Technology in Society (forthcoming)

Recycling Unused Ideas and Technologies of a Large Firm into New Business by Start-ups

Technology in Society (forthcoming)

Mokter Hossain* Researcher Institute of Strategy and Venturing Department of Industrial Engineering and Management Aalto University Otaniementie 17, 02150 Aalto, Finland E-mail:[email protected] Henri Simula CEO Lumisa Ltd Finland [email protected]

Acknowledgement The authors are grateful to the interviewees and other people who have co-operated for this study purpose. The first author is grateful to the Finnish Cultural Foundation for financially supporting this study.

*corresponding author

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Recycling Unused Ideas and Technologies of a Large Corporation into New Business by Start-ups Abstract The objective of this study is to investigate how the non-core ideas and technologies (IaTs) of a large corporation can be utilized by start-ups. Many IaTs are not valuable or useful for the parent corporations. For various reasons, these IaTs become obsolete and therefore non-core IaTs remain unused and eventually perish. However, there are new possibilities to create business from these non-core IATs. We found out that an intermediary organization acting as a catalyst can be useful in order to bring the corporation who possesses IaTs and seeker parties together and to reduce the information asymmetry between them. Funding mechanism is also crucial to appropriate the non-core IaTs. Moreover, the underlying market and economic conditions have a natural role in the transfer of non-core IaTs. Keywords: Non-core ideas and technologies, licensing, idea recycling, technology transfer, large firms, start-ups

Highlights    

This study shows a new way of using non-core ideas and technologies It provides insightful analysis of a case It shows how an ecosystem can be developed to use ideas and technologies The results can be useful for other firms.

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Introduction Large corporations continuously generate numerous ideas and technologies (IATs) to serve their customers with new products and services (Ravald and Grönroos, 1996). As a matter of fact, only a fraction of generated IaTs of a large corporation is launched to the market and only a few of them become successful (Stevens and Burley, 1997). Most of the IaTs remain unused. Consequently, over a period of time, large corporation accumulate numerous IaTs, which are considered as non-core, since they do not fit into the corporation’s existing business portfolios (Anokhin et al., 2011).

IaTs can be defined in many ways. Sawhney and Nambisan (2007) argue that commercially exchangeable goods ranging from immature to mature stages can be considered as IaTs. Mature IaTs are mostly in patented stage, whereas immature IaTs are not patented. IaTs of a large corporation are classified into the core and non-core categories. Like core IaTs, non-core IaTs can range from immature to advanced stages. By non-core IaTs, we mean the ideas and technologies that corporations are unable or unwilling to develop and commercialize to the market. There can be several reasons for that: non-core IaTs are out of corporation’s current strategy, corporations cannot develop each and every idea due to priorization requirements, some ideas may turn to obsolete due to changed market conditions or competitors’ activities (Parhankangas et al., 2003). Often IaTs can be doomed as ‘no go’ because their monetary value in terms of return on investment (ROI) is not lucrative enough or the payback time is too long or simply because these IaTs are perceived too risky (Hurmelinna-Laukkanen & Soininen, 2011).

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In general, non-core IaTs do not contribute to the competitive advantage of a parent corporation. Core IaTs are important to the corporation for its own use or those can be used as protective asset against competitors i.e. those IaT are essential for corporations to possess competitive advantage. IaT stages vary and can be defined such as under-developed, ready to apply for patent, patentpending, and ready for market. Immature non-core IaTs are less valuable than mature IaTs (Natalicchio et al., 2014).

Sometimes corporations consider non-core IaTs as a burden and experience a dilemma of how to deal with those. Taking some of these non-core IaTs outside of a corporation’s boundary brings no risk to the core strategy but may bring considerable benefits to the corporation via other ways such as by benefitting standardization development. Moreover, these non-core IaTs could be useful for other corporations who can develop them further and then commercialize them into different markets with a similar or even with new business models (Hossain, 2016).

