adapting open innovation in ict ecosystem dynamics

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By: Mohamed Eldishnawy Supervisor: Docent Kalevi Kilkki Comnet Research Team – Prof. Heikki Hämmäinen Adapting Open Innovation In ICT Ecosystem Dynamics

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Adapting Open Innovation In ICT Ecosystem Dynamics. By: Mohamed Eldishnawy Supervisor: Docent Kalevi Kilkki Comnet Research Team – Prof. Heikki Hämmäinen. Outline. Background: What is Open Innovation? Research Focus: What exists Vs. What is missing - PowerPoint PPT Presentation

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Page 1: Adapting Open Innovation In ICT Ecosystem Dynamics

By: Mohamed EldishnawySupervisor: Docent Kalevi KilkkiComnet Research Team – Prof. Heikki Hämmäinen

Adapting Open Innovation In ICT Ecosystem Dynamics

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Outline

• Background: What is Open Innovation?

• Research Focus: What exists Vs. What is missing

• Methods: From the dynamic and static point of view

• Results

• Interviews outcome – perception of open innovation

• System Dynamics model

• Business aspect of open innovation

• Conclusion

• Possible future work

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What is Open Innovation?

Background

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Innovation” An innovation is something original, new, and important - in whatever field - that breaks into (or obtains a foothold in) a market or society”*

*Based on Frankelius, P. (2009), Questioning two myths in innovation literature, Journal of High Technology Management Research, Vol. 20, No. 1, pp. 40–51.

Innovation Vs. Invention

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Innovation Process - Innovation Funnel

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G A Stevens, "3,000 raw ideas= 1 commercial success," vol. 40, no. 3, 1997.

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Innovations acts as a competitive advantage

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Closed Vs. Open Innovation

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Adapted from Henry Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology (HBS Press, 2003)

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Closed Vs. Open Innovation

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Closed Vs. Open Innovation

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Adapted from Henry Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology (HBS Press, 2003)

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What exists Vs. What is missing

Research Focus

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Current Research Focused only over

behavioral, managerial and legal aspects of open innovation

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• Revealing internal resources to external environment.

• Out-licensing or selling products acquire inventions.

• Input inventions to the innovation process.

• Firms informal and formal.

Studying static aspects of open innovation

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ResearchQuestions Static and dynamic view

of open innovation.

• Modeling open innovation constitutional functions and variables

• Explore Open innovation Business Phenomena

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From the dynamic and static point of view

Methods

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Interviews

• Review of scientific bibliography to analyze the main dimensions of open innovation.

• Build semi-structured interviews questions.

• Adapting multi-case nested experimental design.

“An empirical inquiry that investigates a contemporary phenomenon within its real-life context; when the boundaries between phenomenon and context are not clearly evident; and in which multiple sources of evidence are used”*

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*R. K. Yin, "Case Study Research: Design and Methods," Sage, Newbury Park, CA., 1989.

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System Dynamics“Understanding the behavior of complex systems over time”*

How open innovation starts and diffuses in innovative environments?

• Ideas and successful products as stocks and flows• Analyzing Feedback and Causal loops

Stocks Term for any entity that accumulates or depletes over time.

Flows Rate of change in a stock

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MIT System Dynamics in Education Project (SDEP)

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Open innovation business aspectsAreas of interest of open innovation

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M., Fredberg,T. and Ollila,S. Elmquist, "Exploring the field of open innovation," European Journal of Innovation Management, vol. 12, no. 3, 2009.

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Open innovation business aspectsThe long-tail business model

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C Anderson, Long tail, the, revised and updated edition: Why the future of business is selling less of more.: Hyperion Books, 2008.

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Interviews outcome – perception of open innovationSystem Dynamics modelBusiness aspect of open innovation

Results

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Interview Outcomes

Perception of Open Innovation

Open innovation is an ecosystem that includes multiple structures connected to each other in an evolutionary development.

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Interview Outcomes

What delays innovation?•Absence of leadership•Lack of interest•Extreme Inbound open innovation•Mistrust

What foster innovation?•Entrepreneurship spirit•Mixing the clusters•Monitoring the dwarfs•Active government and universities activities

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Open Innovation System Dynamics

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ResearchedIdeas

Developedideas

Commercializedideas

SuccessfulproductR1 R2 R4R3

R1: Rate of introducing new ideas into the firm

R2: Rate of developing ideas

R3: Rate of commercializing and marketing the idea

R4: Adoption rate

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Introducing new ideas into the firm

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ResearchedIdeas

R1

KnowledgeAbsorption

Learningwillingness

Learning capacity

Companyabsorption

capacity

Resources

New internalknowledge creation

OrganizationaldifferenceKnowledge

compatibility factor

Level of trust

Establish externalknowledge network

External Knowledgenetwork partners

Openess

Knowledgeoutdate rate

Investments

Knowledge Assets

- +

+

+-

+

+ +

+

+

+ +

+

+

+

+

Successfulproduct

+

+

+

R1: Rate of introducing new ideas

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Adoption Rate & Discard Rate

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Commercializedideas

Successfulproduct

R4

Adoption fraction

Contact Rate

Adoption fromadvertising

Adoption fromWord of Mouth

+

Advertisingeffectiveness

+

++

+

+

+

Total population-

+

B Marketsaturation

R Wordof mouth

B Marketsaturation

R5

RepeatedPurchase rate

++

Purchase rate

+

Productoutdate rate

Adopter AverageConsumption

+

R4: Adoption RateR5: Discard Rate

Bass Diffusion Model Revisited

•Discard rate to resemble the outdate of product.

•Repeated Purchases.

