IN
DEGREE PROJECT INDUSTRIAL MANAGEMENT, SECOND CYCLE, 30 CREDITS
STOCKHOLM SWEDEN 2021,
Facilitating radical
collaboration in open
innovation
A case study in collaboration with IKEA
LINNEA STRÖMSTEDT
ERIK REHMBERG
KTH ROYAL INSTITUTE OF TECHNOLOGY
SCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT
Facilitating radical collaboration in open
innovation
A case study in collaboration with IKEA
by
Erik Rehmberg
Linnea Strömstedt
Master of Science Thesis TRITA-ITM-EX 2021:217 KTH Industrial Engineering and Management
Industrial Management SE-100 44 STOCKHOLM
Möjliggöra radikala samarbeten i öppna
innovationslandskap
En fallstudie i samarbete med IKEA
Erik Rehmberg
Linnea Strömstedt
Examensarbete TRITA-ITM-EX 2021:217 KTH Industriell teknik och management
Industriell ekonomi och organisation SE-100 44 STOCKHOLM
Master of Science Thesis TRITA-ITM-EX 2021:217
Facilitating radical collaboration in open innovation A case study in collaboration with IKEA
Erik Rehmberg Linnea Strömstedt Approved
2021-month-day
Examiner
Christofer Laurell
Supervisor Kristina Nyström Commissioner
IKEA
Contact person Rebecca Ahlstrand
Abstract
The increased customer demand for innovative and sustainable solutions implies that companies need to seek knowledge, and insights, beyond their traditional business models. This by opening up barriers and collaborating with other stakeholders. Using this approach is referred to in the literature as practicing open innovation. There is however a lack of research on open innovation concerning radical innovation and collaboration. The purpose of this report is to fill this research gap by investigating how a large incumbent company can set up radical collaboration in an open innovation space. The gap will be filled by conducting a qualitative and explorative cross-case analysis with the hosting company of this study, IKEA, and the research questions presented in this report aims to assist IKEA in the set of radical collaboration.
The research question and related results were divided into four parts; Strategy implications, partner selection criteria, challenges and successfactors. Regarding the first sub-research question, the strategy of the OIS should be aligned to the long-term goals of the parent firm but the short-term targets should not be controlled. This in order to give the OIS mandate to come up with unexpected and radical solutions. Moreover, in the partner selection process, important criteria to consider for radical collaboration are shared values, culture, and commitment to the project. Concerning challenges with radical collaboration, these are: Clear expectations, Contracts, Identifying focus areas, Implementation of the innovations, Innovation strategy renewal, Introduction of a new concept, NDA’s, Outsourcing and Organizational behavior. Lastly, the findings show that autonomy, self-control, communication, and structure are important success factors. The related recommendation of this thesis is that large established companies, looking to pursue radical collaboration in an open innovation format, should consider these insights to be successful. It should however be made clear that radical innovation practices tend to be more complex and time-consuming. Thus, KPIs for success may need to be revisited in firms traditionally seeking incremental innovations with in-house innovation practices.
Keywords
Open Innovation, Radical Innovation, Innovation Strategy, Radical Collaboration, Collaboration Setup
Examensarbete TRITA-ITM-EX 2021:217
Möjliggöra radikala samarbeten i öppna innovationslandskap En fallstudie i samarbete med IKEA
Erik Rehmberg Linnea Strömstedt Godkänt
2021-mån-dag
Examinator Christofer Laurell
Handledare Kristina Nyström Uppdragsgivare
IKEA
Kontaktperson Rebecca Ahlstrand
Sammanfattning
Med en ökande efterfrågan från kunder på innovativa och hållbara lösningar behöver företag söka kunskap och resurser utanför sina traditionella affärsmodeller. Detta genom att öppna upp sina interna processer och samarbeta med andra. Att använda detta tillvägagångssätt hänvisas till i litteraturen som att utöva “öppen innovation”. Det saknas dock forskning i ämnet som rör radikal innovation och samarbete. Syftet med denna rapport är att fylla detta forskningsgap genom att undersöka hur ett stort etablerat företag kan starta upp radikala samarbeten i ett öppet innovationslandskap. Gapet kommer att fyllas genom att utföra en kvalitativ och explorativ flerfallsstudie med ett värdföretag, IKEA, och forskningsfrågorna som presenteras i denna rapport har som mål att skapa ett ramverk för att hjälpa IKEA introducera radikala samarbeten.
Forskningsfrågan och relaterade resultat delades in i fyra delar; Strategi implikationer, partnervalskriterier, utmaningar och framgångsfaktorer. När det gäller den första forskarfrågan bör innovationsstrategin anpassas till moderföretagets långsiktiga mål, men de kortsiktiga målen bör inte kontrolleras. Detta för att ge initiativet mandatet att komma med oväntade och radikala lösningar.
Dessutom är viktiga kriterier att ta hänsyn till, för radikala samarbeten i urvalsprocessen av partners, att de samarbetande parterna delar värderingar, kultur och engagemang för projektet. Vad gäller utmaningar för radikalt samarbete är dessa de mest kritiska: Tydliga förväntningar, Kontrakt, Identifiera fokusområden, Implementering av innovationer, Förnyelse av Innovationsstrategi, Introduktion av ett nytt koncept, Sekretessavtal, Outsourcing och Organisatoriskt beteende. Slutligen visar resultaten att autonomi, självkontroll, kommunikation och struktur är viktiga framgångsfaktorer.
Den avslutande uppmaningen är att stora etablerade företag, som vill sträva efter radikalt samarbete i ett öppet innovationslandskap, bör ha dessa insikter i beaktning för att initiativet ska bli framgångsrikt. Det bör dock klargöras att radikala innovationsmetoder tenderar att vara mer komplexa och tidskrävande. Därför kan KPI:er för framgång behöva ses över hos företag som traditionellt söker inkrementell innovation med interna innovationsmetoder.
