2nd Annual World Open Innovation Conference

"The Garwood Center for Corporate Innovation, Haas School of Business, University of California, Berkeley, is pleased to announce its 2nd Annual World Open Innovation Conference. The 1st Annual World Open Innovation Conference was a “sold-out” event!
Engage with Open Innovation practitioners, and dialogue with world-renowned Open Innovation experts who share relevant research and expertise in their industry. Gain insight into the prospective value for both industry leaders and academic scholars. Learn how firms organize and incorporate Open Innovation services into their structure. National and international leading organizations will share their Open Innovation challenges with academic colleagues to foster stronger connections between business practice and academia. Academic scholars are invited to present their own research on the topic, and consider how their findings might improve and transform the performance of real organizations. One of the conference’s unique features is that it aims to address and bridge the gaps between academic research and the practical execution of Open Innovation. Join us at the World Open Innovation Conference for an opportunity to network and engage with Open Innovation practitioners."

AstraZeneca coming to Cambridge: A sign of the times?

Earlier this week, planning permission was granted for AstraZeneca's new Global R&D Centre and Corporate Headquarters at the Cambridge Biomedical Campus.  The initial announcement of this plan in 2013 attracted great interest and excitement as it represented a major coup for the region. This seemed to show that Cambridge can not only build £bn companies on the back of its strengths in science and technology, but it can also attract significant direct corporate investment.
Several major corporations have had R&D facilities in Cambridge for many years (Philips, Rolls-Royce, Microsoft, Nokia, to name a few) but the scale of the AstraZeneca facility - £330m investment, 2,000 employees - dwarfs many of the earlier investments by large organisations.

The site of the planned AstraZeneca facility at the
Cambridge Biomedical Campus

AstraZeneca states that it believes Cambridge will provide them with "[..] invaluable access to world-leading scientific expertise and provides excellent opportunities for collaboration with renowned academic research institutions, pre-eminent hospitals and cutting-edge biotech companies". This reflects a widespread trend towards more open models of innovation that draw upon the strengths of specific regional clusters. It also reflects a response to specific challenges facing the pharmaceutical industry, where massively increasing R&D spend has not been leading to 'blockbuster' successes in the market. Establishing R&D activities within a thriving regional innovation clusters is one way for firms to form and manage partnerships that allow them to share the risks (but also the rewards) of research commercialisation.

But there are some potential downsides to this move. There is something of a Catch-22 problem: people want to work and live in Cambridge because of the perceived high quality of life. But the sudden arrival of 2,000 new workers (plus dependents probably doubling that number) in a city with a population of 124,000 may start to put strains on the infrastructure (especially transport and housing), thus lowering the very quality of life that made the move attractive in the first place.

As the Cambridge Technopole continues to build upon its success with more successful start-ups and more inwards investment (most recently from Apple and Amazon), the importance of the joined-up long-term strategy for the city's development within the wider region becomes ever more important.

1st Annual World Open Innovation Conference 4-5 December 2014

The 1st Annual World Open Innovation Conference in Napa was held in early December last year, run by the ‘Founding Father' of Open Innovation, Henry Chesbrough with Wim Vanhaverbeke, Joel West and Frank Piller. The event brought together a broad range academics and industrialists to discuss emerging trends in open innovation research and practice. It was also an opportunity to make connections between open innovation and longer established academic domains such as dynamic capabilities and knowledge management through the presence of David Teece and Ikujiro Nonaka.  

One interesting theme that was noted at several points in the conference was link between the ‘maker’ movement, 3D printing, and open innovation. This message was reinforced by the announcement at the conference of the new strategic alliance between TechShop and Fujitsu’s open innovation activities.

A detailed summary of the day 1 and day 2 activities can be read on Joel West's open innovation blog, and there is also a slideshow on YouTube of themes discussed at the conference. 

The event also served as an informal launch event for the latest book edited book by Chesbrough, Vanhaverbeke and West on “New Frontiers in Open Innovation”.

Is 'open' now redundant?

