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Implementing Open Innovation: cultural issues

Implementing Open Innovation: cultural issues Letizia Mortara* Institute for Manufacturing, University of Cambridge, Mill Lane, Cambridge, CB2 1RX E-mail: [email protected]

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Institute for Manufacturing, University of Cambridge, Mill Lane, Cambridge, CB2 1RX E-mail: [email protected]

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Imke Slacik

Johann J. Napp

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Tim Minshall

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Institute for Manufacturing, University of Cambridge, Mill Lane, Cambridge, CB2 1RX E-mail: [email protected]

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Institute for Manufacturing, University of Cambridge, Mill Lane, Cambridge, CB2 1RX E-mail: [email protected] * Corresponding author

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Abstract: This paper presents the results of case study research into the organisational culture issues underpinning the successful implementation of an open innovation (OI) strategy for multinational corporations. The results of this research are drawn from the series of single company case studies supported by data captured at multi-company workshops. The research highlights the different issues facing both ‘blue sky’ R&D and applied R&D, as well as those service functions established specifically to support the implementation of OI. For the ‘blue sky’ R&D, issues can be overcome by leveraging the scientists’ motivation for research by setting up spaces for interaction with external organisations, and by reducing the barriers and obstacles of the more 'mundane tasks of external interactions. For applied R&D, issues can be overcome by setting specific targets for cooperation with the external organisations, showing the benefits of an OI approach by demonstrating its strong problem solving potential, and using budget constraints to induce the outsourcing of research. Keywords: Open Innovation, Organisational Culture, Implementation.

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Implementing Open Innovation: cultural issues

Introduction

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‘Open Innovation’ (OI) has been recognised as an approach which can enable firms to increase their innovation performance (Chesbrough 2003; Chesbrough and Crowther 2006). A growing number of companies are filling internal innovation gaps with ideas, technologies and opportunities coming from outside and are finding alternative paths to markets for intellectual property developed internally. Many practitioners and scholars agree with Chesbrough in saying that companies should consider the open approach to innovation. This enthusiasm has been fuelled in part by documented success stories from mostly large firms of restructured innovation processes towards a more open approach. Examples of such case studies are Procter & Gamble (Dodgson, Gann et al. 2006; Huston and Sakkab 2006), DSM (Kirschbaum 2005) and Air Products (Tao and Magnotta 2006). Though originating in knowledgeintensive high-tech industries like biotechnology (Fetterhoff and Voelkel 2006), pharmaceuticals (Gassmann and Reepmeyer 2005), electronics and software (Christensen, Olesen et al. 2005; Prugl and Schreier 2006), more recently the general trend of openness can be noted in a broader range of industries (Chesbrough and Crowther 2006).

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From an academic point of view, the OI model (Chesbrough 2003) has opened a series of new research fields. Scholars have long since studied contract research and technology purchasing through contracts and licensing (Teece 1986), the formation of joint development partnerships (Wince-Smith 1993), the creation of joint ventures and strategic alliances (Pennings and Harianto 1992), the possible acquisition of innovative firms (Ansoff 1968). commercialising technologies from universities and public research institutes (Lambert 2003), the involvement of customers and lead-users (von Hippel 1988; Luthje and Herstatt 2004; Von Hippel 2005; Lettl, Herstatt et al. 2006), innovation within networks like regional clusters or science parks (Romijn and Albu 2002), alliances between large companies and start-upfirms (Eisenhardt and Schoonhoven 1996; De Meyer 1999; Alvarez and Barney 2001), exploitation options such as forming joint ventures (Kogut 1988), the out-licensing of technologies (Teece 1986), and the formation of spin-outs (Clarysse, Wright et al. 2005). The implications of OI for innovation strategies are also considered by academics who studied for example, the permeability of company boundaries (Jacobides and Billinger 2006), the balance between external and internal R&D (Kandybin and Kihn 2004; Engardio and Einhorn 2005) and innovation sourcing strategies (Nambisan and Sawhney 2007).These single themes are not radically new, but they can be seen from a new perspective. Questions such as how to gain and measure value through OI projects, how to build and manage partnerships, how to gain the skills and appropriate culture required for the implementation of an open approach to innovation are largely unaddressed. Some case studies have shown that generally questions related to operational issues, in particular questions regarding IP management, expectation management and skills development, are left unaddressed (Minshall, Mortara et al. 2007). The authors have been involved in an extensive programme of research which originates from the practitioners’ needs to understand the operational issues of implementing OI (Minshall, Mortara et al. 2007). Starting from this perspective, the researchers have reviewed a sample of firms in terms of: - their drivers for innovation, - approaches to OI, - challenges faced, and - approaches used to overcome these challenges. Mortara et al., 2010

Implementing Open Innovation: cultural issues It turned out that companies strongly feel that particular emphasis should be placed upon the building of an OI culture throughout the firm. This paper focuses on this specific cultural aspect and addresses the question: What approaches are taken by large multinational organisations to develop an organisational culture that supports the implementation of OI?

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To address this question, we first review the literature on OI and the key studies on organisational culture to extract a set of relevant theories to support the research on cultural issues. We then summaries the results of case studies conducted in large multinational companies to review the approaches taken to modify culture and adopt OI. The paper concludes with a discussion of the key findings on how to encourage a culture which supports an OI approach.

Culture for Open Innovation

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Culture is what (Schein 1992) refers as “a pattern of shared basic assumptions […] (of what is) the correct way to perceive, think and feel in relation to problems”. It goes without saying that changing a firm’s approach to innovation from ‘closed’ to ‘open’ requires also supportive cultural underpinnings, which are actually, in Schein’s view, the primary source of resistance to change. Relying on external contributors to feed the innovation process presents different problems than when implementing a closed approach. Open practices have deep resonance and implication for everyone in the firm involved with innovation. Employees might perceive the adoption of Chesbrough’s model as ‘contradictory’ or ‘antithetic’ to their current practices and culture. Scholars have highlighted this idiosyncrasy by discussing the ‘Not Invented Here’ (NIH) syndrome (Clagett 1967; Katz and Allen 1982; Schein 1992; Mehrwald 1999), an attitude that resists against external knowledge. In companies where internal innovation is highly valued, the NIH syndrome can be a problem to overcome when implementing OI. Lichtenthaler and Ernst (2006) expanded on this theme and highlighted that OI can, on the other hand, originate over-enthusiastic feelings towards external knowledge with what they call the ‘Buy-in’ (BI) syndrome. Also, when companies try to exploit internally developed ideas, over-positive and overnegative attitudes can be observed; the ‘Sell-out’ (SO) and ‘Only-Use-Here’ (OUH) syndromes (Lichtenthaler and Ernst 2006). In the enthusiasm of taking advantage of the external opportunities, companies might get rid of important technical capabilities; the ‘Relate-Out’ (RO) syndrome (Lichtenthaler and Ernst 2006). Doing the opposite and focussing only on internal knowledge accumulation would instead be a symptom of the ‘All-Stored-Here’ (ASH) syndrome (Lichtenthaler and Ernst 2006). Studies on OI cultural implication so far have not reviewed the direct implications for firms of the adoptions of an open approach to innovation. The relevance of the cultural aspects in the implementation of OI could be understood if considering that OI – i.e. the way of pursuing product and service innovation by combining internal with external capabilities – is an ‘innovation’ per se, an innovative way of getting to innovation. Looking at the literature on ‘innovation implementation’ it is clear that ‘innovation’ is not only referred to introducing novelty in products and services but also to the process of enabling the organisation’s members to get an ‘appropriate and committed use of the [an] innovation’ (Klein and Sorra 1996). In Mortara et al., 2010