The outbound open innovation approach of Nokia Corporation is an exemplary initiative regarding how to utilize non-core IaTs using a new ecosystem. The objective of this study is to investigate how the non-core IaTs of a large corporation can be utilized by start-ups. As mentioned earlier, many IaTs are not valuable for the parent corporations and it has happened with Nokia, too. In this study, we have made attempt to find answers of the following questions: How large corporations can appropriate their non-core IaTs? What kinds of support are necessary to appropriate their non-core IaTs? And how transferring non-core IaTs of large corporations are beneficial for business, and society? Considering Nokia’s model of transferring non-core technologies, this study provides new insight for scholars and practitioners about the

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use of non-core IaTs of large corporations. Corporations, policy makers, and state organizations may consider these finding useful

Literature review Some studies have explored how large corporations can capture value from their non-core technologies (Bessy and Brousseau, 1998; Kollmer and Dowling, 2004; Markman et al., 2008; Palomeras, 2007). Even though transforming technologies into commercial goods has been studied from various perspectives (Bjelland and Wood, 2008; Chesbrough and Chen, 2013) limited attention is given to non-core IaTs. Most of the studies deal with mature and apparently highly valuable non-core technologies (Bjelland and Wood, 2008). The extant literature has largely ignored how the non-core IaTs of large corporations can be used appropriately no matter what stage — mature or immature — they are in. Not only mature but also immature non-core IaTs can be commercialized with the help of a new business ecosystem. With a cooperation between various parties, such as state funding agencies, intermediaries, and start-ups, a large corporations can adopt outbound open innovation approach (Chesbrough and Crowther, 2006) to provide their non-core IaTs to the other parties.

Many non-core IaTs are also profitable for the parent corporations to take outside (Gilsing et al., 2016). However, transactions for IaTs are limited even though there is evidence that they are growing (Arora et al., 2001). Non-core IaTs may emerge in many ways, such as (1) output of a project, which turns out to be irrelevant to current business focus, (2) a project that has been cancelled before getting into a final stage, (3) losing the main driver of a project, (4) unintended discovery, (5) change in management and business strategy, (6) merger and acquisition, (7)

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downsizing, (8) divestment of a business area. The value of non-core IaTs largely depends on its position in a maturity chain, complementary assets, effective matching, rivalry, user reproducibility, business model, and the organizations which they are embedded in (Teece, 1986; Chesbrough, 2010; Gans and Stern, 2010). IaTs of the immature stage may not be worthy of patenting (Sawhney and Nambisan, 2007) and they may not provide any value or benefit for internal use.

Many large corporations, such as DuPont, Dow Chemical, Hitachi, Procter & Gamble, and Texas Instruments have active licensing policy to earn from their non-core IaTs (Arora et al., 2013). Licensing provides a licensor the right to transfer a technology to licensees in exchange of fees/royalties while the licensees get the right to exploit the technology for a long term (Palomeras, 2007). However, many non-core IaTs have no value for licensing but they can be valuable for other corporations with some modifications or if occupied with different business models. Corporations have several options to deal with their non-core IaTs. Putting on the shelf, discarding for good, donating or licensing are some of the commonly used options. Non-core IaTs can be taken outside through a spin-off, sell-off or via various licensing arrangements. The recently emerged open innovation concept emphasizes taking technologies outside of corporations’ boundary (Chesbrough, 2003). Outbound open innovation denotes outward technology transfer and suggests that corporations may explore external environment to commercialize technologies (Chesbrough and Crowther, 2006). Corporations tend to prefer taking out their IaTs when the uncertainty of the transaction is low and the transaction cost is high, whereas they tend to prefer selling under the opposite conditions (Jeong et al., 2013).

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A key way for external use of non-core IaTs is licensing. A study by Cockburn and Henderson (2003) found that nearly 75 percent of the intellectual property (IP) managers surveyed believed that they could increase licensing revenue without impairing their competitive advantage. Along with the difficulty to find licensees, the reluctance of business units (Cockburn and Henderson, 2003) and conflicts inside a corporation are often considered as key reasons for the inefficiency of licensing (Razgaitis, 2004). Studies show that around one-third of the patent portfolios of US corporations remain unexploited (Palomeras, 2007), and one-third of patents in Europe are not applied in products (Giuri et al., 2005). Furthermore, Elton et al. (2002) found that 10 percent of the patent portfolios of research-oriented corporations are underexploited and corporations could increase their operating income by five percent via licensing.

The extent of cooperation between idea owners and idea seekers is crucial in the licensing process of non-core IaTs (Hutter et al., 2011). The commercialization of non-core IaTs by external corporations generates value in many ways (Appiah-Adu et al., 2016). For example, corporations can earn financial value and develop the ecosystem in the periphery of their core products to boost the business ecosystem where they operates. Non-core IaTs provide opportunities to create new businesses. Thus, customers can get new types of product and service. Timing is important for technology transfer even though the extant literature lacks research on timing of technology transfer (Szulanski et al., 2016).