Just under three years ago, I gave a presentation on the impact of open innovation on the activities of firms within the Cambridge high tech business cluster.  In that talk, I made a throwaway comment about whether we'd one day be able to drop the 'open' bit and just go back to talking about 'innovation'.  Last week, as I was summing up the key learning points from a module on Technology and Innovation Management for some of our MEng students, the same thought struck me again.  As I drew together the key points from each of the sessions we'd covered during the week (the timetable is shown below), almost every theme we covered had 'open' aspects to it. With hindsight  it felt a little bit as though having a session explicitly on open innovation was now a bit redundant.  But I'm not sure whether this is just a bit of Maslow's hammer in my thinking (i.e. I just see open innovation everywhere because that's how I see the world), or whether we really should be thinking - and teaching - less about specific flavours of innovation, and more about appropriate tools for different tasks.

Start with open questions: How Cambridge academics are learning the skills of open innovation

Many large corporations talk of transforming themselves to embrace open innovation, and opening up to external ideas.  But grand strategic statements and new corporate PowerPoint slides do not change the capabilities of an organisation.  The implementation of a more open approach rests also on the development of specific skills among individual employees. Research has identified what some of these skills are, and shown that these can be internally developed or accessed via various intermediary organisations.  Much of this research on open innovation has focused on the ways in which corporations - predominantly large multinationals -  have transformed themselves, or are attempting to do so.  However, there is much less discussion on the ways in which one particular type of open innovation partner - universities - also need to develop new capabilities.


Since the late 1990s, UK universities have been explicitly encouraged - and funded - by the Government to develop their 'third missions', i.e. adding 'application' to their traditional two missions of teaching and research. Public funding for universities is now explicitly linked, in part, to their ability to demonstrate the 'impact' of their research activities.  One way of helping ensure that research is more impactful is through the engagement of corporate partners throughout the research process, as funders, collaborators and end-users. Or, to put it another way, universities are now positioning themselves as open innovation partners for corporations.

Many universities have set up dedicated groups to help smooth interactions with industry partners, but what has received much less attention is the need to help academics themselves develop the skills needed to identify, negotiate, setup and manage projects that deliver mutual benefit. Though there is an essential role to be played by university research offices, technology transfer, and corporate liaison offices, as successful technology entrepreneurs know, engaging with customers is something that everyone in the organisation needs to be good at.   Recognising this, Cambridge University Computer Lab and the Engineering Department recently ran a workshop to help academics develop their skills for setting up industrial collaborations.


The workshop was delivered by a former Cambridge Engineering Department researcher, who has gone on to run several successful manufacturing and service businesses across Europe:  getting an engineer to run the workshop helped avoid some of the Dilbert-esque concerns that might have turned-off potential attendees. 38 academics from across the School of Technology signed up to spend a day learning about the process of identifying and working with potential commercial partners to develop collaborative research activities.    Basic negotiation and sales skills were introduced, and delegates then spent the bulk of the day practicing these skills through the delivery of elevator pitches and the series of structured role-plays.

One workshop alone will not make a huge difference to the culture and operations of a university.  But by showing how partnerships with industry can result in the identification and resourcing of relevant and exciting research topics, and giving people the skills to develop such partnerships, events like this are an important step in the development of universities as useful open innovation partners.

Partnerships between technology-based start-ups and established firms: making them work

In my last post, the issue of how partnerships with start-ups could help large Japanese ICT firms cope with the fact that their industry is moving from a hardware to a software focus was discussed. I thought it might be helpful to give a summary of the outputs of some research we did on the general topic of managing partnerships between high-tech start-ups and larger, older firms.

Within an open innovation environment start-ups can be an important source of ideas for larger companies. Technology-based start-ups typically lack the strategic and operational rigidities that can stifle innovation in established firms. On the other hand, start-ups have limited resources and often struggle to access the complementary assets they need to get their ideas to market. Bringing together start-ups and established firms in mutually beneficial partnerships seems an obvious solution.
Research shows that making such partnerships work can be problematic. However, there are ways to increase the chances of success. Here we indicate some of the problems that can arise – and some possible ways to avoid them. More information on this topic can be found at www.managingpartnerships.net

The large company’s point of view… 

IP and NDAs

Start-ups may be reluctant to reveal details of their technology without a non-disclosure agreement (NDA) fearing their intellectual property may be appropriated. They may fail to see that the large company could already have its own IP in this area. 