Implementing Open Innovation: cultural issues this literature stream there is a clear reference to the importance of culture; for example, Klein and Sorra (1996) underline how for successful innovation implementation two cultural requirements are needed: 1) an appropriate organisation climate and 2) the perceived fit of the innovation with the organisation members’ values. Having identified the relevance of the cultural issues for OI implementation both from an industrial and an academic point of view, studies of organisational culture have been reviewed for key lessons, useful for an implementation of OI.

Organisational Culture

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Culture has different levels of depth (Schein 1992), changing the deepest levels of culture (the ‘basic underlying assumptions’) is very hard and takes a long time (Anthony 1994:5).

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Many approaches have been taken to study the very complex theme of organisational culture and change. There are consequently a number of models, frameworks and paradigms which could be used to investigate cultural implications of implementing OI. Pheysey (1993) and Brown (1998) reviewed some of the pillar theories of organisational culture from which we extracted some concepts to structure our research.

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Four main archetypes of organisational culture exist (Pugh, Hickson et al. 1968; Harrison 1972; Handy 1985; Quinn and McGrath 1985), summarised in Table 1. The ‘role’, ‘power’, ‘achievement’ and ‘support’ cultures have different characteristics and are typified by certain organisational structures.

Internal Control

External Control

‘Greek temple’ or hierarchy where each function (e.g. finance) is a pillar, controlled by a small group of senior executives (the temple roof)

Hierarchical control via impersonal regulations

Closure Separation

This is regulated by a central power irradiating throughout the organisation. Culture is dependent on politics, trust, empathy, and personal magnetism.

This organisational structure is the one of a web or of a pyramid

Hierarchical control via direction and supervision

Conquest Confrontation

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Based on regulation, bureaucracy and logic. Characterised by job descriptions, rules, procedures. Emphasis on conformity on expectation.

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REGULATIVE METHODS

Structure

Role (bureaucracy)

Description

Power (adhocracy)

Culture Type

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Table 1: The types of culture (combining the works by Harrison (1972), Handy (1985) Quinn and McGrath (1985), (Pugh, Hickson et al. 1968). Adapted from Pheysey (1993)).

Self-control, personal accountability for delegated achievements

Problemsolving compromise

Individuals feel to have a personal stake in the organisation. Assumes that people contribute out of a sense of commitment and belonging. Satisfaction comes from relationships, mutuality, belonging and connection.

Cluster or clan, with no dominant individual or group

Collaborative control with mutual accountability

Dynamic connectedness and transformation

APPERCIATIVE METHODS

Organisations which focus on specific projects or tasks. Matrix or market structure

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Flexibility adaptability and dynamism characterise this culture. Power resides with expertise. People are interested in the work itself and want to see it completed.

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Support (person)

Achievement (task)

Implementing Open Innovation: cultural issues

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Organisational culture is intrinsically related to motivation and control. Nelson and Machin (Nelson and Machin 1976) explored how cultures tend to control internal and external contingencies (i.e. the variables which need to be controlled). Methods of control and motivation are connected. It is important to understand how people can be motivated to adopt an OI model and to deal external innovation partners. Considering the context of OI, achievement and support culture seem to be more capable of interacting in a positive way with the external environment, since the ways to cope with external contingencies are of a ‘problem solving compromise’ and ‘dynamic connectedness and transformation’ respectively . According to Argylis and Schon (1976) the dynamic connectedness of the supportive culture enables receiving continuous feedback from the external which consents adaptation. On the contrary, the power culture is ‘confrontational’ with contingencies posed by the external environment and wants to ‘conquer’ the competition; the role culture withdraws and ‘closes’ itself from the challenges posed by the external environment.

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Table 2: Pros, cons and differences of regulatory and appreciative methods of control. Adapted from Pheasey (1993) from the theories by Cammann and Nadler (1976) Regulative methods.

Appreciative methods

Pros: performance is being measured. Measures must be ‘people proof’, target difficult and rewards tied to targets

Pros: high sense of total accountability which precludes game playing. Large flow of information

Cons: ‘people proof’ measures do not exist. People use numbers to cover their back, loss of valid information and unwillingness to take risks

Cons: little control over subordinates, goals are difficult to access, low-growth-need employees will not respond. Loss of track risk.

Predetermined plan – management seeks to impose this plan

Situations are met as they are. Management is mutual adjustment between organisation and situation

Management is seen to be focussed on goals

Management is seen to be a process focused on maintaining balance in a field of relationships

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Implementing Open Innovation: cultural issues Narrow specialised purpose is emphasised

General values or norms inform behaviour

Management relies on techniques and extrinsic motivation

The source of control is seen to be within people, intrinsic motivation

Development is seen to require more sophisticated techniques and greater rationality

Development is seen as a process of increasing understanding of the extent and depth of the context

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Regulative methods (e.g. measurable targets, goals, rules, plans etc.) are more effective when the variety in the environment is quite low; while for variable constraints and high variety appreciative methods – e.g. selection of what has to be valued and how - are to be preferred. The role and the power cultures are prone to adopt regulative methods for the control of contingencies. Those within these cultures typically feel motivated by extrinsic motivators such as financial bonuses. Achievement and support cultures prefer to adopt appreciative methods of control and feel motivated by inclusion, recognition and positive judgement. Cammann and Nadler (1976) highlighted the pros and cons of the two types of control methods. (See Table 2). Within a wide group of individuals which could be generically said to belong to a specific culture, many subcultures can exist which can be enhancing (i.e. more intensely adhere to the main culture than the average), orthogonal (that accept the main culture but also adhere to other cultures at the same time) or countercultural (i.e. which challenge the dominant culture) (Martin and Siehl 1983). Badawy (1988) studied how to motivate technical professionals and highlighted two common subcultures. Technical professionals fall into two categories: those who are more organisationally incentivised (‘Engineers’) and those who feel more professionally incentivised (‘Scientists’). For the two groups, different types of incentives and motivations (Schein’s artifacts) are needed. According to Badawy (Badawy 1988), incentives for engineers may include a dual ladder for career progression, merit-based salary increases, promotion up a clear career ladder, stock options, profit shares, rewards for suggestions and patents, rewards and recognition for superior performance, increased challenges, support and infrastructure. Incentives for scientists are focused on providing freedom and resources for their job. Incentives may include encouragement to publish, participation in seminars, paid transportation to professional meetings, subscriptions to professional organisations, tuitions and educational opportunities, greater freedom to come and go, better technical equipment, and more time for education and professional meetings. According to de Brentani and Kleinschmidt (de Brentani and Kleinschmidt 2004), a culture which encourages innovation is one that encourages risk taking. In such a culture, top management support and encourage entrepreneurship, new ideas and has tolerance for failure. Adaptation and innovation (number of innovations successfully implemented) are a result of innovation culture which can be associated with emphasis on learning, development, and participative decision making (Hurley and Hult 1998). Changes can be directed from the top only when there is a single culture and norms (rather than assumptions) are changed. Top-down approaches are short lived as they tend to produce over compliance rather than acceptance (Hassard and Sharifi 1989)

