Innovation

Dr. Manfred Bischoff Institute for InnovaInnovation Management of EADS Research Report 2012/2013 ______2 Dear readers of the research report,

It is my pleasure to inform you about our research and managerial activities in 2012 and 2013. We aim at presenting you this information in a rather non- typical scientific way in order to foster discussion and interaction with you. Therefore, my team and I summarized the most important research results and projects undertaken into short articles which should serve as impulse for your daily innovation practice as well as to rethink and deepen your knowledge about innovation management.

With this report we would like to thank our engaged research partners who helped us tremendously conducting our research and advancing the field of innovation management. Within joined projects, responses to our surveys and cooperation in teaching we aim to work very close at the needs of practice with our scientific knowledge and tools. Please stay in contact with us and help us to identify future needs and research topics!

Again, thank you for your time and effort and please don´t hesitate to contact us!

Best regards,

Ellen Enkel

Prof. Dr. Ellen Enkel Head of the Institute phone: +49 7541 6009-1281 email: [email protected]

______3 Contents

The Institute in a Nutshell 8 Highlights and our major topics of the year 10 Innovation at the institute in numbers 2012

Insights in Collaborative Innovation Chapter 1: Excellence in Open Innovation 14 Why is it hard to measure excellence in open innovation? 16 Innovation Study 2012 – Benchmarking 28 The three best open innovation companies 2012 32 Technology manager’s absorptive capacity of external knowledge

Chapter 2: Innovation Strategy 36 Balancing open and closed innovation: Business strategy as determinant 39 Search strategies for cross-industry innovation: Development of a multi-job multi-method matrix with BMW

Chapter 3: Cross-Industry Innovation 41 “We borrow with pride“: Cultural and structural capabilities for systematic cross-industry innovation 47 Radical innovation from beyond established industry boundaries: How to prepare for distant collaboration 51 When distant partners become your closest friends: Ambidexterity through cross-industry collaboration projects 54 Cross-industry innovation: Why should a marine biologist cooperate with a chemical company in an innovation project? 57 Guidelines on where to search appropriate partners

______4 Chapter 4: Business Model Innovation 59 Increasing digitalization enables and demands new digital business models 63 Designing radical business models by looking across industry boundaries 66 Flying high or low: Capabilities for business model innovation in the highly competitive airline industry 68 How to systematize business creation? The case of Europe’s largest aerospace company 72 How to “fight” Amazon and Google: Business model innovation in the specialized publishing industry

Chapter 5: Perception and Communication of Innovation 74 Research Brand Equity 78 Brand Creators

Further Information 83 Research and teaching at the institute 84 Further publications of the institute 87 Cooperation in practice 88 Team 90 The institute goes international 92 References

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______Institut6 The Institute in a Nutshell

______Institut7 The Institute in a Nutshell

Highlights and our major topics of the year

The innovation study of 2012 is one of the major potentials of new technology. Therefore, we doubled highlights of our year. This study, which is conducted our effort to learn more about triggers for changing since 2010, collects data about innovation business models, identify capabilities to create new activities of companies in Germany, Austrian and businesses (in cooperation with the Copenhagen Switzerland. We use this research in order to Business School), to create digital business models verify new upcoming topics as well as changing (in our executive master program digital pioneering) behaviour and best practices. In 2012, more than as well as to learn how to develop disruptive 200 companies participated in the study. Three of business models by imitation from other industries. these were selected as Best Open Innovators in How successful our research efforts have been can our yearly conference and are illustrating why their be seen by the number of new articles that were innovation management is very successful. Please created, the increasing number of students learning follow up for more information about the study about innovation on bachelor, master and executive and about the best open innovation companies in master level as well as by the huge attention we Chapter 1. received on international conferences.