Nyckelord
Öppen Innovation, Radikal Innovation, Innovationsstrategi, Radikala Samarbeten, Samarbetsstruktur
Table of contents
1. Introduction 1
1.1 Background 1
1.2 Problem Formulation 2
1.3 Purpose 2
1.4 Research Questions 3
1.5 Delimitations 3
2. Methodology 4
2.1 Research Design 4
2.2 Research Process 5
2.2.1 Data collection 5
2.2.2 Data analysis 7
2.3 Quality of Research 7
2.4 Ethical Considerations 8
3. Literature Review 10
3.1 Business and Innovation Strategy 10
3.2 Innovation 11
3.2.1 Innovation space and positioning 11
3.2.2 Radical innovation 12
3.3 Collaboration 12
3.3.1 Modes of collaboration 13
3.3.2 Selecting the right mode of collaboration 14
3.4 Open Innovation 15
3.4.1 The concept of open innovation 16
3.4.2 Open innovation space 17
3.4.3 Selecting partners 18
3.4.4 Approaches to find partners 19
3.4.5 Planning of open innovation project management 21
3.5 Conceptual Framework 23
4. Case Company 25
4.1 About IKEA 25
4.2 The IKEA Values 25
4.3 IKEA on Collaboration 26
4.4 OPEN X 26
4.5 The Open Innovation Space 28
5. Empirical Findings 30
5.1 Information about Interviewed Companies 30
5.2 Case A: MobilityXlab 32
5.3 Case B: ICA Group 33
5.4 Case C: Volvo Group 35
5.5 Case D: Vattenfall 39
5.6 Case E: EY Doberman 40
5.7 Case F: German Technology Company 41
5.8 Case G: Lego 44
5.9 Case H: Mannheimer Swartling 45
5.10 Case I: Ericsson 48
5.11 Case J: SPACE10 51
5.12 Empirical Summary 53
6. Analysis 55
6.1 Strategy 55
6.1.1 Purpose 55
6.1.2 Strategy alignment 56
6.1.3 Innovation type 56
6.2 Partner Selection 57
6.2.1 Types of partners 57
6.2.2 Ways to find partners 58
6.2.3 Process to select partners 59
6.2.4 Partner selection criteria 59
6.3 Challenges 62
6.3.1 Culture 63
6.3.2 Operations 63
6.3.3 Structure 64
6.3.4 Execution 65
6.3.5 Stakeholder 65
6.3.6 Information sharing 66
6.3.7 Summary of challenges 66
6.4 Success Factors 67
6.4.1 Structure 68
6.4.2 Team layout 68
6.4.3 Shared vision 69
6.4.4 Parent firm 69
6.4.5 Metrics 70
6.4.6 Project type 70
6.4.7 Summary of success factors 70
7. Discussion 72
7.1 The IKEA Radical Incubator 72
7.1.1 Initial stages 73
7.1.2 In the process 76
7.1.3 Afterwards 76
7.1.4 The framework 77
7.2 Hidden Stars-Progr 78
7.3 Strategy Implications 80
7.3.1 IKEA values 80
7.3.2 Innovation- and business strategy alignment 80
8. Conclusions 82
8.1 Research Question Implications 82
8.2 Managerial Implications 84
8.3 Sustainability Implications 84
8.4 Limitations 85
8.5 Research Implications and Future Research 86
References 87
Appendix 93
A. Interview Guide 93
B. Coding template 94
C. Partner Selection Criteria 95
D. The Ten Principles of the Code of Honour 96
List of Figures
Figure 1: Innovation framework
Figure 2: A representation of the level of integration for the different organizational modes Figure 3: A framework representing four basic modes of collaboration
Figure 4: The situative open innovation framework Figure 5: Conceptual framework
Figure 6: The new IKEA strategy Open X
Figure 7: A representation of the empirical findings regarding challenges Figure 8: A representation of the empirical findings regarding success factors Figure 9-A: Overview of the IKEA Radical Incubator framework
Figure 9-B: The IKEA Radical Incubator framework
Figure 10: Advertisement for becoming an Innovation Ambassador
List of Tables
Table 1: Interview information
Table 2: Organizational models for technological collaboration Table 3: Approaches to find relevant partners
Table 4: A representation of partner-related criteria Table 5: Forces in the set up of an open innovation space Table 6: Potential risks of open innovation
Table 7: Summary of empirical findings
Table 8: A representation of the selection criteria found in the empirical data Table 9: A representation of the challenges found in the empirical findings Table 10: A representation of the success factors found in the empirical findings
List of Abbreviations
Artificial Intelligence (AI) Internet of Things (IoT) Intellectual Property (IP) Open Innovation (OI)
Open Innovation Space (OIS) Systematic Literature Review (SLM) Research and Development (R&D) Non-disclosure agreement (NDA)
Acknowledgements
During the spring semester in 2021, this thesis was performed as a final degree project of the Master of Science programme in Industrial Engineering and Management at the Royal Institute of Technology in Stockholm, Sweden.
We would like to express our gratitude to the people that have contributed to making this study possible. Firstly, we would like to send a big thank you to our supervisors Rebecca Ahlstrand at IKEA, and Kristina Nyström at KTH . Your continuous feedback, assistance and help throughout the project have been important factors for this report's success. We would also like to thank the team at IKEA for your support and contribution to the development of this report. A special thank you to team members Nils Larsson, Göran Nilsson and Lars Wingren for participating in team meetings that acted as important contributions in the tailoring of recommendations for IKEA.
Furthermore, we would like to thank all the external participants that have contributed by providing data through interviews. Your time, inputs, and knowledge have been very valuable for us to succeed with this study.
______________________ ___________________
Erik Rehmberg Linnea Strömstedt
May 24, 2021, Stockholm
1. Introduction
This section introduces the background related to the research area of this report. This is followed by a problem formulation, the purpose of this study, and related research questions. Lastly, delimitations related to this scope will be presented.
1.1 Background
A company’s ability to be innovative has transformed from being a mechanism for growth to one for survival (Johannsson et al., 2015). The drivers for this paradigm shift are globalization, new technological advancements, and an increasing need for faster time-to-market launches (Inauen and Schenker‐Wicki, 2012). One way to meet uncertainties such as these is for a firm to set a business strategy (Spender and Spender, 2014). A business strategy’s core is in the company’s actions, and the strategy shares the same goal as its innovation practices to create meaningful added value for the customers and the firm (Ibid.). In this way, by encouraging innovation practices in the company strategy, firms can increase their competitiveness (Gnyawali and Park, 2011).
The concept of innovation, on the other hand, is widely discussed, taking many different shapes such as open, linear, and closed (Johannsson et al., 2015). However, in order to approach the paradigm shift, firms should open up their innovation processes and introduce open innovation as a concept in the Research and Development (R&D) practices. This concept is necessary to adopt since companies need to collaborate, and build relationships, to keep up with the complexity of the modern world (Tamm and Luyet, 2019). Using an open approach is also a way of tackling the increased pressure from customers and regulations to improve the firm’s sustainability compliance (Bengtsson, 2020).
The need for innovative solutions, that enables more sustainable products and services, implies that companies need to seek knowledge and insights from beyond their traditional business models by opening up firm barriers and collaborating with other stakeholders (Bengtsson, 2020; Inauen and Schenker‐Wicki, 2012). Moreover, the concept of open innovation has also been proven to improve business performance (Chesbrough, 2017). This theory is further strengthened by Inauen and Schenker‐Wicki (2012) who argue that creating a space for open innovation practices yields in-depth participation, more openness, and thereby enables better performance in the innovation process.
Therefore, companies looking to foster radical innovations should shift focus from in-house operations to open-source inspiration. This since in-house R&D processes tend to produce incremental innovations rather than radical ones (Ibid.).