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Implementing Open Innovation: cultural issues

Conclusions from the literature Learning from the lessons presented in the literature, the authors did not expect to be able to suggest any definitive recipe for changing organisational culture in order to enable OI as, according to Berg (1985), it is difficult if not impossible to demonstrate the effectiveness of a change. The authors decided to: highlight what cultural features at the shallowest level of culture (‘artifacts’) have been adopted in companies who are embracing OI including the artifact which can encourage interactions with the external environment for innovation and in time could lead to a deep acceptance of OI. These include regulatory, motivational and control features. This approach is in line with approaches taken by prior research in this area (e.g. Martin and Siehl 1983).



highlight whether there are subcultures within the companies and whether companies have adopted different artifacts for these different subcultures. The authors expected to see a lower resistance to adopting OI in those groups where the traits of a supportive and an achievement culture could be observed and a strong resistance to it in power and role culture groups.



highlight what incentives for control were adopted by the organisations and compare them with the lessons from the literature.

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Background to this research and methodology

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This paper concentrates on one of the phases of a wider research programme which examined the implementation of OI (See Fig. 1). The wider research project, reviewed the approaches to implementing OI of 37 multinational companies though a combination of case study interviews with individual companies and multi-company workshops. The overall sample of companies included mainly large firms from a range of sectors including Fast Moving Consumer Goods (FMCG), Chemicals; Energy, Electronics, Communications and Aerospace. In addition, data was captured from intermediary organisations active in supporting the implementation of OI. Those who contributed to the research were mainly managers responsible for OI implementation in their companies or were highly active in OI. This paper discusses only the findings of the case studies of Phase B (See Fig. 1). However, the lessons learned in Phase A have built a background understanding on OI implementation in companies and have been taken into account. The key findings of Phase A (which addressed the question: ‘What are the main challenges in the implementation of OI?’) are reported in Section 2.1 of this paper. Phase A lead to understanding that the development of an appropriate culture to enable the operation of an OI strategy are topics of significant interest for practitioners (Minshall, Mortara et al. 2007; Minshall, Mortara et al. 2007). Hence, the Phase B followed directed to investigate the cultural issues underpinning successful implementation of OI. **********Insert FIGURE 1 here********** Fig. 1: Phases in the research on the implementation of Open Innovation. Mortara et al., 2010

Implementing Open Innovation: cultural issues In Phase B, 17 semi-structured interviews were conducted with 9 companies (background information on which are given in Table 3). We interviewed predominantly individuals who were asked by their respective organisations to champion the transaction from a closed to an open approach (OI managers). We asked them questions relative to the cultural issues in the adoption of OI in their organisations and about practical activities, initiatives and tools (i.e. artifacts (Schein 1992)) which have been useful to encourage those more resistant to the idea of embracing OI. The interviews used the following set of questions as a guide, although the interviewees were left free to comment widely on their strategy for OI implementation: Give us a generic overview of the OI implementation in your organisation



How has the company culture changed when you started implementing OI?



How did the company encourage the adoption of the new approach?



What implications did it have on the company culture?



Who (what group) was most difficult to convince about being open? Why? What initiatives have been taken to make OI an accepted practice?



What are some positive and negative examples of the implementation of the OI approach within your company?

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Table 3: Description of the case studies from Phase B of the research programme shown in Fig. 1. ID Company background

Traditional business:  The remaining R&D staff became ‘informed buyers’ to outsource R&D  ‘Not owning’ IP policy which enabled a strong flux of external collaborators lead to a weak IP base  Altogether, A is considering rebuilding R&D capability New business unit:  Use of a large network of university and supplier collaborations, venturing activities and acquisitions of start ups

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 Multinational energy company  Major restructuring in 1990: outsourcing of large parts of the R&D  Ecosystem of privileged suppliers: spin-offs from A  New business unit since 2005: Operating in a fast growing and dynamic market

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Key features of OI approach

B  Global FMCG firm  R&D function is organized globally under a Chief Technology Officer (CTO) with two science and technology groups  The company is in the process of implementing OI to leverage external ideas

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 R&D staff are encouraged to investigate collaborations with firms beyond usual industry suppliers and universities  OI-Team: With support from the CTO, two individuals have been financed from the R&D facility budget to implement OI  OI-Team currently manages OI, acting as a clear contact point for all issues related to OI for internal as well as external people

Implementing Open Innovation: cultural issues  Consumer and industrial electronics firm with significant global presence  Disruptive technology on its core business area led to a re-think of its approach to innovation  Reduction of central laboratories in 2003. Introduction of a small R&D unit as an access point to regional innovation  R&D works mainly with universities and start-ups

 Regional R&D group established to enable the identification of local technological and market developments  Focus on science & technology emerging from within universities and industries and to understand the different ways consumers choose to use and interact with technology and products  OI team consisting of people with broad research background and entrepreneurial skills to help main R&D departments to set up external collaborations

D

 Global FMCG company  Main R&D unit with a constellation of small distributed R&D facilities, without any blue sky R&D  Although OI-strategy has not officially been declared, D has been working in external collaborations and is currently formalising the processes

 Currently mainly cooperation with suppliers, who have complementary R&D resources  Initiative to open up the R&D function has just started to leverage on external resources for innovation, including some long term blue sky projects  A small group of R&D managers has the task to set the rules for the OI rollout  OI to complement (rather than substitute) the internal capabilities

E

 Global mobile communication technology provider  Due to an increasing demand for internal R&D resources for new product development, the top management reduced the budgets on individual projects  In response, OI has been selected by middle managers as an approach to improve achieving their personal targets  The research division was split into a research unit and a new ‘technology sourcing’ group

