Chiaroni, D.; V. Chiesa & F. Frattini, 2010, Unravelling the Process From Closed to Open Innovation Evidence From Mature

Unravelling the process from Closedto Open Innovation: evidence frommature, asset-intensive industries

Davide Chiaroni, Vittorio Chiesa andFederico Frattini

Politecnico di Milano, Department of Management, Economics and Industrial Engineering, PiazzaL. da Vinci 32, 20133 Milano, Italy. [email protected]; [email protected];[email protected]

Open Innovation has been one of the most-debated topics in management research in the

last decade. Although our understanding of this management paradigm has significantly

improved over the last few years, a number of important questions are still unanswered. In

particular, an issue that deserves further attention is the anatomy of the organizational change

process through which a firm evolves from being a Closed to an Open Innovator. The paper

represents a first step in overcoming this limitation. In particular, adopting a longitudinal,

firm-level perspective, it addresses the following question: which changes in a firm’s organiza-

tional structures and management systems does the shift from Closed to Open Innovation

entail? In answering this question, the paper uses established concepts in organizational change

research to look into a rich empirical basis that documents the adoption of Open Innovation by

four Italian firms operating in mature, asset-intensive industries. The results show that the

journey from Closed to Open Innovation involves four main dimensions of the firm’s

organization, i.e. inter-organizational networks, organizational structures, evaluation pro-

cesses and knowledge management systems, along which change could be managed and

stimulated.

1. Introduction

Open Innovation has been one of the most-debated topics in management research in

the last decade (Chesbrough, 2003; Christensenet al., 2005; Gassmann, 2006; Vanhaverbeke,2006; West and Gallagher, 2006). It is an emer-ging innovation management paradigm com-prised of two dimensions: (i) inbound OpenInnovation, which is the practice of establishingrelationships with external organizations or indi-viduals with the purpose of accessing their tech-nical and scientific competences for improvinginternal innovation performance and (ii) out-

bound Open Innovation, which is the practice ofestablishing relationships with external organiza-tions with the purpose of commercially exploitingtechnological knowledge.

Although our understanding of Open Innova-tion has significantly improved over the last fewyears, a number of important questions are stillunanswered (Gassmann, 2006). In particular, anissue that deserves further attention is the anat-omy of the organizational change processthrough which a firm evolves from being a Closedto an Open Innovator. The literature has ac-knowledged the pervasiveness of Open Innova-tion, which permeates several dimensions of a

R&D Management 40, 3, 2010. r 2010 The Authors. Journal compilation r 2010 Blackwell Publishing Ltd,2229600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA

mailto:[email protected]

mailto:[email protected]

firm’s organization and management systems(Chesbrough, 2003). Nevertheless, a systematicand longitudinal analysis of the process throughwhich these dimensions are transformed by theadoption of Open Innovation is lacking.

The paper represents a first step in overcomingthis limitation. In particular, adopting a firm-levelperspective, it addresses the following main ques-tion: which changes in a firm’s organizationalstructures and management systems does the shiftfrom Closed to Open Innovation entail? In an-swering this question, the paper reports andcomments on a rich empirical basis that docu-ments the adoption of Open Innovation by fourItalian firms operating in mature, asset-intensiveindustries. These data represent a source of valu-able insights for research and development(R&D) managers who are interested in under-standing and weighting the implications that ashift towards a more open approach to innova-tion implies, as well as the organizational andmanagerial solutions that might streamline thispervasive transformation process.

Change from Closed to Open Innovation is arather unexplored topic in both high-technologyand asset-intensive industries. However, our em-pirical and theoretical knowledge of the charac-teristics of Open Innovation in low-techenvironments remains very limited in comparisonwith high-tech environments (Chesbrough andCrowther, 2006; Vanhaverbeke, 2006; van deMeer, 2007). Our decision to focus on firmsbelonging to mature, asset-intensive industries isbelieved therefore to make a stronger contribu-tion to the debate on the use and diffusion ofOpen Innovation.

The paper is structured as follows: Section 2reviews the relevant literature on the implementa-tion of Open Innovation, with a focus on mature,asset-intensive industries. Section 3 develops atheoretical framework that was used as a lens togather and interpret the data on the process ofimplementation of Open Innovation. Section 4motivates the design of the research and describeshow the case studies have been conducted. Section5 presents and discusses the results of the empiricalanalysis, whereas conclusions and future avenuesfor research are described in Section 6.

2. Literature review

In order to be recognized as a new paradigm forindustrial innovation, Open Innovation must ac-count for anomalies that are not fully explained in

earlier paradigms (Kuhn, 1962), and it mustexplain evidence beyond its initial area of inquiryto prove external validity (Yin, 2003).

The search for providing evidence to Kuhniananomalies informed in particular the recentwork of Henry Chesbrough (Chesbrough andCrowther, 2006; Chesbrough et al., 2006) andother authors (e.g., Maula et al., 2006; West andGallagher, 2006; Perkmann and Walsh, 2007),who have mostly reflected on the theoreticalimplications of Open Innovation. This focus ofrecent research has left the issue of how OpenInnovation is implemented in practice ratherunder-researched. Only scattered anecdotic evi-dence is indeed available about the processthrough which firms shift their organizationaland managerial systems from a Closed to anOpen Innovation paradigm. For instance, Hustonand Sakkab (2006) describe the different types ofnetworks, either developed specifically to facil-itate innovation activities or already existing andjoined by the firm (e.g., InnoCentive) and thestrategic planning processes that are at the heartof Procter & Gamble’s (P&G) model of OpenInnovation. Dodgson et al. (2006) further elabo-rate on the case of P&G by discussing the roleplayed by information technologies (data miningand searching, simulation and modelling, virtualand rapid prototyping) in supporting the adop-tion of Open Innovation. Haour (2004) andDittrich and Duyster (2007) focus on the way inwhich networks for innovation are created andmanaged, analysing the cases of the ‘distributedinnovation’ system at Generics and the develop-ment of new-generation mobile phones at Nokia.Finally, Gassmann and Enkel (2004) identifythree core innovation processes (outside-in, in-side-out and coupled processes) that explain theadoption of Open Innovation in practice.

As far as the issue of external validity of OpenInnovation is concerned, it remains an open ques-tion whether its underlying concepts apply tolower technology or more mature industries.Only very recently have a few attempts beenundertaken to study Open Innovation in low-tech, mature industries. Chesbrough and Crowther(2006) survey 12 firms in the United States, identi-fied as ‘early adopters’ of Open Innovation, in theaerospace, chemicals, inks&coatings and consumerpackaged goods industries. The authors find that,even if Open Innovation concepts are not wide-spread in use, the firms in the sample clearlyincreased their leverage on external sources ofinnovation to complement their internal R&Dactivities. Vanhaverbeke (2006) and van de Meer

Unravelling the process from Closed to Open Innovation

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R&D Management 40, 3, 2010 223

(2007) study Dutch innovative SMEs operating indifferent mature industries (e.g., food and bever-age, chemicals, machinery and equipments)and find that the use of ‘importing mechanisms’for accessing external sources of innovation israther diffused, whereas serious barriers are stillperceived in the adoption of ‘exporting mechan-isms’, through which technologies are externallyexploited. Taken together, these contributionsclearly indicate the prevalence of the inboundover the outbound dimension of Open Innovationin mature industries.

This article addresses both these limitations ofthe extant literature, studying the process of im-plementation of Open Innovation in firms belong-ing to mature and asset-intensive industries. Inparticular, its focus is on inbound Open Innova-tion, because previous research has shown that itis the prevailing dimension in these companies.

3. Reference framework

In this section, we describe the reference frame-work that was used as a guide to gather andinterpret the empirical evidence collected throughthe case studies. This framework has been devel-oped by looking into both organizational changeand Open Innovation research.

3.1. Process of implementation of OpenInnovation

Implementing Open Innovation has a deepimpact on the organization and managementsystems of the innovating firm. As noted byChristensen (2006, p. 35), ‘Open Innovation canbe considered an organizational innovation’.Similarly, the barriers that IBM, P&G and AirProducts had to overcome in their journey fromClosed to Open Innovation (Chesbrough, 2006)closely resemble the dynamics underlying organi-zational change, as noted also by Deck (2008).Differently put, an interesting parallel can bedrawn between the characteristics of organiza-tional change processes and the challenges thatfirms are confronted with in their journey towardsOpen Innovation: (i) Open Innovation does notmerely require a firm to intensify its relationshipswith external organizations throughout its inno-vation processes. Rather, it involves the use of thebusiness model as the cognitive device throughwhich decisions about innovation are evaluatedand taken (Chesbrough, 2006). Similarly, organi-

zational change involves variation in both currentmodes of action and cognition, in order to enablethe organization to take advantage of internaland external opportunities (Gioia and Chitti-peddi, 1991); (ii) overcoming the Not-Invented-Here and Not-Sold-Here syndromes is key insuccessfully introducing Open Innovation (Ches-brough, 2003). Similarly, research has shown thatinertia is the most challenging barrier towardseffective organizational change (e.g., Sastry, 1997;Armenakis and Bedeian, 1999); (iii) both theadoption of Open Innovation and successfulorganizational change require the developmentof new organizational routines, e.g., evaluationprocedures and metrics of performance (Mar-shak, 1993; Chesbrough, 2006); (iv) firms imple-menting Open Innovation have to undergo acontinuous process of experimentation, adapta-tion and learning to pro-actively define theirbusiness environment, as it occurs in organiza-tional change initiatives (Burnes, 1992). There-fore, it is reasonable to conceive the journey fromClosed to Open Innovation as an organizationalchange process and hence to use the approachesand instruments developed by organizationalchange research to unravel its characteristics.

