About the author
Jochem Verburg is co-founder of Mobina and has an interest in improving business processes using information systems. He just completed his Master Business Information Technology and during his graduation project for Mobina he studied several important aspects of the innovation process of industrial SMEs. He shares some important lessons in this series of blogs.
February 2nd, one of our founders, Jochem Verburg, graduated from the Master Business Information Technology at the University of Twente. After conducting in-depth literature research, Jochem identified several key aspects for Mobina to improve support for the innovation process of industrial SMEs. He wrote a series of three blogs on topics of his thesis. This blog, he describes the usefulness of open (process) innovation. Upcoming two Mondays we will publish blogs on:
- The usefulness of a strategy process
- The void between idea generation and the project: the pre-project phase
One of the major developments to improve companies’ innovation results is open innovation. This term was originally described by Chesbrough in 2003 as “a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology”. However, the term has started to lead its own life, and everyone uses its own definition. Globally, open innovation consists of those practices in which a company (actively) involves other people and organizations in their innovation process.
The road to open process innovation
Traditionally, innovation and thus also open innovation is often concerned with product (and service) innovation. However, it can also be effectively used for process innovation as concluded from a study involving 1000 Swiss manufacturers and the Volvo Group. Although in some cases keeping unique process knowledge within the company (e.g. how to produce a specific metal alloy or medicine) is wise, for most manufacturing companies opening up can provide a competitive edge to improve (production) processes. Innovation is a numbers game, and using open innovation you can find more ideas and thus more good ideas. Next to this, it can give companies access to even more knowledge.
It is difficult to evolve from a closed to an open company at once. There are many challenges on the way. It is therefore useful to focus on six big steps to gradually improve process innovation: open up internally; focus on the pace of process innovation; exploit connectivity technologies; improve your organization’s ability to absorb and implement ideas from external sources; open up to the outside; and utilize unconventional sources of knowledge.
Open innovation dimensions
If you have successfully completed these steps, which practices are important to actively adopt open innovation? There are many options to practice open innovation, in several different dimensions.
First, one can perform outside-in innovation and inside-out innovation. Most focus is on outside-in innovation, but it can also be useful to exploit innovations outside the company for example through selling intellectual property rights. It can also be useful to adopt a coupled process, where innovation is developed mutually for example in an alliance or joint venture.
Most of the formal practices, like IP licensing and venturing, are adopted mainly by larger companies, SMEs are looking mostly into exploration. For exploration you can look to increase your search breadth (the number of – different – outsiders you involve) and search depth (collaborating with others throughout development of the innovation). Search depth can especially be useful for radical innovation, to get in-depth knowledge of key technologies. Search breadth can help a company to find new combinations to make significant improvements.
Last, you can draw from sources both vertically and horizontally. Vertically, customers and suppliers are often involved in product innovation, but shared knowledge can also lead to better processes. Next to this, it can be useful to collaborate with horizontal partners. Competitors might have the same struggles on processes with no added value and can help each other improve. You might even learn from other industries.
LEGO Ideas allows consumers to design their own LEGO set. This allows LEGO to internalize outside knowledge, while involving its customers. They involve a large number of people, all consumers, deeper in their (product) innovation process since they even design part of the product.
Coupled open innovation is stimulated on the High Tech Campus in Eindhoven, which allowed Philips to collaborate with a wide variety of companies more in-depth. In Twente, we also have similar initiatives like the Kennispark and the High Tech Systems Park. The physical proximity allows companies to casually build trusting relationships but is of course not always necessary. Online technologies can of course also help to establish open innovation in a geographically dispersed network.
A great example of process innovation which was achieved by looking horizontally across industries, is Toyota’s just-in-time philosophy. Taiichi Ohno was inspired by the process in supermarkets, where “the next process (the customer) goes to the preceding process (the supermarket) to retrieve the necessary parts when they are needed and in the amount needed” (toyota-global.com).
Open innovation in Mobina
Mobina is a great tool to improve your business processes. Using Mobina, you take large steps towards opening up your organization. It stimulates sharing knowledge internally and helps you identify useful best practices to adopt. Next to this, our support for improving the information landscape makes sure you get the most out of connectivity technologies. You can also find many potential (technological) innovations to improve your processes. Finally, you can add users from partners and grant them access to specific processes in the reference model. You might want to involve the distribution partner in the distribution processes, or a supplier in inventory management.
You might already unknowingly practice open innovation ad hoc. Many SMEs already adopt informal practices like customer involvement and networking, which can lead to creating more ideas. IP licensing, venturing, and other practices cost more, require formalized contracts and need a more structured approach. However, they can be useful to internalize external knowledge in a structured way. You can also keep an eye on technological and organizational developments in articles or fairs to adapt your processes for the best.
In the end, there’s not one best practice to pursue open process innovation. You should first gradually work towards openness and ensure the organization is ready to adapt to it. Then, multiple practices can be useful, and each has its own strengths and weaknesses. Most importantly, the adopted practices should be coherent and aligned with the organization’s goals. Keep an eye on the open innovation dimensions and explore those practices that create the most value for your company.
Want to know more about open (process) innovation? Check out the sources for further reading and/or contact us to make an appointment to explore the possibilities in Mobina for improving your company.
- Chesbrough, H. (2003). Open Innovation The New Imperative for Creating and Profiting from Technology Xerox PARC The Achievements and Limits of Closed Innovation. Harvard Business School Press, 1–10. doi.org/10.1111/j.1467-8691.2008.00502.x
- Enkel, E., Gassmann, O., & Chesbrough, H. (2009). Open R&D and open innovation: exploring the phenomenon. R&D Management, 39(4), 311–316. doi.org/10.1111/j.1467-9310.2009.00570.x
- Julien, P.-A., Raymond, L., Jacob, R., & Ramangalahy, C. (1999). Types of technological scanning in manufacturing SMEs: An empirical analysis of patterns and determinants. Entrepreneurship and Regional Development, 11(4). doi.org/10.1080/089856299283119
- Laursen, K., & Salter, A. (2006). Open for innovation: the role of openness in explaining innovation performance among U.K. manufacturing firms. Strategic Management Journal, 27(2), 131–150. doi.org/10.1002/smj.507
- Rahman, H. (University of M., & Ramos, I. (University of M. (2011). Is Open innovation imperative to small and medium enterprises?: A comparative study. 7th Americas Conference on Information Systems 2011, AMCIS 2011, 3, 2078–2084.
- van de Vrande, V., de Jong, J. P. J., Vanhaverbeke, W., & de Rochemont, M. (2009). Open innovation in SMEs: Trends, motives and management challenges. Technovation, 29(6–7), 423–437. doi.org/10.1016/j.technovation.2008.10.001
- von Krogh, G., Netland, T., & Wörter, M. (2018). Winning With Open Process Innovation. MIT Sloan Management Review, 59(2), 53–56.