Licensing non-core IaTs requires a high level of engagement from the licensors. Some corporations have an independent unit for non-core IaTs whereas others consider it occasionally (Hering, 2002). However, third party involvement for the evaluation of non-core IaTs for

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licensing can also be a feasible option (The New York Times, 2002). There is evidence that corporations’ internal units often have significantly different opinions from external experts regarding valuation of non-core IaTs (Seppänen et al., 2010). Additionally, a corporation can join with other corporations and establish common platforms and joint ventures where non-core IaTs are centrally evaluated for licensing. Corporations can also utilize intermediaries who can help in match-making with potential licensees. Recently, many intermediaries, who connect technology and innovation seekers and receivers, have emerged. Intermediaries such as InnoCentive, Yet2.com, IdeaConnection, and Innoget are playing a significant role in technology licensing and idea business (Hossain, 2012a). Thus, the utilization of non-core IaTs are getting increasing attention from scholars, practitioners, and policy makers.

Research methods This is an explorative study with qualitative approach, which provides an opportunity to understand the context and benefits of the underlying phenomenon studied. We have considered a single case study approach, which allows deep dive type of understanding on a specific phenomenon (Eisenhardt and Graebner, 2007). The case study approach is suitable for answering why and how type of questions (Yin, 1994). This single case study aims to answer how the noncore IaTs of a large corporation can be transferred to external companies – basically start-ups. Yin (2009) argues that the choice of the single case study is rational when the studied phenomenon is unusual, rare, critical or revelatory. We are confident that this study unveils a rare phenomenon, which has also received limited attention in the extant management literature.

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Case studies can include multiple cases or just a single case with different levels of analysis (Yin, 1994). According to Kennedy (1979), the researcher who studies multiple cases should investigate the cases separately and individually, but try not to average or pool the data across cases. Similarly, Dyer and Wilkins (1991) criticize the approach of using multiple cases outlined by Eisenhardt (1989) and claim that multiple case studies lack the richness of classic, single case studies. Whilst there are pros and cons in each of these two approaches / school of thoughts, we have now taken the approach to rely on single case study.

We have collected data in several ways. Primary data sources include interviews of key informants combined with personal communications and other informal discussions with other relevant persons. Secondary data sources include press conferences, press releases, seminars, white papers, and webpages, along with other related documents that have appeared in various outlets. Multiple sources of data collection were used as suggested by triangulation method experts. Triangulation is considered as a powerful technique that increases the validity of data through cross verification from several sources (Bogdan and Biklen, 1998). Triangulation — combining different kinds of data from various sources — improves the accuracy of judgments and increases the reliability of a study (Jick, 1979). Scholars such as Yin (1994) and Denzin (1978) have emphasized using triangulation, by which they mean combining different sources of evidence and shifting between analysis and interpretation.

The interview questions were mainly open-ended as suggested by the epistemologically constructionist approach (Warren, 2002). Open-ended questions are suitable when the aim of a study is to explore a phenomenon in depth. A sample set of questionnaire has been provided in the

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appendix of this paper. The potential interviewees were selected in advance from the pool of companies and organization involved with the project. During discussions, some of the interviewees pointed out additional key informants who have also been interviewed. Thus, we updated the list of interviewees based on those suggestions. The choice of informants was premised on the principle that information is best elicited from people who have been involved with the phenomenon and who possess significant knowledge about it (Arksey and Knight, 1999). In other words, the persons interviewed were so called key or elite informants. Key informants are persons in organizations who are supposedly knowledgeable about the issues being researched and willing to discuss those issues (Welch et al., 2002).

Some of the questions used for interview purposes were common for all groups of actors. Additionally, we used specific sets of questions to a particular group of actors to explore and understand the roles of various actors in detail. Altogether, we have eight interviews of key informants including one from Nokia – the originator if IaTs, one from Tekes – the national funding agency for research and innovation in Finland, one journalist of a national business newspaper who has been involved in writing and following this phenomenon, two managers from the intermediator, and the CEOs of three start-ups who received funding for their initiatives. All the interviews were conducted face to face except one, which was conducted over the telephone. The interview duration ranged from 30 minutes to two hours. All the face-to-face interviews were recorded with the permission of the interviewees. The list of interviewees, their functional roles, and the length of the interviews are listed in Appendix A. Due to confidentially reasons the names of interviewees are kept anonymous as this was promised to them. We did additional personal communications and informal conversations with some informants who have substantial

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knowledge about the case. In order to receive information concerning some details additional inquiries were made to informants concerned.

Case - Nokia Innovation Mill This section provides empirical findings of a real life case that was created to commercialize non-core IaTs of Nokia. We provide an overview of the program followed by more detailed description of the underlying process. We also elaborate outcomes, achievements and challenges. Relevant issues and dilemmas are then analyzed in the discussion section.

