Analysis of the state of the art of open innovation: Practical implications in engineering
I. Jamett 1*, **, L. Alvarado ***, S. Maturana *
* Pontificia Universidad Católica de Chile. CHILE
** Universidad de Antofagasta. CHILE
*** Universidad Católica del Norte. CHILE
ABSTRACT
The article aims to describe, identify and classify application forms for Open Innovation, delivering specific cases for its justification. The methodology consisted of a critical review of the main theoretical fundamentals presented in the statement about art, the concept of Open Innovation, its evolution and application. The concept of Open Innovation and its implementation is a matter that occurs in practice, where methodologies have not been determined to define the application mechanism that best suits the organization. The document has four sections. The first discusses the evolution of the concept of Open Innovation. The second classifies this concept, then in the third we present specific application fields and its main mechanisms or application tools, application examples and at the end of the last section findings and input on prospective studies are delivered.
Keywords: Innovation, innovation management, open innovation, application of open innovation
1. Introduction
The application of the concept of innovation has evolved from an initial theory that gave emphasis to a closed innovation, where a linear process of innovation is highlighted with high investments in the research and development processes, evolving into what can be referred to as Open Innovation, which generates different degrees of receptivity of organizations, increasing or decreasing the flow of input or output of innovation.
The open system model has several important advantages over the closed system. First, it allows profitability to be achieved at all stages of innovation: not only through sales, but also through licensing or exit in earlier stages.
Second, it allows full use of the potential of human resources, as it also allows for "outside the box" thinking or organization thinking (Van der Merr, 2007). There is a misunderstanding regarding management techniques which are needed to implement IA initiatives, (Hagel, 2008). The contemplated objective for this analysis consists of: an analysis of the different forms for implementation IA, which should be documented. When applying IA, different mechanisms have been established in the practice, whose advantages and disadvantages have not been thoroughly debated or discussed yet.
In the generation of new models of open businesses, organizations must find the “right” level of internal capacities, such level should provide them the necessary flexibility for a quick and flexible adaptation to the changes of the environment, and the necessary absorption capacity to identify and take advantage of the different opportunities in the environment that are more fitting for each situation, (Mauleon et al., 2011).
In order for these new businesses to have a highest chance to be successful, it is necessary to overcome connection difficulties with external parts, and problems when obtaining information from the environment and market, (Eftekhari and Bogers, 2015). In the construction industry, it has been detected that the technology level is limited in comparison with other industrial areas in Chile. There is a few Chilean construction companies that see technological innovations as business opportunities, as a consequence, these companies will slowly lose their competitiveness, (Ghio and Bascuñan, 2006). The management of these construction companies must explicitly stand for innovative ideas, to make strategical decisions about the management of the company innovative activities and to provide methodical and hierarquical support during the innovation process, (Hartmann, 2006).
2. Methodology
The methodology used aims to examine the state of the art for: (a) Understanding the mechanisms of implementation of Open Innovation; (B) To group and make a comparison between these implementation mechanisms of Open Innovation; (C) To analyze the results, complemented by case examples to detect the use forms that could be developed in different contexts to address. A review of scientific articles was carried out, based on Scopus data in the business, management and accounting and Social Sciences categories, from 2002 to 2015, resulting in 686 articles found. After, a selection and classification of important documents was carried out according to the criteria indicated by the conceptual map, see Figure 1.
The analysis and synthesis of information allowed ordering the information obtained by evaluating according to the objectives of the study, so the consistency and coherence of existing forms of application was reviewed. The results gave consistent ways to be summarized and outlined. When reviewing innovation in the construction area, a search using both concepts in the Scopus and Scielo database was carried out in English and Spanish from 2002 to 2015. This search resulted in 23 articles in Scopus and 41 articles in Scielo, these works were classified in the same way, which helped find the inclusion of the construction area inside the Open Innovation concept.
3. State of the art of open innovation
The process of innovation has changed over the time, which has answered the needs of the globalization era. It is no longer possible to consider that only one organization can face the quick changes of consumers or the opening of new markets, based on the traditional or closed innovation, where the fulfilment of the innovation process is internal to the organization, (Caracąs, et al., 2009), this concept of closed innovation worked during a long time, which is no longer enough for a successful performance (Quiñones, 2012). The Open Innovation appears as a way which allows organizations to expand their limits and possibilities (Chesbrough, 2007), which has defined their applications and tools, according to its use in particular. It can be indicated that Open Innovation has been outlined from the organization itself, which allows the academic debate and the subsequent generation of empirical models organizing its own application. The question, what practices of Open Innovation are more adequate for each organization and context? Does not have definite answers (Rodríguez, 2016).
