP ecosystem know beforehand
the percentage of the revenue that they will receive when a new innovation is introduced to the market
In the coupled process where companies form alliances and cooperate in order to innovate there is a
very important limiting factor the company might be very open and the customer might be very closed
or it could be the other way around.
The industry-driven traditional business strategy suggests that competition is a zero sum game.
Challenging this approach, Brandenburger and Nalebuff [1996] introduced the concept of 'Value Net'
suggesting that firms operate by having four main groups of influence, namely suppliers, customers,
competitors and complementors.
Entering into carefully selected coupled processes with suppliers, customers, competitors and/or
complementors is believed to i) intensify existing competitive advantages and/or ii) create new
difficult-to-imitate competitive advantages. These new competitive advantages may now be routed in
mutually beneficial relationships with customers, suppliers, competitors and/or complementors
[Livieratos et aI., 2012]. Continuing with Ericsson example Ericsson Labs is a website where Ericsson
displays their latest research in the field of Internet and mmunication Technologies (ICT), opening up
the findings of their R&D department and making them accessible to everyone. Through this initiative
Ericsson reveals concepts that have already been proven in practice but it also reveals ideas that are in
an early stage of development. The users of Ericsson Labs can find prototypes and running code on
several research areas. In addition Ericsson provides software and tools that these users can try out. The
outside-in part of Ericsson Labs is letting the public to temper with its IP. Ericsson receives valuable
feedback that can improve their innovations or it may lead to new concepts. This initiative is Ericsson’s
way of admitting that their R&D department is not flawless and that there are people outside of the
company that can contribute to their ideas.

5. Sarantis Pispilis
28/07/2013
All the involved parties contribute in R&D with concepts and technologies. The existence of mutual
nondisclosure agreements is necessary for the protection of such a cooperation. By opening up the
research of Ericsson, joint innovation projects are created and technologies are tested in new business
contexts. All the organizations involved have rights over the results of the R&D and by exposing their
research and getting feedback they can adjust their internal innovation accordingly.
Even though some of the ideas become joint patents and some are patented separately the inclusion
principles are the ones that motivate for expanding the collaboration. In the projects that were Ericsson
jointly participated with others it is observed that the implementation and the adaptation of innovations
was done faster as well as the time that is required for an innovation to reach the market .