Open innovation has become well established as a new imperative for organizing innovation. In line with the increased use in industry, it has also attracted a lot of attention in academia. However, understanding the full benefits and possible limits of open innovation still remains a challenge. We draw on strategic management theory to describe some of these benefits and limits. More specifically, we develop a dynamic capabilities framework as a way to better understand the strategic management of open innovation, which can then help to better explain both success and failure in open innovation. With this background, as guest editors we introduce select papers published in this Special Section of California Management Review that were originally presented at the fifth annual World Open Innovation Conference, held in San Francisco, California, in December of 2018.
While collaborating with several competitors on coupled innovation projects requires smooth knowledge sharing to ensure the project's success, protecting knowledge is also essential due to the prevailing risks of coalition formation, opportunism, and knowledge leakage. Intense tensions between knowledge sharing and protection may arise and must be managed to avoid project failure. This article explores the formal and informal mechanisms used to manage these tensions. The case studied (Galileo) reveals the limited role of informal mechanisms to manage such tensions and shows how a centralized project structure encouraged the formal sharing of knowledge by protecting firms from unwanted knowledge transfers between competitors.
This article investigates how project expertise and complexity jointly impact the decision to adopt open or closed innovation. It identifies four different types of open innovation models-crowdsourcing, coopetition, science-based, and network-and explores the varying conditions of project expertise and complexity under which firms tend to adopt a particular type. Using large data analysis from pharmaceutical drug development projects, the authors find that complexity moderates the relationship between project expertise and the choice of open or closed innovation and that levels of complexity and project expertise vary between different open innovation models.
Align Technologies was a leader in disrupting the orthodontist and dental markets with the original development of clear plastic aligners, which allowed for customized solutions to malocclusions, the incorrect alignment of teeth and jaws. Unlike traditional braces, plastic aligners enabled more flexibility and customization by combining digital and physical technologies that were convenient and attractive than other alternatives. As the company began to enter its third decade, the leadership team was dealing with the challenges of new competition, expiring patents, how to improve international growth and how best to increase operational efficiency.
Talking Points is a U.S. not-for-profit 501c3 organization that provides a multilingual platform to help teachers communicate with families. The idea was first created in 2014 at a Startup Weekend as a translation-embedded SMS tool, inspired by the evidence of a strong connection between parental engagement and student outcomes. By 2019 the organization was reaching 500,000 families, exclusively via word of mouth. They had plenty of internally-collected data and anecdotes about their positive effects on students, families and teachers. MIT's Abdul Latif Jameel Poverty Action Lab was assisting them to conduct a randomized control trial (RCT, the "gold standard" in measuring efficacy) in the 20-21 school year. The product, which uses a combination of AI and human translation, had grown to include versions for schools and districts. The company was earning subscription revenue and strong customer retention. They also faced competition from several venture-backed for-profit start-ups. At the time of the case, the organization has just received a sizable grant from google.org, which would enable it to transition from a small start-up to a more established entity.
The case is set in September 2019, and the protagonist of the case is Sheryl Sandberg. The case opens with her contemplating the new ventures on which Facebook is embarking, such as its transformation into a mega-app, the launch of its Libra cryptocurrency and the roll-out of its dating site, so as to continue its growth and to fend off competition. More than 99 percent of Facebook's revenues come from advertising and, along with Alphabet's Google, it dominates the digital advertising space. However, Facebook and other big tech companies are coming under increasing attack from governments and civil society groups for this dominance. Antitrust investigations and possible break-ups of these big firms are being proposed. Sandberg is facing other challenges as well. Concerns about how Facebook uses data it gathers from its users have come to the forefront. It has fallen afoul of privacy laws in Europe and the United States and been subject to large fines. Facebook's role as a vehicle for propagating fake news has been under scrutiny. Elections in the United States have been impacted and civil unrest (with occasionally fatal results) has occurred in other countries. Libra itself is facing problems, as governments and regulators voice objections to its introduction, applying pressure on potential partners. In 2019, Facebook was the fifth most valuable company on the planet, with a market capitalization of $540 billion (behind Microsoft, Amazon, Apple, and Alphabet).
China Merchants Bank, the sixth-largest lender in China, intends to boost its family office business as a result of an increase in the population of ultra-high net worth individuals. Already ranked China's number-one private bank with AUM exceeding US$300 billion, the Bank is exploring different ways to cater to the demand from newly minted billionaires and their families, and to maintain its competitiveness in retaining these customers amid fierce competition with domestic and foreign banks. Management also needs to brace for an emerging trend in which super-affluent families opt to reduce their reliance on traditional bankers by setting up independent family offices. The case raises issues in segmentation of private banking, change in organization design, and devising strategies for target customers and value creation.