Especially the connection between strategy, In cross-industry innovation, already existing culture and the right innovation activities seems to solutions from other industries are creatively determine innovation success. Several qualitative imitated and retranslated to meet the needs of and quantitative research results of the institute the company‘s current market or products. Such indicate that strategy give the direction how much solutions can be technologies, patents, specific of open and closed innovation activities is effective knowledge, capabilities, business processes, and efficient while the culture is supportive or general principles, or whole business models. hindering the strategy fulfilment. Furthermore, as Innovations systematically created in a cross- open innovation is already seen as the dominant industry context are a new phenomenon for theory design in innovation management, skills of and practice in respect of an open innovation employees need to adapt accordingly. Inspired by approach. While the cognitive distance between a project with BMW we analysed which capabilities the acquired knowledge and the problem to be a technology manager needs to successfully solved was regarded as a counterproductive identify, evaluate and integrate knowledge from the factor in older research, recent theory regards it outside world. In an on-going large scale survey we as positively related to innovation performance. aim to link those capabilities with the company´s Therefore, we tried to develop a new tool how to technology strategy in order to develop archetypes measure cognitive distance of industries before of capability sets for each strategy. For more selecting a collaboration partner. Additionally, as information to these points please see Chapter 1 existing research point out that especially high and 2. distance collaboration lead to disruptive results, we studied the capabilities needed to successfully One important result of the last year’s research manage those collaborations (see Chapter 3). projects was the increasing importance of business models, both digital and analog as well as hybrid forms. Practice believes that market growth will be dependent on adapting established or inventing new business models, which better reflect changing customer behaviour, new strategic direction and

______8 The Institute in a Nutshell

The institute team Sebastian Heil, Florian Mezger (standing), Jana Kremer, Karoline Bader, Prof. Dr. Ellen Enkel and Junior Prof. Marco Hubert (sitting), Annette Horvath, Katja-Maria Prexl as well as Sabine Marx are missing

In cooperation with Wharton University in the The institute is very much profiting from its new US, we further examined how companies can junior professor Marco Hubert who focuses reach ambidexterity, aiming for both exploratory his research on this topic. In a joined research (disruptive) and exploitative (incremental) project with the chair of marketing of the Zeppelin innovation, by pursuing cross-industry innovation University (Prof. Kenning) and the chair of applied collaboration. Our case study analysis led to social psychology and consumer research lab of the identification of major success factors the University of Vienna (Prof. Florack), the institute like individual learning potentials differ for the undertook several empirical studies to find out when collaboration partners, acting as a function of consumers identify a brand as innovative as well the initial knowledge distance, project objective as if these relates to financial data of the company. and subsequent process architecture. Please see Additionally, Prof. Hubert tries to identify indicators Chapter 4 for more information. to measure innovativeness of companies. Please follow up on this research area in Chapter 5. Last but not least, appropriate communication about the complex topic of innovation is increasingly important. Financial analysts as well as customers evaluate innovative companies higher than companies not known for their innovation but research and practice are lacking clear indicators to prove innovativeness.

______9 The Institute in a Nutshell

Innovation at the institute in numbers 2012

About 200 companies participating in open innovation survey 2012

Participation in 7 international conferences and workshops

1090 participantes at lectures of the institute

263 students learning about innovation in fall/springsemester

263 students learning about innovation in fall/springsemester

| 152 bachelor students at the courses Introduction to Scientific Working, Introduction to Innovation & Technology Management and Open Innovation | 77 Master students at the courses Advanced Open Innovation, R&D Metrics & Creativity, Knowledge Management as well as Marketing Management | 34 Executive Master students participated in each of the modules Innovation & Technology Management, Digital Business Modeling, Networks, as well as New Markets & Technologies in Digitalization

______10 The Institute in a Nutshell

13 presentations on management conferences and symposia

Research projects in practice done with BMW | Astrium | Henkel | EADS | Friesland Campina

3 best open innovator awards

International research cooperations with Copenhagen Business School, WU Wien, Universität Mannheim, Universität St.Gallen (HSG), Université Paris-Sud, University of Cambridge, Leuven University, Wharton USA

41 peer reviewed academic articles submission >> under review >> in press or printed

20 journal and conference submissions 11 scientific articles under review 10 academic articles 10 managerial contributions

______11 Collaborative

______novatiom12 Innovation

______novatiom13 Excellence in Open Innovation

Why is it hard to measure excellence in open innovation?