Overview of the Program and Its Main Actors This case study presents how Nokia Corporation has been dealing with the ideas, technologies, and knowledge that do not fit in its corporate strategy. The program for Nokia’s non-core IaTs transfer was called Innovation Mill (IM) and it started on May 6, 2009. There are three major parties involved in the IM program: Nokia – the corporation who wanted to disclose its non-core IaTs, Tekes – the state funding agency of Finland, and Technopolis — the intermediary, which did work as a match-maker. Apart from these major players, several municipal authorities (in the first phase of the project) and additional third party service providers were involved with the IM program. The basic assumption behind IM program originates from the notion that corporations with large research and development (R&D) investment also have a large pool of IaTs, which just remain unused.

The IM program has been carried through three distinct phases. In the first two phases, Nokia and Nokia Siemens Networks were the corporations that delivered non-core IaTs that were

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mostly related with the ICT business, such as near field communications, environmental and energy-related solutions, health care and well-being applications, location-based services, mobile security, and future internet services (Jokinen, 2011). IM did work as a vehicle to transfer the non-core IaTs of Nokia to Finnish start-ups with fast track funding by Finnish national funding agency (Tekes). The reason for funding only Finnish start-ups originates from Tekes’ mission.

Nokia had realized that many of its non-core IaTs are valuable outside of Nokia and start-ups with more agility and a motivated team could actually make business out of them. Nokia could deliver its unused IoTs to innovative start-ups and thereby give these IaTs a new life. In fact, there had been a growing number of employees in Nokia who had asked if they could start developing their ideas further by utilizing Nokia’s technologies (Ahokangas et al., 2013). The IM program was created to support that demand. A CEO of a start-up expressed his opinion regarding the IM program: “The worst thing to happen is the situation that a large amount of money (originating from public source and from Nokia) is spent on a development project and then the project is just buried”.

The main funder for start-ups in Finland is Tekes, which finances some 1,500 business R&D projects, and almost 600 public research projects at universities and research institutes. In 2012, for example, Tekes invested USD 740 million in the R&D projects of Finnish corporations and research organizations. The role of Tekes was also instrumental for the IM program. Seeing Nokia’s willingness for licensing its non-core IaTs, Tekes felt that fast track funding to start-ups would help to create businesses and new jobs.

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Tekes often use external partners to run operational and administrative tasks. For the IM program, it announced a tender to find a service provider that was able to deal with Nokia’s noncore IaTs and consequently Technopolis Ltd. was selected as the intermediator. Technopolis is a Finnish real estate company, which also used to have management and consultancy services that time. The role of that intermediator was to provide operative and administrative activities that helped the start-ups. According to Jokinen (2011), the roles of intermediator namely include third party procurement, vendor short listing, competition, selection, contracts, and fund transfer. Naturally, one of the underlying motivations for the first intermediator to run this program was to get new corporations to use its premises as tenants. They, however, also claimed to have some broader perspectives for the IM program, such as the support of innovation ecosystems. Due to some merger and acquisitions, three organizations have worked as intermediator with this program. In any event, the founding intermediator operated the IM program for three years. Several municipal authorities were also involved in funding and other logistic support.

The Process of the IM program

The basic process of the IM is depicted in Figure 1. The starting point of the process is Nokia’s disclosure of its non-core IaTs to the intermediator. Some teams actually had an access to noncore IaTs directly, because they did work at Nokia or were otherwise well-informed about certain non-core IaTs. In practice, the process went so that a start-up or a idea seeking team got into contact with the intermediator, which then reviewed if there were some IaTs from Nokia side that could be a good match with that start-up. The intermediator also often had discussions with teams inside Nokia, who had some potential to spin-out the project they were working with.

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A CEO of a start-up has expressed the importance of moving people for technology transfer the in following way: “My personal opinion is that you cannot make technology transfer without moving people”. Disclosure of IATs by Nokia

Screening of IATs by intermediator

Searching for Start-ups or vice versa

Preliminary selection of start-ups

Project proposal

Decision and disposal of funding

Launching a new business

Figure 1. Process of the IM program from IATs disclosure to launching new business

If a potential match was identified, the intermediator then supported the start-up with all kinds of practicalities, including business consultancy to apply for Tekes funding. The main incentive to the intermediator was to get as many start-ups as possible through the IM program because its service fee was tied to the funding of the start-ups. If there were readily available teams inside Nokia, who had willingness to spin-off, it was naturally easier to support them rather than finding and dealing with new start-ups or teams outside Nokia.