F

 Publicly funded media broadcasting corporation  Traditionally an open approach to innovation since the creation of technical standards is often publicly funded and involves a variety of other media companies  F relies heavily on out-licensing and knowledge transfer collaborations due to small availability of resources  Due to the boom of the internet and web

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 Sourcing technologies from external organisations (especially supply chain) and building business around new standard technologies  Technology sourcing group collaborates with universities and other partners  Change towards OI was directed from top management, but engineers saw it as a natural consequence of the current business environment  E encourages suppliers to sell co-developed technology to other firms, for example to set industry standards

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 Because of its public nature, F has a very open attitude towards innovation and a non proprietary attitude towards IP  R&D employees collaborate with universities, national agencies and other companies in the sector  New media innovation team has been created to promote innovation for new broadcasting media  Use of intranet to allow transpa-rency and

Implementing Open Innovation: cultural issues exchange of ideas with wikis, personal blogs and webpages  Use of internet to interact with lead users and small innovative firms

 Global consumer goods company  In 2005 an external consultant suggested OI to enhance the innovation performance  OI implementation was officially started at the beginning of 2008

 OI activities started with an internal facilitator  Networking through hosting visiting scientists and by establishing a scientific advisory board  Current focus: universities as main collaboration partners.  Aiming at ownership of the IP from funded university projects  Venturing unit, but more financial than strategic tool  Planned collaboration with lead customers

 Software development company

 Blue sky research department:  800 scientists looking at science with impact on the long term future  Findings are published in academic papers and are patented  Collaboration with various universities, welcoming PhD interns, and supporting academic partners in their bids for funding  A venturing unit commercialises the IP generated that is believed to be outside the remit of H’s business  Selected blue sky R&D managers provide links between projects and main business

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2.0, the extent of openness has reached new levels involving users for the projects in future media research

 Large telecommunication company  Provider of services, more than products.  A combination of R&D activities looks into long (5 years ahead of market) and short (1 year) future.

 J has open practices throughout the innovation spectrum. OI has been the natural adaptation to the distributed innovation in the telecomm sector.  Different collaborators (e.g. universities, companies, government organisations, customers) are involved globally at different innovation stages.  A venturing unit provides funding to partnership projects and funding for spin-outs.  IP exploitation is seen positively as a facilitator of partnerships and a source of revenue.

J

 Large telecommunication company  Provider of services, more than products.  A combination of R&D activities looks into

 J has open practices throughout the innovation spectrum. OI has been the natural adaptation to the distributed innovation in the

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Implementing Open Innovation: cultural issues long (5 years ahead of market) and short (1 year) future.

telecomm sector.  Different collaborators (e.g. universities, companies, government organisations, customers) are involved globally at different innovation stages.  A venturing unit provides funding to partnership projects and funding for spin-outs.  IP exploitation is seen positively as a facilitator of partnerships and a source of revenue.

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Key emerging issues in the implementation of OI

As a result of Phase A of the research on the implementation of OI as shown in Fig. 1, several issues emerged from the practitioners’ perspective. These issues are summarised following as they provide a context for the reader. There is a lack of clarity on how to quantify ‘openness’ and how to setup targets and evaluation methods for guiding its implementation. Each interviewee had different perspectives on what OI meant to their organisation, and how much their organisation was open.



Although OI is an approach which potentially involves every function in an organisation, in each company observed, implementation activities seem to start from or primarily be impacting the R&D function.



OI is an organisational innovation in itself and, consequently, faces many of the common challenges of implementing any innovation.



While there are some common themes observed among the sample of firms, there is also clear evidence that individual firm approach OI in numerous different ways.



It was also noted that some firms shifted towards OI before Chesbrough’s (2003) study made it popular. These early adopters were pushed by an evolutionary need to boost their innovation capability. Some of these firms are now leading cross-company communities of practice involved in understanding how best to structure the implementation of OI. There are also ‘late adopters’; i.e. firms in more conservative industries who are now becoming aware (or who are being forced to become aware) of the potential importance of OI to their business and who are trying to learn from success of the early adopters.



Internalisation of external opportunities (typically technologies) and the external exploitation of internally intellectual property may not have equal relevance for firms. While the former is considered to be of immediate importance and links directly with the strategic aims of the company, the latter has a lesser strategic relevance and imposes on the firm a set of difficult decisions relating to which innovations can be made available to the external world.



Companies need, in the first place, to become flexible and to be able to adapt to the required change. Often the transitions from open to closed and vice versa are cyclical, depending on the innovation needs, the influence of leadership and of external factors.

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Implementing Open Innovation: cultural issues 

The main groups of challenges perceived across the community of OI implementers related to: the management of IP; the identification of the key skills required for OI; and the cultural implication of a transaction towards an OI model. This last theme (culture) is discussed in the following sections.

4

Findings from case studies on culture and OI implementation

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Within individual firms, many different attitudes could be observed with regards to ‘Open Innovation’ (Fig. 2). Interviewees gave different examples of OI, but it was clear that in each organisation, some business activities (e.g. ‘blue-sky’ R&D) seemed to have an inherently (or de facto) open approach. Some functions had been set up specifically to support OI activities (e.g. intelligence units and corporate science parks). For other business activities (e.g. applied R&D, marketing or procurement) the shift from a closed to an open approach can be a major challenge. These departments experience the strongest cultural clash with the OI approach, as it means a considerable change in practice. For example, in one company, the role of the procurement department has significantly shifted from providing raw materials in response to R&D directives, to taking a more active part in the innovation process. This change has in some cases made the R&D departments feel threatened by a perceived reduction in their political influence over decisions. In some cases the R&D department also fears becoming redundant if innovation and new technologies are imported from the outside. Human resource and finance departments are still marginally involved although implications of the implementation of OI could be potentially high.

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**********Insert FIGURE 2 here**********

Figure 2: Mapping of company activities and their perspectives in embracing OI. This paper focuses on the differences between Applied R&D and Blue sky research and on the support given by the OI implementation team.

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The R&D function seemed the most involved in the implementation of OI, as most of the interviewees’ comments related to this department. Hence, the cases focused on understanding how people within these departments feel about looking externally for resources to feed their innovation processes. We also asked for examples of initiatives taken to stimulate R&D people to embrace OI. Most of the interviewees had been asked by their companies to manage the implementation of OI. Table 4 reports a summary of the evidence collected from the case studies and a general description how the artifacts adopted. Table 4: Summary of case studies ID Cultural features A

 Reorganisation induced fear of job losses and consequently an inclination to adapt to

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Cultural artifacts  Internal knowledge exchange platform for R&D staff

Implementing Open Innovation: cultural issues

 B has occasionally collaborated with Universities and suppliers for specific projects.  The top management has realised that the external environment is a good source of breakthrough innovation as the ‘outperformers’ in the food industry use external sources of innovation  Blue-sky R&D site contributes to the knowledge sharing networks with intrinsic motivation  Blue-sky R&D always been very connected with Universities and it is based within a University well positioned in this field. It has always been considered a research facility which could perform research also for third parties  People in product development are more career driven than those in the research groups.