The way in which companies change theirorganization is a central topic in organizationalstudies. Van de Ven and Poole (2005) attempt toorganize different approaches used by scholars,tracing them to different ontological views aboutorganizations (i.e. whether they are viewed asconsisting of things or of processes) and differentepistemologies about the methods for studyingchange (i.e. through variance theory, wherechange is represented as a dependent variableand statistically explained by a set of independentvariables, or through process theory, wherechange is explained as a temporal order andsequence of events). Their analysis clearly indi-cates that approaches conceiving of the organiza-tion as made of things (which are dominant inempirically grounded organizational and socialscience research) and explaining change as atemporal order and sequence of events (whichare better suited to understand ‘how’ the processof change takes place) are more appropriate forthe purpose of our multiple case-study analysis(Tsouskas and Chia, 2002).

An established research stream on processmethods conceptualizes the process of change asa sequence of interconnected phases or stages(Fisher, 1970), which allows for ‘encapsulatingthe essentials of the richness of processesin a simpler account of stepwise development or

Davide Chiaroni, Vittorio Chiesa and Federico Frattini

224 R&D Management 40, 3, 2010 r 2010 The Authors


typical activities’ (Van de Ven and Poole, 2005). Anumber of phase models have been developedover time (e.g., Kotter, 1995; Galpin, 1996).Armenakis and Bedeian (1999), in their reviewof theory and research on organizational change,show that all these models have originated fromthe early work of Lewin (1947), who conceptua-lized the change process as progressing throughthree main phases, namely unfreezing, movingand institutionalizing. The first phase is con-cerned with the establishment of a sense ofurgency for change, the establishment of a ‘guid-ing coalition’ (Kotter, 1995) for championing itand the creation and communication of the newvision to both internal and external stakeholders.The second phase concerns the actual implemen-tation of change, through the establishment ofnew procedures and patterns of behaviour con-sistent with the new vision, eventually acting onbudget constraints, targets, schedules and rewardsystems. This phase is usually characterized by anexperimental approach, through which the solu-tions that are best suited to the firm’s endeavourare identified. Finally, the third phase involves theinstitutionalization of the new order, throughconsolidating improvements achieved to preventa slip back to the antecedent status quo. Arme-nakis and Bedeian (1999) go further by suggestingthat the Lewin’s model should be used as anintegrated and simplified framework to supportfurther research into organizational change.

Consistent with Armenakis and Bedeian(1999), we decided to adopt Lewin’s model asan instrument to examine the journey fromClosed to Open Innovation undertaken by thefirms in our sample. This choice was suggestedespecially by the parsimony of the model, whichdivides the organizational change process intoonly three phases, thus improving the reliabilityof our empirically grounded research (Yin, 2003).

3.2. Managerial levers for OpenInnovation

Understanding the anatomy of the process fromClosed to Open Innovation requires identificationof the dimensions along which change occurs, inthe three phases of the organizational changeprocess. Our framework identifies four dimen-sions (namely networks, organizational struc-tures, evaluation processes and knowledgemanagement systems) along which the changerequired to become an Open Innovator takesplace and, most importantly, can be stimulated.

They could also indeed be conceived as manage-rial levers on which a company can intervene tostreamline its journey towards Open Innovation.

3.2.1. NetworksEmpirical evidence clearly shows that firms imple-menting Open Innovation require the establish-ment of extensive networks of inter-organiza-tional relationships with a number of externalactors, in particular universities and researchinstitutions (Perkmann and Walsh, 2007), suppli-ers (EmdenGrand et al., 2006) and users (vonHippel, 2005; Simard and West, 2006). Laursenand Salter (2006) identify two variables thatdescribe the characteristics of a network forinnovation, namely its search breadth, which isdefined as the number of external sources orsearch channels that firms rely on, and its searchdepth, which is defined as the extent to whichfirms draw from the different external sources orsearch channels. Working on these variables,increasing both search breadth and depth, firmsare able to implement inbound Open Innovation.

3.2.2. Organizational structuresEffectively managing externally acquired knowl-edge requires the development of complementaryinternal networks (Hansen and Nohria, 2004), i.e.organizational systems focused on accessing andintegrating the acquired knowledge into the firm’sinnovation processes. Evidence shows that thisinternal reorganization might concern: (i) organi-zational structures, e.g., the establishment ofindependent ‘Open Innovation’ business units(Kirschbaum, 2005), or task forces and dedicatedcross-functional teams (Huston and Sakkab,2006). (ii) Organizational roles, e.g., championswho lead the process of transition from Closed toOpen Innovation (Chesbrough and Crowther,2006), or gatekeepers who manage the interfacebetween the firm and its external environment(Tushman, 1977). (iii) Rewarding and incentivesystems, which should include more open-or-iented goals and metrics (Chesbrough, 2003).

3.2.3. Evaluation processesAnother key dimension where change entailed byOpen Innovation becomes manifest is the processadopted to evaluate innovation opportunities andprojects. The openness of the innovation systemcomplicates this evaluation, because it determineshigher levels of technical and market uncertainty.Under these circumstances, firms should learn toplay ‘poker’ as well as ‘chess’ (Chesbrough et al.,2007), i.e. they need to use new evaluation criteria


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to focus more on external sources of innovation.As far as inbound Open Innovation is concerned,the evaluation process should be designed tomanage the higher uncertainty that analysingtechnologies and opportunities developed outsidethe firm’s boundaries entails. In this respect,systems to systematically scan and continuouslymonitor the range of technologies available in theexternal environment (van de Vrande et al., 2006),as well as new forms for the involvement ofexternal sources of innovation through the stra-tegic use of corporate venturing (Keil, 2002),appear to have increasing importance.

3.2.4. Knowledge management systemsFinally, knowledge management systems repre-sent another area where Open Innovation im-pacts. Open Innovation is in fact all aboutleveraging and exploiting knowledge generatedinside and even outside the firm, to develop andexploit innovation opportunities. ImplementingOpen Innovation requires therefore the use ofknowledge management systems able to supportthe diffusion, sharing and transfer of knowledgewithin the firm and with the external environ-ment. For the purpose of this paper, we considerboth the use of Information and CommunicationTechnology platforms and Intellectual Property(IP) management systems. The role of ICT insupporting a shift towards Open Innovation hasbeen widely acknowledged in the literature (Hus-ton and Sakkab, 2006; Piller and Walcher, 2006).The largest part of these technology platforms isused with the main purpose of facilitating theinflow of knowledge from outside sources. This isthe case, e.g., of the IT infrastructure used byP&G to collect ideas throughout its suppliersnetwork (Huston and Sakkab, 2006). Similarly,

the use of IP protection systems enables inboundOpen Innovation, as it prevents the opportunisticbehaviours of the actors with which the firmcollaborates (Chesbrough, 2003).

The elements of the reference framework thathave been discussed in the last paragraphs areintegrated and represented in Figure 1.

It is important to note that changes occurringalong one of the four managerial levers that lie atthe heart of our framework necessarily have animpact along the other levers. Although it isbeyond the scope of this paper to systematicallyassess how each dimension is connected to eachother, it is important to comment on the nature oftheir linkages and provide some examples of themthat are grounded in the existing literature. Withthe growth in the scope and size of the network ofexternal organizations or individuals from whichto in-source knowledge and technologies, a firmneeds to develop dedicated ICT and, morebroadly, knowledge management systems to sup-port its operation (link between ‘networks’ and‘knowledge management systems’). This is exem-plified by the cases of P&G with its Connect &Develop innovation management model (Dodg-son et al., 2006) and the development of ‘TheSims’ computer game (Prugl and Shreier, 2006).Similarly, a timely and accurate evaluation of ahigh volume of technological opportunities andinnovation projects generated in an Open Inno-vation environment requires the development anduse of dedicated ICT and knowledge managementsystems (link between ‘evaluation processes’ and‘knowledge management systems’). For instance,both P&G (Huston and Sakkab, 2006) and BMW(Stahl and Bergfeld, 2008) had designed centra-lized databases (respectively named Eureka andTechnis) and automated ICT flow systems for

INBOUND OPEN INNOVATION

InstitutionalizingMovingUnfreezing

Networks

Organizationalstructures

Knowledgemgmt. systems

Evaluationprocesses

Networks

Organizational structures


Evaluationprocesses

Networks



Evaluationprocesses

Figure 1. Theoretical framework.




rapidly collecting, processing and evaluating in-novation ideas and technologies emerging fromdifferent sources both inside and especially out-side the firm. Putting into practice these processesfor the evaluation of technologies and innovationopportunities emerging from external and hetero-geneous sources increases the need for a firm toestablish dedicated organizational roles such astechnology gatekeepers and innovation cham-pions (Gemunden et al., 2007). Similarly, neworganizational units are often created or re-con-figured with the aim of concentrating heteroge-neous competencies and decisional authority (linkbetween ‘evaluation processes’ and ‘organiza-tional structures’). This is clear for instance inthe case of the Dutch multinational companyDSM reported in Kirschbaum (2005) and in thecase of Generics discussed by Haour (2004).Similar changes at the organizational level arealso needed if a firm wishes to reduce the costsinvolved in the operation of a broad and hetero-geneous network of external technology sourcesand to maximize its capability to capitalize on it(link between ‘organizational structures’ and ‘net-works’). In this respect, Gassmann and Enkel(2004) describe how the re-configuration of theIBM R&D laboratory in Ruschlikon was neededto improve the integration in the innovationprocess of a broad network of customers andsuppliers. Finally, improving IP managementcapabilities and developing an IP-enabled busi-ness model require a firm to establish both orga-nizational roles that oversee the generation anddeployment of its IP and dedicated units that

facilitate the achievement of a critical mass in thisactivity (link between ‘organizational structures’and ‘knowledge management systems’). This link-age is the subject of an entire chapter of the mostrecent book by Henry Chesbrough (2006), wherethe cases of Qualcomm, UTEK and IntellectualVentures are described.