Opening up the innovation process in order to allow knowledge and resources in order gain technology external knowledge to enrich internal knowledge leadership. Those companies should possess a and capabilities has already been established as large portfolio of different collaborative activities to dominant design in Europe. As we identified with identify the next technology change and the best previous innovation studies, external knowledge partners to develop products and services based or resources help companies with both, increasing on new technologies. Especially large corporations their effectiveness and their efficiency in innovation. with several business units acting under the one But we already know that the balance between or the other corporate strategy, called analyzer internal (closed) and external (open) innovation is companies, should decide for open and closed determined by industry speed, corporate strategy innovation activities on business unit level instead as well as by the existing culture of the company. on corporate level.

Whereas high industry speed, like in information and In order to excel in open innovation, corporate communication industry or fast moving consumer culture plays a significant role. Culture can goods industry, forces companies to enrich their be supportive or disturbing following an open own knowledge base and resources with external innovation approach. Yet, research doesn´t know if ones to gain development speed, slower industries strategy follows culture or the other way around. like energy, textiles or raw material producers However, opening up the innovation process is collaborate only in selected projects (e.g., when requiring a whole set of new or adapted processes new technologies are required or new customer and skills on nearly every level of the company. demands need to be meet). Therefore, our recent research tries to explore which capabilities technology managers need, Recent studies of our institute show that corporate dependent on technology strategy, to successfully strategy determines how much open or closed identify, adapt and integrate external knowledge innovation is necessary to create corporate and resources. One other aspect very new in performance impact in terms of radical and our research agenda is how management and incremental innovation. Additionally, we know by researchers need to communicate innovation in now which activities companies should undertake order to create awareness of being an innovative in order to best support their strategic decision. partner for other companies. Appropriate As companies with a market defender strategy communication of innovativeness has an impact should focus mainly on internal resources for on consumers, potential and existing partners as their innovation, enriched by frequent customer well as on financial analysts. Therefore, we aim to and supplier integration activities to increase identify ways of appropriate communication and market orientation and optimize their resource persons within the company to do so. management, companies with a prospector strategy should heavily focus on external

______14 Excellence in Open Innovation

Why is it hard to measure excellence in open innovation?

Besides the individual level, research as well as The following chapter is giving an overview about practice lacks in good performance indicators our recent research results in the area collaborative in order to compare and adapt open innovation innovation, derived from the 2012 innovation study. activities. While the maturity framework measures Thanks to all participating companies we are able the excellence of open innovation processes, the to enrich knowledge about when collaborative clear link between corporate strategy and open innovation is mandatory and beneficial and or closed innovation activities shows if the right what to do. The figures displayed show different processes are selected and supported. Therefore, comparisons between, e.g., different strategy we measured excellence and, by doing so, types as well as between the best in class and the identified the best open innovation companies by average companies. The further readings indicate their alignment between corporate strategy and more information about the summarized topics in activities. In order to classify if their processes each chapter. and activities are excellent and best in class, experts from practice (the best open innovators of the previous year) needed to visit the companies and look into their activities. Yet, no existing measurement system could support us. The same is true for the internal monitoring of open innovation activities. Most related key performance indicators measure the number of, e.g., external partners, collaborative patents, or open innovation projects successfully finished, instead of the impact or reach of activities (e.g. membership in the most important networks, quality of the partner in the own network, or impact of open versus closed innovation projects on corporate performance). Our on-going research in the field of innovation metrics might help to shed light on this topic as well.

