Wednesday, 23 January 2013
Open innovation organizational adoption
The attitude of collective benefits leads to exploratory measures on identifying what is the ultimate meaning and source of benefit for each party. In real business environments, it is necessary and important to understand that each company tries to perceive the best possible value which is normally monetized. The key player here is open innovation. However implementing open innovation means that the individual company has established all these necessary mechanisms and has created the required organizational culture and structure which firstly depicts its organizational trust as an antecedent to open innovation.
It is very important to underline the following paradox; the importance of open innovation and the impact that it already has on the business world affecting, product, process and service innovation is widely accepted. Every executive seems to be aware of the concept; there is a broad acceptance of the basic premises of open innovation but the number of examples coming from companies which have actually implemented projects via an open innovation mindset is extremely small. Hagel and Brown (2008) presented this paradox and came up with two interrelated reasons depicting the poor implementation of open innovation. The first reason is the fact the open innovation still remains a perplexed concept, meaning that there is a lot of confusion over what open innovation really means and what it actually involves. The second reason is the fact that there is also great confusion and lack of understanding on the mechanisms and the management techniques to be followed to foster open innovation initiatives especially when this normally involves a great number of diverse parameters and various partners. In the same paper, Hagel and Brown (2008, p.39) identified a “large and persistent gap between potential and results”. This means that yes open innovation can improve business performance, can bring and create value in the market, can bring new ideas, and strengthen cooperation and partnerships, as long as the right institutional mechanisms are set in motion.
Blackwell and Fazzina (2008, p.2) point out four main reasons showing the unwillingness or the suspicion of organizations towards open innovation; “not-invented here syndrome, poor management focus and endorsement, lack of process for finding, vetting and leveraging outside sources of innovation and concerns about intellectual property”. These reasons show a substantial disconnection between the theory of open innovation and its actual implementation and execution by the organizations.
An interesting interrelation between connective capacity and collaboration can be found in the study of Lichtenthaler and Lichtenthaler (2009) who by using the example of Cisco discuss the way knowledge sharing and connective capacity have helped Cisco to manage a large alliance portfolio. This leads to the understanding that collaboration becomes easier when there is substantial knowledge, experience and ability to value external partners. This is also related to another important element in the same research i.e. the combination of internal and external knowledge process with ambidexterity and the formulation of exploitative and explorative norms of action in terms of strategically implemented developments.
Lin and McDonough (2011, p.497) have conducted an empirical analysis on “the role of leadership and organizational culture in fostering innovation ambidexterity”. The key word here which is related to thinking and trust is strategic leadership, with the second playing a highly crucial role since it is called to take up the challenge of mediating the balance between the forces of exploration and exploitation leading to the creation of an organizational culture imbued with trust. The study is very important since it is the first endeavor which empirically investigates the role of leadership not in terms of balancing exploration and exploitation but the role of leadership in the creation of an organizational culture which in turn facilitates exploration and exploitation activities in the form or incremental, radical and process innovation.
It is important here to distinguish the knowledge outflows and inflows under the perspective of dual interests of two firms sharing and exchanging knowledge since in a network of multiple firms trying to exchange knowledge the dynamic relationships and the flow of information is more complex (Torkkeli et al., 2009). An interesting parameter emerging from Torkkeli et al paper (2009) concerning the interrelation between the perspectives followed in terms of knowledge sharing and collaboration stems from Nash’s game theory (Torkkeli et al., 2009); stating that there are reasons and circumstances under which firms would agree to cooperate, what kind of payoff strategies will be implemented and how the players attitudes and actions would have a tangible or intangible impact on the actual result (product, service etc). Furthermore, within cooperation both partners need to start sharing knowledge in order to contribute to the establishment of the cooperation and put it motion. This denotes the willingness of both parties to elaborate further and to make sure that the cooperation unfolds in order to cater for more knowledge sharing. Trust plays a vital role here since it leads to the creation of long-term trustworthy relationships, openness and developed absorptive capacity.
Another interesting side in the analysis and understanding of the role of ambidexterity lies within the study of Henri Mintzberg (1994 cited by Aubry and Lièvre, 2010) who proposes that the analysis and examination of ambidexterity is not only a matter of organization but also a matter of individual analysis. Mintzberg introduced a new way of addressing the question of ambidexterity through the left brain/right brain perspective. Influenced by physiology and psychology Mintzberg identified that a brain must function under a dual thought formation; analysis and synthesis. These forms can be translated in terms of ambidexterity and are reflected in the two forms of action which on the one side is planning and rationalization and on the other side adaptation and learning. The difference between the approaches by Mintzberg and March lies within the importance of knowledge sharing, learning and the level of organization and individual.
Aubry, M., & Lièvre, P. (2010). Ambidexterity as a competence of project leaders: A case study from two polar expeditions. Project Management Journal, 41(3), 32–44.
Blackwell, K., & Fazzina, D. (2008). Open Innovation: Facts, Fiction and Future (p. 15).
John Hagel, J. S. B. (2008). Creation Nets: Harnessing the Potential of Open Innovation. Journal of Service Science, 1(2), 27–40.
Lichtenthaler, U., & Lichtenthaler, E. (2009). A Capability-Based Framework for Open Innovation: Complementing Absorptive Capacity. Journal of Management Studies, 46(8), 1315–1338.
Lin, H.-E., & McDonough, E. F. (2011). Investigating the Role of Leadership and Organizational Culture in Fostering Innovation Ambidexterity. Engineering Management, IEEE Transactions
Marko T. Torkkeli, Carl Joachim Kock, P. A. S. S. (2009). The “Open Innovation” paradigm: A contingency perspective. Journal of Industrial Engineering and Managemennt, 2(1), 176–207.