4. Research methodology

We decided to use case-study research as anoverall methodological approach for our empiri-cal investigation. As suggested by a number ofscholars, this is in fact a very powerful method forbuilding a rich understanding of complex phe-nomena (Eisenhardt and Graebner, 2007) thatrequires the capability to answer to ‘how’ and‘why’ questions (Yin, 2003). In particular, weused a multiple case-study design, which waschosen as it allows both an in-depth examinationof each case and the identification of contingencyvariables that distinguish each case from the other(Eisenhardt, 1989).

The study involved four Italian firms fromdifferent industries (cement, concrete and steelpipes, chemicals, automotive brake systems) thatwere studied during the last year (see Table 1,where real names have been blinded for confiden-tiality reasons). In the beginning, a preliminaryscreening of Italian newspapers (see Chesbroughand Crowther, 2006), carried out using a profes-sional database (see http://www.lexisnexis.com),allowed us to identify 10 firms from mature, asset-

Table 1. Preliminary information about the studied firms

Firm Industry Annualsales(2007)

Employees Annualinvestmentsin R&D(% sales)

Number ofemployeesin R&D

Role ofinterviewed people

Company A Cement andconcrete

h6.0 bn 23,700 0.5 250 Former head of corporateR&D Head of the IP officeHead of corporate R&D

Company B Steel pipes h10.0 bn 21,700 0.6 300 Head of corporate R&DCoordinator of R&D andtechnological innovationprojects Divisional productdevelopment manager

Company C Adhesivesand sealantfor buildings

h1.2 bn 4,700 6.7 170 Head of corporate R&DHead of technical assistanceCoordinator of networkinnovation projects

Company D Automotivebrake systems

h0.9 bn 4,300 5 400 Head of corporate R&DHead of the IP office


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http://www.lexisnexis.com


intensive industries, which could be considered asearly adopters of Open Innovation in Italy. Man-agers from these companies were invited to takepart in a workshop, where they could illustratetheir approach to innovation. For the empiricalanalysis, we selected the four firms that have infact initiated and carried out an evolutionaryprocess towards Open Innovation. As we sus-pected, it emerged that these firms had in factimplemented only the inbound dimension ofOpen Innovation. In this respect, the choice tofocus only on this dimension in the paper isconsistent with our empirical setting.

We gathered information mainly through directinterviews; in particular, we followed these steps:

� At the outset of each case, a relationship wasestablished with the manager who took part inthe workshop. He or she was informed aboutthe research project through a written sum-mary and a telephone meeting. During thismeeting, we identified the most adequate re-spondents for our analysis. Our first keyinformant was the head of corporate R&D,but we also interviewed people with differentroles and responsibilities in innovation (seeTable 1), to reduce the risk of retrospectiveand personal interpretation biases.

� Then we personally interviewed the selectedinformants; we undertook two semi-struc-tured interviews for each of them (each inter-view lasted on average one and a half hour) inorder to gather the information required topursue the objectives of the research. Directinterviews followed a semi-structured replic-able guide, which comprised a set of openquestions for each of the relevant constructs inour reference framework (e.g., organizationalstructures, inter-organizational networks).

� Secondary information was collected in theform of company reports and project documen-tation. These secondary information sourceswere integrated, in a triangulation process,with data drawn from the direct interviews, inorder to avoid post hoc rationalization and toensure construct validity (Yin, 2003).

� All interviews were tape-recorded and tran-scribed; generally, at this stage, a telephonefollow-up with the respondents was conductedin order to gather some important missing data.

The following section reports and discusses theempirical evidence we gathered for the four com-panies. It is used to illustrate the anatomy of theorganizational change process through which theyhave transformed fromClosed to Open Innovators.

5. Results and discussion

Evidence collected through the case studies ismapped along the dimensions of our referenceframework in Table 2. The firms that we studied,at the beginning of the change process describedin Table 2, were characterized by a Closed ap-proach to innovation and by:

� A strong but very narrow scientific and tech-nical body of competencies, in their own areaof interest.

� R&D carried out, in a very unstructuredfashion, inside organizational units devotedto technical assistance activities.

� A focus on markets where customers arerelatively low demanding in terms of productinnovation and where competition is ratherweak.

This indicates the magnitude of the changerequired by the implementation of Open Innova-tion in these firms.

In the following, a detailed discussion of theanatomy of the organizational change process thestudied firms have undergone to adopt OpenInnovation is provided, distinguishing betweenthe three phases of unfreezing, moving and in-stitutionalizing.

5.1. Unfreezing

This phase of the organizational change process ischaracterized by the following aspects:

� The key role of top management in triggeringchange, i.e. in contributing to overcome thefirms’ organizational inertia. This ‘enabling’role is well established in the literature onradical organizational change (see, e.g., Good-man and Dean, 1982; Kaplan et al., 2003). Inall the four cases, the critical role of topmanagement is clearly evident, even if thediscontinuities to be faced were rather differ-ent in nature: the sudden increase of competi-tion caused by the blurring of boundariesbetween geographical markets for companyA, a corporate restructuring process followingrelevant corporate acquisitions for companiesB and C and finally the access to large inter-national markets for company D.

� The re-design of the organizational structure,which represents the first managerial dimen-sion interested by the implementation of OpenInnovation and leads to the establishment ofan independent unit devoted to R&D activ-

















Table2.Summary

ofthecase

studies

CompanyA

Unfreezing(1991–1994)

Moving(1995–2005)

Institutionalizing(2006–)

Backgroundinform

ation

Thewaveofglobalizationhitthe

cementindustry

atthebeginning

of1991,when

alsotheevolution

ofnorm

srulingtheEuropean

Unionlowered

thebarriers

of

entryforforeignplayersin

nationalmarkets.

Topmanagem

entofcompanyA

wasaware

ofthefact

thatin

order

toremain

competitivein

amore

geographicallyopen

contest

the

firm

needed

tosignificantly

increase

itsscale

anditspresence

inother

markets.

Astheseobjectives

hadto

be

achieved

rather

quickly,the

companystarted

theprocess

of

acquisitionofanother

largeplayer

oftheindustry

atEuropeanlevel.

Atthetimeofacquisition,the

target

companyhadnearlythree

times

theproductivecapacity

of

theacquirer

andawider

presence

inother

Europeancountries.

Theacquisitionhadbeenfinalized

inApril1992.

Thecompanystillin

1990heldno

patentseven

ifitwasalsoactivein

basic(academ

ic)research.

Theheadofthetechnicalsupport

centre,

employingnearly100

people,wasauniversity

professor,

andtogether

withtheother

three

graduate

people

ofthecentre,

published

anumber

ofpapersin

academ

icjournalsand

conferences.

Networks

Atthebeginningofthe1990s,the

companyretained

alimited

number

ofform

alrelationshipswithkey

suppliers,notrelatedto

innovation

activities.

Customers,whowerecharacterized

byarelativelylow

dem

andof

innovation,werenotinvolved

inresearchanddevelopmentproject.

Theonlynetwork

thatseem

sto

play

arole

since

thebeginningisnotthe

oneatthefirm

level,butthesocial

network

ofthenew

headofR&D,

involvingonanindividualbasisa

number

ofItalianuniversity

professors.

Leveragingonthesocialnetwork

oftheheadofR&D,thecompany

started

toestablish

form

al

relationshipswithanumber

ofItalian

universities

andresearchcentres

(amongothers,PolitecnicodiTorino,

PolitecnicodiMilano,CNR).

Thecreationofthisnetwork

followed

thestartingofapilotprojectbasedon

theidea

touse

cementto

reduce

pollutionbyintroducingphoto-

catalyticelem

ents.

Indeed,althoughtheidea

was

generatedwithin

thecompany,it

clearlylacked

knowledgeofphoto-

catalysis,whichis,asachem

ical

process,quitedistantfrom

those

adoptedin

thecementindustry.

Theparticipationofthecompany

toEU-funded

researchprojects

allowed

toinvolveaEuropean

network

ofuniversities,thus

enlargingtheoriginal

relationshipswithItalian

academ

icprofessors.

Aform

alsystem

andasetof

proceduresandtemplateshave

beencreatedformanagingthese

collaborations.

