Driving Open Innovation: Learning from Three Cases
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(2) Outline. •. Open p innovation in Knowledge-Intensive g Firms. •. Opening up Innovation • Rockwell Collins • EuroTel’s P-Dev Unit • OpenSource p. •. Takeaway. http://leanit.mit.edu. © 2008 Jayakanth Srinivasan 12/12/08 2.
(3) Knowledge-Intensive g Firms. •. We adopt p Alvesson’s* definition of knowledgeg intensive firms – those in which most work is said to be of an intellectual nature and where well-educated, well-educated qualified employees form the major part of the workforce. •. Case Domains - Avionics, Telecommunications and Software Development. *Alvesson, M. (2000). ‘Social identity and the problem of loyalty in knowledge-intensive companies’. Journal of Management Studies, 37: 8, 1101-1123. http://leanit.mit.edu. © 2008 Jayakanth Srinivasan 12/12/08 3.
(4) Rockwell Collins Rockwell Collins-brand aircraft electronics are installed in the cockpits of nearly every airline in the world and its airborne and ground-based communication systems transmit nearly 70 percent of all U.S. and allied military airborne communication.* ATC. A hit t Architecture ffor IInnovation ti. COE. BU. *http://www.rockwellcollins.com/about/history/index.html http://leanit.mit.edu. © 2008 Jayakanth Srinivasan 12/12/08 4.
(5) Innovation at Rockwell Collins. •. 1998 – Focus on Technology-enabled gy growth g • Connect innovation to the business, but not be driven by the business. •. A system of innovation • Technology panel based planning • Scorecard with sales growth leverage (SGL) at the core. SGL =. http://leanit.mit.edu. Total 5 yr. R&D Expenditure (ATC) Projected Impact by BU’s (looking out 5 years) © 2008 Jayakanth Srinivasan 12/12/08 5.
(6) Synthetic y Vision •. 1998 – AFRL research grant. •. 1999 – NASA selects Rockwell Collins to develop synthetic vision for business and commercial aircraft. •. 2002 – Synthetic Vision tested by USAF. •. 2004 – Synthetic Vision demonstrated by NASA Team. •. Also demonstrated the modified weather radar. •. SVS team honored with the 2006 Prometheus Inventor of the Year Award. •. Integrated SVS into their ProLine Fusion line of products. http://leanit.mit.edu. © 2008 Jayakanth Srinivasan 12/12/08 6.
(7) Fostering g Innovation. •. The 10X p program g – Initiated in 2004 to foster disruptive thinking. •. Launched with a budget of USD 500 500,000 000 – funded 8/46 ideas. •. Expanded E d d to t US Engineering E i i in i 2nd year with ith USD 1 Million - 70+ ideas. •. Third year - 180 proposals. http://leanit.mit.edu. © 2008 Jayakanth Srinivasan 12/12/08 7.
(8) Open p Innovation. •. Initiated in 2005 to answer the q question : How do we collaborate smartly so that we can take ideas and come up with innovative solutions for our customers problems, faster and cheaper than our competitors?. •. Fighting the NIH syndrome to drive open innovation – transitioning from invent & develop to connect & develop. •. Established a Technology area council. http://leanit.mit.edu. © 2008 Jayakanth Srinivasan 12/12/08 8.
(9) Cognitive g Radio. •. Leveraging g g Adapt4 p technology gy • Demonstrate cognitive radio capability for legacy military equipment. •. David Baugh – 2007 Q4 Open Innovator Award Winner. http://leanit.mit.edu. © 2008 Jayakanth Srinivasan 12/12/08 9.
(10) EuroTel •. Tension between the business units. •. •. EuroTel. Vertical disintegration. •. We Focus Here. http://leanit.mit.edu. •. Minimization of P-Dev’s innovation capabilities. From developing hardware and software to COTS. Multiple channels. • • • •. Outsourcing Near Shoring Global Development Students. © 2008 Jayakanth Srinivasan 12/12/08 10.
(11) P-Dev’s Innovation Challenges g. •. EuroTel does not p perceive P-Dev to be the source of innovation. •. Diminishing of domain expertise • Downsizing and retirement. •. Increased offshoring • Expect to leverage supplier capabilities, yet • Limited investment in supplier capabilities. http://leanit.mit.edu. © 2008 Jayakanth Srinivasan 12/12/08 11.
(12) OpenSource p. •. Developing p g open-source p version of a ‘proprietary p p y standard’. •. Unusual case • reverse engineering • Corporate p sponsored p. •. Team structure – core/floating/observers • Salaried employees • Pro-bono contributors. http://leanit.mit.edu. © 2008 Jayakanth Srinivasan 12/12/08 12.
(13) Takeaway y •. Successful firms match their innovation strategy to their business model. •. Rockwell Collins focuses on both value creation and value capture, while OpenSource focuses on value capture. •. Change management and leadership commitment are critical. •. Engaged and Empowered employees both. • •. http://leanit.mit.edu. Drive the innovation engine g Provide the strongest organization sense-making mechanisms. © 2008 Jayakanth Srinivasan 12/12/08 13.
(14) Selected References •. Katz, R. and T. J. Allen (1982). "Investigating the Not Invented Here (NIH) syndrome: A look at the j Groups." R&D Management g 12(1): ( ) 7-20. performance, tenure, and communication patterns of 50 R & D Project. •. Davenport, T. H. and L. Prusak (1998). Working knowledge, Harvard Business School Press Boston, Mass.. •. Cohen, W. M. and D. A. Levinthal (2000). "Absorptive capacity: a new perspective on learning and innovation." Strategic learning in a knowledge economy: Individual, collective and organizational learning process: 39-67.. •. Victor, B. and A. C. Boynton (1998). Invented Here: Maximizing Your Organization's Internal Growth and Profitability, Harvard Business School Press.. •. Chesbrough, H. (2006). "Open Innovation: A New Paradigm for Understanding Industrial Innovation." Open Innovation: Researching a New Paradigm. Oxford University Press, Oxford 400: 0-19.. •. Chesbrough, H. W. (2003). "The Era of Open Innovation." MIT Sloan management review 44(3): 35.. •. Chesbrough, H. (2004). "Managing Open Innovation." Research-Technology Management 47(1): 23-26.. •. Henkel, J. (2006). "Selective revealing in open innovation processes: The case of embedded Linux." Research Policy 35(7): 953-969.. •. Chesbrough, H. and A. K. Crowther (2006). "Beyond high tech: early adopters of open innovation in other industries." R&D Management 36(3): 229-236.. •. Chesbrough, H. W. (2007). "Why Companies Should Have Open Business Models." MIT Sloan management review 48(2): 22.. http://leanit.mit.edu. © 2008 Jayakanth Srinivasan 12/12/08 14.
(15) Research Overview. Stakeholder Alignment. Employee Emplo ee Empowerment. Group and Organizational Learning. Performance Measurement System. Institutionalizing Process Improvement. B ildi Innovation Building I i Systems S. Dynamic Enterprise Capabilities. Leveraging Global Competence. http://leanit.mit.edu. © 2008 Jayakanth Srinivasan 12/12/08 15.
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