In summary, large incumbent firms need to engage in collaborative initiatives to foster radical innovation (Gnyawali and Park, 2011). This can be done by setting up an open innovation space (OIS) and inviting other actors to participate in activities and projects (Han et al., 2012). Here, the physical proximity of the open innovation practices is referred to as an open innovation space (Ghahestani et al., 2020). Moreover, companies can either look for local, or distant, knowledge (Lopez-Vega, Tell and Vanhaverbeke, 2016). Local refers to looking for partners in “the neighborhood”, while distant partners are remote to the company’s current know-how. Research has shown that distant search for collaborators could identify opportunities to access solutions unrelated to the firm's current capabilities and thereby enable radical innovation (Inauen and Schenker‐Wicki, 2012; Lopez-Vega, Tell and Vanhaverbeke, 2016). In this way, a distant search is directly related to potential longer-term prosperity, and increased competitiveness, as firms depend on radical innovation to match saturated markets (Ibid).
For medium-sized and large companies in Europe, the commercialization of external technological advancements are not yet implemented, and research has shown that it holds immense potential (Inauen and Schenker‐Wicki, 2012). For these types of companies, engaging with smaller companies, and start-ups, is perceived as a great possibility to create synergies where all parts can benefit from the collaboration. In order to support the creation of these synergies, meeting places need to be established and facilitated (Wikhamn, 2020). This indicates that, with the implementation of an open innovation framework on how to collaborate in this space, these firms could access great potential and opportunities from external stakeholders. It is however not easy to collaborate, and it does involve complexity to search for external knowledge (Lopez-Vega, Tell and Vanhaverbeke, 2016). There are uncertainties, and risks, regarding rivalry when looking for knowledge transfer.
1.2 Problem Formulation
Open innovation literature typically focuses on all innovation types. For instance, success factors and the selection of partners in open innovation collaboration are portrayed from a general perspective. On the other hand, there is some literature that focuses on specific innovation types. Urbinati et al. (2021) focus on the implementation of open innovation for radical innovation purposes, and what organizational forms of collaboration lead to successful radical collaboration. However, Urbinati et al.
(2021) state that their choice of model for evaluating collaboration, in terms of selection elements or requirements, is insufficient and more research about this is needed.
Since there is a lack of literature on open innovation concerning radical innovation and collaboration, the aim of this report is to fill this literature-gap. The gap will be filled by conducting a qualitative and explorative cross-case analysis with ten companies from various industries and a hosting company, which in this study is IKEA. With a new business strategy, Open X, IKEA has realized that their internal ecosystem does not possess all the capabilities needed to face the challenges of tomorrow.
According to Nilsson (2021), Open X and collaboration is particularly necessary to meet sustainability related goals. Moreover, IKEA refers to the collaborations that ensure radical innovation as radical collaboration. The literature describes radical collaborations as a necessity to stay competitive, and the term involves rethinking where the boundaries of partnership end and competition begin (Shih, Pisano and King, 2008). Radical collaborations are also about engaging in new types of partnerships, as well as striving to produce something new that helps save the planet’s resources, and achieving something better together than what could have been accomplished alone (Neal, 2010; O’Malley et al., 2014). Therefore, the term radical collaboration is used in this study to describe collaborations that foster innovations that have a considerable and radical impact on the market, and where an open-approach to collaboration is used. Moreover, the findings of this study will work as a guide in the setup of these collaborations in an open innovation space.
1.3 Purpose
The purpose of this study is to investigate and give recommendations on how a large incumbent company should go about setting up radical collaboration in an open innovation space. Here, criteria to succeed with collaborations in an OIS, partner selection, and challenges incorporated in collaborations is analyzed. Also, this study investigates how the innovation strategy at the OIS should be aligned to the overall business strategy of the parent firm. Furthermore, this study aims to contribute to fill the research gap concerning radical collaboration within open innovation. By giving recommendations on managerial implications for an industrial company, this thesis seeks to contribute to the field of Industrial Management.
1.4 Research Questions
In order to fulfill the purpose of this study, the following research questions have been set up:
Main RQ: How can a large incumbent company set up radical collaboration in an open innovation space?
● SUB RQ1: How should the innovation strategy of an OIS be aligned to the overall business strategy of the parent firm?
● SUB RQ2: What selection criteria need to be considered when selecting partners for collaboration?
● SUB RQ3: What are the challenges with collaboration?
● SUB RQ4: What are the success factors in collaboration?
1.5 Delimitations
This study is written in collaboration with a case company, IKEA, and is therefore delimited by its nature. Thus, it is delimited to the requirements, desires and requests of the case company. The case company has influenced the focus of this report and the selection of the research.
Another delimitation of this study is the selected research questions. The sub-research questions delimits the main research question in how to set up radical collaboration in terms of success factors, partner selection criteria, challenges and strategy alignment. The scope of this thesis could have included, for instance, a business model perspective. However, this would have contributed to making the research more complex. Due to the time constraint of this thesis project, and the requests of the case company, it was decided that the scope would exclusively focus on the previously mentioned questions. Based on the purpose of this study, which is to propose suggestions and recommendations on how to set up radical collaboration in an open innovation space, the findings are exclusive for the open innovation space and do not include other undertakings or business processes that the case company is pursuing. Another delimitation in this study is the specific focus on radical collaborations, and not collaborations in general. This to ensure a contribution to research by filling a gap in the literature.
The empirical data that was gathered in this study was delimited by only selecting interview subjects that operate in similar open innovation initiatives that the case company was investigating. There are many businesses in Sweden that have established initiatives that are similar to an open innovation space. However, to gain a broader perspective on the questions, and align the answers to IKEAs international presence, respondents from several countries were interviewed. Thus, a geographical delimitation was set to Central Europe and Scandinavia.
2. Methodology
The following section presents the methodological rationale of this study. This section is introduced by a description about the research design and what methodological considerations that were made in this study. This is followed by a presentation about the research process which includes an explanation of how the data was collected and analyzed. Lastly, the quality of research is discussed and ethical considerations are presented.
2.1 Research Design
In this study, the selected research design was based on multiple methodological choices. The study uses a qualitative and exploratory cross-case methodology. The study was conducted in an abductive way and through an interpretivist lens.