The intermediator first analyzed the non-core IaTs, sought viable teams or start-ups that could take the IaTs further, and helped the founder(s) to start the business (see Hossain, 2012b for more details). With the support of the intermediary, the start-up prepares project proposals along with supplementary documents. In funding applications, start-ups need to show an estimate of costs in advance to get funding. The start-up was then invited to present and pitch its business plan to Tekes in order to get funding. The process was designed to be as unbureaucratic as possible. The normal process time for Tekes funding for a start-up is typically over three months, whereas the processing time in the IM program was around two weeks. Under the IM program, start-ups got the funding decisions instantly after their pitches. Since funding from Tekes is dispatched quickly, start-ups were able to launch their new business immediately after receiving

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funding. A CEO of a start-up expressed opinion about the importance and necessity of the IM program in the following words: “IM is like…very tailored for young start-ups and it provides plenty of support so in that sense it is good and clearly much better than starting without it”.

The IaTs delivery was arranged in a way that the dedicated person of the intermediator got access to Nokia’s portfolio of non-core IaTs. Therefore, the intermediator acted as a matchmaker between the actors. It is worth mentioning that negotiation for a licensing agreement took place separately between Nokia and each start-up case by case. One of the interviewees expressed: “but when it comes to the negotiations…. my take on is that it is a commercial business …it is not charity…”.

The agreement rules with Nokia were such that a start-up could use non-core IaTs free of cost, with parallel usage rights, royalty free, irrevocably and permanent (Jokinen, 2011). However, start-ups were not permitted to transfer non-core IATs to any third party. If two or more startups used an idea in parallel, none of them would get access to the further development of that idea by other start-ups. As per requirement of Tekes, an applicant for non-core IaTs had to be an established start-up but with less than eight month old. Any start-up interested in Nokia’s ideas had to provide a clear business plan. As a manager of the intermediator expressed, “it is not a flea market”. A start-up could get funding of maximum 200 000 euros and the average funding was 170 000 euros (Spinverse, 2014). The time span of piloting, testing, and market research regarding an idea was typically six to eight months.

Challenges

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Nokia disclosed that they had over 4000 potential non-core IaTs (Spinverse, 2014). It had a small team to collaborate with other parties, such as the intermediator, the funding agencies and the start-ups (Hossain, 2012a). In 2014, one hundred and ten non-core IaTs have been been transferred to start-ups (Spinverse, 2014). It means that only 2.75% of the non-core IaTs were utilized to transfer with funding.

The IM program encountered some organizational challenges. After three years of its start, the IM program was transferred from Technopolis to a new organization called Open Innovation Management. And only after few more months, Spinverse – a technology consulting SME – acquired Open Innovation Management. The growth of the IM program slowed down especially due to the changes of the intermediator twice in a short period.

Start-ups of this program are yet to be successful in the market. Despite some exceptions, it takes time for a start-up to grow. There were also some opinions that some start-ups just joined the program to get fast access to funding, but were not planning to utilize the transferred non-core IaTs. In fact, the first intermediator had a plan to expand the IM program in other European markets especially to attract venture capitalists. Since Technopolis divested the IM operation the plan of internalization did not come into practice. Moreover, the present intermediator is not active in expanding the program in the international market.

The detailed licensing process of IaTs was not public. Due to non-disclosure agreements (NDAs) no parties disclosed details about the terms and conditions of licensing agreement between Nokia and each start-up. It is worth mentioning that the IM program started when Nokia’s performance

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in the market was declining sharply and it was laying-off many employees. Hence, many employees intended to leave Nokia and had ideas to start their own ventures.

Outcomes and Achievements Initially, Nokia had the corporate societal responsibility as a one of the drivers of the programme. Later on, however, its business downfall leads outplacement as an important aspect of the process. Mr. Esko Aho (a former prime minister of Finland) acted as Nokia’s Executive Vice President of Corporate Relations and Responsibility during the creation of IM program. While considering the IM a successful program, Mr. Aho articulated that there were plenty of question marks regarding the process at the early stage of it. Mr Aho was also a member of IM’s executive board at the beginning. One of the basic objectives of the IM program was to make the decision process fast. For any new business, raising funds is a daunting task. However, in the IM program, funding is readily available and the funding decision is very fast. Moreover, Tekes has a positive attitude for further funding if the performance of the program is satisfactory.