Prof. Dr. Ellen Enkel Head of the Institute Tel. +49 7541 6009-1281 E-Mail: [email protected]

______15 Excellence in Open Innovation

Innovation Study 2012 – Benchmarking

Introduction

In what way can open innovation formats help In order to gather the necessary information for the firms to systematically enhance their innovation benchmarking analysis, the data were collected via performance? Which open innovation activities a web-based online survey between March and might be more beneficial than others? Are there November 2012. In so doing, companies of different specific antecedents with respect to differing open sizes and industry affiliations were addressed via innovation formats and business model initiatives? personalized cover letters and systematic email Our Innovation Study 2012 shall support companies waves. to benchmark against others and shall help to answer such questions. In total, we addressed over 2.500 companies and finally received 183 filled questionnaires. Due to The study dealt with three key topics: the the fact that some questionnaires were not fully relationship between innovation strategy and completed, we had to cope with missing values openness, business model innovation and cross- regarding specific questions. This led to a reduced industry innovation. In this context, the Chair for number of observations. Apart from the missing Innovation Management predominantly focused data problem, some companies did not reach a on organizational capabilities including cultural, critical firm size or were categorized as start-up strategic and structural aspects which might companies which again led to a reduction in sample foster or hinder specific innovation formats and size. Finally, we could utilize an adjusted sample of approaches in the corporate landscape. 169 observations for the benchmarking analysis.

Manufacturing

Electricity, gas, steam and air conditioning supply Construction

36.10% 39.10% Wholesale and retail trade

Transportation, storage, and logistics

Information and communication (including IT and services) 4.70% 4.10% Media and publishing 6.50% 3% Financial and insurance activities 0.60%

0.60% 1.80% Business value added services 2.40% 1.20% Other services

Others (no service providers)

Figure 1: Industry affiliation of surveyed companies (N = 169) in Innovation Study 2012

______16 Excellence in Open Innovation

73.4% of the surveyed companies belong to The Analyzer’s profile describes a company to the category of big corporations (more than 500 rarely be “first-in” with new products or services employees), whereas 26.6% are small and medium- and enter emerging market segments. However, sized enterprises (SMEs). by carefully monitoring their competitors’ actions and the customers’ responses, Analyzers can With respect to the industry affiliation, 78.6% of the be characterized as “fast followers” with a better companies can be categorized as manufacturing targeting strategy, an increased customer benefit, firms, whereas 21.4% are service providers (=non- or lower total costs. Depending on the product or manufacturing). Since the topics open, cross- service category, Analyzers consciously decide in industry as well as business model innovation are favor of two differing strategies: In some categories, still more frequently discussed in manufacturing they act as cost leaders and thus, attempt to firms, this unequal distribution might be explained. enhance market shares in existing markets. In other Nevertheless, these topics have also become more categories, they aim for a differentiation strategy in important for non-manufacturing firms during the order to stand out by offering the most innovative last years. Overall, we observe an increased interest products or services. with respect to required organizational capabilities and employed innovation activities to increase a The Defender’s profile exhibits that this company company’s innovation performance. type tries to maintain a relatively stable domain by aggressively protecting its product-market position. Strategy as determining factor for openness Defenders are rarely at the forefront of product or service development. Instead they often follow one Based on theoretically derived strategy profiles out of two possible sub-strategies: (DeSarbo et al. 2005; Olson et al. 2005) we were able to separate the corporate landscape into (1) On the one hand, they might focus on different proactive strategy archetypes. The producing goods or services as efficiently as companies were asked to categorize themselves possible. They frequently emphasize an according to defined strategy profiles. Within the increase of existing market shares by providing benchmarking analysis, we only regard the three products or services at the best prices. This proactive strategic archetypes (N=160) and neglect type is known as the cost-leading Defender. the interrogated non-proactive strategic archetype, as the latter type is less successful in the market. (2) On the other hand, they might focus on This is true, since innovation obviously does not providing superior levels of service or product play a key role for this company type. quality. Then, their product or service prices are typically higher than the industry average. The Prospector’s profile describes a company to This type is known as the differentiated Defender. frequently be the first-to-market with new product or service concepts. This company type aggressively Based on the different business strategies, enters new market segments where it perceives an innovation strategies and the degree of firm opportunity or new trend. Furthermore, Prospectors openness can be assumed. Companies that follow concentrate on offering products or services that a Prospector strategy are usually more open than overcome and push performance boundaries. They companies which follow a Defender strategy (see offer the most innovative products or services, also Enkel and Bader, 2012). Due to the fact that whether based on performance improvement or Analyzers are positioned in the middle, we expect cost reduction. Prospectors to have the highest degree of firm openness, followed by the Analyzers, and finally followed by the Defenders.

