Open Innovation – The New Paradigm in Knowledge Creation

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An academic take on open innovation with a case study of Siemens

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  • 1. Open Innovation The New Paradigm in Knowledge Creation Ahamed Iqbal Archana KC
  • 2. Agenda Scope Innovation Redefining Boundaries Knowledge Creation in Open Innovation Looking at Open Innovation through SECI Lens A Case in Point Lessons Learnt Conclusion
  • 3. Scope The presentation is limited to exploration of knowledge creation aspects in open innovation through technology partnerships, crowdsourcing and spin-offs. The research is limited to knowledge creation and does not elaborate on the knowledge transfer process involved in Open Innovation. It is brief and does not look at the concepts of knowledge creation, innovation and open innovation in detail. Nonakas SECI model is conceptually adapted to suit the analysis.
  • 4. Open Innovation Redefining Boundaries Innovation is the key driving factor for companies to prosper, grow and sustain a high profitability. There is a strong need to open up the innovation process. Boundaries of innovation process breaks up due to mobility of knowledge workers and the development of new financial structures like venture capitals. OI is the new paradigm through which the firms use external ideas as well as internal ideas, paths to market, for the firms to advance their technology. Concept uniqueness derived from external venture handling, external technology in-sourcing, utilization of external technology base, license and through spin-offs. Definition: Open Innovation(OI) is the use of purposive inflows and outflows of knowledge to accelerate innovation and expand the markets for the external use of innovation, respectively. (Chesbrough, 2006)
  • 5. Knowledge Creation in Open Innovation Innovation process begins with knowledge, elaborates that knowledge and produces knowledge as the final outcome. In open innovation, organizational diversity positively influences collaborative knowledge creation. Collaborative knowledge creation in open innovation terms is a source of creativity. Thus, a framework for analysis of open innovation in knowledge creation terms becomes essential. SECI Model is used for this analysis
  • 6. Technology Partnerships Crowd Sourcing Spin Offs Socialization Potential partner identification and relational capital formation Exploitation of the wisdom of crowds by connecting to the mass with the brand identity in form of competition where requirements are clearly elucidated. Identification and investment in entrepreneurial ventures or Start Ups Externalization Interaction of knowledge assets like shared resources, best practices and dynamic culture during the due diligence process and post partnering. Results in formation of unique culture, development niche technologies with the monetary capital and infrastructural support from the investors. Combination New Knowledge creation and capture as a result of the complex interaction of inter organizational factors New knowledge creation as a result of problems solved, applications created, contents created, ideas galore. Internalization Resultant know how, best practices, cultural impact and increase in net organizational knowledge. Exploitation of the resultant assets for internal knowledge cycle. Acquisition of new capabilities through equity relationships with start ups. SECI lens of Analysis for OI OI Types SECIDimensions
  • 7. Case in Analysis
  • 8. OI in Siemens Opening labs and sharing knowledge with outside world results in global synergies. Cost-effective collaborative path of knowledge creation. Key activities across automotive, healthcare and energy domains. Integration of knowledge networks and internet. OI in Siemens is a success due to its world wide operations and in house expertise. The lab is our world The world is our lab
  • 9. Strives to use latest results of fundamental and applied research. 1000 cooperative projects with universities, research institutes and industrial partners. Set up of Centers of Knowledge Interchange (CKIs) on the campuses with a mutual collaborative benefit - issues explored beyond academic research. OI in Siemens - Technology Partnerships Partner/Vendor Domain/Industry Project Perceived Benefit Denmark Technical University (DTU) Automotive (Electric Vehicles) Integration of electric cars into power grids Innovative technology outsourcing projects Energy Suppliers in Germany and research institutes in Netherlands Clean tech (Energy ) Capture of carbon dioxide in power plants Collaborated benefits employment of scientists Shanghais Tongji University Sustainable environment( Infrastructure) Development of a eco-city model Joint research, promote talented individuals and knowledge on future china for Siemens King Abdullah University of Science and Technology Material Sciences ( Healthcare) A course in environmental technology Development of sustainable solutions for green technologies. Infrastructure development