In four years, 110 non-IaTs have been funded and 81 of them are in new start-ups and 29 in existing start-ups (Spinverse, 2014). The Innovation Mill program raised 84 million euros funding including 42 million euros from Tekes, and it has created over 1000 new jobs (Spinverse, 2014). In terms of the number of launched start-ups, the achievement of IM program is reasonable. From a policy-making perspective, one of the fundamental reasons for favoring the IM program to support the IT industry re-structuring in the time of economic downturn. According to Aho (2012), “the goal was to support Finnish innovation ecosystem”. In addition, the IM program has seemingly provided an outplacement option for Nokia. Around 65% of the

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start-ups were founded by teams from Nokia and around 35% start-ups originated from outside (Ahokangas et al., 2013). There were several key reasons for the IM program’s success. Jokinen (2011) argues that (1) the traditional innovation system is too slow and weak to support this kind of IaTs transfer, (2) the business environment was supportive as Nokia had plenty of unused IaTs and the willingness to put them forward, and (3) there were several start-ups and teams who were eager to exploit these IaTs.

Aho (2012) believes that the initiative has exceeded the expectations and he expressed: “in Finland we are good at making strategies; this initiative is a part of the National Innovation strategy; sometimes it is worth investing outside Finland to get added value to Finland, too.” He argues that there were three main reasons for the success of the IM program. First, the ICT restructuring; there were many experts available and this program provided new opportunities for them. Second, the value of IPRs had been increasing and this initiative made it possible to refine non-core IaTs. Third, the timing was right for digital innovation, not only in ICT or in closely related sectors, but also in many other sectors. Therefore, the IM program had a great potential.

Ahokangas et al. (2013) revealed that the overall results of the program have been moderate. One start-up has achieved a very high growth and nine start-ups were able to increase their revenues and profits. As we know, the failure rates of start-ups are extremely high in any industry. Hence, one very successful start-up and increase of revenues and profits of nine start-ups indicate that the IM program is a viable option for other large corporations to transfer their non-core IaTs.

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The start-ups were seemingly very happy with the rapid decision making process of Tekes in the IM program. As the CEO of a start-up noted: “This has been a good program, it fits well into its purpose and it was important to us and a good thing.” Moilanen (2010) points out that the main benefits of start-ups were that they could perform a range of activities with the funding: Technical specification for the new product, user interface design, demo, proof of concept, production plan, agreement check, market study, competitor analysis, sales and marketing, business plan, project implementation, financing plan, partnering negotiation, contract template or other legal study/planning. Additional benefits for start-ups were created via media coverage. One Finnish business magazine followed-up and published several articles concerning the IM program. In addition, some international TV-crews has been mentioned of making documentary filming of the program. As a whole, the stakeholders concerned were happy about the achievements of the IM program.

Thus, it is reasonable to state that transferring non-core IATs outside the parent corporations benefits the parent corporation, small businesses and society to create business and employment.

Discussion Most of the start-ups of the IM process were formed by teams that used to work in Nokia. Thus, we are left to wonder the actual openness of this innovation program after all. Active marketing activities were not conducted to disseminate the IM program. For instance, it did not have any homepage. Therefore, it seems that the outcomes were dependent on the level of activeness of the intermediator. Nokia allowed start-ups to take over non-core IaTs, but sometimes the teams were also allowed to take the “whole business” with an existing customer base, which provided a

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significant boost for the underlying business. However, there were also some suspious opinions that some start-ups just joined the program to get fast access to funding, but were not planning to utilize the transferred non-core IaTs at the end of the day.

It is evident that large corporations are eager to utilize this type of open innovation program when they are bound to shrink their operations and downsize employees. One of the interviewee put it this way: “During the growth years Nokia was in quite expansive mode and then one was able to study and research plenty of things and do plenty of stuff, but when there are less resources then one must concentrate…and it is quite natural in an innovation activity that one studies more than actually utilizes”.

When organization are not suffering economically, they have a better position to try out new initiatives and play out with different business models. It can yield additional benefits too. For example, one CEO of a start-up believed: “The program is very much (corporate) social responsibility but in our case especially there is also a clear connection to standardization work concerning the underlying technology. It is meaningful (for Nokia) that there is a firm that develops and participates in technology standardization, at the same time when Nokia is forced to focus on its current core business.”

The pools of non-core IaTs were not openly accessible to start-ups or others. Rather they were accessible only to the personnel related to the intermediator. Due to this restriction of accessibility, many potential non-core IaTs may have remained unused. There was also some critique towards the program. The question is why not to open up, at least, part of the pool if not all of non-core IaTs for public? That would have increase the public image of Nokia as an 20

innovative corporation and could be a marketing tool towards partners and investors.

