Transcript Open Organizations

Henry Lopez Vega
Ph.D. Candidate
ESADE Business School

What is Open Innovation?
 Who is using it?
 Do I lose resources if I do not use it?

What is an Open Business Model?
 Why do organizations require Open Business Models?
 Business model maturity stages
 How to use Business models?

European Living Labs
 How does Open Innovation works in Europe
 What is real real-life user-driven innovation?

Customers and consumer markets have
returned to center stage

Changes in economic conditions and political
events

The global economic plain field is been
flattened ( Thomas Friedman)


Closed Innovation Success 1945 – 1980
1980 – 1992
 Problems transferring research results into
production

1992 Near Death Experience
 the single largest quarterly and annual lost in U.S.
corporate history, a loss $4.96 billon after taxes
 New External CEO, Lou Gerstner

Solutions 1992 - 2007
 Helping customers integrating computing
technologies to achieve their business goals
 Management of customer’s equipment
 Unbundling the value chain
 Licensing Intellectual Property (IP)
 Learning from customers and not only from …
Actual IBM’s Business Model
Open innovation

Other firm´s
market
Our new
market
Licence, spin
out, divest
Internal
technology base
Internal/external
venture handling
External technology
insourcing
External technology base
Our current
market
Source: Chesbrough, H.
$1.9 B licensing,
OEM for semi co’s
ODM for others
Internal
Technology
Base
External
Technology
Java,
Base
Linux
R
Global Svcs
Sun, and others’ eqmt
Technology Insourcing
D
Other Firm’s
Market
New
Market
Current
Market
Other Firm’s
Market
“Use it or Lose it”
New
Market
Internal
Technology
Base
External
Technology
Technology
Base
Scouts
R
Current
Market
Large
Acquisitions
“L’Oreal”
Venture
Acquisitions
“Spinbrush”
D
Open Innovation is the use of purposive inflows
and outflows of knowledge to accelerate
internal innovation, and expand the markets
for external use of innovation, respectively
(Chesbrough ,2006)
INTERNAL
EXTERNAL
 R&D Departments
 Customers
 Joint Ventures
 Competitors
 Licenses
 Venture Capital
 Spinoffs
 Start-ups
 Universities
 Research Institutions
 Living Labs
Closed innovation principles
The smart people in our field work for us
To profit from R&D, we must discover, develop
and ship it ourselves
If we discover it ourselves, we will get it to
market first
If we are the first, to commercialize an
innovation we will win
We should control our intellectual property so
that our competitors don’t profit from our ideas
Open Innovation Principles
Not all the smart people work for us
External R&D can create significant value;
Internal R&D is needed to claim some portion of
that value
We don’t to originate the research in order to
profit from it
Building a better business model is better to
market first
We should profit from others’ use of our IP, and
we should buy other IP whenever it advances our
Business model

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
ipod
IBM
Ryan Air
MTV
MTV networks is part of the
VIACOM group, world’s largest
entertainment and media
company
How does MTVsurvive in
the new media world?
What about your
Business Model?

Sometimes opportunities are not visible

Undifferentiated business model - none

Differentiated business model – Ad hoc

Segmented business model – Planned

Externally aware business model – externally supportive

Integrated business model – Connected to business
model

Platform leadership business model – identifies new
business model
Xerox
3Com
Adobe
Identified market
segment
Corporate and government
market
Corportate PC market
PC, Mac, and laserprinter
market
Clear Value
Proposition
high-quality copies at a low establishes file and printer enables output of richer
monthly lease rate
sharing between IBM PCs document types
Elemets of value
chain
developed entire copier
system, including supplies,
focused on supplying fonts
sold through a direct sales Focused on Ethernet
to laserprinter and software
force
protocol, and add-on boards firms
Defined cost and
profit
modest profit on
equipment, high profit on
supplies or per "click"
high volume, low unit costs very high fixed costs
First mover in "dry" copy
Positioned in value process; did not require
network
pursue partners
Set the IEEE 802 standard;
utilized PC distribution
defined the PostScript
channel
standard for scalable fonts
Formulated
competitive
Strategy
Compete on standard, new strong network extenalities,
channels
high switching costs
Competed on technology,
product quality, product
capability
New
Revenues
Revenues
Market
Revenue
Own
Market
Revenue
Sale/
Divestiture
Spinoff
License
Own
Market
Revenue
0
Internal
Developmnet
Costs
Costs
Rising Costs
Of innovation
Source: Chesbrough (2006,2007)
Internal
Develop
ment
costs
Internal
And Extenal
Development
costs
Costs and time savings
From leaveraging
Extenal development
A business model is a useful framework to link
ideas and technologies to economic output

Two clear functions
1. Value Creation
2. Value Capture
The European Network of Living Labs creates a platform
where firms, public authorities and citizens can work
together on developing and testing new technologies,
business models and services in real-life contexts
The ultimate aim is to set up a new European Innovation
Infrastructure where users play an active role in innovation
business goals
scenario planning
reporting
test user selection
user feedback
prototyping
usage analysis
test deployment
How to launch converged services…
 Build an IP network
 Test a service in the lab
 Launch it after a couple of years
 Charge a nice subscription
 Customers buy it
 We make a nice profit
Think of another service…
But true convergence, and some really cool
companies changed all this…
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Health Care
Mobility
Tourism
Culture & Heritage
Logistics
Education
e-Gov
Food & Retail

Pocket PC = your office in your pocket

Consumers don’t need an office, they don’t want to sync with a PC

PDA needs to become a connected device like a mobile: turn it on,
it works

Naked PDA is too difficult to turn into a fun and useful tool

i-City bridges the gap with its own Runtime Environment
(Mercator)
“This converged world will require new forms of
partnerships. Microsoft grew up on partnerships with
companies like Intel, HP, Dell and others -- for this
next generation of innovation, the partners are going
to look like France Telecom.”
Steve Ballmer, CEO, Microsoft Corporation
1.
2.
3.
4.
Knowledge is inside and outside your
organization. So, become an Scout
Business models create value (Exploration). So,
capture (Exploit) it.
Users are the best innovators !!! So, let them
evaluate your innovation
Your role as consultant, manager, …. is to let
employees tell you their ideas and your work is
to find a market and a business model for it