 Knowledge sharing networks facilitated internal openness, leading to awareness that helpful ideas could be found outside ones own research group  OI Values communicated by the CEO  The first wins from the prospecting projects were very actively communicated Blue sky:  Introduction of new bonus criteria: (1) technology delivered on time, (2) technology implemented in products, (3) efficient knowledge sharing, (4) collaboration with external parties  Researchers were asked to come up with research questions for which external solutions could be helpful. Researchers responded very actively Global R&D:  Positive examples of how external technology could solve problems brought to development R&D units to incentivise to adopt OI  When problems are solved with the help of the knowledge sharing network, contributors are acknowledged in company newsletters  New bonus criteria include explicitly external collaboration

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 Incentives for participating in knowledge network: career enhancement through being recognised as expert  Open office structure to enhance communication  Introduction of (internal) global teams to connect individuals across the globe

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change  External relationships were ‘easy’ with former colleagues who spun-out businesses  Emphasis on internal openness through knowledge sharing networks and the reduction of internal competition New business unit:  People selected with an inclination to work collaboratively, giving them the feeling to be able to shape the new business

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Implementing Open Innovation: cultural issues  Blue-sky: The collaboration with other experts is intrinsically rewarding  OI team relieve researchers of the less rewarding tasks associated with the management of external collaborations  Some R&D individuals feel that OI can be career limiting choice, as no clear career paths exists for those who are not following the traditional technical career

 Internal collaboration and sharing of information, e.g. electronic lab books  Rewards for communication and information sharing OI team provide:  Scouting for external solutions  Due diligence on partners and support in dealing with IP issues  Provision of corporate funds to engage with start-ups  Agreements with selected universities enable R&D staff to explore research work without worrying about NDAs

D

 The R&D people feel that D is ‘a small company gone big!’  R&D is concentrated on current products and has historically done more development than research. Competencies are organised geographically and have a strong market focus.  The company culture is very friendly and supportive. Employees either leave the firm shortly after joining or stay until the end of their working career.  Innovation group has been established to develop long term and short term projects for breakthrough innovation in collaboration with external parties  Good communication channels: Limit of the available time and resources is the only barrier to internal technology transfer  D has a good reputation of meeting the targets and achieving what agreed, thus suppliers are typically keen to collaborate

 R&D groups asked to propose ideas for long term research project  IT tool to keep record of collaborations, ensuring that partners are not overloaded with interactions  Liability insurance is anticipated by firm D if partners cannot afford it  Knowledge sharing network, dividing researchers into interests groups, rewarding contributors (often financially)  Employees are encouraged to suggest their own acquaintances for a position; the same system is going to be implemented for external collaborators  OI champion visits the R&D groups communicate that the access to external innovation is offered as an alternative (but not a substitution) for internal innovation.

E

 E has a self conception of market leader this attitude might have delayed the process towards OI  Gradual shift towards OI has been due to the pressure sector and technology

 Tougher targets for development: they are difficult to be achieved with internal capability only  Development: Bonuses are tied to on time delivery  Technology sourcing: it is proposed to link bonuses on the creation of ecosystems (and standards for the industry)

F

 Enabling interaction with users had good effects on the innovation rate and is a source of useful feedback

 Intranet platform for sharing of personal activities and projects  Internet infrastructure to enable individual

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Mortara et al., 2010

Implementing Open Innovation: cultural issues lead users to give feedback and to co-innovate  Collaboration with small companies through a series of creative workshops, where startups benefit from the interaction with peers, experts and mentors (few ideas are sponsored for development). IP is left with start-up during exploration  Open communication, transparent decision making and flat hierarchies facilitate internal openness

G

 So far no cultural challenges has been realised related to OI, because of the currently small scope and impact of external collaborations  G’s R&D is still currently closed  It is expected that external collaboration would be seen as positive approach

 To anticipate negative biased attitudes towards OI and to support an open mindset of employees, external speakers are invited (speakers usually sign a consultant agreement that provides also terms of non disclosure)

H

 Researchers enjoy an academic lifestyle coupled with higher salaries  Researchers are continuously in contact with colleagues in academia and encouraged to develop their ideas in collaboration with other scientists  Rewards (small bonus) and awards for patents  If the generated IP is commercialised, scientist receive resources for their labs

 Annual internal conference for interaction among different research groups within this blue sky unit and H’s product groups  Monthly technology newsletter presents the latest developments in (internal) research  The product groups usually implement the best ideas that are proposed from various R&D facilities

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 Interaction of people with different backgrounds through the internet has pushed a change in culture  New media innovation team feels that an organisation has to be internally open in order to pursue innovation with external parties  Despite initial concerns for the introduction of blogs and wikis, this new form of communication induced a culture change, as the people became friendlier, appreciating the new transparency

Mortara et al., 2010

Implementing Open Innovation: cultural issues  Cultural changes occurred in the last decade as a result of several company’s reorganisations and the change of technology and business model  The whole organisation is now a very entrepreneurial and researchers have lost their ‘technocratic’ attitude  However among technical groups different approaches to openness exist. Typically the younger technologists are more flexible while older technologists tend to be more closed

 Global scouting team serves all levels of innovation  Strategic partnerships with specific universities  Every partnership management is done involving a specific group of people who are expert in managing collaborations  When funds are needed the venture fund gets involved  Project proposals which have an external partner are most likely to be funded.  The secondment of researchers to spin out businesses and prestigious universities brings flexibility  Personal key performance indications, vary among the research groups but include revenue generated form licensing and creation of strategic relationships

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Discussion

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The companies observed have in most cases created an implementation team which supports R&D units in becoming more open and designs the OI implementation rollout. They constitute a third group with a different perspective, compared to the one of those within the R&D departments. This group of individuals are normally a small team of senior R&D managers. This implementation strategy is in agreement with the one suggested by Tushman and O’Reilly III (2002) who advocate that change should be lead by ‘visionary leaders’, supported by a wider team inclusive of different skills capabilities and styles. OI managers have usually a strong technical background and business mindset coupled with a deep understanding of the company. They are enthusiastic about embracing OI and they provide the link with other company functions which can support OI. These individuals or groups make sure to provide a ‘service’ to the rest of the organization which supports the interactions with the external world. They also provide training and links within the groups and facilitate the access to tools (such as corporate venture funds). This happened in cases B, C, D, F, G, H, and J. This approach agrees with Minbaeva (2005) who notes that managers can improve the absorptive capacity of their organisations by applying specific Human Resources Management practices oriented towards improving and making better use of the ability of individuals such as training and performance appraisal. In addition, staff can be motivated by practice which consider performance-based compensation and promote internal communication. In case E, the OI implementation seemed less strategically imposed, but it has however taken place with a series of progressive steps which has lead to the same results. The new business of Case A was born recently already open.

