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This book presents the emerging paradigm and methodology, Open Innovation 2.0 (OI2), which aims to help drive significant structural changes and benefits through digital innovation to society and industry. It highlights how new services and markets can be co-created in open ecosystems and how this leads to a transformation from win-lose to win-win situations for all stakeholders. Organized around a number of core patterns of OI2, such as shared purpose, partnering and platforms, this book leverages more than five years of research by the EU Open Innovation Strategy Policy group.

Popularized in the early 2000s, open innovation is a systematic process by which ideas can pass among organizations and travel on different exploitation vectors for value creation. With the simultaneous arrival of multiple digital disruptive technologies and rapid evolution of the discipline of innovation, it became apparent that an entirely new approach to innovation was needed that incorporated technological, societal and policy dimensions. Unlike other innovation methodologies, OI2 is an innovation paradigm and methodology with a purpose: to seek and deliver innovations that move us collectively on to a trajectory towards sustainable intelligent living. OI2 is a paradigm advocating for disruptions, seeking the unexpected and providing support for rapid scale-up of successes. As a method, it provides a safety net for both innovations and innovators, inspiring innovators to have the confidence and courage to innovate.

Featuring case studies from domains such as energy, telecommunications, transportation, and finance and from companies including Intel, Lego, Alcatel Lucent and Alstom, this book is useful to industry executives, policy makers, academics, and students of innovation and innovation management.



Chapter 1. Introduction

Many people recognize that innovation is not just an imperative for economic and social progress but that it is an art and skill, which underpins progress and survival of the human species. We have all seen how industries such as the music and book industry, which existed relatively unchanged for decades, have been transformed through digital technologies. These changes have exemplified Schumpeter’s ‘creative disruption’ and Christensen’s ‘disruptive technologies’ where new players such as Amazon and Spotify have replaced incumbents such as HMV and Borders stores. As a global society, we are ready for the next stage of disruptive change as societal level systems such as those for smart cities, agriculture, energy, health, and transportation systems are set for digital disruption. Equally, many industries are ripe for digital disruption. The potential benefits are enormous and so also are the challenges. The innovations and changes which will be required to drive these transformations will require much collaboration and alignment across ecosystems and indeed society. The emerging paradigm of Open Innovation 2.0 (OI2) offers a series of design patterns to help innovators move efficiently and grasp this new opportunity of digital.
Martin Curley, Bror Salmelin

Chapter 2. Digital Disruption

Digital disruption is all around us and the different possible impacts of digital technology can reinforce each other in a chain reaction where an industry that has existed stably for a century is transformed in less than a decade, for example, the rise of Amazon and the demise of Borders bookstores in the USA. Amazingly today almost 50% of consumer ecommerce transacted in the USA is transacted over the Amazon platform. This chapter explores and explains six key patterns of digital disruption also providing real-world examples of each.
Martin Curley, Bror Salmelin

Chapter 3. Sustainable Intelligent Living

Sustainable innovation can have several meanings and all of them are desirable. Firstly, innovations that result in better more efficient use of resources and secondly innovations that have longevity. We define innovation (Baldwin and Curley 2007) as the adoption and creation of something new, which create value for the entities that adopt and create/deliver the innovation. The business proposition for a particular innovation is only sustainable if both the creating and receiving entities achieve value more than the cost of creation and delivery and the cost of adoption. Increasingly, we are seeing that the unit of competition is moving to the ecosystem (Curley 2015).
Sustainable innovation is also full of disruptions requiring innovators to have courage to seek the unexpected. OI2 approach creates a safety net for innovation.
Martin Curley, Bror Salmelin

Chapter 4. The Evolution of Innovation

The rapid spread of information and communications technology coupled with significant increases and lower costs of international flights and freight have created a changing innovation landscape. The EU OISPG sketches an evolution picture for the practice of innovation as shown in the figure below. In the past, much innovation came from individuals in places such as Bell Labs or IBM labs, which used a closed or vertical innovation approach. Open Innovation 2.0 (OI 2.0) as defined by the EU Open Innovation and Strategy Policy group (OISPG 2010) sees the benefits of collaboration and networking from a broader perspective as a way for firms and other organizations to improve their innovation base so as to make optimal use of the societal capital and ‘creative commons’ at their disposal.
Martin Curley, Bror Salmelin

Chapter 5. Framing OI2

In a seminal blog in 2010, John Hagel and John Seely Brown identified that the next key challenge for open innovation was open innovation itself. Hagel and Seely Brown say ‘We’re moving from a world where value is created and captured in transactions to one where value resides in large networks of long-term relationships that provide the rails for much richer “knowledge flows”’.​ Hagel and Seely Brown argue that the opportunity is to build long-term trust-based relationships amongst ecosystem players and encourage participants to build cumulatively upon the contributions of others. Karl Erik Sveiby says that trust is the bandwidth of communications. Hagel and Brown advocate an extended open innovation approach, which promotes fostering and building upon relationships between the players in an ecosystem. A core proposition is that increased interaction leads to increased knowledge, which leads to increased value.
Martin Curley, Bror Salmelin