The case study approach is suitable for finding and studying topics or phenomenons in their natural setting (Saunders, Lewis and Thornhill, 2009). Case studies are commonly used in social science research due to their characteristics of creating and generating empirical data and knowledge, which is suitable when deep knowledge about a phenomenon is requested (Levy, 2008; Saunders, Lewis and Thornhill, 2009; Blomkvist and Hallin, 2015). Furthermore, the case study methodology is suitable to use when linkages of the studied phenomenon or aspects are so complex that surveys and experiments are insufficient to receive a deep understanding of an issue (Yin, 2017). Blomkvist and Hallin (2015) present four types of case studies; longitudinal, historical, comparative and exploratory. This study is based on an exploratory case study. This type of case study is appropriate when there is a request to gain in-depth knowledge about a phenomenon (Saunders, Lewis and Thornhill, 2009). Moreover, exploratory case studies are characterized as adaptable and dynamic, which is beneficial when a flexible research approach is requested (Ibid.). In this study, the researchers investigated cases with similar characteristics to IKEA’s initiative. Thus, the use of an explorative case methodology was suitable for this case.
The interpretivist approach is used when a deep understanding of a social context, or phenomenon, is requested (Saunders, Lewis and Thornhill, 2009). In this study, the researchers studied a phenomenon in different business settings where empirical data was gathered. This data was based on the beliefs and understandings of different people, which later was interpreted by the researchers to generate findings. The approach requires that the researchers are interacting in the environment of the respondent when gathering empirical data, this is because meanings about a specific phenomenon are presented through conversation and interaction between researchers and participants (Given, 2008).
Furthermore, retrieving the empirical data in the environment of the respondent allows the researcher to verify hypotheses and results (Ibid.). In this study, the use of the interpretivist research philosophy was suitable though the determined phenomenon was studied in its natural setting to achieve a deep understanding.
There are three ways to develop theory in research; deductively, inductively, or abductively (Saunders, Lewis and Thornhill, 2009). Concerning the theory development of this report, an abductive approach was used. The abductive theory development approach includes both the deductive and inductive approaches. The abductive approach is used when data about a phenomenon is gathered in order to explore the phenomenon and to identify patterns and themes. This in order to generate new theories or modify existing ones. According to Saunders, Lewis and Thornhill (2009), developing theory through an abductive approach is common in qualitative studies.
According to Saunders, Lewis and Thornhill (2009), there are two main methodological approaches in research; qualitative and quantitative. The quantitative research approach, or research design, is commonly used to investigate relationships and connections between determined variables by numerical analysis. The quantitative research design is affiliated with a positivist research philosophy and a common method for performing the numerical analysis is through statistical methods. To succeed with quantitative research design, the data needs to be standardized and quantifiable (Ibid.).
In qualitative research, interpretivist research philosophy is common where the beliefs and meanings of people about a specific phenomenon are studied (Saunders, Lewis and Thornhill, 2009). What separates the quantitative and qualitative research design is the qualitative approach’s ability to gather, use and analyze unstandardized data. The unstandardized data can be collected through a range of methods, for instance through semi-structured interviews, which enables the researcher to adjust procedures and questions in a naturalistic and interactive research setting. In this study, the qualitative research design will be used. The qualitative research design is selected based on the nature of the studied phenomenon, and that it will be reviewed in its natural setting. Alos, the method requires that the empirical data will be gathered by conducting multiple interviews with respondents that have insights about the phenomena that is being studied, thus non-standardized data will be generated (Ibid.). This strengthens this thesis choice of the qualitative methodology.
2.2 Research Process
In the following section, a description of the data collection processes and data analysis activities that were used in this study are described.
2.2.1 Data collection
In this study, primary and secondary data were collected and used. According to Blomkvist and Hallin, primary sources represent the empirical material that is generated during the study as well as material that is closely linked to the research objective and the purpose of the report (Blomkvist and Hallin, 2015). Secondary sources are represented by sources that are not equally proximate to the objective of the study.
In this study, primary sources consist of data that was empirically gathered through the use of semi-structured interviews. As earlier mentioned, this study was performed qualitatively, which supports the use of semi-structured interviews. Semi-structured interviews are frequently used in qualitative studies due to their ability to collect non-standardized data (Saunders, Lewis and Thornhill, 2009). The semi-structured approach is also appropriate to use in explorative case studies due to its ability to generate background and contextual information (Ibid.). Furthermore, an interview guide was developed around different themes that were related to the research objective of this study. The guide was used during the interview to collect empirical data from the interviews and can be found in appendix A. The guide was developed following the ethical research codes from the Swedish Research Council. The codes are represented by; the good use requirement, the consent requirement, the confidentiality requirement and the information requirement. Other primary sources were used, such as corporate-specific material that was provided by IKEA which is found in “4. Case company”.
The companies that were interviewed were selected with regards to the scope of this project and to the nature of the OIS that IKEA was investigating. Thus, this resulted in interviewing companies that had established collaborative innovation initiatives.
The secondary sources used in this study were gathered through a systematic literature review (SML).
To ensure the quality of research, unity and compliance among the researchers of this report, an SML protocol was created for the initial search for relevant literature. The protocol derives from a framework by Tranfield et al. (2003) and it contributes to ensure and enhance the research though it includes different criteria that are considered when research is searched for. This protocol was used throughout this thesis project and is an important tool to ensure the replicability of this report but also to narrow the searches in the database. The following represents the protocol that was used:
1. KTH Primo and Web of Science were selected as digital libraries where literature was gathered.
2. For the initial search, keywords were used and written down in this protocol to enhance the traceability of the selected sources:
Keywords: Open Innovation, Radical Innovation, Radical Collaboration, Collaboration, Selection Criteria, Business Strategy, Innovation Strategy, Partner Selection, Partner, Selection Process, Innovation Space, Innovation Initiative.
Furthermore, in the initial search, the time frame was set between the year 2000 and 2021.
This was considered as an appropriate time frame that contains relevant literature for the research objective of this report.
3. To narrow the initial search, the filtering criteria “relevance” was used. This was selected in the digital library. This selection criterion is beneficial though it sorts literature based on the most relevant literature with regards to the chosen keywords.
4. The literature search was narrowed even further by only selecting search filters “books” and
“articles”. Scientific articles were selected from a quality perspective since scientific articles are peer-reviewed.
The interviews that were conducted are described in table 1 below.
