Innovation management open innovation management culture by Lars

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

â&#x20AC;&#x153;Rome, â&#x20AC;Ś, 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.â&#x20AC;? Kevin Stark, director, technology solutions, NineSigma Industry Week, October 12 2011

1 What is an open innovation corporate culture? Do we have the same understanding ?

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 risktaking, 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.

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

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

2 Culture as an enabler and an obstacle when implementing Open Innovation

Benefits and Enablers of having Open Innovation

Enablers:

SOURCE:

Mortara, L, Napp, J., Sladk, I. And Minshall, T (2009), How to implement opn innovation, IfM, University of Cambridge.

Barriers to Open Innovation

Barriers:

SOURCE:

Mortara, L, Napp, J., Sladk, I. And Minshall, T (2009), How to implement opn innovation, IfM, University of Cambridge.

“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

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

“…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

SOURCE:

Mortara, L, Napp, J., Sladk, I. And Minshall, T (2009), How to implement opn innovation, IfM, University of Cambridge.

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.

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.

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.

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

3 NIH and NSH

â&#x20AC;&#x201C; it is about losing what you are and have now for building for the future â&#x20AC;&#x201C;

Overcoming NIH / NSH syndromes Chesbrough (2003,2006) NIH-syndrome

- 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?” -

WHAT CAN WE DO ABOUT IT?

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

Overcoming NIH / NSH syndromes Chesbrough (2003,2006) NSH-syndrome (resistance against external commercialization of technology)

- Unwillingness to undertake extra-organizational knowledge transactions Loss of IP Risk that licensee / spin-off may become very successful

WHAT CAN WE DO ABOUT IT?

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

4 10 steps that companies should follow to create and cultivate a successful open-innovation program Source: K. Stark (2011)

â&#x20AC;&#x201C; it is about losing what you are and have now for building for the future â&#x20AC;&#x201C;