Managing Distributed Innovation: Strategic Utilization of Open and User Innovation

Research from a variety of perspectives has argued that innovation no longer takes place within a single organization, but rather is distributed across multiple stakeholders in a value network. Here we contrast the vertically integrated innovation model to open innovation, user innovation, as well as other distributed processes (cumulative innovation, communities or social production, and co-creation), while we also discuss open source software and crowdsourcing as applications of the perspectives. We consider differences in the nature of distributed innovation, as well as its origins and its effects. From this, we contrast the predictions of the perspectives on the sources, motivation and value appropriation of external innovation, and thereby provide a framework for the strategic management of distributed innovation. Keywords: open innovation; user innovation; cumulative innovation; communities; social production; co-creation; open source software; crowdsourcing Acknowledgements: Earlier versions of this paper were presented at the User and Open Innovation Workshop 2009, and the UC Berkeley Center for Open Innovation. 1 Introduction........................................................................................................................2 2 Divergent Views of “Innovation” ...............................................................................3 2.1 Innovation Attributes: Knowledge, Components and Complements ............... 3 2.2 Varying Degrees of Innovativeness ................................................................................. 6 3 Integrated and Distributed Models of Firm Innovation .................................8 3.1 A Vertically Integrated Model of Industrial Innovation......................................10 3.2 Open Innovation.....................................................................................................................11 3.3 User Innovation......................................................................................................................13 3.4 Other Distributed Processes .............................................................................................14 3.5 Applications of the Perspectives.....................................................................................16 4 Strategic Management of Distributed Innovation..........................................18 4.1 Identifying/Searching for Distributed Innovation ................................................18 4.2 Maximizing/Motivating the Supply of Distributed Innovation .......................20 4.3 Appropriating Value from Distributed Innovation................................................22 5 Discussion.........................................................................................................................24 5.1 Implications .............................................................................................................................24 5.2 Opportunities for Future Research ...............................................................................26 6 References ........................................................................................................................28 7 Tables and Figures........................................................................................................39