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The Causal Loops

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KnowledgeAbsorption

Knowledge Assets

+

+

+

Importance of absorption capacity to firms

Wesley M. Cohen and Daniel A. Levinthal, "Absorptive Capacity: A New Perspective on Learning and Innovation,"

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The Causal Loops

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The need of heavy investment in innovation process at the beginning to improve the internal knowledge creation

ResearchedIdeas

R1

Level of trust

Establish externalknowledge network

External Knowledgenetwork partners

+

++

Successfulproduct

+

+Knowledge

Network

Developedideas

R2

Externaldevelopment

network

Established externaltechnology

development network

Level of trust

Successfulproduct

+

++Development

Network

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The Causal Loops

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Commercializedideas

Successfulproduct

R4

R5

Productoutdate rate

Initializationloop

Successfulproduct

R4

RepeatedPurchase rate

+

+

+Loyalty

loop

The strength of the relationship between an individual's relative attitude and repeat patronage*

*Alan S. Dick and Kunal Basu, "Customer Loyalty: Toward an Integrated Conceptual Framework,"

The return of adopting customers to potential customers stock

• An indirect effect on the market saturation

• A threat that can be an opportunity

• Firms need to focus on building the loyalty of customers

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The long-tail Phenomenon of innovation

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Breakthrough innovations are found in the “long-tail”*

*Lee Fleming, "Breakthroughs and the "Long Tail" of Innovation," MITSloan Management Review, vol. 49, no. 1, pp. 69-74, Fall 2007Novozymes. [Online]. http://www.novozymes.com/en/about-us/Pages/default.aspx.

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The Android Case – Open Source

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Source: Gartner and IDC

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The Mobile Application Store

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Source: Flurry analytics

Top 25% App account  28% of total revenue of ~7€ Billion

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Where Current Players Exists?

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Internal cross-functional collaboration

Mass collaboration

R&D AllianceInternal R&D

Outside

Nu

mb

er

of

colla

bo

ratin

g a

cto

rs

Inside

Locus of innovation process

2

N

M., Fredberg,T. and Ollila,S. Elmquist, "Exploring the field of open innovation," European Journal of Innovation Management, vol. 12, no. 3, 2009.

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Conclusion

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General Findings

• Open Innovation is a must for firms to survive in existing ICT ecosystem.

• Trust and behavioral aspects are important in collaborative environment.

• There is an intersection between the different factors affecting the innovation process.

• The strategy of a firm needs to change rapidly with open innovation.

• Mass Collaboration is challenging and differentiating.

• The value results from open innovations usually lies in the “long-tail”.

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Possible Future Work

• Developing the System Dynamics model further.

• Data mining.

• Stochastic simulation of the model.

• Studying firms in a micro-level (Human Centric Approach).

• More investigation in the long-tail phenomenon.

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Thanks!Any Questions?

[email protected]

www.mohamed.eldishnawy.com

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Supporting Slides

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Interviews

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Interviewee About Short Description

Annakaisa Häyrynen (AH)Mobile Operator/ ICT

AK is head of discovery project at Elisa Oyj. She has more than 15 years of experience in innovation. She studied open innovation from the master Henry Chesbrough himself in Berkeley.

Elisa Oyj is the leading ICT company in Finland. As head of discovery project AK responsibility is to find new business opportunities, analyze them, validate them and foster them in the organization.

Kalevi Ekman (KE)University/Research 

KE is professor at Aalto university. He is managing Aalto design factory. His research focus is in Integrated product development.

As manager of Aalto design factory, KE have long relation in collaboration between universities, research centers and companies. As described by KE “Design Factory is the symbiosis of the state-of-the-art conceptual thinking and cross-disciplinary hands-on doing. It leads a way towards a paradigm shift in education and business by providing a constantly developing collaboration environment for students, researchers and business practitioners” [26]. The design factory now opened in Chili, China, Australia. Expansion is ongoing and collaboration with universities around the globe is highly active.

Janne Parantainen (JP)Mobile/ ICT Vendor

JP is head of solutions, technology to business acceleration at Nokia Siemens Networks (NSN)

JP is responsible in NSN to produce proof of concepts and validation to ideas. To reach this result, his team collaborates with different parties till they reach validation and proof of concept for the idea, then the idea can move to further stages within NSN internal network.

Kimmo Pentikäinen (KP)GovernmentStartup

KP is member of the board of Tivit Ltd, a non-profit company in Finland that focuses on collaboration and funding research projects that are with industry. KP as well has long experience in entrepreneurship for last 10 years.

Tivit is a “strategic center for science, technology and innovation in the field of ICT in Finland launches research programs in the ICT industry and services sectors. It channels both private and public funding towards these programs”.As member of the board, KP analyzes the applications by universities and companies for funding. He provides his point of view and decision to the board based on the applications and his broad experience in the area of innovation and experience. The projects’ only gets accepted if it creates a cutting edge and breakthrough in technology in a market-driven approach [27].

Raul Soderstrom (RS)ICT Vendor

RS is innovation manager at Ericsson R&D head-quarters in Finland

Fostering innovation, RS work with his team to check possible business opportunities in different areas. Product design and fitting the innovation in Ericsson ecosystem is part of his team responsibilities. Collaboration with external resources is needed to achieve that.

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System Dynamics Models

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ResearchedIdeas

Developedideas

R2

Technologyoutdate rate

IdeasImplementation

capacity

Knowledgemanagement skills

Internal Incentives

R&D investments

Resources

Externaldevelopment

network

Established externaltechnology

development network

Technologicalcapability difference

Level of trust

Successfulproduct

+

+-

+ +

+

+

+

<External knowledgenetwork partners>

+

++

+

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System Dynamics Models

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Developedideas

Commercializedideas

R3

+

Resourcesacquired

Business modelsgenerated

Identifiedopportunities

Technology marketrelevance

New technologymarket relevance

Technologyexistence period

Market demand

+

++

+

++

+