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Process and structure for open Innovation

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Title: Process and structure for open Innovation


1
MOOI Theme 3Processes and structures for open
innovation
Prof. Henry Chesbrough, University of
California, Berkeley ESADE Prof. Wim
Vanhaverbeke, Hasselt University, ESADE
National University of Singapore Dr. Nadine
Roijakkers, Hasselt University February 4, 2013
2
Processes and structures for OIOverview
Innovation Overview
  • Findings
  • Both vertical and horizontal integration work,
    depends on the business
  • Distinction between formal and informal
    organization. How OI is related to these forms?
  • Implications
  • Key actions to implement in an organizational
    structure
  • Some organizational structures

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FINDINGS
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Processes and structures for OIOverview
Innovation Overview
  • Findings
  • Both vertical and horizontal integration works,
    depends on the business
  • Generally distinguishes between formal and
    informal organization. How OI is related to these
    forms

4
5
Processes and structures Finding 1 Vertical
and horizontal integration Overview
  • Both vertically and horizontally integrated
    companies have moved forward with adopting open
    innovation concepts, but the resulting
    innovationprocesses are distinct
  • Horizontally integrated companies
  • .. because they leverage their market position
    and network of suppliers/clients to become the
    nexus of the evolving open innovation
    network...
  • In this way, these central companies are greatly
    increasing the number of ideas coming in
    ..while greatly decreasing their RD costs.

5
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Processes and structures Finding 1 Vertical
and horizontal integration Overview
  • Vertically integrated companies
  • normally have a very strong core competency in
    their product development, and their competitive
    advantage is based on this. ..
  • These firms are not blessed with the same network
    of suppliers and clients as their horizontally
    oriented compatriots...
  • Challenge these large RD operations can
    produce too many ideas all trying to go down the
    product development funnel

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Structuring horizontal and vertical OI
  • Horizontal OI
  • Standards? Precompetitive RD?
  • Vertical OI (Lego)
  • We have made a cultural shift internally,
    where we have gone from considering our customers
    as necessary intermediaries for reaching our end
    users to see them as very important partners
    Mads Nipper
  • Partnerships with large customers like Wal-Mart,
    Target and Toys-r-us has proved invaluable to
    Lego.
  • more shelf space
  • involve both customers and some of the key
    suppliers in the development of new products.
  • Lego invites up to 20 of their largest and most
    important customers very early in their
    development process in order to discuss what the
    new products should be and whether the pricing
    ideas are right.

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Processes and structures for OIOverview
Innovation Overview
  • Findings
  • Both vertical and horizontal integration works,
    depends on the business
  • Generally distinguishes between formal and
    informal organization. How OI is related to these
    forms
  • Implications
  • Elements to implement in an organizational
    structure
  • Some organizational structures

8
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Processes and structures Finding 2 Formal and
informal structure
  • Formally structured organizations tend to be
    more bureaucratic and are characterized by
    institutionalized rules, .., difficult
    integration across functions,...
  • an informal organizational structure is
    characterized by openness in the system which is
    a necessary precondition for idea initiation in
    the innovation process
  • An informal organizational structure is
    positively related to the creation of open
    innovation by an organization.
  • A formal organizational structure is negatively
    related to the creation of open innovation by an
    organization.

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Interactive poll 1
  • What are the three most important general
    structural elements for stimulating Open
    Innovation?
  • Centralized OI decision-making
  • Flat hierarchy
  • Informal way of working/communicating
  • Horizontal integration
  • Project-based organization
  • Cross-functional teams/boundary spanning roles
  • Empowerment in OI implementation

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implications
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Processes and structures for OIOverview
Innovation Overview
  • Findings
  • Implications
  • Key actions to implement in an organizational
    structure
  • Some organizational structures

12
13
Processes and structures Implication 1
Elements to implement in an organizational
structure Overview
Seven key actions in order to structure open
innovation management and organize for OI 1.
Delegation of Decisions to OI Teams. 2.
Integration of RD into the Business Units. 3.
Co-Location of OI-Teams and Departments. 4.
Central OI Teams. 5. Central OI Funds. 6.
External Interface for Open Innovation. 7.
Merger Acquisition Department.
13
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Processes and structures for OIOverview
Innovation Overview
  • Findings
  • Implications
  • Key actions to implement in an organizational
    structure
  • Some organizational structures

14
15
Processes and structures Implication 2 Some
organizational structuresOverview
Decentralized
Hybrid form
Centralized
  • View of company-wide needs levrage across
    businesses
  • Brings strategic growth options
  • Experts in OI skills IP
  • Central contact point internally externally
  • Need to work to be viewed as a business unit team
    member
  • Acceptance requires support from the top
  • OI generalist in each business
  • Lack of OI expertise in each skill
  • View of business specific needs and markets
  • Some leverage across businesses
  • Community of Practice for OI skill development
  • Central contact point by business
  • Viewed as a business unit team member
  • OI generalist in each business
  • Lack of OI expertise in each skill
  • View of business specific needs and markets
  • Lack leverage across businesses
  • Different OI practices by business diffcult to
    develop a community of practice
  • Central contact point by business
  • Viewed as a business unit team member

15
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Current OI management structure at PG
  • Bert Grobben until recently Director Open
    Innovation Asia-Pacific (Singapore) in PGs new
    Innovation Center
  • Global responsibility for particular technologies
    (Skincare)
  • Managing Asia Pacific portfolio of Open
    Innovation partners and defining landscape and
    capabilities for building Best in Class Open
    Innovation and Connect Develop approaches. cost
    innovation, strategic alliances Academic, SME
    and MNC interactions.
  • Businesses in PG have their local OI-team which
    can tap into the major OI-centers around the
    world.

16
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Interactive poll 2
  • What are the three most important specific
    structural elements for stimulating Open
    Innovation?
  • Delegation of Decisions to Innovation Teams
  • Integration of RD into the Business Units
  • Co-Location of Teams and Departments
  • Central Innovation Teams
  • Central Innovation Funds
  • External Interface for Open Innovation
  • Merger Acquisition Department

17
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References
  • Blog, http//www.communitech.ca, April 2011
  • Dr. Sharan Kaur, International Journal of
    Business and Social Science, Vol. 2 No. 6 April
    2011
  • Wentz RC Die Innovationsmaschine, Springer
    Berlin-Heidelberg 2007
  • Snyder NT, Duarte DL Strategic Innovation
    Embedding Innovation as a Core Competency in Your
    Organization. Jossey-Bass, Hoboken, 2003
  • Lafley AG, Charan R The Game-Changer, Crown
    Business, New York 2008
  • Blog, Linda Beltz, organizational structures for
    open innovation, http//www.15inno.com/2011/09/02/
    organizationalstructures/
  • Stephen Lindegaard http//www.15inno.com/2010/03/
    12/legovertical/


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QA
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