Corporate Benefits of Collaborating with Universities

In today’s competitive business environment, continuous innovation is a prerequisite for building a firm-specific advantage. Few firms can rely entirely on in-house research. The value of open innovation is widely recognized; yet, little is known about how firm-level and lab-level policies toward open innovation are related to R&D performance.

A recent study of Japanese firms – across many industry sectors – sought to understand this.

In surveys conducted at the lab-level of over 200 Japanese firms, Asakawa, Nakamura and Sawada asked lab managers’ perceptions of corporate open innovation policies at their firm. The surveys also asked about the labs’ operations, including the external R&D collaborations with universities and businesses. While other studies have explored open innovation in corporate labs, this study was unique in its multi-level approach – exploring both the firm-level and lab-level influences concurrently - and differentiation between university and other business ventures.

Their results showed that open innovation policy can have a positive impact and contribute significantly to a laboratory’s R&D performance, depending on the lab’s alignment with the firm’s policies and on the type of collaboration.

Lab managers’ perceptions of their firms’ open innovation policies vis a vis local universities and businesses were positively and significantly correlated to their labs’ collaborations. Interestingly, the impact of the policy perceptions had a stronger benefit on R&D performance than the actual collaborations did. The benefit appears to be less about the specific contribution of the external collaborator to the lab’s R&D performance and more about the increase in research capacity that results from those collaborations, especially with universities. While this may seem counter-intuitive at first, there is a logical explanation.

Asakawa et al. explain it this way. The way top management regards the potential of innovation outside the firm influences the mindset and the behavior of each unit and person inside the firm. Top management’s views determine the dominant logic that defines the frame in which managers think and behave. When open innovation is sanctioned as the firm’s dominant logic, searching for and utilizing knowledge that is external to the firm becomes legitimized. This legitimacy authorizes members and subunits within the firm to pursue open innovation accordingly. Executed at the firm level, open innovation becomes institutionalized as a corporate routine, develops symbolic properties associated with such behaviors, and becomes part of the corporate culture, even at the level of laboratory personnel.

Now, here's the part I like most.

Open innovation policies vis a vis local universities have a significant and positive impact on the laboratories’ research performance (as distinguished from development capabilities.) Interestingly, open innovation policies vis a vis local firms (intended to deliver development results) do not have this same impact. In other words, there is a differentiated impact of the firm’s open innovation policy, depending on its whether the impact is intended for research or development activities.

One explanation is that a laboratory’s research performance is highly dependent on the firm-level technological capabilities. Firms that engage in open innovation are more likely to have the ability to absorb the benefits of collaboration. Externally sourced knowledge (research) is transformed into firm-specific capability (development) through the firm’s combinative capability. Once internalized within the firm, knowledge and capability can be transferred to the laboratory and leveraged there. The firms’ combinative capability reinforces the laboratory’s absorptive capacity, which facilitates its sourcing and leveraging of external knowledge to enhance R&D performance.

The perception of firm-level policies about open innovation are important. Laboratory-level collaborations with external parties are heavily influenced by the corporate dominant logic, which legitimizes laboratory-level behavior. What this study suggests is that corporate R&D executives need to put more emphasis on facilitating the external collaborations than on trying to directly influence the labs’ efforts to enhance R&D performance. The results of this study also suggests that in order to enhance the laboratory’s R&D performance, corporate and laboratory managers need to be in alignment on the objectives a of open innovation policies. Additionally, the results also suggest that lab-level managers need to be aware that different types of external collaborations contribute to different types of R&D performance. Collaborations with universities tend to contribute to research performance. Corporate policies influence the success of these collaborations. Collaborations with local businesses are generally intended to contribute to development performance. The ability to absorb development know-how is less influenced by the perception of corporate policies; this absorption may be more direct and rely less on research capabilities.

It’s important for laboratory managers engaged in external collaborations to proactively align those activities with open innovation policies at the corporate level. If sanctioned at the firm level, collaborations with universities have very strong potential to positvely influence the capacity of labs - potentially providing a cascade of benefits for knowledge acquisition from both internal and external sources.

Kazuhiro Asakawa, Hiroshi Nakamura and Naohiro Sawada, "Firms' open innovation policies, laboratories' external collaborations, and laboratories' R&D performance," R&D Management 40:2, 2010.

Forbes: Special Report: Data Driven Companies

Forbes recently released a special report on "Data Driven Companies".
An article of particular interest is Obama's Data Visionary:

Before Edward Tufte came along, no one would have suspected that "data visualization rock star" could be a job description.
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Earlier this month the administration announced that Tufte would join the Recovery Accountability and Transparency Board, tasked with tracking the distribution of the $787 billion economic stimulus package Congress passed in 2009. Tufte's assignment: to make Recovery.gov an easily readable Web site, even while quantitatively tracking hundreds of individual stimulus projects around the country.
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For the past year I've been helping the Recovery and Accountability Transparency Board develop an intellectual model for Recovery.gov. That relationship got formalized when the president appointed me to an independent advisory panel. I found that thrilling. Other panelists are four experts on government funding, effective management and avoiding waste and fraud. I'll be working the data display side of Recovery.gov.
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The test of a good display is not whether it's accessible in a single glance, but whether the viewer learns something. Another way to describe it is an intense clarity of information: Intense but accessible. Being clear and straightforward is very different from being simple-minded. We can't be simpleminded with this much data--it's impossible to catch $787 billion scattered over the U.S. in a glance.
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Enterprise Innovation Ecosystem Metaphor

From his iPhone, he tapped up a full-screen visual.