Organizational

structures

Atthebeginningofthe1990s,the

CEO

(alsoamem

ber

ofthe

company’sfoundingfamily)usedto

sayin

internalmeetings:‘W

ehave

beenso

farleader

ontheItalian

market

leveragingtheundoubted

reliabilityofourproducts,butin

order

tobealeader

inthefuture

globalizedmarket

weneedto

finda

new

wayto

nurture

ourinnovation,

lookingmore

andmore

outsidethe

boundaries

ofourcompany’.

In1992,once

theacquisitionwas

completed,anew

GroupTechnical

Center(C

TG)wasestablished

mergingtheprevioustechnical

services

ofboth

firm

s.Within

the

CTG,aseparate

R&D

functionwas

established,forthefirsttimein

the

history

ofthefirm

settinga

distinctionbetweentechnical

assistance

andR&D

activities.

Therole

andcompetencesofthe

internalproject

managersgrew

significantly,together

withthe

number

ofpersonnel

withatechnical

orascientificdegree:

thenorm

al

turnover

ofretirees

wasindeedused

tohirehigher

skilledpeople,

maintainingtheoverallnumber

close

to100.

TheheadofR&D

then

decided

toopen

asm

allresearchcentrein

South

Italy

withnearly10people.Theaim

ofthecentrewasto

promote

research

projects,involvingItalianandforeign

universities,to

befunded

bythe

EuropeanCommissionunder

the

Framew

ork

Programmes.

In2001,anew

smallresearchteam

of

threepeople

wasestablished

for

developingnew

additives

tobeused

especiallyforthecementproducedby

thecompany.Additives

are

used,e.g.,

TheR&D

functionhadbeen

restructuredbyestablishingthe

so-called

sectorheads.Seven

sectorheads,whowerechosen

amongthemost

experienced

project

managers,havetherole

tocoordinate

innovationprojects

belongingto

certain

areas(e.g.,

cement,additive,

concrete),to

identify

therightproject

manager

tobeentitled

withthe

responsibilityofeach

project,to

support

theheadofR&D

inthe

evaluationprocess

ofinnovative

projects,to

managethe

relationshipsbetweenthedifferent

functionswithin

thefirm

(also

ensuringtheinvolvem

entof

commercialunits)

andfinallyto

nurture

andexpandthe

innovationnetwork

ofthe

company.


r 2010 The Authors



Table2.(C

ontd.)

CompanyA


Moving(1995–2005)


AsheadofR&D

anew

manager

wasappointedpurposivelyhired

in1991with30years

ofprevious

businessexperience

inother

industries

andalsobringingastrong

socialnetwork

ofresearchersand

scientistsin

Italianuniversities.

In1993,anIntellectualProperty

Office

wascreatedwithin

theR&D

function.Theheadofthe

IntellectualProperty

Office,with

previousexperience

inthe

pharm

aceuticalindustry,wasalso

hired

in1993together

withother

fiveprofessionalsbelongingto

the

existingsocialnetwork

ofthehead

ofR&D.

toincrease

thespeedoftheprocess

of

cementconsolidationorto

makeit

more

resistantto

particular

environmentalconditions(e.g.,heat,

moisture).Before

2001,additives

had

beensimply

acquired

from

external

suppliers.

In2007,to

further

support

the

work

ofsectorheads,anew

organizationalunitcalled

Competitors

Groupwassetup

withtw

opeople

under

the

supervisionoftheIntellectual

Property

Office.TheCompetitors

Groupconstantlymonitors

the

activitiesofcompetitors

regarding

theintroductionofnew

products

andhasalsotherole

ofscouting

most

promisingtechnological

advancesdonein

universities

intherelevantareasforthe

company.

Anew

smallresearchcentrehas

beenestablished

inascientific

park

named

Kilometro

Rosso

withtheaim

toexploitcross-

fertilisationbetweenresearchlabs

offirm

sin

differentindustries

(e.g.,automotive,

aerospace,

biotechnology).

Anew

organizationalstructure,

independentfrom

R&D

and

employing10people,hasbeen

established

andcalled

Innovation

Directorate,withtheaim

of

favouringstrengtheningthelink

betweenR&D

andtheother

company’sfunction.

Evaluation

processes

In1992,thefirstproject

managers

wereappointedandcross-

functionalteams–even

iflimited

toR&D,technicalassistance

and

production–werecreatedto

follow

thedevelopmentofthefirst

innovationprojects.

In1993,ascientificcommitteewas

createdwithsixItalianacadem

ic

Intheperiod1995–2005,thenumber

ofinnovationprojectsim

plemented

each

yearmore

thandoubled,from

nearlyseven

toeightper

yearin

1995

tomore

than20in

2004and2005.

Asaconsequence,explicitevaluation

procedureshadbeenintroducedto

assessthepotentialforaccessing

externalsources

ofknowledge,

Therelevance

ofthenew

approach

toinnovationhasbeenform

alized

inthedevelopmentofanadhoc

indicator,called

‘innovationrate’,

measuringthepercentage

contributionto

theoverall

revenues

ofinnovativeproducts

thatreach

themarket

everyyear.

Atarget

valueof5%

issetforthe




Table2.(C

ontd.)

CompanyA


Moving(1995–2005)


professors.Therole

ofthescientific

committeewasto

revisein

two

meetingsduringtheyearthe

progress

ofinnovationprojectsand

tovalidate

theirscientificbasis.

Regularmeetingswerealsoheld

withtheheadsofR&D

andofthe


Office

todiscuss

practicalproblemsandto

evaluate

thepotentialforfilinga

patent.

particularlywithin

theexisting

network.Theseprocedureshavebeen

initiallytested

inthepilotproject

on

photo-catalyticcement.

Theculture

ofproject

managem

ent

waswelldiffusedatthattimewithin

thecompanyandalsothepersonnel

inR&D

started

beingevaluated,even

ifstillinform

ally,onproject

perform

ance.In

particular,theability

ofcreatinganetwork

ofcontacts

outsidethecompanywasregarded

as

criticalfortheappointm

entand

subsequentevaluationofaproject

manager.

‘Itwaslikecreatinganincentivefor

them

tostayattheconference

venue

talkingwithother

people

insteadof

goingaroundin

thecity’said

the

form

erheadofR&D.

year2013andadditionalmeasures

andtargetshavebeenderived

for

project

managersandtheother

personnel

ofR&D.

TheInnovationDirectorate

becameanactiveplayer

ofthe

process

ofproject

evaluation,in

most

casesrepresentingakey

go-

nogogate

forthose

projects

involvingthedevelopmentof

productsintended

forwidespread

use

within

thecompanyandeven

beyond.

Knowledge

managem

ent

system

s

Theuse

ofinform

ationtechnologies

insupportinginnovationactivities

wasrather

limited.

Intheyears

1992–1994,afew

patents

werefiled,mostly

basedon

technicalknowledgepreviously

developed

inthecompany.

Theincrease

inthenumber

of

projectsalsoledto

theadoptionof

ICTsystem

sforprojectplanning,and

particularlyformanagingcross-

functionalteamsacross

different

countries(e.g.,videoconference

devices),andfordatabase

searching

onscientificpublicationsandpatents.

Recallingthisperiod,theheadofthe


Officessaid:‘for

longtimethefirm

competed

with

universities

inpublishingworksin

journalsandconferences...so

we

werenotusedto

cooperatingwith

externalorganizations.However,we

then

needed

toprotect

ourknowledge

tostart

relationshipsandto

manage

contractualstuff...finallyproject

managersfullyunderstoodtheroleof

theIP

Office

andbeganto

work

more

closely

withit’.

-


r 2010 The Authors



CompanyB


Moving(2004–2005)


Backgroundinform

ation

Intheyear2002,recognizingan

increase

inglobalcompetition,top

corporate

managem

entdecided

toreorganizeandconcentrate

allthe

activitiesrelatedto

steelpipes,

whichwerepreviouslydistributed

inanumber

ofloosely

coupled

localcompanies.

Asaresult,aspecializedcompany

(companyBin

ourcase)was

createdwithin

amuch

diversified

corporation.

In2002,thecompanystillheldno

patents

even

ifitwasactivein

basicresearch.

Networks

Once

appointedheadofthenew

lycreatedR&D

unit,thenew

manager

started

involvingin

innovation

activitiesanumber

ofuniversity

professors

andresearchershehad

previouslymet

duringhiseducation

andhislongcareer

inthecompany

(when

hewasin

chargeofmanaging

basicresearchactivities).

Basedonthesocialnetwork

ofthe

headofR&D,thecompanystarted

anumber

ofform

alrelationshipswith

main

universities

andresearch

centres.In

Italy,thisnetwork

rapidly

grew

intheyears

2004–2005to

includenearly50universities

and

publicresearchlabsandconsortia.

Relationshipswerealsoestablished

at

aninternationallevel

withtopUS

technologicaluniversities

andother

researchcentres

closedto

the

subsidiaries

ofthecompanyin

Argentina,MexicoandJapan.

However,alltherelationshipswere

managed

directlybytheItalianR&D

centralunit.

In2005,adedicatedorganizational

structure

wascreatedto

managethese

relationships.Interestingly,other

thandevelopingjointresearch

programmes,thecompanyfinanceda

number

ofPhD

programmes

withthe

aim

ofboth

achievingresearchresults

ofinterest

intheareaofsteelmaking

andestablishingfurther

relationships

withtopscientists(anduniversities)

inthefield.

