《技术创新管理》课程教学课件（英文）Network Industries and Open Innovation

NetworkIndustriesandOpen InnovationDr.MScBertSadowskiTechnischeUniversiteitTUeEindhovenUniversity of TechnologyWhere innovation starts

Network Industries and Open Innovation Dr. MSc Bert Sadowski

StructureOpeninnovation:theoriginsandtheconcept.Openfirmstrategiesmeanopenmarkets?TheNetNeutralityDebate:TheOpenInnovationAngleSummaryTechnischeUniversiteitTUEindhoveneUniversityofTechnology10/13/2013PAGE1EcononomicsofInnovation2013

Structure • Open innovation: the origins and the concept • Open firm strategies mean open markets? • The Net Neutrality Debate: The Open Innovation Angle • Summary Econonomics of Innovation 2013 10/13/2013 PAGE 1

Openinnovation:Origins oftheconcept,contextand newdevelopmentsTechnischeUniversiteitTUeEindhovenUniversityofTechnology10/13/2013PAGE2EcononomicsofInnovation2013

Open innovation: Origins of the concept, context and new developments Econonomics of Innovation 2013 10/13/2013 PAGE 2

The Traditional Concept of (Closed)InnovationAssumption:FirmrequirescontrolResearchDevelopnerntoverinnovation(wholeinnovationFimmtchain)boundanesOABased onthelinearmodel ofOinnovationReseardh pojectsO+Madets0R&Distightlycoupledandinternallyfocused00BoundariesofthefirmcharacterizelimitsofthefirminwhichideasflowSouroe:Chesbxught2003fromtheleftandflow outtothemarket to the rightBut:Firm boundaries limit exchangeof(abundant)knowledgefromSource:Chesbrough,2003outsideTechnische UniversiteitTUEindhovenUniversityofTechnologyPAGE3EcononomicsofInnovation201310/13/2013

The Traditional Concept of (Closed) Innovation • Assumption: Firm requires control over innovation (whole innovation chain) • Based on the linear model of innovation • R&D is tightly coupled and internally focused • Boundaries of the firm characterize limits of the firm in which ideas flow from the left and flow out to the market to the right • But: Firm boundaries limit exchange of (abundant) knowledge from outside Econonomics of Innovation 2013 10/13/2013 PAGE 3 Source: Chesbrough, 2003

Origins closed innovation paradigmHistory:Governmentsanduniversitiesnotinvolvedincommercialization of scienceClosed innovation>commonpracticeof companiesbeforethesecond worldwar(secrecy,nointegrationofR&DinformationbeyondownR&Dlab)No linkswithoutside scientific communitiesand notimetowaitfor theapplication ofoutsideideasfromcompaniesConsequence:vertical integration as most efficient formTechnischeUniversiteitTUEindhovenUniversityofTechnologyPAGE410/13/2013EcononomicsofInnovation2013

Origins closed innovation paradigm • History: • Governments and universities not involved in commercialization of science • Closed innovation > common practice of companies before the second world war (secrecy, no integration of R&D information beyond own R&D lab) • No links with outside scientific communities and no time to wait for the application of outside ideas from companies Econonomics of Innovation 2013 10/13/2013 PAGE 4 Consequence: vertical integration as most efficient form

Challenges to the closed innovationmodelGrowingmobilityofhighlyexperiencedandskilled people(expensiveknowledgemoveswiththem)Amountofcollegeandpost-collegetrainingthatpeopleobtained>spilloverfromlargecorporateR&DlabstosmallercompetitorsDevelopmentofprivateventurecapital(vC)>creatingnewfirms(evenfiercecompetitors)bycommercializingexternalresearch(e.g.PhilipsHighTechCampus)Increasingfasttime-to-the-marketofproductsandservicesIncreasinglyknowledgeablecustomersandsuppliersEmergenceof newmarketforoutsideknowledgeTechnischeUniversiteitTUEindhovenUniversityofTechnologyPAGE510/13/2013EcononomicsofInnovation2013