Chesbrough, (2003), indicated that the process of traditional innovation integrates innovation activities in a vertical manner, generating the possibility of getting false positives (ideas that should solve problems) or false negatives (ideas that seem to be destined to fail).
Many authors (Furman, et al 2002;. Narula, 2003;. Cavusgil, et al 2003), have argued that the generation of knowledge and innovation is not necessarily the product of people working internally in the organization. This coupled with that knowledge is no longer an element capable of being contained within the borders of organizations, makes the ability to be more competitive, allowing to reach new markets and seek enhancement through partnerships and cooperation (Eickelpasch and Fritsch, 2005).
It is in this area where the paradigm of Open Innovation arises, which postulates the need to establish internal and external flows of knowledge by organizations to extract the most value from their innovative potential (Chesbrough, 2003) .The first definition Open innovation was enunciated by Chesbrough (2003), as a process that expands the boundaries of the organization through which the company can accelerate internal innovation, where several sources of innovation and technology are used, whether internal or external (Chesbrough , 2006).
This proposal is supported by the new competitive environment for the generation of value, which forces companies to look for new ways to organize internal processes and design their relationships with other agents, with whom it will share risks and resources (Dahlander and Magnusson, 2005; Minshall et al, 2007). One of the most recent proposals to define Open Innovation is to describe a dynamic perspective, as "the set of actions and practices whereby companies incorporate the innovation process agents who traditionally have not participated in it, whether internal to the organization or external to it, through the integration of external knowledge, external dissemination of knowledge created internally, and cooperation in the creation of knowledge. "(San Martin et al, 2012). One of the most used descriptions of the concept of Open Innovation consists of relating it to the operations, as a process with a starting and ending point inside organizations. The Open Innovation is the discipline and practice of taking advantage of non-evident findings of others as a first step in an Innovation process through formal and informal relations within an organization, (Deutsch, 2013).
Figure 1. "Conceptual map, application of Open Innovation"
For a group of authors (Chesbroug, 2003; Laersen and Salter, 2006; Van de Vrande, 2009; Lee, S., et al., 2010) AI is a proposal that will be largely delimited in the concept. On the other hand, it is proposed that the concept of AI, its models and practices will be absorbed in the long run by a broader framework of concepts that involves the activities of the value chain of organizations (Von Hippel and Von Krog 2006; And Von Krog, 2010, Huizingh, 2011). See Figure 2.
3.1 Evolution of the concept of open Innovation
This has been presented as continuous in time, highlighting that these changes have been, especially lately as a product of parallel efforts, making possible for several of them to coexist today, including combinations thereof that have been generated by the practice and / or requirements of each organization. From the creation of the cluster concept in the nineties, together with the emphasis of globalization, it has enabled organizations to focus their innovation management towards a logic of collaboration and generation of agreements together, so the emergence of new ways of generating innovation, has a higher speed in its evolution and emergence in recent times, see Figure 3.
Figure 2. Open innovation definitions analysis
Figure 3. Evolution of the concept of open innovation in time
According to Calderon (2010), open innovation models are classified into two groups, those "strategic" where cooperation results in agreements or alliances defined almost always in a contract or similar and those "organizational" which are more structuring and designed thinking of a role of the organization that promotes receptivity. In a first stage the first models that were observed in practice characterized by emphasizing the generation of networks and connected groups that potentiated a common search around innovation, due to the development and work of this type of models It reaches a kind of cooperation scheme more defined and organized leading to models with a structure that provide a concrete framework for innovation activities undertaken together, becoming part of the organization of each of the participating entities, or formalizing an independent organization.
Figure 4 summarizes the main characteristics of the innovation models present in time, according to the sequence observed in Figure 3, with different degrees of receptivity that have given way to open innovation model. As the degree of receptivity increases we can see that the main problem of these models is the ability to direct and control their activities, increasing the chances of frustration in the pursuit of innovation (Bogers, 2009). Operations become more complex and it becomes necessary to generate a capacity of articulation of the models that allows adequate development (Elmquist, et al.,2009). As a result of the generation of new models of open businesses, organizations must find the “right” level of internal capacities, such level should provide them the necessary flexibility for a quick and flexible adaptation to the changes of the environment, and the necessary absorption capacity to identify and take advantage of the different opportunities in the environment that are more fitting for each situation, (Mauleon et al., 2011).
Figure 4. Evolution of characteristics of open innovation models in time
4. Open innovation, towards its application
4.1 Open Innovation as a process
Open innovation has been described from different perspectives, with recurring definitions that address the external feature and the relationship of organizations with external actors. (Laursen, 2006), and the ones that focus towards the definition of Open Innovation as a revelation of inner knowledge abroad (Henkel, 2006). One of the mostly accepted classifications comes from Gassman and Enkel (2004) who propose a first approach to the definition of the various applications of the Open Innovation by dividing its activities into three categories: inbound, outbound and coupled activities. shown in Figure 5. Chesbrough and Bogers, (2014) define Open Innovation as “a process of distributed innovation, based on knowledge flows through the limits of the organization, using pecuniary and non-pecuniary mechanisms, in line with the business model of the organization”. In this new definition, the aspect of business and the generation of value for the company is emphasized reaching an agreement between the concept of Open Innovation, the knowledge flow, and the capacity organizations have to rescue the associated value of the innovation process.