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Implementing Open Innovation: cultural issues

Subcultures The authors observed that the OI implementation managers interviewed mostly commented on their R&D departments, highlighting differences between groups of R&D individuals (Table 5). This confirmed the expectation derived from literature that subculture exist within the same organisations.

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 In terms of the ideas presented by Badawy (1988), we found that ‘blue sky’ units are characterised by scientists, more than technologists. They typically are motivated by collaborating with other individuals with similar passions and appreciate access to new stimuli. In these facilities the atmosphere was described as ‘friendly’ and people were typically organised in teams. The blue sky research facility exists only in some companies. People within these functions assert that they have not recently changed their way of working: it has always been open, e.g. they are already working with partners in universities and research centres. The interest in research is one of the primary motivators for the scientists. According to Badawy (1988) and Hebda (2007), professionally oriented motivators such as greater freedom, equipment, participation to professional associations and seminars are appreciated by this type of researchers. This was observed in practice: even when the company hasn’t formally embraced OI, people in blue sky facilities interact with scientists working in the same domains outside the company. Often they visit universities, participate to conferences, collaborate at scientific research projects with university research groups, support academic research, and publish their own findings. Hence, it seems that a certain degree of openness is intrinsic to these types of research groups. However, barriers to openness can exist and scientists can sometimes be discouraged to talk with the external world for fear of compromising future IP.

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 Applied R&D units typically focus their efforts on less speculative research and technologies which are closely linked and bound to products and markets. These technologists look at what could become a new product or what could solve a current product or process problem. These researchers are usually more structured in their research and are often organised in projects teams, lead by project managers with targets, deadlines, plans, budgets and a series of stronger constraints, compared to their colleagues of the blue sky research units. The applied R&D units seem to reflect the characteristics of the achievement culture. Technologists feel motivated by meeting targets and goals and to receive monetary and career compensation in return for their efforts (Badawy 1988). These groups are less prone to discuss with external parties about their innovation activities unless it is strictly within ‘safe’ frameworks. Examples of typical interactions are contract research with universities or suppliers.

Table 5: Attitudinal differences within R&D Mortara et al., 2010

Implementing Open Innovation: cultural issues Applied R&D

Mid to long-term outlook

Short to mid-term outlook

Blue sky

Focus on incremental research Market/product focus

Scientists

Experts in technology

Enjoy technology

Problem-solving approach

Satisfaction in the technology itself and achieving expert status

Motivated by reaching targets, gaining rewards and achieving an expert status

Team-oriented people, friendly environment, driven by developing future knowledge

Career driven, task oriented, strong project management approach

Supportive culture

Achievement culture

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In summary, and with reference to the literature archetypes of culture, we found that people in the more blue sky research units were held together by a ‘supportive’ culture, whilst in the departments working closer to market we recognised the traits of an ‘achievement’ culture. It is hence predictable that both groups could positively react and accept an open approach to innovation. No cases showed dominant power or role culture in their R&D departments.

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Resistance to change

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Even if the R&D culture(s) overall seem to be inclined towards the adoption of OI, some overarching indicators of resistance to accept it were highlighted during the interviews. The most significant are reported below.

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 The fear of ‘losing out’. If the adoption of OI means restructuring and job losses, or shift in power and importance, the resistance is likely to be high. In response to this, many companies have highlighted how OI has been instead promoted clear and loud as ‘an alternative and equally good way of getting to innovation, not for a substitute for internal innovation (D)’. Another interviewee commented: ‘[Under closed innovation] the only way to be a ‘star’ was to patent a lot, with OI it is possible for everyone to become a ‘star’ alternatively patenting or by finding externally resources for innovation’.

 Resistance to open ideas can be the result of education. ‘People like to be in control’, said one company. They have learnt to be good project managers, but they ‘think in project, not in portfolio terms’, while OI might provide alternative ways of completing projects and reducing times, but it might entail compromise of other elements (e.g. quality). Some find it difficult to compromise on original aims and objectives.  Cultural limitation can affect not only OI but also any form of innovation where people are used to dealing with ‘tidy’ operational approaches such as ‘lean manufacturing’ or Six Sigma. It is difficult for such organisations to play and try to innovate when so much has been invested in rigorous standardisation processes. In addition, every company has a business focus on which most decisions depend. OI could represent an opportunity to test Mortara et al., 2010

Implementing Open Innovation: cultural issues

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and enter new business trajectories (i.e. expanding current businesses, find new ones). Often companies can bring some examples of when this has happened, but in general, as the majority of the current resources is directed towards the core business focus, these remain isolated examples. Resource allocation processes should distinguish between incremental and breakthrough innovation otherwise there the risk to miss out important technological opportunities and threats. There is a tendency of allocating the majority of resources towards the short-terms innovation relevant for existing business, while companies should be ‘ambidextrous’(Tushman and O'Reilly III 2006) and support both innovation types through a diversification of innovation paths.  The process of cultural change is slow. ‘A cultural identity cannot change quickly,’ said another of our contributors. ‘Our corporate culture tends to assume that A + B = C. The business of innovation is not really like that. It is more iterative.’  Lack of recognition of the ‘open’ contributions to innovation: ‘Although we generally recognise the importance of getting to know and use what is developed externally,’ said one interviewee, ‘there is not the cultural and practical background which enables and motivates the employees to be completely open: there are no formal ways of career progression for someone who is an open innovation operative.’  Aversion to risk taking. Some individuals resist changes as they feel that the organisation has been prone to a ‘recriminatory’ attitude when things are not unfolding well. In one case one individual kept a thorough diary of decisions and consultations as backup to present in case of unpleasant developments.

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The OI implementation group seemed to be in a good position to identify the elements that lead to resistance to change and the differences among groups and to judge how best to seed an OI culture within different company functions. Such a group can be established as a dedicated unit with a specifically open culture from the beginning. It can then connect to and link the different sub-groups within the company and introduce the culture to them.

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Actions towards the building of an OI culture

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The differences among the R&D groups are reflected in the initiatives taken by the third group (the OI managers) to support the two types of R&D in becoming open and overcoming the resistance to change. It was interesting to see similarities across the spectrum of the case studies, regardless their sector or nationality. Overall, the strategies adopted by the companies in the implementation of OI are described in Fig. 3. **********Insert FIGURE 3 here**********

Figure 3: Overview of OI implementation strategies. Two different approaches (in grey squares) encourage an OI attitude in blue sky and applied R&D functions.