In2006,thecompanystarted

aprogrammeforcreatingamore

established

network

withitskey

suppliers,makingthetransition

from

anadhocproject-by-project

involvem

enttowardsamore

structuredinvolvem

entbasedon

potentialforknowledgetransfer

ingiven

scientificandtechnological

areas.

Despitetheeffortsmadein

this

programme,

thereare

stillseveral

problemsmainly

dueto

thefact

thatmost

ofthekey

suppliersare

smallcompaniesrather

reluctant

totheform

alizationoflong-term

relationships.

Attheendof2007,nearly30

companieshavebeeninvolved

intheprogramme.

Organizational

structures

Thedecisionto

concentrate

all

activitiesonsteelpipes

inasingle

companywasstrongly

supported

by

thetopmanagem

entatthe

corporate

level.Thenextstep

envisioned

inthisrestructuring

process

concerned

theincrease

intheinnovationpotentialofthe

company.Managerswereusedto

claim

that‘now

thatwecanreally

exertaclearcontrolover

all

activities,wemustproveweare

able

toleverageourassetsforbecoming

In2004,theR&D

unitfurther

concentratedoninnovationactivities,

alsoafter

quality

controlprocedures

(thatwerepreviouslyin

chargeof

R&D)wereallocatedto

thetechnical

assistance

centre.

Inthesameyear,asm

allindependent

organizationalunitwasestablished

tomanagerelationshipswith

universities.Theunit,other

than

monitoringthedevelopmentofjoint

researchproject,focusedonthe

developmentofPhD

programmes

In2006,aform

alrole

(‘customer

representative’)wascreatedwithin

theR&D

unitwiththeaim

of

‘bringingthevision’ofkey

customersinto

project

teams.

Customer

representatives

periodicallyvisitkey

customers

together

withpeople

ofthe

marketingunitfordirectly

‘translating’into

technical

requirem

ents

majorneedsofthe

customers.

In2007,asm

allteam

of

Table

2.(C

ontd.)




Table2.(C

ontd.)

CompanyB


Moving(2004–2005)


themostinnovativecompanyin

this

field’

Intheyear2002,anew

independent

R&D

unitwassplitfrom

the

technicalassistance

centreand

entitled

ofallproduct

innovation

activities.

TheheadofR&D

waschosen

amongthemost

experienced

managersofthecompany.His

appointm

entwasparticularly

supported

bytopmanagem

ent,

given

thefact

thatforthefirsttime

inthehistory

ofthecompanyakey

managerialpositionwastaken

bya

non-m

ember

ofthecompany’s

foundingfamily.

Inthefollowingyear,anIntellectual

Property

Office

wascreatedwithin

thecompanyandunder

thedirect

controloftheheadofR&D.The


Office

established

since

itsbeginningtight

relationshipswithanetwork

of

professionalsin

thefield.

(andassociatedgrants)in

themain

scientificareasofinterest

forthe

company.

technicians(‘gatekeepers’)within

thetechnicalassistance

centrewas

createdto

constantlymonitornew

productsdeveloped

by

competitors.Theresultsofthis

scoutingactivityare

periodically

reported

toproject

managersin

theR&D

unit.

Evaluationprocesses

Atthebeginningof2002,the

evaluationprocess

usedbythe

companyforassessinginnovation

projectswasstillrather

inform

al

andmostly

basedontheperiodical

interactionbetweentheheadofthe

technicalassistance

centreandthe

headofthemarketingunit.

TheheadofR&D

since

his

appointm

entstarted

holdingregular

meetingsinvolvingpeople

from

differentunitsandtheheadofthe


Office.

Intheperiod2002–2004,cross-

functionalteamsincreasedin

number,alsoinvolvingpeople

belongingto

subsidiaries

other

than

totheItalianheadquarters.

Quarterly

review

meetingswere

established

toreview

theprogress

of

innovationprojects.A

key

role

inthesemeetingswasplayed

bythe

headoftheIntellectualProperty

Office,whose

task

wasto

evaluate

the

potentialforfilingpatents

outof

project

results.

Theevaluationprocess

was

strengthened

byexplicitly

introducingtheassessm

entof

accessingexternalsources

ininnovationactivities.Tothisend,

theIntellectualProperty

Office

developed

anumber

ofprocedures

andstandard

form

ats

thatquickly

becameaday-by-daytoolfor

project

managers.Oneofour

intervieweespointedoutthat:‘I

never

even

thinkto

contact

someonein

acompanyorin

auniversity

forproposinga

collaborationofanytypewithout


r 2010 The Authors



Table2.(C

ontd.)

CompanyB


Moving(2004–2005)


havingin

mybagtherightform

at

forsigningtheagreem

ent’.

Anumber

ofindicators

(e.g.,

number

ofnew

patents,number

of

new

projects,anumber

ofnew

products)

are

currentlyunder

developmentto

measure

innovationactivitieswithin

the

company.Thecoordinatorofthe

R&D

andtechnological

innovationprojectssaid:‘even

ifweare

stillfarfrom

havinga

reward

schem

eforourresearchers

basedoninnovationperform

ance,

weallknowthiswillbethecase

inthenexttw

oorthreeyears’.

Knowledge

managem

entsystem

sThecompanystarted

intheseyears

filingafew

patents

leveraging

existingknowledge,

particularlyin

thefieldofsteelpipes

connections.

Theincrease

inthenumber

of

projectsledalsoto

theadoptionof

ICTsystem

sforproject

planning.

Moreover,thecompanyinvestedin

gainingtheaccessto

scientific

databases(e.g.,Cilea,Science

Direct)

andpatentdatabanks,made

availableto

allem

ployeesthroughthe

company’sIntranet.

Thecompanyconsolidatedits

patentingactivitybyfilingnearly

50patents

per

year.

Asystem

ofcollectionofproject

ideasfrom

allem

ployees(called

‘longlist’)wasdeveloped

onthe

company’sIntranet.Ideas

collectedare

then

screened

once

ayearbyapoolofproject

managers

andtheresulting‘short

list’is

inserted

into

thenorm

al

evaluationprocess

forinnovation

projects.TheheadsofR&D

said:

‘weknow

Ibm

does

thesame,

and

even

much

betterthanus,butwe

are

stillyoungin

usingsuch

tools’.




CompanyC


Moving(1998–2005)


Backgroundinform

ation

Intheyear1994,thecompany

reshaped

significantlyitsbusiness

model

byacquiringoneofits

larger

suppliers(andalsothe

largestEuropeanproducer)

of

polymersforthebuilding

industry.Theintegrationtowards

thesupply

ofbasicmaterialswas

considered

thefirststep

for

startingthedevelopmentoftruly

innovativeproducts,allowingthe

companyto

expanditsproducts’

rangeandto

address

new

markets.

Despitehavingsubsidiaries

inmore

than10countriesandbeing

renowned

foritsabilityto

adapt

themain

featuresofitsproductsto

localenvironments,thecompany

in1994heldnopatents.

Networks

Thenew

headofR&D

started

its

activitiesin

thecompanywitha

clearprogrammein

mind:‘W

ithout

accessingfreshknowledgefrom

the

outside,

having(aswedo)up-to-

date

facilities

andskilledpersonnel

isnotenough.Weare

alarge

companyin

ourindustry,butifwe

talk

ofresearchweare

stillasm

all

chem

icalcompanyandwelack

the

criticalmass

forpursuing

innovationbyourselves’.

Hestarted

acollaborationwitha

leadinguniversity

professorin

the

fieldofrheologywhom

hemet

duringhispreviouscareer

inthe

researchcentreofEni(thelargest

Italianoil&gascompany).

Moreover,existingcontactshad

beenactivatedatPolitecnicodi

MilanoandScuola

Norm

ale

di

Pisa,thuscreatingthefirstbulk

of

thecompany’sinnovationnetwork.

In1998,aform

alprogrammewas

started

withPolitecnicodiMilano

andScuola

Norm

ale

diPisato

offer

twoPhD

grants

per

yearonresearch

areasofinterestforthecompany.The

aim

wasto

further

strengthen

relationshipswiththefacultyofthe

twouniversities

andto

gain

accessto

highly

skilledpersonnel

tobelater

employed

inthecompany.Even

ifthe

latter

goalwasnotcompletely

achieved

(withonly

afew

PhDs

currentlyworkingforthecompany)

theprogrammeallowed

todeepen

the

company’sknowledgeonkey

researchareas.

Startingfrom

theyear2000,the

network

ofuniversities

involved

ininnovationprocess

grew

innumber

andalsofrom

ageographicalpointof

view,byincludingUniversita

di

Padova(Italy),Miamiuniversity

and

PennState

university

(US).

Intheyear2005thenetwork

counted

more

than10universities

infive

countries.

Thenetwork

withuniversities

was

further

enlarged

byincluding

CNR

–NationalCentrefor

Research,Universita

FedericoII

inNaples,Universita

diTorino.A

number

ofcontractualagreem

ents

havebeenform

alizedfor

facilitatingthedevelopmentof

jointresearchprojects.Training

programmes

forundergraduate

andpostgraduate

students

have

alsobeendeveloped.

Organizational

structures

Intheyear1995,theTechnical

Assistance

unit,whichhadbeen,till

then,centralizedatthecorporate

level,wasdrasticallyre-organized.

