Insights from the Company Case Studies
Els Van de Velde Vlerick Leuven Gent Management School 1
Number of company case studies, by industry 12
10
8
6
4
2
0 Pharma & Life science
Chemicals
Electronics & Telecom
ICT
Transport Equipment
Materials
FMCG
Services
2
Number of company case studies, by employment 14
12
10
[0 ; 250[ [250 ; 10.000[ [10.000 ; 50.000[ [50.000 ; 100.000[ [100.000 ; + ∞[
8
6
4
2
0 1 Number of Employees
3
Insights from the Quantitative Part of the Questionnaire
4
Proportion of companies’ R&D investment used to fund outside research in companies % funding outside research in companies 20 18 16 14 12 10 8 6 4 2 0 0-5%
6-10%
11-20%
>20%
5
Proportion of companies’ R&D investment used to fund outside research in public organizations % funding outside research in public organisations 20 18 16 14 12 10 8 6 4 2 0 0-5%
6-10%
11-20%
>20%
6
Activities other than R&D, important in realizing innovations 40
35
30
25
20
15
10
5
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Standards
Suppliers
Customers
Safety regulations
Other
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Critically important reasons for the location of R&D facilities
20
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Main Insights from the Qualitative Part of the Questionnaire
9
The Use of External Sources of Innovation
Major motivation: – To increase the speed of innovation, especially by tapping into knowledge from research institutes, companies and adjacent markets Focus on specific technology or product, not on company
– To increase the number of ideas for new projects
– To attract and retain talent – To increase external funding of ideas and technology developments 10
The Use of External Sources of Innovation
MNEs and SMEs – For MNEs: open innovation happens at two levels • Open through close cooperation with external partners • Open between business units
– For SMEs: • Lead users (market information, new trends, …) • Close interaction between people, creating an ecosystem inside and outside the company • Open innovation model is often (partly) internalized at the moment of acquisition
11
The Use of External Sources of Innovation
MNEs are very active in creating ecosystems • • • •
High tech campuses & networks Valuable partnerships Spill-over effects Not geographically based, but rather technology-based
Engagement in partnerships • Valuable partnerships • Complementary skills • Reputation
IT tools • Innovation portals • Technology intermediaries 12
Alternative Ways of generating Revenue with in-house Innovations and External Innovations
When? – In case the technology is not part of the core strategy, but has a huge potential – In case of small potential, technology/idea is killed
Corporate venture capital fund
Spinning-off companies
Posting on websites of technological brokers
13
Assessment of the Value of ‘External’ Projects/Companies
Assessment units with different objectives: • • • • •
Business Development group: active screening of market Financing funds e.g. venture capital initiatives and CVC funds Emerging Business Opportunities: identify potential business growth areas Business group for scouting Research centers in which other firms are invited to cooperate
Corporate venturing program • To invest in start-ups & other companies • To keep an eye on potential opportunities • To establish mutual trust
Spinning-in companies • Primarily technology focused, on not financially • Focus on potential market success of innovations
Joint ventures and other collaboration agreements 14
Human Resource Management
Creating an innovation culture within the company is very important – The innovation culture needs to be present and operative at every level – Give autonomy to employees – Install a decentralized management structure – Diversity leads to new thoughts, new insights – Trust is crucial: the more space employees get, the more involved they become – Emphasis on knowledge exchange & sharing, and on communication
15
Intellectual Property Rights
IPR have become important in almost all industries: – – – –
Non-disclosure agreements Confidentiality and exclusivity agreements Brands, design, models Patents: • Important in sectors such as the pharmaceutical sector, but hinder innovation in other sectors such as ICT
IPR for defensive reasons: • To protect the business • To prevent others from taking out a patent that is peripheral for the business
However, companies engaged in OI practices • Licensing activities • Strategic alliances • Sharing technologies
16
Towards an Integrated Model of Open Innovation
17
Open Innovation: Exploration & Exploitation Outside-in
Inside-out
A
B
Searching/exploration with universities/research institutes
Collaboration companies
Selling/buying Licenses Patents Spin-in Spin-off
To strengthen the core technology
To search for new technologies/new applications
A: Tend to close-up at the moment of commercialisation B: Tend to be open since not all required knowledge is available within the company
18
Outside-in process Outside-in Searching/ exploration Collaboration Selling/buying Licenses Patents Spin-in Spin-off
Size dependent: -Small firms have less possibilities to engage in open innovation practices due to resource constraints
Industry dependent: -Opportunity conditions -Appropriability conditions -Cumulativeness of technological knowledge -Complexity of the knowledge base
19
Outside-in process Short life cycle of technology
Long life cycle of technology
High CA
High IPR + high value
High IPR + low value
Engage in outside-in to keep up with the industry
Engage in outside-in to keep up with research
Engage in outside-in to keep up with new developments
e.g. ICT, Electronics & Telecommunications
e.g. Pharma, Chemicals, Materials
e.g. Transport Equipment, FMCG 20