Mortara et al., 2010

Implementing Open Innovation: cultural issues

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OI implementation managers teams became an internal reference point (e.g. in particular in Case B, D and F), they built trust and because often they have been embedded in many functions were able to understand latent resistance to change. The OI managers were seen as supportive (they are even referred as ‘buddies’ (case C), competent, knowledgeable), and are those who have the capability to assemble the skills needed. The only existence of this group of individuals, very close to the top and typically coming from R&D department, reassured R&D people that OI could build ‘successful managers’. In addition, companies also promote OI strongly and directly from the top by communicating new values (like in the case of B). By demonstrating commitment and support, top management holds the key to sway the opinion of those who feel less inclined to accept the new approach to innovation.

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General actions to encourage OI

In order to establish their role and increase the trust of other technical individuals in their services and in the validity of the OI approach, all of the OI implementation teams tried to: Convey a positive image by giving practical examples of OI successes. For example, the manager in company B at first admitted finding scepticism when speaking with some individuals from the R&D side of the company. This attitude was reversed when a solution to a problem was obtained through interdisciplinary research of technologies not just outside the company boundaries, but also outside the industry.



Take over the ‘unsatisfactory part’ of dealing with external collaborations (e.g. less technology-related tasks such as negotiating agreements, assessment of IP).



Encourage internal openness. It had to be paramount if it was expected that individuals would have then be able to be open with the outer world. The introduction of knowledge sharing networks (Cases A, B, D), wikis and blogs (Cases B, F), conferences and trips to other facilities (Cases A, F), sharing platforms (C) are examples of internal knowledge sharing mechanisms. Contributors to knowledge sharing networks which solved problems are recognized in company newsletters (B), recognized as technical leaders (A) or even rewarded financially or in kind (D).



Provide the missing skills required either directly, or by finding the right person. Services are often offered which encompass technology and market intelligence, legal support, financial, due diligence and communication.

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Specific issues for blue-sky R&D Approaches to support the implementation of OI generally leverage the natural inclination of this group of individuals for whom the scientific and technological aspects of their work is intrinsically motivating. This approach follows the psychological theories on ‘conformity’ and ‘commitment’ which state that those who feel the new practices as in agreement with their principles are likely to internalise them and become committed and enthusiastic. Most blue sky researchers welcome the new freedom to collaborate externally and talk with other experts about their technology (C, G, H) aware that external knowledge could be used to improve their personal research (C, B, G). Contributing to internal knowledge sharing networks confers scientists internal recognition and the ‘expert’ status as well as the Mortara et al., 2010

Implementing Open Innovation: cultural issues personal satisfaction of being helpful. The typical collaborators for blue sky speculative research are universities, start-ups (with incubators) and lead-users. Examples of artifacts include the following: Some companies create ‘safe’ environments for the researchers to work with the external partners. For example, company C setup university-wide ‘master agreements’ which create a legal umbrella to protect scientists and researchers within certain universities. Other examples of initiatives with the same purpose include providing insurance liabilities for working with start-ups (D) and leaving IP to the start-up for the period in which technology is evaluated until it is selected (F).



The communication of the importance of external collaborations by the top of the organization (B) is very effective mean of conviction and makes scientists feel more comfortable of having relationship with external colleagues.



The team for the implementation of OI often provides scouting and due diligence services to researchers to identify potential partners (B, E, J).

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The personal development and assessment scheme uses modified personal targets: in some cases ‘external collaboration’ is explicitly named as a criterion for bonuses (B, C, J). Bonuses can be team-based to support team spirit and reduce competition (B). Also, criteria are adapted to link blue sky research to market needs (B), obliging blue sky researchers to make links and connections with other company functions. Career paths offer possibilities of a ‘sabbatical’ in universities (J), or to experience entrepreneurial spirit in with temporary secondment in spun off businesses (J).

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Contrary to what was expected by reading the literature, it seems that some ‘extrinsic’ motivators are used to support individuals within these departments. In fact

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Although in contrast with what literature seems to suggest, this might be an indication of a tendency in industry whereby some companies (C, D) do not have blue sky R&D or try to decrease its size (B, E) or even completely eliminate (A) this infrastructure1. In addition, companies are pushed to think that OI can be an opportunity to outsource research to SMEs and universities (Chesbrough, 2003). The companies who attempt such a radical change usually restructure, ask people to move department, change their working practices and make some researchers redundant. These have been instances historically witnessed by some of the organisations reviewed. However, the authors feel, in line with what other scholars remarked (e.g. (Cohen and Levinthal 1989 ; Pennings and Harianto 1992; Kochanski, Mastropolo et al. 2003), that the choice of reducing R&D capabilities might save costs in the short term, but in the long-term, the loss of technical internal capability might jeopardise the company’s ability to access external technology and to appreciate its value. In other words, beware the Relate Out syndrome! (Lichtenthaler and Ernst 2006) 1

During a workshop on OI held subsequently, it was confirmed that currently many firms feel less inclined towards

supporting long term, blue sky research in universities. A number of factors have been driving this change including the move by many firms towards a shorter term focus for the business objectives, and, in the UK, universities have moved towards a ‘full economic cost’ model for working with industry. This could end in a potential ‘long term’ problem of lack of development of new technological breakthroughs. Who will do the ‘blue sky’ research?

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Implementing Open Innovation: cultural issues

Specific issues for applied R&D Approaches to support the implementation of OI generally leverage the natural inclination of the technologists, who are used to be driven by meeting targets, career improvements and monetary rewards (Badawy 1988). This attitude fits well with the archetypal description of the achievement culture in which power resides with expertise and people are keen on completing the tasks with flexibility adaptability and dynamism. However, on this point there seems to be a disagreement between what Camman and Nadler suggest (Cammann and Nadler 1976) on one side and what Badawy (1988) reports. In practice, we observed a mix of control mechanism. Examples of such mechanisms include:

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 Adapting criteria for personal rewards such as a delivering on time (B, A), reducing time to market and costs (E). Career paths include business unit hopping to enhance knowledge sharing (A, B, J)

The setting-up of:

Infrastructure that help to archive personal targets;

o

Service functions that identify needs and scouts for external solutions to the technologists’ needs (B) and sources necessary external technology (E);

o

Small intrapreneurial, cross functional teams, which are empowered to do ‘everything’ as long as they achieve their targets (D).

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 Creating conditions which can lead to resorting to external resources such as cutting of R&D budget (E) to increase the outsourcing of research in order to be able to access capabilities and resources.

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For this type of technical professionals, satisfaction in excellence, achievement and personal commitment to the goal are the main intrinsic motivators (Handy 1985) and reflect an appreciative type of control regulator. In fact, experts seem to take some pleasure out of the respect which derives from their work, however they appreciate a way to ‘measure it’ for example by the number of patents filed. Extrinsic motivators are also efficient and we found (as Badawy 1988; Hebda, Vojak et al. 2007) that these individuals aspire to meet their targets in order to get personal bonuses and progress in their career (B, E). They embrace OI if they realise that external collaboration can help to achieve their aims (E, B). Their contribution to knowledge sharing networks is facilitated if it is evidently linked to promotion (A, D), or is financially rewarded (D). However, it can be still difficult to incentivise the participation to knowledge sharing as individuals in applied R&D units are often focused on their own deliverables and they feel they have limited resources to share (D).