Risk of brand abuse

Large firms may fear that the start-ups may use the partner’s brand in inappropriate ways in pursuit of commercial credibility. The following quote shows an example of a nightmare scenario for a large firm:  “After we had signed a deal with a start-up, we gave them sight of our confidential technology roadmap. They then went off and talked about this in a press release!” (Large firm Technology Manager) 

Technology or ready-for-market solution?

Start-ups often perceive their role is to provide a technology to be incorporated into a large firm’s product. The large firm on the other hand may want a ready-for-market solution. This gap can be quite significant and start-ups often do not appreciate the time and cost involved in moving from technology demonstrator to fully supported product. 

Financial stability

Start-ups sometimes fail to understand a large firm’s need for due-diligence checks to give potential partners confidence in the start-ups on-going commercial viability. 

Culture

Start-ups may be run by individuals impatient for progress and unwilling to be governed by someone else’s ‘mindless’ bureaucracy:  “We ask for simple things like a business case or cash flow projections or reports and they get resentful. They don’t see why they should have to justify everything!” (Large company manager).

The start-up’s point of view …

How to get in?

While some large firms have very clear points of contact, many do not. The complexity and scale of some large company operations mean that even their own staff are unable to help a start-up contact the right people.  “The [large company] people would start every meeting with us looking at their organisation charts to try and work out where they fitted into the company. If they didn’t know who did what, what chance did we have?” (Start-up CEO)

Understanding company roles

It is very hard for the start-ups to work out the different roles of people in a large company. Who is the decision maker? Who influences them? Who will be working on implementing the partnership? Who will be affected by its outcome?  

Changing points of contact

Start-ups may start by talking to the large company’s technologists who are likely to be enthusiastic and speak the same language. As they move towards formalising the deal the start-up will have to talk to the procurement and legal teams who may treat them quite differently. 

Slow decision cycles

Small start-ups are usually able to make decisions very quickly. Large firms, due to their complexity and multiple layers of management often find it very hard to make decisions at ‘start-up speed’. This can be very frustrating for the start-up. 

Power imbalance

The large firm may intentionally or unintentionally abuse its position by drawing out negotiations and attempting to prevent discussions with competitors. This can push the cash-strapped start-up towards accepting a less lucrative deal. 

Ignorance of start-ups

Demands made of start-ups by large firms show the lack of awareness of how a start-up operates: “They would ring us up and ask to speak to our Latin America sales director or ask us to train 20,000 of their consultants. Our whole business was six people in one room.” Start-up CEO.

Ways to help make partnerships work 

Research shows that companies deal with these issues in a number of ways. Some of the more successful strategies employed are given below grouped under five main headings. 