Table 1: Interview information
Interviewed Company
Type of OIS Interview Subject at OIS
Employment at OIS
Year OIS was Founded
Industry Date of Interview
Length of Interview
A:
MobilityXlab Innovation
Ecosystem A1 EcoSystem
Manager 2017 Automotive,
Telecom, Transportation
2021-03-01 45 min
B: ICA Innovation
Hub B1 Head of
Strategy and Finance
2017 Retail, Food,
Grocery 2021-03-01 55 min
C: Volvo Group
Innovation Lab C1 Vice President 2017 Automotive 2021-03-04 38 min
D: Vattenfall Open Innovation Platform
D1 Business
Development Manager
2017 Energy,
Electricity, Heat
2021-03-10 29 min
E: EY Doberman
Innovation Studio
E1 Strategy Intern 2020 Sustainability 2021-03-16 25 min
F: German Technology Company
Innovation Ecosystem
F1 R&D Strategy
Consultant
2019 Manufacturing,
Infrastructure, Transportation
2021-03-16 27 min
G: Lego Product
Innovation and Business
G1 Design
Director 2018 Toys, Retail 2021-03-17 24 min
Disruption Unit H:
Mannheimer Swartling
Innovation Lab H1 Innovation Manager
2019 Law 2021-03-19 55 min
I: Ericsson Innovation Incubator and Accelerator
I1 Head of
Ericsson One Gothenburg
2019 Telecom,
Networking Equipment
2021-03-22 50 min
J: SPACE10 Research and
Design Lab J1 Strategy and
Design Lead 2015 Retail, Design,
Furniture 2021-03-31 39 min
2.2.2 Data analysis
After the interviews were conducted, each interview was transcribed and analyzed. The method of analysis was based on thematic analysis. According to Saunders, Lewis and Thornhill (2009) and Blomkvist and Hallin (2015), a common method för analyzing empirical data in qualitative studies is through thematic analysis. It is used to search and identify themes and patterns in empirical data and it enables a flexible and systematic approach when the data is analyzed. As previously described, an interpretivist lens was adopted in this study. The thematic analysis is suitable when an explorative case study is performed and where an interpretivist lens is taken since the analysis method allows the researchers a flexible and systematic approach to analyse the gathered data (Ibid.) The themes that were used for the analysis of the empirical data were based on the established interview guide. These generated themes allowed the researchers to develop a coding template, which was used to analyse the gathered data. The coding template is presented in appendix B, here, the themes are coded to a separate colour where each colour was used to map the empirical data to the relevant theme. After the empirical data was coded it was analysed and compared with the presented literature.
2.3 Quality of Research
To evaluate the quality of the methodological decisions, a framework was used. The evaluation is performed by using four separate areas that are presented by Gibbert, Ruigrok and Wicki (2008).
These are internal validity, external validity, construct validity and reliability.
To fulfill the area of internal validity, three criteria were evaluated. The first criteria regard the choice of the research framework. In this report, a research framework was developed, described as the conceptual framework in this report and is presented in section 3.5. This conceptual framework was developed on the basis of the research questions and the literature in the literature review. The research questions are visualized in the conceptual framework where the main question is positioned in the middle, and the four sub-research questions are encapsulating the main question as headings with a blue edge. Within each sub-research question, the words “establish” and “refers to” are used.
“Establish” represents relevant literature for each heading, and “refers to” describes a question that is representing the literature. Thus, the criterion regarding the research framework is considered to be fulfilled. This conceptual framework was developed and used to structure the empirics and analysis to allow the researchers to access a more structured approach to developing the thesis, thus fulfilling the pattern matching criteria. The third criteria concerning triangulation regard the methodological choices that were taken (Gibbert, Ruigrok and Wicki, 2008). As described in the research design, this report was developed with the following methodological considerations: qualitative, exploratory, abductive, interpretivism, cross-case study. The research process of this study followed a predetermined time frame where monthly deadlines were set. Each deadline considered different sections of the report, which provided a foundation and structure for the course of work. The structure
is similar to the four-phase process that Blomkvist and Hallin (2015) presents. Here, the first phase was called “thesis proposal” which is similar to the first phase “formulate”. The second step considered the theoretical development of the report, which could be considered as the “design”
phase. The third phase “produce” included the goal to present a draft of the report. And lastly, the
“deliver” phase contains the delivery of a complete report. This process was used to provide and receive feedback on the content of the thesis.
External validity considers the generalizability of the study and includes that data and literature that is used in the study should be mapped to scope, but also towards other aspects, in order to comply with the criteria of generalizability (Gibbert, Ruigrok and Wicki, 2008). To comply with the criteria, the study should be performed through a cross-case analysis (Ibid.). Furthermore, the details about the case study, and the motivation behind it, should be described. This criterion is considered to be fulfilled since the study is based on a cross-case foundation where multiple cases, which in this report is represented by the interviewed companies, are analyzed. Moreover, the details about this study are provided in the introduction of this report.
The third area considers construct validity, which is based on the criteria logic behind the chain of evidence, and the criteria use of triangulation (Gibbert, Rugirok and Vicki, 2008). In this study, different sources of data were used and the rationale behind the analysis of the data has been described in the data analysis section. Also, the logic behind how the study was performed is described.
However, since this study is based on a scope that was provided by a case company, the selection of literature has been based on this scope, which may have limited the research and the outcomes of this report. Thus, the first criteria are considered to be partly fulfilled. The triangulation criteria evaluate if different sources and types of data have been used. In this report, empirical data from interviews and literature based on a systematic literature review has been used, thus both primary and secondary data has been used which fulfills the triangulation criteria.
The last area regards reliability, which includes the criteria of replicability and transparency (Gibbert, Ruigrok and Wicki, 2008). The transparency criteria are partly fulfilled, the case company is described in the report. However, the respondents are not described by name, which is not compliant with the criteria. The replicability of the report is considered to be fulfilled since the research process is described.
Other aspects of quality need to be considered as well. The interviewed companies were selected based on the condition that they had established similar initiatives to the one IKEA was investigating.
The selected interviewees had different positions within the innovation initiatives, and some respondents possessed more knowledge about the areas that were brought up during the interview than others. This resulted in answers that varied in extent and depth, which is why some empirical findings contain less data than others.
This study was performed by two authors. Thus, different people with different ways of analysing and interpreting data conducted the report and developed solutions and suggestions for the case company.
Conducting a report between several people is described as collaborative writing, which is a complex process that requires structure and continuous communication between the researchers (Lowry, Curtis and Lowry, 2004). To ensure that this perspective of quality was supported, the authors established a project plan that contained frequent meetings and strict deadlines.
2.4 Ethical Considerations
With regard to ethical consideration, this study used the four principal requirements of ethics by the Swedish Research Council (VR, 2021); (1) information requirement, (2) consent requirement, (3) confidentiality requirement and (4) good use requirement.
1. Fulfilled as the interview subject were pre informed on the purpose of their participation and this study. This is further supported in Appendix A: Interview guide.
2. Fulfilled as the interview subject agreed to participate in this study.
3. Fulfilled as the information provided has been treated with integrity and confidentiality. The respondents’ names have been considered confidential, table 2.2.1 presents their expertise and what company they represent.
4. Fulfilled as the collected material has only been used in such a manner that was presented to the interview subjects.
Also, the interviewees received the opportunity to revise the transcribed empirical data. Furthermore, this study has considered the 10 ethical codes of honor by Swedish Engineers (Swedish Engineers, 2021). The reason for this has been to ethically consider all participants in the process of conducting this thesis. The codes can be found in Appendix D.
