Differences closed/openinnovationClosedlnnovationPrinciplesOpenInnovation PrinciplesThesmartpeopleinthefieldworkforusIfwe createthemostand thebestideasintheindustry,wewill win.ToprofitfromR&D,wemustdiscoverit,developit,ExternalR&Dcancreatesignificantvalue:internalR&DisneededtoclaimsomeportionofthatvalueandshipitourselvesIfwediscoveritourselves,wewill getittotheWedon'thavetooriginatethe researchtoprofitmarket first.from it.The company thatgets an innovationtothe market Buildinga better business modelis betterthanfirstwill win.getting to themarketfirst.IfwecreatethemostandthebestideasintheIfwemakethebestuseof internal andexternalindustry,wewillwinideas,wewillwin.IfwecreatethemostandthebestideasintheWeshouldprofitfromothers'useofourIP,andweindustry,wewillwinshouldbuyothers'IPwheneveritadvancesourbusinessmodel.Source:Chesbrough,2003Technische UniversiteitTUEindhovenUniversityofTechnology10/13/2013PAGE10EcononomicsofInnovation2013
Differences closed / open innovation Econonomics of Innovation 2013 10/13/2013 PAGE 10 Closed Innovation Principles Open Innovation Principles The smart people in the field work for us. If we create the most and the best ideas in the industry, we will win. 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 some portion of that value. If we discover it ourselves, we will get it to the market first. We don’t have to originate the research to profit from it. The company that gets an innovation to the market first will win. Building a better business model is better than getting to the 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 and external ideas, we will win. If we create the most and the best ideas in the industry, we will win. We should profit from others’ use of our IP, and we should buy others’ IP whenever it advances our business model. Source: Chesbrough, 2003
OpeninnovationinstrumentsStageininnovationprocess(addressingdifferentparties):Idea generation (Any source of knowledge and activities contributingtoinnovation)Research(lnstrumentsfacilitatingcollaborationorinsourcingoftechnology)Development (Activities engaging with partners in creation of new productsandservices)Commercialization (Activities with outside partners bringing technologiestothe market)Openinnovationprocess:Outside-inprocess(external knowledgeorresourcesare brought intothecompany)Inside-outprocess(internal knowledgeorresourcesaretransferredtotheoutsidetocommercializationCoupledprocess(outside-inandinside-outarecoupledandpartnersshareTechnische Universiteitcomplementaryresources)TUEindhovenUniversityofTechnologyPAGE11EcononomicsofInnovation201310/13/2013
Open innovation instruments • Stage in innovation process (addressing different parties): • Idea generation (Any source of knowledge and activities contributing to innovation) • Research (Instruments facilitating collaboration or in sourcing of technology) • Development (Activities engaging with partners in creation of new products and services) • Commercialization (Activities with outside partners bringing technologies to the market) • Open innovation process: • Outside-in process (external knowledge or resources are brought into the company) • Inside-out process (internal knowledge or resources are transferred to the outside to commercialization) • Coupled process (outside-in and inside-out are coupled and partners share complementary resources) Econonomics of Innovation 2013 10/13/2013 PAGE 11
ExampleDeutscheTelekomDeveloped byHowDeutscheTelekom createsanopentmmovattonecasystemincumbenttelecomoperatorFcresight(DT) threatenedIdea generationExecutivetorumworkshopsby"extinction"eCustomerintegrationResearchCorporate ventureEndowed chairsConsortspcapitalistnEODevelopmentInternet platformsferelopmemStrateg ic allian cesCommercializationSpin-outsTestmarketsLowMediumHighIntensity (Budget, time, resourc es)htanaged by EIC T htanaged by T-LabsItanaged by business unitsFigure1.Open finnovation ecosystem at Deutsche TelekomTechnische UniversiteitTUEindhovenUniversityofTechnologySource:Rohrbeck.etal200910/13/2013PAGE12EcononomicsofInnovation2013
Example Deutsche Telekom Econonomics of Innovation 2013 10/13/2013 PAGE 12 Source: Rohrbeck, et al 2009 Developed by incumbent telecom operator (DT) threatened by “extinction