A large cruise ship (with well-honed product and service teams) sails the wide oceans and is serviced at one archipelago by a fleet of small boats, coming from and operated by residents of many small islands, who navigate out to sea (but not too far) to meet and exchange with the mothership. Xu, Chenyang (TTB US) Siemens.

The challenge of optimizing efficiency and growth in the business units of a large established enterprise is directly at odds with the requirements for nimble agility and productive friction in the corporate or satellite centers responsible for fueling innovation. John Seely Brown and John Haley III applaud the combination of "productive friction" and dynamic specialization as the new means for connection and coordination. Corporate innovation teams are searching for ways to make innovation more "open."

Similar dynamics operate in established educational institutions. Disciplinary rigor establishes intellectual prestige - the primary currency in academic institutions. At the same time, real-world relevance depends on continuing connections, collaborations and congruence with the problems and opportunities of business, community and government entities. Rapid iteration on these ever-changing interfaces serves as a catalyst to maintaining intelligence about opportunities and conditions that inform direction for the mothership.

Media X is Stanford University's catalyst for interdisciplinary interaction among thought leaders at Stanford and change agents in industry - on questions about people and information technology. With questions posed by industrial partners, Media X initiatives tap the expertise of Stanford research laboratories across the entire campus to ignite cognitive bonfires and conduct concept-proving research. Results are transferred to the academic and industrial motherships for further development, refinement and assimilation.

American Mayors Take On Economic Viability of Cities in 2030

By 2030 cities will need programs that provide infrastructure for jobs that are no longer tied to location but are inextricably interdependent on the global economy. Ubiquitous communications and the knowledge/service economy are game changers for urban leaders. This narrated version of a presentation to Mayors of American cities by Cisco’s Dr. Norman J Jacknis, Director IBSG Public Sector, describes the challenge of assuring the economic viability of cities in 2030: http://vimeo.com/9261722

Investments That Bring the Benefits Home

Technology-based business development initiatives use local, regional and/or national resources to improve the global economic competitive position. Regional development, science cities, technopolis programs, business clusters, and e-clusters have been financed with hopes of improving employment and increasing revenues.

But the results have surprised many. High-potential talent has gone abroad with new business relationships and stayed there. Profit imperatives have driven employment opportunities overseas. The information age and the knowledge revolution have changed the game for technology-based regional development. Flat-world relationships over high-bandwidth channels are changing on a real-time basis. The former concepts of infrastructure support have a new context.

Home-based resources are spent to encourage businesses to compete in the global economy. The challenge, to policy makers and program leaders, is to capture local returns on the investments made locally intended to reach globally. The Innovation Ecosystems Initiative is studying flows of people and resources in technology-based companies - to identify the infrastructure requirements, inflection points and succdess metrics - and to build a new model to guide policy and intervention decisions. Professionals from Paris, Finland, Norway, Malaysia, Tokyo, Britain, Barcelona, Paris, and the United Arab Emirates agree that new concept are needed.

Launch Workshop - Media X at Stanford University

Innovation Ecosystems Benkyo-Kai

The word, "benkyo-kai,"aptly describes a new initiative focused on Innovation Ecosystems. In Japanese tradition, benkyo-kai - study groups - have formed around key technological initiatives. We've formed this one around innovation itself, and the ecosystem conditions in which it thrives.

Optimizing the catalytic impact of public and private investments in technology-based development has been a focus in many countries and regions for several decades. Some experiments of innovation ecosystems – science parks, technology parks, business parks, or business clusters – are heralded as successes; some disappear from awareness; others are deemed failures.Some say we're now living in a global "stimulus economy." Current stimulus programs targeting innovation usher in a new wave of public investment in new experiments. Yet, a clear understanding of success (and failure) factors and metrics for regional information communication technology (ICT) experiments with international interdependencies has not been developed.

We seek to change this with the Innovation Ecosystems Initiative, which focuses on a data-driven analysis and visualization approach. An international group of scientists with expertise in network analysis, information visualization, data mining and integration, regional development, technology transfer, and reputation development propose a comparative study of well-established and new programs for technology-based economic development in ICT.

Four regions - Beijing, China; Tokyo, Japan; Tampere, Finland; and Silicon Valley, USA – have been selected as the starting points for the study.

A Media X Workshop on March 5, 2010, introduced the Innovation Ecosystems Benkyo-Kai to American, Canadian, Asian, and European collaborators, with interests in government, educaiton and business interventions.

We welcome data partners, analysis partners and community-of-practice partners to this benkyo-kai. Contact: martha.russell@stanford.edu