From Closed to Open Innovation: The Evolving Nature of Teams and the Use of Information Technology - Information Technology and Product Development - page 133

According to a survey conducted by Coopers and Lybrand, more than half of the
fastest growing companies in the US are involved in strategic alliances both within
and across industries (WSJ, 1995 in Chan, Kensinger, Keown, & Martin, 1997).
Star Alliance and One World represent two cases in the airline industry where
cooperative alliances between major airlines and foreign carriers allow for expanded
capabilities and sales (Beamish, Morrison, Inkpen, & Rosenzweig, 2003). Joint ven-
tures allow collaborators to pool resources and to coordinate innovation activities to
achieve results not easily attainable if either acted as a solo developer. As a source
of increased innovation sales, firms may enter new markets, market their products
in new territories, or diversify into new categories or new markets.
IKEA, the world renowned Swedish furniture retailer, collaborates intensively
with a network of global suppliers. For some component suppliers, IKEA provides
designs, technical support, leased equipment, and may even provide much needed
financial assistance. Suppliers are accorded with enhanced capabilities, continued
access to one of the world's largest retailers, and more balanced sales while IKEA
enjoys low-cost, high-quality furniture. International giants Toyota and General
Motors are engaged in a joint venture in California - vehicles produced from this
locale are clearly branded GM or Toyota, and then are sold on a competitive basis
through each one's distribution network. Brands maintain their unique identity as
these cooperating competitors increase market share in their respective vehicle
categories (Beamish et al., 2003).
Several studies have identified positive performance effects from incorporating
external knowledge at various levels. Such effects range from innovation success, to
increased novelty of innovations and higher returns on R&D investments (Grimpe &
Hussinger, 2008). For instance, many firms may use an offensive approach to intel-
lectual property by licensing to outside parties, and some may even be their own
competitors. Qualcomm Inc., the maker of cellular technology, makes chips and
sells licenses to its technology. Genzyme licenses technology from the outside, fur-
ther develops it in-house, and transforms external ideas into an array of new cures
for rare diseases (Chesbrough, 2007).
Open innovation models are changing the project type mix of many firms'
portfolios. From 1982 to 2004, PDMA members reported more incremental new
product introductions versus new-to-the-firm and new-to-the-world introductions.
A composite view of projects showed repositioning at 8%, cost reductions at
11%, improvement at 38%, additions to existing lines at 24% with new-to-the-firm
projects and new-to-the-world projects at 18% and 8%, respectively (Adams-
Bigelow, 2004). On a continuum of project innovativeness, new-to-the-firm and
new-to-the-world projects are more risky and are characterized by higher levels of
know-how, longer lead times, and higher development costs. With more risky new
product introductions, prevailing technologies are transformed, whereas with incre-
mental innovations prevailing technologies are refined. Incremental innovations
tend to reinforce existing market structures and competitive positions and strengthen
existing barriers to entry and so more stable industries or product categories seem
to follow an incremental innovation strategy.