In 2015, Homesake entered the home décor sector in India by designing, producing, and selling home décor products, including lighting, tableware, and wall hangings. By 2018, after three years in operation, Homesake had generated sufficient sales that its founder was ready to grow the business internationally; increase its traditional (offline) retail sales; and expand to hotels, bars, pubs, and restaurants. However, challenges related to a possible expansion were becoming evident, including the contractual nature of the labour force, inefficiencies in the supply chain, a constant need to design and develop new products, and the need to improve quality control and logistics. What would be the best course and business model for the founder to pursue to ensure Homesake's consistent growth in the future?
In the fall of 2018, Serbia found itself at a crossroads yet again. Following the Balkan Wars of the 1990s and the collapse of Yugoslavia, the country had embarked on a slow and arduous process of accession to the European Union (EU). This had been further hampered by the country's tortuous relations to its breakaway province of Kosovo, one of several regions fighting for political independence at a time when the continent itself was seeking greater economic and political integration in the form of the EU. Support for the EU accession was falling in Serbia, however, also in light of the increasing presence in the country of Russian and Chinese interests and investments. But would the country eventually have to pick a side amidst the rapidly changing geopolitics of the early twenty-first century?
This case describes the first commercial flight of Boeing's 787 Dreamliner in 2011, three years after originally planned, as well as the first commercial flight of Airbus' superjumbo, the A380, in 2007. It also describes the companies' current endeavors in 2011, including Airbus' work on the A350 and A320neo (new engine option) and Boeing's development of the 737 MAX. Boeing originally considered replacing the 737 with a completely new and redesigned ("clean-sheet") plane, but utlimately (in part due to pressure from the A320neo) decided to modify the 737 instead.
This case describes an issue with the batteries of Boeing's 787 Dreamliner planes overheating and sometimes catching fire in 2013. The planes were grounded for several months until Boeing introduced new safety measures. The case also discusses a problem with cracks on the wings of Airbus's A380 superjumbo, which required the company to make a costly fix to a particular wing component.
This case describes the introduction of Airbus's A350XWB (Xtra Wide Body) in 2015. It also describes Airbus and Boeing's current endeavors in 2015, including Airbus's development of the A330neo, Boeing's work on the 737 MAX, and Boeing's announcement of the 777X.
This case describes Airbus and Boeing developments in 2016, including Airbus's delivery of the first A320neo and Boeing's work on the 737 MAX and 777X programs. It also notes Airbus's restructuring in 2016.
This case describes Airbus's partnership with the Montreal-based aircraft manufacturer Bombardier beginning in 2017. The two companies partnered on the C Series of aircraft (later named the A220 Family), which consisted of small aircraft with 100-150 seats. The case also describes Boeing's 2018 joint venture with the Brazilian aerospace company Embraer, which produced the E2 Family of planes (97-120 seats).
This case describes Airbus's February 2019 announcement that it was ending production of the A380, with the last delivery scheduled for 2021. The announcement followed an order cancellation by Emirates, a major customer of the A380. The A380 had faced significant competition from Boeing's Dreamliner, and airlines had difficulty filling their A380s enough to make them fuel efficient and cost effective. Since the plane's launch, Airbus had sold far fewer A380s than it initially predicted.
This case describes the October 2018 and March 2019 crashes of Boeing MAX 8 jets, which together killed over 300 passengers. The planes involved in both crashes shared a problem with a software system called MCAS, which Boeing had revamped at the last minute prior to selling the planes, but had failed to mention in its pilot manuals until after the first crash. As of July 2019, the MAX 8 remained grounded worldwide. As the investigation into the MAX 8 continued, a simultaneous investigation into a Boeing 787 factory found that the company had repeatedly ignored reports of manufacturing defects and debris left on 787s from the factory.
This case follows Nikos Stathopoulos, Managing Partner of BC Partners, as he and his team evaluate the potential sale of one of BC Partners' portfolio companies, Acuris. Acuris was a global financial intelligence, news, and data company that had been acquired by BC Partners only three years prior. During that time, Stathopoulos and his team had been able to implement a variety of operational improvements and acquisitions which resulted in BC Partners receiving numerous offers for both full and partial sales of the company, at attractive multiples. But the BC Partners team felt there was still more gain to be realized from their value-add initiatives, and there were also several initiatives they had identified but not yet implemented. Stathopoulos had to decide: should they pursue a full sale, partial sale, or no sale at all?