If non-core IaTs were good for the ecosystem of Nokia, then what prevented these non-IaTs of being fully disclosed! One of the interviewees believed that the amount Technopolis got as a service fee was quite high compared to their actual workload. Moreover, the IM program was not in-line with the core strategy of Technopolis. Consequently, there was some discontentment from the start-ups regarding the quality of service provided by the Technopolis especially at the initial stage.

Conclusion and outlook This study demonstrates that large corporations can benefit from their non-IaTs. Corporations may directly engage with start-ups concerning their non-core IaTs or use an intermediator to achieve this. Large corporations can utilize their unused IaTs by creating joint ventures with existing start-ups or invest in start-ups to expand their portfolios in order to see if some of these ideas can actually turn out to be a major business.

IaTs are not typically disclosed to public; which was also the case with Nokia. As such, information asymmetry is a challenging issue (Silveira and Wright, 2010). Idea seekers are always limitedly aware of non-core IaTs and their potential if they have no access to all of these IaTs. In the IM program, for instance, external teams and potential developers had no clue, if there existed something of interest to them. In this respect, the IM program should have been more open to a large ecosystem of innovation networks, which could have given a vibrant platform to increase and exchange ideas and knowledge in an open environment. We feel that it

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would have been beneficial to open IM as an innovation network, something which was also emphasized by Ahokangas et al. (2013). This openness would have helped a large number of actors to explore non-core IaTs, which would have created more business potential altogether.

Organizational re-structuring during recession forces organizations to downsize their operations, which naturally result in new opportunities for some entrepreneurial individuals and teams to create new start-ups. When corporations are expanding their operations and recruiting new people, they may not be too eager to allow their talents to leave. Therefore, they may not be willing to engage into programs, which deal with non-core IaTs transfer.

Large corporations can consider the option of boosting idea “recycling” by taking a multi-actor development approach and perhaps invite some organizations with complementary assets to develop and co-create better business models. In the USA, for example, the Defense Advanced Research Agency has already initiated the Vehicle FORGE program, where the global community of experts designs and rapidly manufactures complex systems together.

Nokia also had an idea crowdsourcing program called IdeasProject in place, but its focus was to collect new ideas, not to donate IaTs. There was also another initiative where a group of students and unemployed professionals engaged in developing Nokia’s ideas together and started businesses based on these. Large corporations may also consider crowdsourcing to find options to better utilize their IaTs externally (Hossain and Kauranen, 2015). There are evident of how open innovation intermediaries (OIIs), such as IdeaConnection, InnoCentive, Yet2.com help to exchange valuable IaTs between two or more parties (Hossain, 2012a). Exchange of non-core

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IaTs might be an additional value for OIIs. Hence, large corporations can engage OIIs that can find a (better) match for their non-core IaTs on the global level.

To sum, this study provides primary evidences on how non-IaTs of large corporations can be used in a novel way. However, additional studies on other large corporations with similar initiatives are necessary to strengthen the body of knowledge on non-core IaT transfer. References Aho, E. (2012). Technopolis press conference.” Available online at: http://mediaserver.fi/embed/technopolis/innovationmill.flv. Ahokangas, P., Seppänen, V., Hurmelinna- Laukkanen, P., Haapanen, L., & Paloniemi, K. (2013). Innovation mill – evaluation (2013). Oulu Business School, University of Oulu. Anokhin, S., Wincent, J., & Frishammar, J. (2011). A conceptual framework for misfit technology commercialization. Technological Forecasting and Social Change, 78(6), 10601071. Appiah-Adu, K., Okpattah, B. K., & Djokoto, J. G. (2016). Technology transfer, outsourcing, capability and performance: A comparison of foreign and local corporations in Ghana. Technology in Society, 47, 31-39. Arksey, H., & Knight, P. T. (1999). Interviewing for social scientists: An introductory resource with examples. Sage. Bjelland, O. M., & Wood, R. C. (2008). An Inside View of IBM's' Innovation Jam'. MIT Sloan Management Review, 50(1), 32-40.