3. Literature Review
In the following section, the literature review is presented. The section is introduced by a strategy chapter and followed by an innovation chapter that discusses the innovation space, positioning, and radical innovation. Next, a chapter on collaboration which includes modes of collaboration and management of collaboration failure. This is followed by a section concerning open innovation and a situative open innovation framework is presented. Here, focus is made on two of the parameters of the framework; selecting partners and planning of projects in an open innovation space. Lastly, the content of this chapter is summarized through a conceptual framework.
3.1 Business and Innovation Strategy
In relation to a business model, a business strategy is more generic (Teece, 2010). A business strategy’s core is in the company’s actions, and the strategy aims to create meaningful added value for the customers and the firm (Spender and Spender, 2014). It is also a way to map a plan of how a company should act on opportunities and mitigate threats from surrounding environments (Chesbrough, 2002). That, in turn, indicates that the strategy is set to support the creation of a business model, and ensure competitive advantages. According to Tracy (2019), the reason why 20 percent of businesses in every industry collect 80 plus percent of the earnings is due to consciously developed business strategies. Moreover, the business strategy should always be created based on the company’s mission, vision, and values (Muthuraman and Jayaraman, 2014).
It is however important that the business strategy is revisited continuously. A business strategy that worked a couple of years ago is today, in most cases, obsolete (Tracy, 2019). That indicates that no corporate strategy is eternal (Johnston and Douglas Bate, 2013). It should also be supported by clear objectives for the company, which companies could need to reinvent, to ensure its efficiency and keep up with a transforming world (Muthuraman, and Jayaraman, 2014; Tracy, 2019).
Thus, the business strategy should always be proactive and push the company to move forward to develop new products, services, and ways of interacting with its customers (Herzog, 2011). This indicates that companies should embed an innovation strategy into their overall strategy with shared mission, vision, and long-term goals, to ensure long term success (Herzog, 2011; Bessant and Tidd, 2013). Jajja et al. (2017) supports this theory by arguing that an innovation-focused company strategy has proven to be successful in creating a competitive edge.
Moreover, there are two types of innovation strategies; (1) closed and (2) open (Herzog, 2011). The first refers to inter-firm R&D processes, while the latter focuses on sourcing and joint R&D arrangements. According to Jajja et al. (2017), the innovation strategy should focus on partnering up for collaborative purposes to achieve innovation goals. Here it is important to establish communication, trust, and structures that facilitate collaboration. Companies managing their innovation strategy through collaboration, by opening up firm boundaries to external actors, are applying an open approach to their innovation strategy and thus implementing an Open Innovation Strategy (Herzog, 2011). By using a network, both incumbent and entrant firms are more likely to solve customer problems with promising innovations (Christensen and Rosenbloom, 1995).
Furthermore, a firm's innovation strategy should address how the different innovation types fit the business strategy and what resources are needed to successfully innovate (Pisano, 2015).
3.2 Innovation
Innovation is described as the process of transforming an opportunity into new ideas and distributing these ideas to be used in practice (Bessant and Tidd, 2013). The term innovation derives from the Latin word “innovare”, which means “making something new”. The term innovation has changed throughout history and has been affiliated with different meanings. For instance, Schumpeter (1934) defined innovation as the novel combinations of society and the world. Furthermore, innovation is not a concept that suits pay-of-performance schemes (Manso, 2010). Innovation per say is often destined to fail as it covers the exploration of something new. Therefore, looking for quick payoffs, and punishing such initiatives with terminations as it does not show early success, may prohibit the innovation process. Instead focus should be on long-term success and tolerance of early failure (Ibid.).
3.2.1 Innovation space and positioning
In the researched literature, different definitions and positionings of innovation are discussed.
According to Bessant and Tidd (2013), the innovation space contains four dimensions. These are:
product-, process-, position- and paradigm- innovation. Product innovation considers the change in the services or products an organization offers; Process innovation regards the changes in how the products or services are created and delivered; Position innovation represents the change in the context in which the services or products are introduced. And lastly, paradigm innovation considers the mental models which define what the organization does (Ibid.).
Figure 1: Innovation framework (Henderson and Clark, 1990)
Henderson and Clark (1990) introduces a framework for defining four different types of innovation:
Incremental-, Modular-, Architectural- and Radical-innovation. As visualized in figure 1, the innovation types are positioned according to a vertical and horizontal dimension where the vertical dimension represents the change of interlinkages between components and core concepts, while the horizontal dimension represents what impact the type of innovation has on the components of the product (Ibid.).
Another way to classify innovations is with the Innovation Ambition Matrix, consisting of three innovation type classifications; (1) core, (2) adjacent or (3) transformational (Nagji and Tuff, 2012).
This framework states that the company tactics should be adjusted according to the purpose of the innovation practices. According to Nagji and Tuff (2012), this framework works as a guide for management when deciding the right overall ambition for the company’s innovation portfolio. The innovation type core refers to incremental changes to current product lines (Nagji and Tuff, 2012). As an opposite, transformational initiatives are looking to create new offers and businesses. These innovations are breakthroughs and with similar characteristics as radical innovations (Kasmire, Korhonen and Nikolic, 2012; Nagji and Tuff, 2012). In between these landscapes there are adjacent innovations. This innovation type leverages the strengths and capabilities of the firm, and transforms it into a new setting. Moreover, the Innovation Ambition Matrix by Nagji and Tuff (2012) shares similarities to the Mckinsey Model of Three Horizons (Viki, 2016). Here, the third horizon in the Mckinsey model also focuses on breakthrough, radical and transformational innovations. Viki (2016) recommends companies striving for horizon three to invest in innovation labs and collaborate with emerging startups.
3.2.2 Radical innovation
Radical innovations are innovation types with a higher degree of novelty, compared to incremental innovation. For instance, by offering substantially new processes, services, or products (Kasmire et al., 2012; O’Malley et al., 2014). Radical innovation is also characterized as an innovation that has a considerable impact on the market where the impact may influence change in market structure or make present products obsolete (Henderson and Clark, 1990) Also, radical innovation practices are argued to be a reason for why well established companies fail (Christensen, 2013). This is because the technological capabilities that are required to succeed with radical innovation are often lacking at established firms (Ibid.). Considering process innovation, radical innovation is developed through different phases of applications, design, and exploration which contributes to fundamentally changing everyday activities within an organization. To achieve radical innovation, different marketing, and technology skills compared to existing skills within an industry are required (O’Malley et al., 2014).
Furthermore, radical innovations are characterized to have a significant effect on future development, making current superior processes and technologies obsolete (Kasmire, Korhonen and Nikolic, 2012).
However, radical innovations can be challenging to implement, particularly in large enterprises, though the radical shift challenges established certainties within the enterprise such as cultures, risk objectives, project management, and rewards (Dougherty and Hardy, 1996). Moreover, according to O’Malley et al. (2014) few organizations possess the resources that are necessary to succeed with radical innovation. To solve this, collaborations with other organizations has been considered as an essential factor to succeed with this type of innovation (Inauen and Schenker‐Wicki, 2012).
