I. Innovation
3. Innovation management; entrepreneurial mindset at large
3.5. Open innovation
3.5.4. Four Ways to Collaborate in Open Innovation
The four possible forms of collaboration within the context of open innova-tion are based on the two network types and two governance types described above.
The four basic models of collaboration in open innovation
Governance
Hierarchical Flat
Participation
open Innovation mall Innovation community closed Elite circle Consortium
Pisano, Gary P. and Verganti, Roberto (2009): Which Kind of Collaboration Is Right for You?’, Harvard Business Review, 86(12), pp. 78-86.
Elite circle
It is a select group of collaborators, in which the participants are selected, the problem is defined and the most appropriate solution is chosen by a single company. An example of elite circles is the group of more than 200 carefully
selected experts invited by Alessi to propose new designs for the production of home products.
It should be used when:
• we know the domains from which the best solution to our problem is likely to come;
• it is important to work with the best experts and we are able to find and select them;
• we can define the problem and evaluate the proposed solutions.
Consortium
It is a private ‘club’ of contributors, whose members define the problems requiring a solution, make decisions about the workflow and select the best solutions together. For example, IBM has established such a partnership with other companies for developing semiconductor technologies.
It should be used when:
• the problem is big and cannot be partitioned into smaller chunks that can be handled separately;
• we know the domains from which the best solution to our problem is likely to come;
• it is important to work with the best experts and we are able to find and select them;
• all contributors are expected to be highly competent;
• the participants are only willing to collaborate if we share the power with them;
• the intellectual property produced can be shared with the rest of the collaborators.
Innovation mall
It is a forum where a company posts its problem, and anyone can contribute proposals for a solution, and in the end, the company will select the best so-lution. An example of innovation malls is the InnoCentive.com website, where companies can post scientific problems.
It should be used when:
• contributions are required from a large number of collaborators, and the best ideas might come from unexpected sources;
• a lack of better solutions that elite players not involved in the process could provide does not have serious consequences;
• it is easy to join the network and get involved in the work;
• the problem is small, or if it is big, it can be partitioned into smaller chunks that can be handled separately;
• many proposed solutions can be tried at a low cost.
Innovation community
It is a network in which anyone can post problems, propose solutions and decide which solution to use. An example of innovation communities could be the Linux open-source community.
It should be used when:
• contributions are required from a large number of collaborators, and the best ideas might come from unexpected sources;
• we do not know all user needs; therefore, we want to share the costs and risks of innovation with others;
• it is easy to join the network and get involved in the work;
• the problem is small, or if it is big, it can be partitioned into smaller chunks that can be handled separately;
• it is not important that our company be the owner of the intellectual property, i.e. the solution.
Each approach can be effective under the right circumstances. One must al-ways be wary about opinions stating that one form of collaboration is supe-rior to others. Open is not always better than closed, just as the flat is not always better than hierarchical. The development of an effective approach to collaboration begins with a solid understanding of the company’s strategy.
What is the business problem that the collaboration is expected to solve?
What unique capabilities can we bring to the process of innovation?
Designing financial and non-financial incentives that attract collaborators is crucial in any of the four forms of collaboration. Non-financial rewards—
like high visibility in the labour market, good reputation among a peer group, the psychological fulfillment of pursuing a professional interest, or the chance to use the solutions in one’s own business—can replace or comple-ment monetary rewards. There are no rigid rules about which incentives work best with particular forms of collaboration.
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Kelemen Ottó János