First

ofall,anR&D

unitwas

createdbycollectingtoptechnicians

andresearcherswithin

thecompany

withtheaim

ofincreasingits

innovationpotential.TheCEO

of

thecompanyusedto

say‘W

eare

growingrapidly.Wedonothaveto

misstheopportunityofthisgrowth

forinvestingin

ourfuture.Andour

future

ismore

productsandmore

In1998,theR&D

unitwasentitled

tocarryoutaproject

aim

edat

introducingnanotechnologiesinto

company’sproducts.Theneedfor

accessingexternalknowledgewas

then

clearto

theheadofR&D

‘Thisis

notsuch

abattle

wecanwin

alone’.

TheheadofR&D

appointedhim

self

responsible

forthemanagem

entof

thenetwork,whilethemost

experiencedresearcher

inthe

companywasappointedproject

manager.

Startingfrom

2002,anew

In2006,thesonoftheCEO,and

mem

ber

ofthecompany’s

foundingfamilywasappointed

headofR&D,thusfurther

signallingthecommitmentoftop

managem

enttowardsthe

innovation.

ThepreviousheadofR&D

was

nominatedcoordinatorof

network

projects.Hismain

task

isto

consolidate

andfurther

develop

therelationshipswithuniversities

andresearchcentres

tobe

involved

inthecompany’s

Table

2.(C

ontd.)


r 2010 The Authors



Table2.(C

ontd.)

CompanyC


Moving(1998–2005)


innovativeproducts.Weneeda

best-in-class

R&D’

TheremainingpartoftheTechnical

Assistance

wasfurther

organized

by

productline(atthattime,threelines

ofproductsweremarketed)and

smalltechnicalcentres

hadbeen

createdin

each

foreignsubsidiary,

withtheaim

ofkeepingthem

close

tothefinalcustomer.

Theheadofthenew

lycreatedR&D

unitwasentrusted

toanexperienced

R&D

manager

belongingto

the

R&D

centreofEni.Themanager

waspurposivelyhired

tocreate

adiscontinuitywiththetraditionof

technicalassistance

andto

introduce

atruly

R&D

approach.

Intheyear1997along-term

agreem

entwassigned

withaPatent

Office

ofpatentprofessionalsand

attorneysbasedin

Milan.The

agreem

entallowed

thecompanyto

accessonadem

andbasisthe

services

ofthePatentOffice

tomanageitsIP.

organizationalrole

wasdefined

within

theTechnicalAssistance

units,

particularlythose

inforeign

subsidiaries.Named

technology

scout,ithastheobjectiveto

reportto

theR&D

unitinform

ationonhow

customersusedin

practicethe

company’sproducts(e.g.,ifthey

use

aparticularmixture

ofproducts,if

they

follow

theinstructionforuse).

innovationprojects.

Anew

organizationalrole,named

technologypromoter,was

establish

withtheaim

ofensuring

anefficientandeffective

knowledgetransfer

from

and

towardsR&D

andtheother

company’sunits.

Asm

allgroupofresearchershas

beenestablished

in2007working

inthefieldoforganic

chem

istry

andservingasinternalreference

pointformostofbasicinnovation

projects.

Evaluationprocesses


usedbythe

companyto

asses

innovation

projectswasbasedin

practiceonthe

interactionbetweentheheadof

R&D

andtheCEO

aboutthe

directionswhereto

pursuethe

researcheffort

ofthecompany.

Intheperiod1998–2005,the

companyim

plementedacompletely

new

evaluationprocess.Firstofall,it

increasedthecross-functionality

of

theprocess

byinvolving,other

than

R&D,alsoTechnicalAssistance

and

Marketingunits,under

thedirect

supervisionoftheCEO.Moreover,a

two-stepevaluationwasintroduced.

Inthefirststep,projectsare

evaluated

onaverygeneralbasislookingat

theirmain

goal(e.g.,introducingnew

productsin

agiven

product

line,

openingupanew

product

line)

and


was

further

strengthened

andagreat

effort

wasexpended

inconvincing

researchersthatexternaland

internallygeneratedprojectshave

tobeconsidered

inthesameway.

Evaluationmetrics

forresearchers

havebeenestablished

explicitly

includingthenumber

ofnew

contactsestablished

duringthe

yearandthedegreeof

participationto

‘external’projects.

ThecurrentheadofR&D

said:‘A

few

years

ago,externalprojects




Table2.(C

ontd.)

CompanyC


Moving(1998–2005)


assessingtheirstrategic

fit.In

the

secondstep,projectsare

evaluatedon

theirtechnicalandeconomical

feasibility.In

thisstep

ofthe

evaluation,key

peers

ofthenetwork

are

alsoinvolved.

Periodicallyreview

meetingswere

established

toreview

theprogress

of

innovationprojects.

wereconsidered

aspotentially

dangerousasthey

mighthave

drained

financialresources

for

internalprojects.Now

our

researchersknow

thatweare

willingto

reward

them

asmuch

as

they

are

able

todealwiththese

project.They

started

tounderstandtherealvalueof

externalprojectsforthe

company’.

Knowledge

managem

entsystem

sThecompanyhadnopatents

and

alsotheuse

ofIC

Tsystem

swas

rather

limited.

Theinteractionwithuniversities

on

basicresearchprojectsforced

the

companyto

adoptIP

managem

ent

procedures,withthehelpofthe

externalPatentOffice

(withwhichit

signed

anagreem

entin

1997).The

firstpatents

werefiledin

1998.

Intheyears

1998–2000,thecompany

completely

renew

editsIT

infrastructure,creatinganInternet

website

(withconfidentialsectionsfor

employeesonly),andacquiring

video-conferencesandinstant

messagingsystem

sforconnectingits

subsidiaries

withthecorporate

centres.

Thecompanystrengthened

its


10patents

per

year.


r 2010 The Authors



CompanyD


Moving(2003–2005)


Backgroundinform

ation

Startingfrom

theyear2000,in

response

toanincrease

inglobal

competitionin

theautomotive

components

market,thecompany

decided

tostrengthen

itspresence

inforeignmarkets.Thecompany

acquired

manufacturingplants

inBrazil,established

ajointventure

inSouth

Africafortheproduction

ofbrakedisks,acquired

asm

all

UK

companywithalongtradition

intheproductionofbrakesystem

sformotorcycles

andfinally

established

ajointventure

witha

Chinesemanufacturerof

automotivebrakesystem

sto

accessthefast

growingmarket

of

FarEast.

Thecompanywasorganized

by

product

lines

and,despitebeing

recognized

asoneoftheleading

companiesin

theindustry,R&D

activitieswererather

limited.Only

thebusinessunitdedicatedto

auto

races(started

in1975)hada

researchteam

ofabout50people,

clearlyseparatedfrom

therest

of

thecompany,focusedonthe

developmentofinnovativebrake

solutions.

ThecurrentheadofR&D

described

thesituationoftheother

businessunitsatthattime:

‘Every

BU

hasitsownproduct

developmentteam.Theaim

of

theseteamswasto

adaptthe

productsto

theneedofcustomers,

eventuallybyintroducingsm

all

Networks

Thecompanyhadastrongnetwork

includingkey

playersin

the

automotiveindustry.However,with

thepartialexceptionofracing

teams,theinvolvem

entof

customersin

theinnovationprocess

wasrather

limited.

In2002,thenew

headofR&D

started

creatinganinnovation

network

byinitiallyinvolving

universities

(PolitecnicodiMilano,

Universita

diBergamo)in

basic

materialsandmechanicalresearch

projects,leveraginghispersonal

contacts.

Theinvolvem

entofuniversities

also

wasofhelpforthenew

headof

R&D

ingainingacceptance

among

company’sresearchers,whofelt

proudofcollaboratingwithwell-

respectedacadem

ics.

Thenetwork

wasfurther

strengthened

byincreasingthe

number

ofcollaborationswith

universities

(University

ofMunich,

Universita

degliStudidiMilano).

Key

customers,particularlyhigh-end

automotivemanufacturers,started

becominginvolved

ininnovation

projects.

In2007,across-industries

consortium,named

Intellim

ech,

wasestablished

bythecompany

involving18industrialpartners.

Theaim

oftheconsortium

wasto

developmechatronicssolutions

foranumber

ofpotential

applications,even

outsidethe

automotiveindustry.

Organizational

structures

Intheyear2000,theCEO

(mem

ber

ofthecompany’sfoundingfamily)

promotedastrongre-organization

ofinternalR&D

activities:‘A

companythatstillin

2000operates

likein

the1990sisdoomed

tofail.

Weneednew

approaches

both

on

themarket

sideandontheresearch

side’.

Anew

corporate

R&D

unitwas

createdwiththeaim

of

concentratinginnovationefforts

andforcingthedevelopmentof

radicalrather

thanmarginal

innovations.Thebestresearchers

andtechniciansfrom

product

developmentteam

wereselected

as

personneloftheR&D

unit,whereas

theremainingmem

bersofthe

In2003,thecompanystarted

aproject

involvingatopGerman

automaker

andanumber

of

universities

withtheaim

todevelopa

new

productlineofhigh-perform

ance

ceramic

brakesystem

s.Theproject

waschosenbytheheadofR&D

asa

pilottestingfieldforim

plementinga

new

approach

towardsinnovation.

