Open Innovation ( Sixth generation innovation model )

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Sixth generation innovation model
Milad Jahandideh
Dr. Amir Ali Saifuddin Asl

2. “It’s war: Innovate or Die”
Cooper wrote 2005 in his book Product Leadership: “It’s war: Innovate or Die”.

3. INTRODUCTION
Every year innovation becomes not only more vital for the success but also determines a company’s
very existing. The ability to innovate is one of the core competence needed for an organization to
compete in the ever increasing challenging and highly changing environment (Cooper, 2005).

4. Importance of innovation in company’s agenda
The Boston Consulting Group’s annual
global report shows this awareness from
firms very clearly. For the year of 2015,
79% of the respondent’s ranked
innovation as either the top priority or a
top three priority (see Table 1.). Since
2009, the importance in a company’s
agenda for innovation has raised by 15%
(Ringel, M., Taylor, A., & Zablit, H.,
2015).

5. For companies to become more innovative, they need to be ready for change and to have set up
mechanisms that will support the process.

6. Understanding of the process of innovation at the firm-level has evolved throughout recent decades from
simple linear and sequential models to increasingly complex models embodying a diverse range of inter
and intra stakeholders and processes.
Innovation at the firm-level has evolved
Rothwell (1994) documented five shifts or generations, demonstrating that the complexity and integration
of the models increases with each subsequent generation as new practices emerge to adapt to changing
contexts and address the limitations of earlier generations (Ortt and van der Duin, 2008) .
More recently and following on from the seminal work of Rothwell’s innovation generation model
typology, researchers (Kotesmir and Meissner, 2013) have suggested that Chesbrough (2003) open
innovation model represent the latest wave of innovation models.

7. Model Generatio
n
Characteristic Strengths Weaknesses
Technology
Push
First Simple linear
sequential process,
emphasis on R&D
and science
Simple
Radical
innovation
Lack of
feedbacks
No market
attention
No networked
interactions
No technological
instruments
1st Generation

8. Model Generation Characteristic Strengths Weaknesses
Market Pull Second Simple linear
sequential process,
emphasis on
marketing, the
market is the
source of new
ideas for R&D
Simple
Incremental
innovation
Lack of
feedbacks
No technology
research
No networked
interactions
No technological
instruments
2nd Generation

9. Model Generation Characteristic Strengths Weaknesses
Coupling Third Recognizing
interaction between
different elements
and feedback loops
between them,
emphasis on
integrating R&D and
marketing
Simple
Radical and
incremental
innovation
Feedbacks
between phases
No networked
interactions yet
No technological
instruments
3rd Generation

10. Model Generation Characteristic Strengths Weaknesses
Interactive Fourth Combination of
push and pull
models, integration
within firm,
emphasis on
external linkages
Actor networking
Parallel phases
Complexity
increment of
reliability
No technological
instruments
4th Generation

11. Model Generation Characteristic Strengths Weaknesses
Network Fifth Emphasis on
knowledge
accumulation and
external linkages,
systems integration
and extensive
networking
Pervasive
innovation
Use of
sophisticated
technological
instruments
Networking to
pursue innovation
Complexity
increment of
reliability
5th Generation

12. Model Generation Characteristic Strengths Weaknesses
Open Sixth Internal and external
ideas as well as
internal and external
paths to market can
be combined to
advance the
development of new
technologies
Internal
and external
ideas as well as
internal and
external paths to
market can be
combined
Assumes capacity
and willingness to
collaborate and
network
Risks of external
collaboration
6th Generation

13. More recently and following on from the seminal work of Rothwell, innovation generation model typology
researchers have signalled that open innovation represents the latest wave of innovation models. Reflecting
a dominant orientation to the preceding network models of innovation, the open innovation approach is not
limited to internal idea generation and development, as internal and external ideas in addition to internal and
external paths to market (licensing, insourcing etc.) are facilitated within the innovation development chain
(figure. 5).
Open Innovation
Figure 5 Open Innovation Model
Source: du Preez and Louw (2008)

14. What is Open Innovation?
Henry Chesbrough (2003)
“Open innovation is 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.
Open innovation combines internal and external
Ideas into architectures and systems whose
requirements are defined by a business model.”