3.3 Collaboration
In an age when ideas and innovations are developed around the globe, and technology has significantly reduced costs to access these ideas and innovations, no organization should innovate on its own (Pisano and Verganti, 2008). This is also the purpose of open innovation and by collaborating with other partners, companies can generate successful innovations more rapidly and effectively.
According to Schuman (2006), collaboration is an outcome of the recursive interaction of perceptions of trust, knowledge, engagement, results, and accumulation of activities that are performed over a period of time. Sharing resources among two or several organizations is not only an approach to reduce costs and risks related to product development, collaboration also allows firms to more quickly respond to market needs through an improved development speed (Heidemann and Timenes, 2017).
There are however several ways to go about when collaborating for innovation, these are now to be presented.
3.3.1 Modes of collaboration
There exist different forms of organizational modes that can be used when external knowledge is sought. Chiesa and Manzini (1998) present different organizational modes a firm can take to achieve technological collaboration. Table 2 presents the different organizational modes for a technological collaboration together with a short definition.
Table 2: Organizational models for technological collaboration (Chiesa and Manzini, 1998)
Acquisition Through the acquisition, a company gain access to requested
technological skills and competence
Educational acquisition A firm acquires a smaller company or recruits experts
within a specific domain to access specific technological skills or competence
Merger A company merges with another actor that possesses
technological competence and a new company is developed
Licensing Through the purchase of a license, a company accesses a
requested technology
Joint Venture Multiple companies engage in technological development
and collaborate through an established joint venture where a third corporation is created
Joint R&D Multiple enterprises engage in technological collaboration
and jointly performs research and development without any equity involvement
R&D contract A purchase R&D service at research institutions or
innovative firms
Alliance Multiple firms join in a collaboration with a common
objective
Consortium Multiple companies join efforts with public institutions to
pursue technological innovation
Networking A company uses a network to gain technical insights and
capture technological possibilities
Outsourcing A company can use the collaborative approach to outsource
its technological activities and acquire the generated output
The organizational modes of technological collaboration can be defined according to a scale representing the level of integration. Chiesa and Manzini (1998) describe the level of integration as the extent to which the resources and activities of the collaboration are integrated into the company’s resources and activities. For instance, the mode of outsourcing requires no or low integration in the company’s activities since the company externalizes the technological activities. The mode of acquisition however requires a high level of integration since the acquiring firm gains full access to the technological resources and activities (Ibid.).
Figure 2: A representation of the level of integration for the different organizational modes (Chiesa and Manzini, 1998)
The level of integration is defined by five dimensions; the impact of the firm, time horizon, control, time/ costs, and flexibility (Chiesa and Manzini, 1998). The organizational modes are positioned according to these five dimensions represented in figure 2. The impact of the firm considers how the organizational structure is affected by the collaboration. Time horizon regards the frame of the collaboration. Control includes how the control over people, information, organization, and activities are affected by the type of collaboration. The dimension time/costs defines the extent of the project in terms of financial input. Lastly, flexibility is the dimension that considers to which extent the collaboration can be modified. Evaluating these five dimensions is important in order to determine the level of integration and to decide which mode of collaboration is suitable for the specific case.
3.3.2 Selecting the right mode of collaboration
To select the most appropriate organizational mode for collaboration, Chieza and Manzini (1998) concludes in a four-step process with the following steps;
1. The requirements of the collaboration should be defined and prioritized.
2. After the requirements of the collaboration are defined, the possible forms of collaboration are to be negotiated with the potential partners
3. The characteristics of the possible organizational forms that have been negotiated are to be compared with the requirements of the firms
4. Based on how the requirements of the firms and the characteristics of the organizational modes are aligned, the firms should decide to pursue the collaboration type that is best fitted to the requirements.
However, there are other ways to decide what collaboration mode to undertake. Pisano and Verganti (2008) present a framework that is aimed to help managers select what collaboration type to adopt.
The framework is based on two questions; how open or closed should the network with the collaborators be? And, should the governance structure of the network be hierarchical or flat when selecting problems and solutions?
Figure 3: A framework representing four basic modes of collaboration (Pisano and Verganti, 2008)
The framework by Pisano and Verganti (2008), is represented by a matrix which is visualized in figure 3. It contains four different modes of collaboration; Innovation Mall, Innovation Community, Elite Circle, and Consortium. When managers are deciding what collaboration mode to adopt, trade-offs for each mode need to be considered (Pisano and Verganti, 2008). Firstly, it needs to be determined whether an open or closed mode should be used. For the purpose of this report, the open mode will be solely discussed. Using an open network is suitable though it possesses the characteristic of attracting a large number of problem solvers together with a significant amount of ideas. Here, there is no need to identify knowledge domains or the best actors within that area. By letting a large number of actors participate in the problem solving process, eventually, a suitable actor with the right competence will show up and contribute to solving the problem. However, a pitfall with the open mode is that they are not as efficient as closed modes though the processes may be longer and more complex (Ibid.).
Secondly, it has to be determined whether a hierarchical or flat form of governance should be used (Pisano and Verganti, 2008). The main take here is to decide who gets to define the problem and select a solution. In a hierarchical form, a determined, specific organization inherits the sole responsibility to define the problem and select how to solve the problem. This gives the company a high level of control of the efforts for the innovation and captures the greater source of value. However, in the flat case, the decisions are jointly taken by some or all the participants of the project. This approach is beneficial though it allows cost and risk sharing as well as sharing of technical challenges regarding the innovation (Ibid).
Pisano and Verganti (2008) conclude that the choice of collaboration method is in the end depending on the strategic nature of the firm. The firm should also evaluate its method of collaboration on a regular basis, though as the firm's strategy changes over time, the collaboration may also need to change.
3.4 Open Innovation
A way to collaborate for radical innovation purposes is through the use of open innovation (Inauen and Schenker‐Wicki, 2012). The adoption methods of the open innovation concept can however vary
between organizations with regard to three factors; why and when the setup is scheduled, and what culture exists inside the firm (Wikhamn and Styhre, 2019). If implemented well, the initiative can enhance corporate branding, both internally and externally, as it presents the focal firm as creative, open and proactive (Ibid.). This chapter will go through the concept of open innovation, its physical proximity and managerial implications.
3.4.1 The concept of open innovation
The traditional innovation handbook, focusing on internal R&D activities and protecting Intellectual Property (IP), is no longer the sole road to prosperity (Johannsson et al., 2015). Also, with an ever-changing landscape, and the skillset of people in the world keeps evolving, it is no longer feasible for a firm to have all competencies employed within its own company. With knowledge becoming a key business resource for modern innovative companies, the open innovation paradigm is looking to open organizational boundaries with a new way to co-create value and new-to-the-market products (Johannsson et al., 2015; Lazarenko, 2019). By using inflow and outflow of knowledge to accelerate internal innovation, as well as expanding the current market reach, practicing open innovation is a way to cross internal and external barriers to gain a competitive edge (Chesbrough, 2006b; Ungureanu et al., 2020).
