Adapting Open Innovation In ICT Ecosystem Dynamics

1. Adapting Open Innovation In ICT Ecosystem Dynamics By: Mohamed Eldishnawy Supervisor: Docent Kalevi Kilkki Comnet Research Team – Prof. Heikki Hämmäinen

2. Outline Background: What is Open Innovation? Research Focus: What exists Vs. What is missing Methods: From the dynamic and static point of view Results • Interviews outcome – perception of open innovation • System Dynamics model • Business aspect of open innovation Conclusion Possible future work Eldishnawy Mohamed

3. Background What is Open Innovation?

4. Innovation” An innovation is something original, new, and important - in whatever field - that breaks into (or obtains a foothold in) a market or society”* Innovation Vs. Invention *Based on Frankelius, P. (2009), Questioning two myths in innovation literature, Journal of High Technology Management Research, Vol. 20, No. 1, pp. 40–51.

5. Innovation Process - Innovation Funnel Innovations acts as a competitive advantage G A Stevens, "3,000 raw ideas= 1 commercial success," vol. 40, no. 3, 1997. Eldishnawy Mohamed

6. Closed Vs. Open Innovation Adapted from Henry Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology (HBS Press, 2003) Eldishnawy Mohamed

7. Closed Vs. Open Innovation Eldishnawy Mohamed

8. ClosedVs. Open Innovation Adapted from Henry Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology (HBS Press, 2003) Eldishnawy Mohamed

9. Research Focus What exists Vs. What is missing

10. Revealing internal resources to external environment. • Out-licensing or selling products acquire inventions. • Input inventions to the innovation process. • Firms informal and formal. Current Research Studying static aspects of open innovation Focused only over behavioral, managerial and legal aspects of open innovation Eldishnawy Mohamed

11. Modeling open innovation constitutional functions and variables • Explore Open innovation Business Phenomena ResearchQuestions Static and dynamic view of open innovation. Eldishnawy Mohamed

12. Methods From the dynamic and static point of view

13. Interviews Review of scientific bibliography to analyze the main dimensions of open innovation. Build semi-structured interviews questions. Adapting multi-case nested experimental design. “An empirical inquiry that investigates a contemporary phenomenon within its real-life context; when the boundaries between phenomenon and context are not clearly evident; and in which multiple sources of evidence are used”* *R. K. Yin, "Case Study Research: Design and Methods," Sage, Newbury Park, CA., 1989. Eldishnawy Mohamed

14. System Dynamics “Understanding the behavior of complex systems over time”* How open innovation starts and diffuses in innovative environments? • Ideas and successful products as stocks and flows • Analyzing Feedback and Causal loops Stocks Term for any entity that accumulates or depletes over time. Flows Rate of change in a stock MIT System Dynamics in Education Project (SDEP) Eldishnawy Mohamed

15. Open innovation business aspects Areas of interest of open innovation M., Fredberg,T. and Ollila,S. Elmquist, "Exploring the field of open innovation," European Journal of Innovation Management, vol. 12, no. 3, 2009. Eldishnawy Mohamed

16. Open innovation business aspects The long-tail business model C Anderson, Long tail, the, revised and updated edition: Why the future of business is selling less of more.: Hyperion Books, 2008. Eldishnawy Mohamed

17. Results Interviews outcome – perception of open innovation System Dynamics model Business aspect of open innovation

18. Interview Outcomes Perception of Open Innovation Open innovation is an ecosystem that includes multiple structures connected to each other in an evolutionary development. Eldishnawy Mohamed

19. Interview Outcomes What delays innovation? Absence of leadership Lack of interest Extreme Inbound open innovation Mistrust What foster innovation? Entrepreneurship spirit Mixing the clusters Monitoring the dwarfs Active government and universities activities Eldishnawy Mohamed

20. Open Innovation System Dynamics R1: Rate of introducing new ideas into the firm R2: Rate of developing ideas R3: Rate of commercializing and marketing the idea R4: Adoption rate Eldishnawy Mohamed

21. Introducing new ideas into the firm R1: Rate of introducing new ideas Eldishnawy Mohamed

22. Adoption Rate & Discard Rate Bass Diffusion Model Revisited Discard rate to resemble the outdate of product. Repeated Purchases. R4: Adoption Rate R5: Discard Rate Eldishnawy Mohamed

23. The Causal Loops Importance of absorption capacity to firms Wesley M. Cohen and Daniel A. Levinthal, "Absorptive Capacity: A New Perspective on Learning and Innovation," Eldishnawy Mohamed

24. The Causal Loops The need of heavy investment in innovation process at the beginning to improve the internal knowledge creation Eldishnawy Mohamed

25. The Causal Loops The strength of the relationship between an individual's relative attitude and repeat patronage* • Firms need to focus on building the loyalty of customers The return of adopting customers to potential customers stock • An indirect effect on the market saturation • A threat that can be an opportunity *Alan S. Dick and KunalBasu, "Customer Loyalty: Toward an Integrated Conceptual Framework," Eldishnawy Mohamed

26. The long-tail Phenomenon of innovation Breakthrough innovations are found in the “long-tail”* *Lee Fleming, "Breakthroughs and the "Long Tail" of Innovation," MITSloan Management Review, vol. 49, no. 1, pp. 69-74, Fall 2007 Novozymes. [Online]. http://www.novozymes.com/en/about-us/Pages/default.aspx. Eldishnawy Mohamed

27. The Android Case – Open Source Source: Gartner and IDC Eldishnawy Mohamed

28. The Mobile Application Store Top 25% App account  28% of total revenue of ~7€ Billion Source: Flurry analytics Eldishnawy Mohamed

29. Where Current Players Exists? N Internal cross-functional collaboration Mass collaboration Number of collaborating actors R&D Alliance Internal R&D 2 Outside Inside Locus of innovation process M., Fredberg,T. and Ollila,S. Elmquist, "Exploring the field of open innovation," European Journal of Innovation Management, vol. 12, no. 3, 2009. Eldishnawy Mohamed

30. Conclusion

31. General Findings Open Innovation is a must for firms to survive in existing ICT ecosystem. Trust and behavioral aspects are important in collaborative environment. There is an intersection between the different factors affecting the innovation process. The strategy of a firm needs to change rapidly with open innovation. Mass Collaboration is challenging and differentiating. The value results from open innovations usually lies in the “long-tail”. Eldishnawy Mohamed

32. Possible Future Work Developing the System Dynamics model further. Data mining. Stochastic simulation of the model. Studying firms in a micro-level (Human Centric Approach). More investigation in the long-tail phenomenon. Eldishnawy Mohamed

33. Thanks!Any Questions?mohamed.eldishnawy@aalto.fiwww.mohamed.eldishnawy.com

34. Supporting Slides

35. Interviews Eldishnawy Mohamed

36. System Dynamics Models Eldishnawy Mohamed

37. System Dynamics Models Eldishnawy Mohamed