  • 10. A broadened research horizon for Siemens to tap resources with internet as a platform. Innovation Jam moderated discussions to allow flow of new ideas. Internal resource accumulation with emergence of e-brokers. Idea generation contests new impulse plans to result in spin offs. OI in Siemens - Crowdsourcing InternalExternal Osram Idea contest Sustainability Idea contest TechnoWeb 2.0 E-broker K - Sharing Source : Siemens CT Open Innovation
  • 11. OI in Siemens - Spin Offs Founders Professional assistance legal, organizational, financial Siemens Revenues from implementation of programs even if products are not related to core business. Partners Investors Access to innovative technologies and to Siemens global network A step after university collaboration; Siemens acts as a VC and a technology knowledge provider; Knowledge acquisition model for tech start ups, off the core business model; K Creation across verticals financial/business expertise, management enterprise, IP management, cultural learnings. Logo image source : www.siemens.com
  • 12. SECI lens of Analysis for OI
  • 13. Technology Partnerships Crowd Sourcing Spin Offs Socialization Siemens has university partnerships, tech outsourcing partners and corporate ventures Siemens is involved in internal crowdsourcing by creating knowledge networks Techno web and organizing company wide idea generation competitions. Establishment of CKI in universities Externalization Partnerships offer more benefits than technology benefits. Employment to students, and research facilities to institutions A triple beneficial spin off with assured returns, high level innovation and superior value systems in startups. Combination Technoweb acts as a knowledge network resulting in creation of explicit knowledge by tapping tacit sources E brokers are formed to solve issues with external problem solvers and to arrive at innovative options Internalization Siemens Technology Accelerator acts as a internal think tank with accumulated knowledge Internal knowledge base grows exponentially. Technoweb directs to experts, not answers. Siemens acts as a VC and derives direct monetary returns. Also indirectly through licensing, patents etc SECI lens of Analysis for OI - Siemens OI Types SECIDimensions
  • 14. Observations /Lessons Learnt OI is not a means for innovation ; it is a compliment. Various knowledge creation activities in OI is schematically classified under the framework. OI provides wider opportunities for knowledge asset interaction and hence knowledge creation. Nonakas SECI model serves as the foundation for research in knowledge creation. Siemens has a high success rate in collaborations with universities, technology institutes and research houses. Siemens exploits new breakthrough technologies with OI, away from their core business areas.
  • 15. References Fischer, M. M. (2000). Innovation, Knowledge Creation and Systems of Innovation. The Annals of Regional Science . Gassmann, O., & Enkel, E. (n.d.). Towards a Theory of Open Innovation:Three Core Process Archetypes. Siemens AG. (2010). Pictures of the Future - The Magazine for Research and Innovation. www.siemens.com. Nonaka, I. (1994). A Dynamic Theory of Organizational Knowledge Creation. Organization Science, 5(1) Chesbrough, H.W. (2006). Open Innovation: The New Imperative for creating and Profiting from Technology. Boston: Harvard Business Press Popadiuk, S. & Choo, C. W. (2006). Innovation and Knowledge Creation: How are these Concepts Related? International Journal of Information Management. 302-312.
  • 16. References Chateneier, E.D. et Al ( 2009). The Challenges of Collaborative Knowledge Creation in Open Innovation Teams. Human Resource Development Review, 8(3). Wadha, A. & Kotha, S. (2006). The Knowledge Creation Through External Venturing: Evidence from the Telecommunications Equipment Manufacturing Industry. Academy of Management Journal, 49(4), 819- 835. Elmquist, M. , Fredberg, T. & Ollila, S. (2009). Exploring the Field of Open Innovation. European Journal of Innovation Management, 12(3) Chief Technology Office, Siemens AG. (2010). Retrieved March 2011, from http://www.siemens.com/entry/cc/en/: http://www.slideshare.net/heisss/crowd-sourcing-and-knowledge- networking
  • 17. THANK YOU

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