Session 5: Managing open innovation

Question 1

Why is P&G using connect and develop?

Answer 1

P&G has an inclusive approach to open innovation

The key motivation for P&G to embrace OI is to tap into the pool of ideas and capabilities outside the company, which allows them to develop better products more cheaply and more quickly.

Question 2

What are the 4 key challenges when managing Open Innovation?

Answer 2

1. When launching technology how do you decide whether to partner or go it alone?
2. When exploring partnerships, how do you prevent your idea from being stolen?
3. When engaging in large scale co-op R&D, how do you retain control over the development?
4. When using idea submission portals, how do you manage the inflow of ideas?

Question 3

Partner up or go it alone?

Answer 3

Two options to commercialise innovations.

1.Go through the markets for ideas
• Sell ideas
• Sell their company
• Make alliances
2.Go through the markets for products
• Launch their product independently and compete with existing products or complement existing products

Question 4

Profiting from innovation through product market:

Answer 4

Ability to acquire complementary assets to ensure that innovation offers novel customer value proposition

Incumbents may be risk-adverse and slow to respond

Question 5

Product market entry by new firms require them:

Answer 5

1, To be aggressive & quick

2. Manage many factors – marketing, manufacturing, sales and service
3. To be able to establish a market presence
4. Persuade customers of novelty of offering while avoiding detection by incumbents
5. Gaining access to enforceable IPR

Question 6

Profiting from innovation via market for ideas

Answer 6

Co-operate with other firms by signing agreements for the commercialisation of the idea.

Everything is in the price the new firm gets for the idea

Different types of co-operation strategy

1. License technology to one or more buyers
2. Sell firm to incumbents (Primesense, MS Kinect)
3. Joint ventures or strategic alliances (Pixar - Disney partnership)

Question 7

Why does 3M require patent holders for contact?

Answer 7

Firms would have to document all their internal knowledge creation efforts to build proof of ideas that were under development before being approached by external parties.

Question 8

How did Boeing manage 50 different tech suppliers for the 787?

Answer 8

Instead of asking suppliers to design and build to specification requirement, they asked supplies to design and build to performance requirement.

This reduced the complexity of collaboration

Question 9

Firms typically in Open Innovation:

Answer 9

1. collaborate in co-development (e.g. alliances and joint ventures) when they want to share the costs and risks of developing new technology and believe they can benefit from each others’ expertise.
2. license technology in when they do not want to commit resources or do not have the relevant expertise to develop it internally.
3. license technology out when they develop a technology that does not align with their core competence or strategy, or when they do not have the expertise and resources to commercialize it themselves (small firms)
4. engage in crowd-sourcing techniques when they believe that individuals and entrepreneurs may have valuable ideas that can stimulate novel thinking internally.