Theresearchteam

workingonthe

project

waslocatedin

afully

equipped

facility

separatedfrom

the

company,in

ascientificpark

named

Kilometro

RossonearBergamo.The

aim

oftheproject,other

than

obviouslydevelopinganew

product

line,

wasto

gather

asmuch

external

knowledgeaspossible,even

looking

outsideautomotiveandcomponents

In2006,anew

organizationalrole,

named

‘focalpoint’,was

established

within

theR&D

unit.

TheheadofR&D

said:‘The

ultim

ate

goaloffocalpoints

isto

continuouslyscoutideasfrom

the

externalenvironmentand

particularlyfrom

researchlabs

anduniversities

andto

benchmark

ourmarketed

products.Every

timethey

seesomethingthat

appears

betterthanwhatwedo,

analert

issentto

R&D’.

Table

2.(C

ontd.)




Table2.(C

ontd.)

CompanyD


Moving(2003–2005)


improvem

ents.Wewerefar,

however,from

talkingofan

innovationprocess’.

existingproduct

developmentteams

hadbeendevotedto

technical

assistance

activities.

Theheadofthenew

R&D

unitwas

chosenwithin

companymanagers.

However,in

contrast

withthe

company’stradition,hewasnot

selected

amongmanagersof

product

developmentteams,butin

themanufacturingfunction.The

headofR&D

wastherefore

confrontedwithtw

omain

challenges:(i)to

implementnew

proceduresandprocesses

for

increasingtheinnovationpotential

ofthecompany,and(ii)to

sethis

leadership

over

company’s

researchers.

industries.

Inthefollowingyear,anindependent

R&D

sub-unit,named

Advanced

ResearchDevelopment,wascreated

toleverageexternalknowledgefor

sustainingbasicresearchprojects.

WhereastheremainingR&D

activitieswerefurther

concentrated

onapplied

research.

Intheyear2005asm

allIntellectual

Property

Office

withfourpeople

was

createdto

managethegrowing

company’sIP.

Evaluationprocesses


fornew

projectswasrather

inform

aland

mostly

inchargeoftheheadof

R&D.

Inmost

cases,initialinnovation

projectsaddressed

basicresearch

issues

ofresistance

ofmaterialsand

interactionofmechanicalparts.

They

wereusedmore

totest

the

potentialofthecompanyin

radical

innovationsrather

thanfor

pursuingrealproducts’innovations.

Innovationprojectsincreasedin

number

andin

cross-functionality,

alsoinvolvingpeople

belongingto

other

subsidiaries

other

thanthe

Italianheadquarters.

Startingfrom

theyear2005,

evaluationmeetingshadbeenheldon

aregularbasisalsowiththe

participationofmem

bersofthe


Office.


was

further

form

alizedbyintroducing

astage-gate

model,wherethe

potentialmarketabilityofthe

project

resultsisfirstevaluated

andthen,forthose

projectsthat

pass

thegate,technicalfeasibility

issues

are

assessed.

TheheadoftheIntellectual

Property

Office

said:‘O

ur

researchersnow

feel

thatthey

are

workingin

anopen,international

andchallengingresearch

environment,veryfarfrom

the’

provincial‘environmentthey

experiencedafew

years

ago’.

Knowledge

managem

entsystem

sTheheadofR&D

said:‘W

elooked

atourcompetitors

andfoundthat

theirIP

portfoliowasgrowing...in

severalcaseswithsolutionsthatwe

alsodeveloped

forourproducts...

butthatwenever

thoughtbefore

to

Aknowledgedatabase

(withdata

on

contactsandproject

results)

was

createdandmadeaccessible

tocompany’sem

ployeesthrougha

dedicatedintranet

system

.

Thecompanyconsolidatedits


20patents

per

year.


r 2010 The Authors



ities (which is separated from technical assis-tance) and of an IP Office, aimed at managingthe existing and new knowledge basis. This isfairly evident in all the four cases. Thesechanges at the organizational structure levelwere effective in triggering the change processbecause: (i) they made the change immediatelyvisible to everyone within the firm, i.e. theyrepresented a strong sign that the status quohad been unfrozen to enable change; (ii) theydid not interfere with the basic processes androutines of the firm, i.e. they did not conflictdirectly with the status quo. Moreover, thefirst small projects formally launched withinthe R&D unit and the first patents filed byleveraging existing knowledge represented theearly wins (Kotter, 1995), very often needed tosignal the company that implementing changecan lead to tangible results.

� The adoption of a jump-in approach (Kotter,1995; Clark et al., 1997) for identifying man-agers in charge of the newly created R&D unitand IP Office, with the aim of creating thesense of urgency and the right environment ofexcitement and energy to nurture the change(Chesbrough, 2006). This goal can be achievedeither by hiring new managers with a strongprofessional experience in more open-orientedcompanies or by creating a discontinuity in‘traditional’ internal career paths for manage-rial positions. The first solution is well exem-plified in the cases of companies A and C,where the new heads of R&D had both pre-viously worked in the research labs of thelargest Italian industrial company. The crea-tion of a discontinuity in the career paths isclear, on the contrary, in the cases of compa-nies B and D, where the direction of R&D (i.e.a key managerial position) was entitled for thefirst time since the creation of the company toa non-member of the founding family (com-pany B) and to a corporate manager neverinvolved before in R&D activities, thus break-ing the tradition of selecting R&D managersonly within divisional research units (com-pany D). The discontinuity caused by thejump-in approach in companies A and D isalso reinforced by the introduction of a new‘cultivation’ management style (Orlikowskiand Hofman, 1997).

� The marginal role played by the firm’s estab-lished network of customers and suppliers inshaping the initial phases of adoption of OpenInnovation. This aspect is rather new in theOpen Innovation literature that, on the con-T

able2.(C

ontd.)

CompanyD


Moving(2003–2005)


protect

byfilingapatent’.A

few

patents

werefiledwiththehelpofa

patentattorney

intheyear2002.

TheIC

Tinfrastructure

was

strengthened.Video

conferencing

system

sandwe-based

communicationsystem

shadbeen

developed

alsoto

favourthe

connectionsbetweencompany’s

headquartersanditsvarious

subsidiaries

andjointventures.




trary, has almost always stressed the pivotalrole of the firm’s network as a key enabler ofthe adoption of the new paradigm. In ourcases, it emerges that initially, it is the socialnetworks of the managers in charge of R&Dactivities that allowed the firm to access im-portant sources of technologies and innova-tion rather than the firm-level one. This socialnetwork comprises mostly relationships withscientists at universities. Consistent with theperspective suggested by Perkmann andWalsh (2007), these inter-personal networksacted as antecedents to firm-level relation-ships.

In this unfreezing phase, it emerges that actingon the firm’s knowledge management system toimprove IP management capabilities requires afirm to establish an independent organizationalunit and dedicated organizational roles, which isan example of the link between the ‘organiza-tional structures’ and the ‘knowledge manage-ment systems’ dimensions of our framework.

5.2. Moving

In the moving phase of the transformation pro-cess, after the need for a new approach toinnovation has been fully established and com-municated, Open Innovation is put into practice.This step of the process is characterized by thefollowing aspects:

� The establishment of an experimental field, i.e.a pilot project, for testing the practical im-plementation of Open Innovation. Aroundthis project, the first bulk of the firms’ innova-tion network is created, mainly leveraging onthe existing social network of the Open In-novation champion, and the solutions mostadequate to the characteristics of the firm areidentified. The pilot project needs both to havethe characteristics (in terms of the degree ofinnovativeness and requirements for accessingexternal sources of competences) that make ita trustable testing field for the new approachto innovation and to be as clearly separatedfrom the rest of the innovation activities of thecompany as to allow an independent measureof its success or failure (Galpin, 1996; Arme-nakis and Bedeian, 1999). This is the case forinstance of the project on the development ofcement with photo-catalytic elements to beused for reducing cities’ pollution undertakenby company A, or the project about the

adoption of nanotechnology to improve theresistance of outdoor adhesives in company C.

� The establishment of a firm-level inter-orga-nizational network, by leveraging the personalsocial networks of R&D managers. This net-work is mainly explorative in nature (March,1991), as companies need to explore new areasof knowledge, different from the ones theyhave traditionally mastered. This implies that:(i) the depth of the network (Laursen andSalter, 2006) clearly prevails on its breadth, asfirms need to establish long-term formal re-lationships to maximize learning effects(March, 1991); (ii) the preferred partners areuniversities. Relationships with universities,indeed, are less risky in terms of potentialspillovers than others involving suppliers, cus-tomers or even competitors. Focusing on uni-versities as external sources of technicalknowledge is therefore consistent with thelow attitude of the companies towards IPprotection. In some cases (namely in compa-nies B and C), even an ad hoc organizationalstructure has been created with the aim ofmanaging research collaborations with uni-versities in the relevant scientific areas.

� The introduction of a more formalized eva-luation process for innovation projects de-signed to challenge the ‘traditional’ belief inthe superiority of the firm as the central locusof innovation (Chesbrough, 2006), throughexplicitly establishing procedures to assessthe potential and the opportunity to accessexternal sources of technology, even beyondthe existing exploration network. In this eva-luation process, a relevant role is played by theIP Office, which defines mechanisms for facil-itating knowledge transfer and for protectingcompanies from opportunistic behaviours(Chesbrough, 2006).