Challenges to the closed innovation model • Growing mobility of highly experienced and skilled people (expensive knowledge moves with them) • Amount of college and post-college training that people obtained > spillover from large corporate R&D labs to smaller competitors • Development of private venture capital (VC) > creating new firms (even fierce competitors) by commercializing external research (e.g. Philips High Tech Campus) • Increasing fast time-to-the-market of products and services • Increasingly knowledgeable customers and suppliers Econonomics of Innovation 2013 10/13/2013 PAGE 5 Emergence of new market for outside knowledge

Emergence of anewmarketfor(outside)knowledgeOriginscanbefoundinemergenceofR&Dcollaborationsoffirmssincetheearly1970s· RecognizingthatfirmR&DcompetenciesarelimitedUserinnovations(importanceofinteractionswithusercommunitytoimprovedesignortodevelopevennewinnovations)Knowhowtrading(Brokerssellingexpertisefromdifferent“producers")Technische UniversiteitTUEindhovenUniversityofTechnology10/13/2013PAGE6EcononomicsofInnovation2013

Emergence of a new market for (outside) knowledge • Origins can be found in emergence of R&D collaborations of firms since the early 1970s • Recognizing that firm R&D competencies are limited • User innovations (importance of interactions with user community to improve design or to develop even new innovations) • Know how trading (Brokers selling expertise from different “producers”) Econonomics of Innovation 2013 10/13/2013 PAGE 6

Markets for newknowledgeUniversities,Gov.FundedR&DKnowledge from avarietyof marketandnon-marketpartiesFirmR&DUsersSuppliersComplementorsCompetitorsTechnischeUniversiteitTUEindhoveneUniversity of Technology10/13/2013PAGE7EcononomicsofInnovation2013

Markets for new knowledge Econonomics of Innovation 2013 10/13/2013 PAGE 7 Suppliers Firm R&D Users Universities, Gov. Funded R&D Complementors Competitors Knowledge from a variety of market and non-market parties

Central idea of open innovation conceptIfthere arefundamentalDevelopment Researchtechnologicalbreakthroughs>New Marketpossible for engineers andBoundary of the firmtechnicians that thereis anoutsideoptionto createa newResearclcompany (e.g.Philips-AMSL)OCurrent MarketprojecSIEEThe company that originally1fundedthe breakthroughdidCnotprovideitsR&Dinvestment0Companythatdidgetbenefits,00did notre-invest in basicSource:Chesbrough,2003research(nosecondround)Technische UniversiteitTUEindhovenUniversityofTechnology10/13/2013PAGE8EcononomicsofInnovation2013

Central idea of open innovation concept • If there are fundamental technological breakthroughs > possible for engineers and technicians that there is an outside option to create a new company (e.g. Philips-AMSL) • The company that originally funded the breakthrough did not provide its R&D investment • Company that did get benefits, did not re-invest in basic research (no second round) Econonomics of Innovation 2013 10/13/2013 PAGE 8 Source: Chesbrough, 2003

OpenInnovationatASMLASML:1984（PhilipsSpin-off)ResearchDevelopmentLargestproducerof lithographicASMLsystems for chip industryNew Market3300PatentsBoundary of the firm，ASMLCultureiscaught,nottaught"Mostimportant cooperationwithResearclZeissGmbHCurrent MarketprojectsEREEEEE6040036035047.8g50PHILIPS3003012844025032.483Patente24200029.01Kurs23.591502000100益12.57105000Source:Chesbrough,2003TechrischeUniversiteit20TU20082009EindndVenUniversityof Technology10/13/20139EcononomicsofInnovation2013

Open Innovation at ASML Econonomics of Innovation 2013 10/13/2013 9 Source: Chesbrough, 2003 363 360 284 301 213 12.57 23.59 29.01 32.48 47.89 0 10 20 30 40 50 60 0 50 100 150 200 250 300 350 400 2008 2009 2010 2011 2012 Patente Kurs ASML: 1984 (Philips Spin-off) • Largest producer of lithographic systems for chip industry • 3300 Patents • „ASML Culture is caught, not taught“ - Most important cooperation with Zeiss GmbH