Open innovation is an organizational collaborative model type (Nunes and Abreu, 2020). For a successful practice of the organizational mode, different types of expertise and capabilities need to be accessed through active stakeholders. This is because a diverse network would enable more varied learning opportunities and sufficient responses to the market. Research has also shown that firms are evolving their usage of open innovation practices (Brunswicker and Chesbrough, 2018). This by moving from traditional bilateral agreements on alliances, to setting up communities with multiple stakeholders in an interactive climate. As Chesbrough (2017, p. 38) frames it:
“Before open innovation, the lab was our world. With open innovation, the world has now become our lab.”
There are two main processes in open innovation activities; Outside-in process and Inside-out process (Lazarenko, 2019). Outside-in processes focus on absorbing knowledge and resources from external actors such as competitors, customers and suppliers, and according to the firm’s specific needs. With this, costs and time can be reduced by collecting, purchasing, or lending only necessary resources (Nunes and Abreu, 2020). The latter, inside-out processes, rests on a company’s capacity to share knowledge and create profit opportunities outside the firm boundaries (Lazarenko, 2019). This is done by exploiting the inbound knowledge and tech to external actors in the open innovation ecosystem by, for example, adopting out-licensing and transfers of rights or promoting spinoffs (Lazarenko, 2019;
(Nunes and Abreu, 2020). These two processes can be combined and thus create coupled processes.
According to Lazarenko (2019), an open approach has the potential to further improve efficiency and adaptiveness of innovation processes inside the focal firm, but knowledge management needs to be integrated in the company structure. With the three process types mentioned above, three key organizational capabilities can be identified (Lazarenko, 2019). This refers to a company’s ability to absorb, share and co-create knowledge. In this theory, a firm’s open innovation capacity is founded in its dynamic talent of adopting inbound and outbound intelligence to create new products, processes and business opportunities to co-create value with its partners.
3.4.2 Open innovation space
When discussing the term of open innovation in a physical space, research refers to it as an environment meant to, and designed to enable individuals and groups to be creative (Ungureanu et al., 2020). This means that when mentioning an open innovation space, a physical aspect is added to the concept of open innovation. For example an area, or location, on which the open innovation practices take place (Ghahestani et al., 2020). This report will use different synonyms for OIS, some of which are:
- Innovation Hubs: Operates as a boundary-spanning system that provides facilities and functions for nourishing the exchange of new capabilities and innovation (Youtie and Shapira, 2008).
- Innovation Labs: Acts as a semi-autonomous organization that takes on diverse stakeholders, in an open setting, to facilitate the creation and prototyping of radical innovation (Gryszkiewicz, Toivonen and Lykourentzou, 2016).
- Innovation Ecosystem: In this setting, numerous actors are included to collaborate by contributing with their individual offerings for the creation of synergistic partnerships that support growth of the entire system (Granstrand and Holgersson, 2020).
When an open innovation space is to be established, different aspects have to be considered in the construction of the innovation space. These aspects could be considered as requirements that are necessary to account during the development of the open innovation space. The development of the open innovation space may present different challenges and risks that are in many cases related to insufficient planning of the open innovation space, for example considering the selection of partners and the methodological choice of collaboration (Guertler, Michailidou and Lindemann, 2016). It is common that open innovation is established with a trial and error approach which results in inefficient open innovation projects. Therefore, it is essential to evaluate boundary conditions and context factors in which set the limits of the open innovation space and the projects (Ibid.).
Figure 4: The situative open innovation framework (Guertler, Michailidou and Lindemann, 2016)
When open innovation initiatives are to be planned, the “situative open innovation” methodology can be used. The goal of the situative open innovation methodology is to support actors in the planning process of open innovation initiatives. The situative open innovation methodology is represented as a framework in figure 4 which consists of five different phases. The phases are:
1. Analysis of open innovation situations and objectives. Here, the characteristics of the open innovation project are analyzed along with the external and internal context factors of the company. The context factors here could be organizational or competitor dynamics.
2. Selecting open innovation partners. In the second phase, the company identifies partners that are relevant for the project that the open innovation space is to undertake. The partners are selected by assessment and ranking criteria.
3. Selecting and adopting open innovation methods. Based on the selected partners for the open innovation project, suitable methods are appointed to the project.
4. Planning of open innovation project management. In this phase, risk management, controlling and performance aspects of the project are determined.
5. Planning open innovation projects in detail.
In this report, we will dive further into step two and step four. These steps are selected based on the research scope of this study. The main research question encapsules partner selection and sub-research question two incorporates challenges with collaborations. Thus, step two and four are selected.
3.4.3 Selecting partners
To succeed with open innovation practice, it is essential that the right partners are selected for the planned project. Different aspects need to be considered in the selection process, such as the purpose of the project, the design of the innovation phases, the required competence and expertise, and factors of context such as expected results of the project or degree of confidentiality (Guertler and Lindemann, 2016). Other factors a company needs to investigate when selecting partners are to where the external actor is geographically positioned and what industry it comes from (Wikhamn, 2020).
However, there are challenges with this process, where the selection of an inappropriate partner could damage the open innovation project and lead to project or innovation failure (Manotungvorapun and Gerdsri, 2015; Guertler and Lindemann, 2016). Furthermore, companies face other risks in the selection process such as missing out on suitable collaborators. This is because companies usually focus on inviting already known partners (Guertler and Lindermann, 2016).
In open innovation projects, Henttonen et al. (2016) argue that several heterogeneous sources of expertise and knowledge should be used in the open innovation project to improve the probability of success in the project, but also for its competitive and strategic benefits. In previous research, partners within open innovation are described as laboratories, universities, suppliers, customers and horizontal competitors. External partners are considered as a key in accessing complementary resources in an open innovation ecosystem (Manotungvorapun and Gerdsri, 2015). Other types of partners that are successful to collaborate with are small enterprises and start-ups. Start-ups are defined as young companies with a purpose to develop a unique service or product, and introduce it on the market with the target of making it irreplaceable and irresistible for customers (Baldridge, 2021). Regarding small companies, these are defined as established companies with 10-49 employees (OECD, 2021).
Wikhamn (2020) describes that collaboration in open innovation between large companies and small companies offers opportunities for synergies for the collaborating partners where each partner gains access to resources, knowledge, and processes that they are lacking. Thus, the collaboration has great potential to enhance the innovation processes for both partners (Wikhamn, 2020). It is also an opportunity for large firms to enhance their business transformation as well as become inspired by the smaller firms' entrepreneurial character (Wikhamn and Styhre, 2019).