15. Open innovation is considered as a paradigm shift
Open innovation is considered as a paradigm shift whereby competitive advantage can result from
leveraging discoveries beyond the confines of a single internal R&D unit (inbound open innovation) and can
equally benefit from relying exclusively on their own internal paths to market through engaging with external
organisations that may be better positioned to commercialize a given technology (outbound open
innovation).

16. In a similar vein, Enkel et al. (2009) identifies three core processes can be differentiated in open innovation:
(1) The outside-in process: which involves enhancing and extending an enterprise’s own knowledge base
through the integration of suppliers, customers, and external knowledge sourcing.
(2) The inside-out process: which refers to securing commercial/revenue benefits by bringing ideas to market
faster than internal development via licensing IP and/or multiplying technology, joint ventures, and spin-offs.
(3) The coupled process: which combines co-creation with partners through alliances, cooperation, and
reciprocal joint ventures with the outside-in process (to gain external knowledge) and the inside-out process
(to bring ideas to market).
Three core processes can be differentiated in open innovation

17. The sixth generation requires interaction networks and innovation systems (Bochm and Frederick,
2010). Marinova and Philimore (2003) are consistent with the Integration in network model in these
two points. However, the “Innovative Milieux” has as central element the innovative milieu, which is
described as combination of knowledge and specific competencies. Additionally, the territorial
organization as well as the technical and economic process are key elements.
sixth generation requires interaction networks and innovation systems

18. The Open Innovation Model (Chesbrough, 2014)

19. The described sixth generation models aren’t focused on internal ideas or close networks anymore
but focus on opening up to the whole market. With this new aspects, ideas can also be generated
externally by customer, states or other companies. Figure 6. shows the difference between a closed
and an open innovation.
Difference between a Closed and an Open Innovation

20. Henry E. Chesbrough wrote in “The Era of Open Innovation” that sooner or later all industries will change
from close to open innovation. On the one hand this gives companies the chance to push internal ideas
outside, e.g.: start us with own personal for ideas that are not fitting the company’s strategy. On the other
hand they can pull ideas from the outside inside to commercialize them (Chesbrough, 2003).
The Era of Open Innovation

21. Open innovation offers several benefits to companies operating on a program of global
collaboration:
● Reduced cost of conducting research and development
● Potential for improvement in development productivity
● Incorporation of customers early in the development process
● Increase in accuracy for market research and customer targeting
● Improve the performance in planning and delivering projects
● Potential for synergism between internal and external innovations
● Potential for viral marketing
● Enhanced digital transformation
● Potential for completely new business models
● Leveraging of innovation ecosystems
Advantages

22. Implementing a model of open innovation is naturally associated with a number of risks and challenges,
including:
● Possibility of revealing information not intended for sharing
● Potential for the hosting organization to lose their competitive advantage as a consequence of
revealing intellectual property
● Increased complexity of controlling innovation and regulating how contributors affect a project
● Devising a means to properly identify and incorporate external innovation
● Realigning innovation strategies to extend beyond the firm in order to maximize the return from
external innovation
Disadvantages

23. References
Main References:
● R. Rothwell, “Towards the fifth-generation innovation process,” International Marketing Review, vol. 11, no. 1, pp. 7-31,
1994.
● J. Tidd, “A review of innovation models discussion paper 1,” Science and Technology Policy Research Unit, Tanaka
Business School, University of Sussex, 2006.
● E. Enkel, O. Gassmann and H. Chesbrough, “Open R&D and Open Innovation: exploring the phenomenon,” R&D
Management, vol. 39, no. 4, pp. 311-316, 2009.
● Taferner, Benjamin. "A next generation of innovation models? an integration of the innovation process model big
picture© towards the different generations of models." Review of Innovation and Competitiveness: A Journal of
Economic and Social Research 3.3 (2017): 47-60.
● Chesbrough, Henry, Wim Vanhaverbeke, and Joel West. "Open innovation." The new Imperative for creating and
profiting from technology 1 (2006).
Blog References to learn and review fast:
● https://ipacso.eu/innovation-modelling/innovation-model-analysis/187-the-evolution-of-innovation-framework-models.ht
ml
● https://en.wikipedia.org/wiki/Open_innovation