Chapter 6. Shared Purpose

Open Innovation 2.O (OI2) is a new paradigm based on principles of integrated collaboration, co-created shared value, cultivated innovation ecosystems, unleashed exponential technologies, and rapid adoption, often accelerated by an innovation methods based on prototyping and experimentation in real world. At the core of OI2 is the concept of shared vision/value and the quadruple helix innovation model where government, industry, academia, and citizens/users aligned around a common shared vision, can drive structural improvements far greater than any one organization could achieve on their own through collaborative innovation. Cultivating and orchestrating an ecosystem, which leverages a common innovation platform allowing co-creation and deep user involvement and innovation, is crucial to successful results.
Martin Curley, Bror Salmelin

Chapter 7. Platforms

A foundational enabler and design pattern of OI2 are platforms. Platforms and their associated ecosystems are hugely powerful, and their emergence is driven by continued rapid evolution of computing and communications, which enable the digitization of many things including products, services, business models, user experience, etc. The growth of an ecosystem around a platform moves the locus of innovation from the platform owner to a network of other organizations and indeed individuals and allow operation on a scale that can be massive and far beyond the scope of what any one organization could achieve on its own.
Martin Curley, Bror Salmelin

Chapter 8. Ecosystem Orchestration and Management

An ecosystem can be defined as a network of interdependent organizations or people in a specific environment with partly shared perspectives, resources, aspirations, and directions (Andersson, Curley and Formica 2010). The ecosystems with the biggest critical mass and the greatest velocity will have the most momentum and will ultimately win.
Martin Curley, Bror Salmelin

Chapter 9. Designing for Adoption

A hallmark of OI2 is the focus on adoption and innovation in OI2 is defined by the creation and adoption of something new, which creates value for the entities that adopt it. Similar to the movement of ‘Design for Manufacturing’ where engineers designing products consider how to make products more easily manufacturable, designing and innovation for adoption is critical for successful adoption of innovations. According to the OECD, 80% of the value of innovation comes from the successful adoption of an innovation with just 20% of the value coming from the creation activity. This is of course obvious and often we consider the hard part of innovation to be the creation phase and this is where most resources are often committed. However ironically as stated most of the value from an innovation comes when it is adopted which is the phase that is least considered or invested in. By carefully considering the factors required for successful adoption, we can significantly increase the probability of successful adoption. We see that the quadruple helix co-creation process is crucial for rapid scalability of new extended products, especially in new markets.
Martin Curley, Bror Salmelin

Chapter 10. Agile Development and Production

Agile development and production is hugely important as development and adoption cycles shrink. The clock-speed of virtually every industry is being shortened by digital disruption. The objective of agile development and production is to move iteratively as quickly as possible from idea to a product or service, which meets a need or opportunity. Agile production is about creating and supporting the processes, training and tools quickly and iteratively create new products and services as well as responding to customer needs and market shifts. A key enabling factor is the development of a production support tools to allow the relevant organization members from designers, developers, and marketers to a common database of code and other parts. As different products cycle through the production process from concept to product or service, they draw upon and also add to the manufacturing support platform.
Martin Curley, Bror Salmelin

Chapter 11. Industrial Innovation

Too often innovations fail. Industrializing innovation is about managing innovation as a capability similarly to manufacturing processes, with the outcomes being a series of more predictable innovations. By applying an industrial lens and discipline to the Innovation process, the probability and predictability of innovation outputs and outcomes can be significantly increased.
Martin Curley, Bror Salmelin

Chapter 12. Data-Driven Innovation

Big data and data-driven innovation are creating significant information monetization opportunities. Former European Research Commissioner, Maire Geogeghan Quinn, coined the phrase ‘Knowledge is the crude oil of the 21st century’ and it aptly describes the opportunity. Even this analogy is not powerful enough as data or knowledge does not get used up as it is shared or used up, as it is a non-rival good. In fact, it often multiplies. Debra Amidon, Piero Formica, and others have defined the three laws of knowledge dynamics which underpin the practice of data driven innovation.
Martin Curley, Bror Salmelin

Chapter 13. Openness to Innovation and Innovation Culture

Open innovation requires courage to be open for innovation. It requires courage to seek (and discover) the new which might lead to disruptive solutions. Openness to innovation also has a twin: courage for seeking the unexpected. Experimentation involves failures but not fundamental and costly ones, and thus the probability of finding timely scale-up solutions is significantly higher than in traditional project approach.
Martin Curley, Bror Salmelin

Chapter 14. Looking Forward

According to Steven Carter, author of ‘Where good ideas come from?’ the great driver of scientific and technological innovation has been the historic increase in connectivity. Indeed, we are witnessing what Kurzweil called the law of accelerating returns with each new innovation building on prior innovations and also often becoming infrastructure for future innovations. The OI2 innovation paradigm is based on extensive networking and co-creative collaboration between all actors in society, spanning organizational boundaries well beyond normal licensing and collaboration schemes. With the ever-increasing speed and rate of connectivity, we are creating a giant global intellectual supercollider and the possibility exists that people and machines alike may participate in a giant neural network, which spans the globe.
Martin Curley, Bror Salmelin


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