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Gilsing, V., Cloodt, M., & Roijakkers, N. (2016). From Birth through Transition to Maturation: The Evolution of Technology‐Based Alliance Networks. Journal of Product Innovation Management, 33(2), 181-200. Hossain, M. (2016). Embracing open innovation to acquire external ideas and technologies and to transfer internal ideas and technologies outside. Doctoral dissertations, 128/2016. https://aaltodoc.aalto.fi/bitstream/handle/123456789/21219/isbn9789526068947.pdf?sequen ce=1&isAllowed=y Hossain, M. (2012a). Open innovation mill: utilization of Nokia's non-core ideas. ProcediaSocial and Behavioral Sciences, 58, 765-773. Hossain, M. (2012b). Performance and potential of open innovation intermediaries. ProcediaSocial and Behavioral Sciences 58, 754-764. Hossain, M. and Kauranen, I. (2015), Crowdsourcing: a comprehensive literature review. Strategic Outsourcing: An International Journal, 8(1), 2 – 22. Hurmelinna-Laukkanen, P., & Soininen, A. (2011). Different paths of appropriation-patent strategies and licensing practices for closed and open innovation. International Journal of Intellectual Property Management, 4(3), 133-152. Hutter, K., Hautz, J., Füller, J., Mueller, J., & Matzler, K. (2011). Communitition: The tension between competition and collaboration in community – based design contests. Creativity and Innovation Management, 20(1), 3-21. Jokinen, R. (2011). Nokia technopolis innovation mill presentation. Budapest, Hungary, Available online at: http://ec.europa.eu/enterprise/policies/sme/best- practices/charter/2011sba-conference-budapest/files/speakers/presentations/wsg_jokinen_en.pdf.

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Appendix A: Interviews Role

Organization

Position

Length (min)

IATs Delivery Nokia Corporation Corporation

Director, Tech out-licensing

120

Financier

Tekes

Director, Start-up companies

80

Intermediator

Open Innovation Management Ltd

Manager (ex- technopolis employee)

45

Intermediator

Technopolis

Manager (ex-technopolis employee)

41

Journalist

Kauppalehti Ltdan industry magazine)

CEO

47

Start-up

Sports Tracker Ltd

CEO

30

Start-up

Quuppa Ltd

CEO

40

Start-up

Wellmo Ltd

CEO

39

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Appendix A: Sample Questionnaire Name of the Interviewee:-----------------Position: ............................. Organization: Interview Time: -- -- to -- -Interview Date:---------Interview Duration: …...... Language used in the Interview:…………. How is Recorded:…………… Name of the Interviewer:……………… For IM Personnel 1. 2. 3. 4. 5. 6. 7. 8. 9.

10. 11. 12. 13. 14. 15.

Any there any academic publications on this initiative if you happen to know? Are you aware of any similar initiatives in other countries? What is Technopolis’s role in this process; please describe your own words? How do you measure the success of this initiative? How does IM get ideas from Nokia? I mean, does Nokia provide just whole basket of their non-core ideas or screening is done before giving to IM? What kind of information does Nokia provide for each ideas? What is the main reason for you not to publish all the selected ideas for anybody to see/use...? What is the contractual procedure and what are the KEY TERMS in contracts between parties? Is it possible for us to familiarize ourselves with materials that are used in communication between parties (we promise not to disclose that and we will also let you to review the article(s) before submitting so that no confidential info will be revealed to outsiders). After screening around 4000 ideas, only 45 corporations including 26 starts-up have been emerged. Therefore, success rate is very low. Your Opinion! When does Nokia consider an Idea as Non-core (time after its inception). If it varies widely from one idea to another what is the usual range and average time) How is the figure of using single idea by several corporations simultaneously? How many start-up have stopped working on an idea after their inception? Do you think IM would be successful even without any funding from Tekes? Are there any plans to make this initiative more international and try to reach out other countries (both for larger

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start-up pool and funding-wise) 16. Is there any funding source from other than Tekes? How is the proportion of other sources of funds? 17. What kind of study was done so far to measure the overall success of start-ups? What is the next plan to study them? 18. What are the fundamental strengths and weaknesses of IM? 19. Are there any plans to try to encourage students to apply for IATS or is IM purposely only targeted towards seasoned professionals; Do you think there are any possibilities for this kind of experiment in future? 20. Does Nokia get some benefits even though ideas are claimed to be given as charity? If so, how is that: monetary, image value, device supporting application, etc.? 21. Can we get contact details of SMEs so that we can interview some of them? 22. What are the criteria for start-ups to be selected that can utilize anchor corporations ideas and IPR? 23. Do you see any potential dispute among corporations that would like to see the ideas but they are not selected? 24. How could IM be improved in future if possible? 25. How do you feel about joining of several big companies, how effective in getting ideas from those companies? 26. What made IM to turn into a spin off? What are the advantages and disadvantages of the spine off? 27. Nokia is not a good position for several years. How do you find its willingness to continue for this project? 28. Contact details of the people from Nokia, who are directly involved with IM initiative!

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