� The introduction and empowerment of infor-mation technologies (Dodgson et al., 2006) forsupporting both project management activ-ities (e.g., videoconference devices, company’sintranet, virtual project workspaces) and in-novation scouting activities (e.g., scientificdatabanks, prior art and patent databanks).

The analysis shows how managing a growingnetwork of relationships with an external actorrequires the establishment of a dedicated organi-zational unit to which the responsibilities for thisactivity are concentrated. This exemplifies theclose link between the ‘networks’ and ‘organiza-tional structures’ dimensions in our framework.


r 2010 The Authors



5.3. Institutionalizing

The results achieved in the implementation of theinbound dimension of Open Innovation are con-solidated and institutionalized in a last distinctphase of the change process, which is character-ized by:

� The partial re-design of the organizationalstructure. More specifically, in this phase,new organizational roles (instead of new struc-tures) are introduced. In particular, gate-keepers (Tushman, 1977), who are given theresponsibility over innovation scouting activ-ities, and innovation champions (Chakrabarti,1974), who administer and streamline the eva-luation and development of innovation pro-jects in a given scientific or product area, areestablished. In other words, the change agents(Galpin, 1996) who – as individuals – in theprevious phases of the implementation processcontributed to pilot testing and rolling outrecommendations about how to adopt the in-bound dimension of Open Innovation, are nowconsolidated into well-defined organizationalroles (and therefore made independent fromindividuals). The introduction of these roles isclear in all our cases even if they go under verydifferent names: ‘sector heads’ in company A,‘customer representatives’ and ‘gatekeepers’ incompany B, ‘coordinators of network innova-tion projects’ and ‘promoters’ in company Cand ‘focal points’ in company D.

� The adoption of performance measures expli-citly aimed at evaluating the results of thecompany and its innovation activities, underan Open Innovation perspective. Early casesof firms implementing Open Innovation out-side high-tech industries (Chesbrough andCrowther, 2006) show that ‘companies usingOpen Innovation to extend their enterprise donot create new processes and metrics; insteadthey layer an Open Innovation perspectiveonto existing processes’. On the contrary,and therefore more interestingly, at least forcompanies A and C, there is evidence that thefirms have undergone a profound change interms of the evaluation metrics that are usedto inform the management activities and re-source allocation in R&D. Furthermore, forall the studied firms, a clear willingness tomove forward in this direction emerged.

It emerges that, in order to avoid a quick slipback to the traditional, Closed Innovation ap-proach, it is useful to establish new organizational

roles in charge of managing the evaluation anddevelopment processes of innovation opportu-nities generated in an Open Innovation environ-ment. This exemplifies the need to contemporarilyintervene on both the ‘organizational structures’and the ‘evaluation processes’ dimension to in-stitutionalize the transition from Closed to OpenInnovation.

Table 3 synthesizes the commonalities in theimplementation of the inbound dimension ofOpen Innovation in the studied cases, hencedrawing a tentative anatomy of the organiza-tional change process through which a firm in amature, asset-intensive industry moves frombeing a Closed to an Open Innovator.

6. Conclusions

This paper adopts a longitudinal, firm-level per-spective, to analyse the changes in a firm’s orga-nizational structures and management systemsthat the shift from Closed to Open Innovationentails. In particular, it uses established conceptsin organizational change research to look into arich empirical basis that documents the adoptionof Open Innovation by four Italian firms operat-ing in mature, asset-intensive industries. Theanalysis shows that the journey from Closed toOpen Innovation involves four main dimensionsof the firm’s organization, i.e. inter-organiza-tional networks, organizational structures, eva-luation processes and knowledge managementsystems. The changes occurring along each ofthese dimensions in the three phases into whichthe organizational change process can be dividedare synthesized in Table 3.

Although the paper should be better conceivedin an exploratory fashion, we believe it holdsinteresting implications for both scholars andpractitioners. As far as research implications areconcerned, our article is one of the first contribu-tions, to the best of the authors’ knowledge, toadopt a longitudinal perspective to comprehen-sively look into the implications that the adoptionof the Open Innovation paradigm has over theorganization and management systems of theinnovating firm. The model that is put forwardin the paper can be used hopefully as a referenceframework to gather and interpret further em-pirical evidence on the topic. Second, the paperalso contributes to organizational change re-search, as it applies the established Lewin’s modelto study the characteristics of a particular changeprocess, namely the journey from Closed to Open




Innovation, that has specific characteristics (e.g.,the need to coordinate change at the level of boththe firm’s internal and external organization),which make it an interesting avenue of research.

As far as managerial implications are con-cerned, the model developed in the paper, andespecially the rich empirical basis that it discusses,provides R&D managers with a number of in-sights that are useful to properly assess theimplications (and the costs) that a shift towardsa more open approach to innovation implies.Furthermore, they are provided several cluesabout how to design and put into practice orga-nizational and managerial solutions able tostreamline the pervasive transformation processtowards Open Innovation. In this respect, themain points that deserve attention appear to be:(i) the fact that the journey towards Open In-novation is triggered by a change in the organiza-tional structure of the innovating firm. Thecreation of independent organizational units de-

voted to the management of innovation projectsseems to be a strong signal that the status quo hasbeen unfrozen, although they do not interferewith established organizational processes androutines; (ii) the pivotal role of the social networkof the Open Innovation champion, which appearsto act as an antecedent and enabler of firm-levelinter-organizational relationships; and (iii) theimportance of identifying a pilot project thatserves as a field test for the Open Innovationprocedures and practices to be fine tuned, becomeaccepted and extended later on to the wholeorganization.

Obviously, the paper has a number of limita-tions that call for future research. First of all,because of the methodology that it uses, theresults cannot be statistically generalized to otherfirms with characteristics different from the onesthat we studied. Future research is thereforeneeded to investigate, through either extensivesurveys or, better, comparative multiple case

Table 3. Anatomy of the organizational change process from Closed to Open Innovation in mature, asset-intensiveindustries

Inbound dimension

Unfreezing Moving Institutionalizing

Networks Exploitation of individualsocial networks,particularly for developingrelationships withuniversities and researchcentres.

Creation of an explorationnetwork, through a switchof existing individualsocial networks to the firmlevel.

Establishment of long-term forms ofcollaboration withuniversities and researchcentres.


Achievement of a strongcommitment from thefirm’s top management.Separation of R&Dactivities from existingtechnical assistance.Creation of anindependent IntellectualProperty Office within thefirmIdentification, eventuallythrough a jump in-approach, of an OpenInnovation champion.

Establishment of adedicated organizationalunit for managingcollaborations withuniversities.Identification of a pilotproject (well defined andseparate from the rest ofthe firm’s innovationactivities) to serve asexperimental field for theimplementation of OpenInnovation.

Creation of the role ofgatekeepers formonitoring thedevelopment oftechnologies and scientificadvances in the areas ofinterest for the firm.Identification of the mainareas of research andestablishment ofinnovation champions foreach of them.

Evaluation processes Establishment of regularmeetings for validatingand monitoringinnovation projectsdeveloped within the firm.

Introduction of explicitevaluation procedures toassess the potential foraccessing external sourcesof knowledge, particularlywithin the existingexploration network.

Adoption of generalindicators and eventuallyof derived innovationperformance measures forproject managers.

Knowledgemanagement systems

Start to file patentsleveraging knowledgealready existing within thefirm.

Adoption of ICT systems(videoconference, projectmanagement tools) forincreasing project teaminteroperability.

Assessment of patentingactivities, eventuallyexplicitly included into thefirm’s strategic plan.


r 2010 The Authors



studies, whether and how the model developed inthis paper can be applied to companies operatingin technology-intensive industries, and in othercountries different from Italy or, more interest-ingly, outside Europe. A fascinating aspect toinvestigate could also be the role played by thefirm’s governance system. In particular, it couldbe interesting to answer the following ques-tion: does the fact of being a private held (oreven a family-owned) or a publicly traded com-pany affect the propensity of a firm to initiate thetransition towards Open Innovation or top man-agement’s commitment in the change process?

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Davide Chiaroni is Assistant Professor at theDepartment of Management, Economics and in-dustrial Engineering of Politecnico di Milano. Hismain research areas are Open Innovation andstrategic management in high-tech industries. Heis the author of two books and of more than 40papers, including articles in R&D Management,Technovation, International Journal of TechnologyManagement and International Journal of Entre-preneurship and Innovation Management.

Vittorio Chiesa is Full Professor of R&D Strategyand Organisation at Politecnico di Milano. He isa member of the Faculty of MIP – the BusinessSchool of Politecnico di Milano, where he isresponsible for the Technology Strategy area.His main research interests are in R&D manage-ment and organization, technology strategy andinternational R&D. He has published six booksand more than 100 papers, including 40 articles inleading international journals such as the Journalof Product Innovation Management, IEEE Trans-actions on Engineering Management and Interna-tional Journal of Operations and ProductionManagement.

Federico Frattini is Assistant Professor at theDepartment of Management, Economics and in-dustrial Engineering of Politecnico di Milano.His research interests are in R&D performancemeasurement, the organization of R&D activitiesand the commercialization of innovation in high-tech markets. He has published more than 50papers, including articles in the Journal of ProductInnovation Management, R&D Management,Journal of Engineering and Technology Manage-ment and International Journal of TechnologyManagement.


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Chiaroni, D.; V. Chiesa & F. Frattini, 2010, Unravelling the Process From Closed to Open Innovation Evidence From Mature