We can identify a second categorization of the activities of Open Innovation, which distinguishes the following classifications: Innovation of exploration from the outside to the inside of the organization; and Innovation of the exploitation from the inside to the outside of the organization (Van de Vrande, 2009). Table 1 summarizes the main characteristics and factors of convergence of these two ways of classifying Open Innovation. It is concluded that Open Innovation is the generation and management of the flow of ideas and knowledge whether incoming or outgoing, which are capable of supplying organizations with new proposals.
Dahlander (2010) indicates that the process of Open Innovation presents differences in its activities if the mechanism is pecuniary or not. So taking this classification, Table 2 shows the advantages and disadvantages of these different forms.
Figure 5. Activities of the process of open innovation
Tabla 1. Convergence activities open innovation process
Tabla 2. Advantages and disadvantages of open innovation
4.2 Open innovation as a process of change
According to San Martin and Rodriguez, 2012, it indicates that because there is no model defined for an organization to transit and implement Open Innovation, for that is chosen the use of the organizational change model proposed by Lewin (1951), which has the following phases.
a. Unfreezing, feeling that change is necessary and urgent, communicating to stakeholders of the company, both internal and external (Kotter, 1997)
b. Impulse, Implementation of change through the establishment of new processes and behavior patterns, often experimental and tentative until the most appropriate path to the claims of the company is located.
c. Institutionalization, consolidation of the improvements achieved, avoiding setbacks.
On the other hand Wallin and Von Krogh, 2010, have proposed an implementation model of Open Innovation that seeks to integrate external knowledge, still remaining how to adopt integrated approaches to be used as a source of innovation.
Fetterhoff and Voelkel (2006) focus on the problems involved in the search process for innovations. They state that companies mostly do not evaluate external innovations, so that they define a model that proposes how to adopt and evaluate the flow of external innovation within the organization, we can indicate that only fits the search for external innovation:
Table 3 indicates that it is possible for the two deployment models of Open Innovation to be observed from the perspective of change management model.
Figure 6. Change process model of Kurt Lewin
Tabla 3. Convergence of open Innovation processes with the change process
Each of the models independent of its main objective meets the stages of change model, generating a cycle able to break the inertia and maintaining mechanisms for systematization in time.
4.3. Practices and examples of application of Open Innovation
In practice, you can find different ways of implementing Open Innovation, being used indistinctively by organizations, even sometimes the application falls in intuitive ways. Van de Vrande (2010), he makes a classification of the different tools for the implementation of Open Innovation, which ranks in monetary or non-monetary.
The use of monetary or non-monetary forms domestically depends on a number of features, among which can be listed: peer pressure, organizational structure and culture, or the kind of innovation sought. In this case, as in others, there is no solution or decision making, optimal universal. (Saint-Martin and Rodriguez, 2012). On Table 4 we have classified application tools of Open Innovation, following categories of incoming or outgoing and whether or not correspond to economic mechanisms.
Tabla 4. Practices and examples of Open Innovation application
4.4 The Open Innovation as a knowledge management
Although, factors, which are dependent on a specific context and can determine the success of a Knowledge Management process are many and varied, Davenport (1997, 1998) cited in Gómez, (2006) identifies nine key factors that are interrelated as possible determinant of the success of a project of knowledge management: a) knowledge-oriented culture, b) technical and institutional infrastructure, c) support from the managerial staff, d) connection to the economical or market value, e) process orientation, f) clarity of the objective and language, g) practices of motivation, h) knowledge structure, i) several channels for the transfer of knowledge.
In this sense, the management of the Open Innovation project presents seven factors for success proposed by Gonzales and García (2011). Three factors are external: a) technical leadership based on experience, b) intensive use of Information and Communication Technologies, which allow a multilateral communication, and c) the presence of intermediate agents or facilitators with a neutral nature. On the other hand, the results of the Open Innovation project also depend on some internal factors: d) the linking positions, e) the searching routines and, f) the establishment of incentive systems, which promote proactivity and an organizational culture.
In each of the modules, a meaningful leadership, an infrastructure based on the Information and Communication Technologies, the transfer of knowledge, the motivational systems and an organizational culture oriented to the innovation and knowledge are main variables for success. Both modules base their implementation on common pillars, which can be oriented to a combination of steps and common procedures.
