Academic journal article Research-Technology Management

The Role of the Innovation Capitalist in Open Innovation: A Case Study and Key Lessons Learned: Innovation Capitalists Can Help Companies Manage the Challenges of Sourcing Innovation Externally

Academic journal article Research-Technology Management

The Role of the Innovation Capitalist in Open Innovation: A Case Study and Key Lessons Learned: Innovation Capitalists Can Help Companies Manage the Challenges of Sourcing Innovation Externally

Article excerpt

The business rationale for pursuing open innovation initiatives is widely acknowledged (Chesbrough 2003, 2007); however, most companies face organizational and managerial challenges in executing such initiatives (Enkel, Gassmann, and Chesbrough 2009; Minshall et al. 2010; Munsch 2009; Sieg, Wallin, and von Krogh 2010). Frequently, companies exploring open innovation will turn to innovation intermediaries, firms that help connect companies to external sources of innovation and mediate their relationships with those sources. Hence, for many companies, a key organizational challenge relates to the nature of relationships with innovation intermediaries (Sawhney, Prandelli, and Verona 2003).

Companies can acquire innovative ideas and technologies for new products/services at different levels of maturity (ranging from raw ideas to market-ready products and services) and from different types of intermediaries. At one end of the continuum, relatively raw ideas and undeveloped technologies can be acquired by reaching out directly to individual inventors or firms--as Proctor & Gamble has done through its Connect+Develop initiative--or by using idea scouts, electronic R&D marketplaces (such as Innocentive), and other such intermediaries whose primary role is to connect the company with inventors. At the other end of the continuum, venture capitalists may serve the role of an innovation intermediary, offering fully developed, market-demonstrated products and services married with matching organizational infrastructures. The high value added by venture capitalists makes the acquisition of such "market-ready products" very costly, albeit less risky.

[FIGURE 1 OMITTED]

A new type of innovation intermediary--the innovation capitalist--has emerged to fill the gap between these two extremes, by offering companies access to market-ready concepts--ideas and technologies that are developed enough to bring clarity to their market potential but not developed enough to inflate their acquisition costs. An innovation capitalist goes beyond traditional innovation brokers by seeking out and evaluating innovative technology and product concepts from the inventor community and other external sources and then developing and prototyping those ideas to a stage where their market potential is validated. That process involves three primary tasks (Figure 1). Innovation capitalist firms tend to make significantly smaller investments (mostly in the $50,000 to $250,000 range) than venture capitalists, which may invest millions of dollars in a promising idea. The project time also tends to be much shorter, measured in months rather than years.

Much has been written about the different types of innovation intermediaries in recent years (e.g., Howells 2006; Tran, Hsuan, and Mahnke 2011; Gassmann, Daiber, and Enkel 2011; Sawhney, Prandelli, and Verona 2003), but there has been limited research focus on innovation capitalists. (1) At the same time, the number of firms adopting such a business mode! has increased rapidly in the last few years. (2) While there is considerable clarity regarding the role and the functions of innovation capitalists (Nambisan and Sawhney 2007a, 2007b), the successful execution of the business model raises a host of operational issues and challenges--both for the innovation capitalist and for its partners at either end of the process. Given the nascent nature of our knowledge on this topic, a case-study approach (Yin 2003) is appropriate to explore related issues and identify best practices.

The Study

We conducted an in-depth study of the practices of one innovation capitalist firm, IP2Biz LLC, which focuses on sourcing innovative ideas and technologies from universities and national laboratories. (3) Our objective was to explore tire key challenges and identify some of the lessons learned from the experience of IP2Biz. Further, companies have had limited success in partnering directly with universities (Buganza and Verganti 2009); by focusing on an innovation capitalist that sources technologies primarily from universities, we hoped to contribute to a better understanding of the relationships between innovation intermediaries and universities. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.