1. Strategy and business model:  The start-up is likely to consider multiple possible application areas for its technology. It can greatly assist negotiations if these can be captured in a roadmap that highlights the various opportunity areas and shows the resources needed for implementation. The start-up should also be aware of three possible outcomes of a partnership: it may help to implement the intended business model(s); it may open new opportunity areas; but it may also restrict future opportunities.  The large firm should try to create a roadmap or portfolio map that can be shared with start-ups. This should position the large firm’s technology capabilities and needs (including an assessment of the level of criticality) and indicate different opportunity areas. Depending on the level of criticality the large firm may decide to spread risk by having parallel technology acquisition routes.
2. The technology: The start-up should make a realistic assessment of the readiness level of its technology and identify tasks and costs associated with preparing it for manufacture – including finding out who owns any complementary resources required.   The large firm should use its roadmap to position the start-up’s technology within the broader range of its activities. It should show what complementary resources are needed to bring the technology to market and how this may change over time. It should assess the readiness levels of the start-up’s technology and how much of the technology is tacit (undocumented) versus explicit. The commercial viability of the start-up needs to be monitored bearing in mind how critical the technology is to the large firm. 
3. Company organisation and culture:  Start-ups will find it useful to check whether the large company has ever worked with a start-up before. If they lack large company experience themselves they should seek advice from non-executive directors, mentors or investors. Talking to the large firm’s suppliers can help develop a sense of how the larger company works. It is also a good idea to encourage informal interaction between the teams so that the large firm gets a better sense of start-up culture.  The large firm should spend as much time as possible helping the start-up to understand the needs, internal processes and culture of the large firm. Process maps can be used to show start-ups how decisions are made. Some firms use a dedicated team or individual champion to act as first point of contact. This can help shield start-ups from unnecessary bureaucracy and smooth communication in both directions. 
4. Setting up the deal:  The start-up should find out who is likely to influence and authorise the decision to form a partnership. The start-up should have a clear idea what is really expected from the partnership on both sides, what realistically can be delivered, how things may change over time and what the possible direct and indirect benefits might be. Legal advice should be sought at the outset. Though costs will be incurred, they are likely to be less than fixing problems later. As decisions relating to the partnership are likely to be made in the start-up’s absence, the start-up should make sure their large company ‘champion’ is armed with the start-up’s viewpoint.  The large firm should ensure that overarching principles concerning the deal are agreed first before moving on to detailed issues. It is essential to be as open as possible with the start-up about any concerns and to be aware of the start-up’s cash flow position. Working with the start-up on a small-scale, cash-generating project first can be very useful. It will give both sides a feel for how the other operates and might reveal ways the partnership could develop in the future. 
5. On-going management of the deal:  The start-up needs to keep in regular contact with its larger partner – not just when there is a problem. Assigning members of the management team to ‘mark’ key contacts at the large firm is one way to receive early warning of any emerging problem areas. Documenting all interactions should be a standard part of any partnership management process in case of later disagreements. Staff in the large firm who are key to the partnership may change roles and strategies and business models can change. Regular reviews of the partnership will help ensure the relationship continues on the best footing.  The large firm should ensure time is devoted to managing communication between the partners. The start-up should be kept informed of developments – for example by attending internal conferences – and should be told of impending milestones and their relative importance. If under-performance is noted, the start-up should be informed as soon as possible and help given to address the problem.

These examples are drawn from case study analysis of over 30 partnerships, along with lessons captured from running 12 workshops over the past 4 years with a range of start-ups, large firms and support service providers.  The high profile of open innovation as a strategy for firms of all sizes points to the need for managers and entrepreneurs to consider 'partnering capability' as a key skill.  As with all capabilities, increased proficiency comes with a willingness to learn,  practice and reflect upon experience That last point is very important as few firms seem to get partnering right first time, and many forget the lessons of their own past partnering experiences.

Open innovation, asymmetric partnerships and Japan's ICT industry

(This is a modified version of a recent post at cambridgetechnopole.blogspot.com)

Last week I went to a talk given at ITEC in Kyoto by Bob Cole from UC Berkeley on the topic of Japanese software. Two key points relating to Bob Cole's talk were:

• Japan's ICT and consumer electronics industries were built predominantly on innovative hardware solutions, supported by bespoke software. This hardware focus plays to, and helped build upon, Japanese strengths in designing and manufacturing precision goods (the term often used to describe this is monozukiri - the art of making physical things).
• The world of ICT has moved to being much more software intensive. The recent activities of HP and IBM provide ample support for that point. Japanese companies have been losing competitiveness, and do not seem able to make the transition to a more software intensive approach (but caution is needed in terms of causality and correlation there).

During the talk, the question was asked of the Japanese technology managers in the room 'In your development activities, do you start with hardware then bring in software, or is it the other way round, or do you do both together?'. The response was ~80% for hardware first, software second. A lively discussion ensued, part of which focused on Japanese management structures where seniority rules. The older employees are more likely to be hardware specialists, and software will larger be the domain of younger - and hence more junior - engineers. As a result, hardware dominates. If this is the situation (and there are many other factors to consider before leaping too quickly to conclusions) then for Japan’s ICT firms to transform themselves, different approaches are needed. And this is where open innovation fits in.

One idea put forward for addressing the issues highlighted above was for Japanese ICT firms to partner with (or buy) software start-ups based outside Japan and use these external organisations to stimulate internal change. Such partnerships are a well documented form of open innovation and seem to offer very clear synergistic benefits to both partners.   However, research shows that getting very large, old, complex firms to partner with small, new, agile start-ups is very challenging.  Add to this the extreme strategic, operational and cultural differences between long established, manufacturing focused Japanese ICT firms and, for example, UK or US-based software start-ups, then the management problems are likely to be amplified.

Partnering for collaboration is one thing; expecting culture change within the larger firm as a result of the partnership is a much bigger issue