5. Open innovation in the construction industry
Most of the construction companies do not find investments in I+D+i attractive because they have not understood their role as a key factor of competitiveness, Correa et al., 2007. Barrio et al., (2011) propose a model for the technological innovation management in the construction area, focused on improvements designed from inside the companies, and are applied individually by each company, generating a closed innovation module as a first step for the standardization of the innovation management. The construction industry is based on projects and people, for this reason a change in mentality and culture must be fostered in order to promote an innovation culture, as a prerequisite for the exchange of knowledge and creativity, (Castro et al., 2012).
Since then, it is assumed that a strategical nature in the innovation should lead to the development of essential capacities, which will be responsible of the future value of the organization. See Figure 7.
Figure 7. Competitiveness module focused on innovation
According to Correa et al., (2007), in order to get a good implementation of successful innovation systems, it is necessary to support other management systems, especially those that contribute to the efficient use of knowledge, the continuous improvement of company processes, and mainly a permanent link with the environment. It is proposed that there are six main concepts that gather the main similarities detected in his bibliographical analysis: innovation concepts, organizational capacities, business environment, strategy, complementary systems, I+D management. The development of strong bounds with providers, the knowledge management and the application of technological vigilance are crucial elements to generate the Open Innovation bases, which is observed as a preliminary strategy for the application of Open Innovation.
The objective of this project was to support companies in the photovoltaic and solar thermal industry for residential market in Calama, so that they could better respond to current national energy needs. This project will be considered as a concrete example of the application of Open Innovation, because through it the CDT is committed to promote innovation in companies linked to the construction sector, identifying technology gaps and meeting demands of expertise and dissemination of expertise and of course generating an instance for the formation of enterprise networks. The activities considered for this project were basically training starting in early 2015 and for a period of twelve months, 4 workshops, 2 technical courses, one technical seminar, 2 business meetings, 2 mass media seminars. The participation was of a total of 24 companies.
The culmination of the process of working together with companies and entrepreneurs was delivered in a publication specifically designed for this purpose and from which the results obtained are extracted directly: Installation of new knowledge in direct beneficiaries; Market Research in Chile; Generating interest among members of the node in project development and research on the subject; Decrease information asymmetries; Networks generated jobs; Improvement of the technical and administrative capacities; communicational impact on the environment of the recipient node, end customers and stakeholders.
As shown in Table 5, the proposal generated by the CDT concurs with a sample application of Open Innovation and as considered as one of the first stages in the implementation in the country and in the industrial area, it is implemented by a specific project financed directly by the state where arises as main objective strengthening the development of an industrial sector that before the project, presented organizational, operational and technical gaps to respond to the needs of the housing market for the use of alternative energies. The companies formed a fuzzy core business unable to deliver a standard technical solution for the requirements associated with the generation of alternative energy in private homes. The way to address the improvement of the supply consisted of specialization and training of enterprise networks capable of delivering a comprehensive solution to market requirements. The realization of this project is part of the three identified stages of change, as proposed by Wallin and Von Krogh, who aim to distinguish the innovation process, as a process of acquisition of knowledge able to become the basis for future innovations.
Tabla 5. Case analysis energy node
Tabla 6. Project Nodes from the perspective of organizational change model
6. Conclusions and future development
It is recognized that innovation has become an essential tool to ensure the development and growth of organizations and nations, although it is noted that implementations are not fast nor solve all the problems occurred in the development process.
We can indicate that the concept of Open Innovation and its implementation is still a matter that occurs in practice, where it has not been determined the methodologies and strategies that help to decide and select the implementation mechanism that best suits the organization. The decision on the best practice to implement, is usually associated with external variables which has primary importance the public policies that support these processes, favoring in a sense the adoption of specific tools.
It is observed with special care the current trend of implementing specific Open Innovation applications related to external exploration processes, pecuniary or non-pecuniary, which could become an element to increase the development gaps between nations or organizations with greater progress versus those who do not possess it, as these practices are generally associated with a centralized core of results. It is in this area where a future contribution is displayed, which is to investigate the possibilities of generating decision methodologies on using this concept or not within organizations, determining donations, contribution of this application, and above all the determination of the real contributions to the development of organizations and nations.
In the evolution of the concept of OI we have observed a process that was born from private contributions that converged towards a more holistic and inclusive approach from which it again began delving into particular issues. This way you can indicate that the evolution of the application of Open Innovation has taken three specific stages, as shown in Figure 8.
Figure 8. Open Innovation transition stages
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Pontificia Universidad Católica de Chile y Universidad de Antofagasta, Chile.
E-mail:Ingrid.jamett@uantof.cl
Fecha de Recepción: 18/08/2016 Fecha de Aceptación: 10/03/2017
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