Concluding remarks We concluded that, as literature indicated, there are different subcultures within a firm and that motivation and control artifacts need to follow the specific inclinations of each type of culture.

Mortara et al., 2010

Implementing Open Innovation: cultural issues The list of approaches (artifacts) (Schein 1992) in the previous sections is in agreement with the literature on innovation implementation. In fact, Klein and Sorra suggested that in order to achieve an “Innovation Implementation Climate”, one should:  Provide skills for innovation use  Training and additional assistance  Provide incentives for innovation use and disincentive for innovation avoidance  progress is monitored and measured with incentives for good use of new practices (OI) and disincentive for avoidance  Remove obstacles to innovation use  Time to absorb and learn about the new practices (OI)  Listen to complaints and concerns

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What was clear is that the same artifacts , such as for example the ‘boundary objects’ (Star and Griesemer 1989) to support the interaction among different communities of practice, might not fit all organisations and not even all groups within the same organisation. One of the industrialists warned that often it happens that external consultants suggest approaches without fully considering the true cultural background of a company, even if the adhesion to open practices might be more in line with some company culture than others. This goes along with what also Schein (1992:140) highlighted: sometimes certain organisational devices could be countercultural for some organisations, but not for others. For example, if change is only imposed through regulations and consequent punishment, the adoption is pro-forma and not substantiated by real ‘cultural change’ (Klein and Sorra 1996).

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Limitations of this research and further work

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This research has taken a very empirical approach and while the results are interesting, caution should be exercised in generalising them. Also, aware of the difficulties in analysing culture highlighted by Anthony (1994), one should be careful in stigmatising any cultural traits. The sample of companies overviewed came from different sectors and the interviewees came from different nations. In this study we didn’t consider any other cultural issue beyond the company itself, neglecting for example national and industry influences which are well known in literature (Alvesson and Berg 1992) to be important. Another limitation lays in the fact that to date the OI phenomenon is still relatively young and companies have only recently considered systematically adopting it. Hence, our results should be considered contextually with the time of the study and definitive conclusions on the effects in the long terms of the artifacts adopted to support OI will have to wait some time. In the next stage of this research we plan to expand our understanding of cultural issues in the implementation of Open Innovation and test these initial findings with a wider number of companies. In addition we aim at continue the investigation on the other issues highlighted in section 2.1.

Conclusions This study is part of a wider research and focused in particular on its cultural aspects on the implementation issues of OI. The research was conducted by integrating learning from the literature on innovation implementation, OI and organisational culture and case studies in 9 companies. We Mortara et al., 2010

Implementing Open Innovation: cultural issues interviewed 17 individuals who were asked by their respective organisations to champion the transaction from a closed to an open approach (OI managers). We asked them questions relative to the cultural issues in the adoption of OI in their organisations and about practical activities, initiatives and tools (i.e. artifacts (Schein 1992)) which have been useful to encourage those more resistant to the idea of embracing OI.

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Since changes in culture take a long time and it is even not clear if organisational culture can be planned, the case studies focused on understanding what types of artifacts (Schein 1992) – i.e. the more superficial aspects of culture – might encourage an OI approach. The contextual study on the OI implementation indicated that most companies start to implement OI in their R&D facilities but we observed that there are differences within the R&D functions attitudes towards OI (i.e. there are two subcultures).

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‘Blue sky’ R&D tend to be intrinsically more inclined to openness than applied R&D. This had a direct comparison with the organisational culture archetypes (Handy 1985; Quinn and McGrath 1985). We observed that in the blue sky units a ‘supportive’ culture exists, while the applied R&D seem more comparable with the traits of an ‘achievement’ culture. Whilst both of these cultures relate with the external world, according to the literature, the supportive culture has a particular ‘connectivedness’ (Argyrs and Schon 1976) with the external world. The achievement culture instead has an attitude of problem solving adaptation with the external (Nelson and Machin 1976) world. We found that these cultural characteristics are reflected by the initiatives that companies take to support OI in these two different R&D types. Companies generally set up teams which are dedicated to support OI implementation. All such groups we interviewed were unanimous in encouraging internal openness in order to improve external openness. For the ‘blue sky’ research units, the OI team provide services which leverage the scientists’ motivation for researching their subjects by setting up environment for interaction with external organisations, and reducing the barriers and obstacles of the more mundane tasks of external interactions. For applied R&D, the OI service team instead encourages the technologists by setting up specific targets for cooperation with the external organisations and show the benefits of an OI approach by demonstrating its strong problem solving potential. Another approach consists of reducing budgets and set up constraints to induce a stronger outsourcing of research.

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Implementing Open Innovation: cultural issues Fig. 1: Phases in the research on the implementation of Open Innovation.

Focus of this paper

Literature Review Open Innovation

Case interview series

 15 Case interviews in



Case interview series 17 Case interviews in 9 companies

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Workshop 17 participants from 15 companies

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Workshop 14 participants from 13 companies

Literature Review OI Culture

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5 companies



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Phase B: Culture for OI

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Phase A: Issues of OI

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Project: Implementing Open Innovation

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Implementing Open Innovation: cultural issues Figure 2: Mapping of company activities and their perspectives in embracing OI. This paper focuses on the differences between Applied R&D and Blue sky research and on the support given by the OI implementation team.

Marketing Applied Research & Development HR

Finance

OPENNESS: perspective change

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Legal department Corporate Ventures

Blue sky Research

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Open Innovation implementation team

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Technology intelligence & scouting

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= Cluster of similar perspective towards adoption of OI = Business functions

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= Functions in focus of this paper

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Corporate Science parks & incubators

OPENNESS: services established to support the OI approach

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OPENNESS: always been open

Procurement

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Business Units

University and Government programmes

Science parks

VCs/Angels

Consultancies

OPENNESS: working to support companies OI

Int

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Implementing Open Innovation: cultural issues Figure 3: Overview of OI implementation strategies. Two different approaches (in grey squares) encourage an OI attitude in blue sky and applied R&D functions.

C

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Applied Research & Development

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• OPENNESS: strongest change of perspective • Achievement culture • Problem solving approach • Extrinsic motivators

Offer services that help to achieve market driven targets

• OPENNESS: de facto • Supportive culture • Externally connected • Intrinsic motivators

Open Innovation implementation team

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Provide right pool of skills

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= Activities performed by the Open Innovation implementation team

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Provide internal knowledge sharing platforms

Established to support the OI approach

= Cluster of similar perspective towards adoption of OI = Business functions

Provide links between functions

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Offer services that create a space where scientists can interact safely and freely with other experts

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Blue sky Research