______17 Excellence in Open Innovation

This assessment makes sense, when regarding the In comparison to the Prospectors, the Defenders archetypes’ market orientations, internal structures are less open with regard to the integration of and processes as well as their objectives regarding external knowledge and predominantly focus on resource allocation. To get a better overview with their internal know-how. Since the Defenders either respect to the archetypes’ utilization of open strive for cost leadership or quality leadership (see innovation activities, we conducted an analysis and cost-leading versus differentiated Defenders), calculated the mean of activity utilization for each these firms do not have to open up as much as strategic archetype. Prospectors do and can still be equally successful (see also article by Karoline Bader about balancing Figure 2 shows that the Prospectors achieve the open and closed innovation). This is true, as highest utilization mean for all investigated open companies sometimes lose focus and over-search, innovation activities. This implies that Prospectors or they might rely too heavily on external resources strive for a higher degree of firm openness. Since (Dahlander and Gann, 2010). these companies regularly integrate external knowledge in their innovation processes, they often set new trends and are able to discover a variety of opportunities.

Commercialization of existing knowledgec and solutions in foreign industries Off-licensing of products and/or services to foreign geographical markets Investment in other companies

Inside-Out Spin-offs Application of online ideas generation and/or solution platforms Creativity workshops with experts of foreign industries or knowledge areas Acquisition of additional knowledge through cross-industry M&As Acquisition of additional knowledge through M&As within own industry

Outside-In Collection and exchange of knowledge in cross-industry networks Collection and exchange of knowledge in networks within own industry Joint development projects with universities/ research institutions across fields Joint development projects with universities/ research institutions within the own field Joint development projects with companies of foreign industries Joint development projects with companies in the same industry Integration of lead user knowledge

Coupled Joint development projects with suppliers Joint development projects with customers Sharing of cross-field knowledge between a company's BUs

0 1 2 3 4 5

Prospector Analyzer Defender

Figure 2: Average utilization of open innovation activities depending on the three proactive strategic archetypes (N = 160)

______18 Excellence in Open Innovation

As a result, one cannot argue that companies To sum up, we can show that the degree of firm with a higher degree of firm openness are more openness can be derived from strategy and that it successful. If companies do not adapt their differs with respect to a company’s strategic focus. innovation strategies – including the application of Furthermore, we demonstrate that this tendency is open innovation formats – to their strategic goals also true for single open innovation formats. and vision, these companies are likely to be less successful in the markets (Gianiodis et al., 2010; Finally, we are able to reveal which open innovation Laursen and Salter, 2006). activities are the most important ones across all three proactive strategic archetypes. Taking for Due to the fact that the Analyzers follow a instance the integration of lead user knowledge hybrid strategy adopting both characteristics or the knowledge exchange in networks within of Prospectors and Defenders, they might the own industry (see Figure 3), we see that these occasionally be less open regarding single open open innovation formats were intensively applied. innovation activities (e.g. spin-offs or knowledge In contrast, the integration of external knowledge acquisition via M&A) and instead focus on others. via M&A seems to play an inferior role. However, from a general point of view, the Analyzers achieve a greater degree of firm openness than the Defenders do.

Sharing of cross-field knowledge between a company's BUs Commercialization of existing Joint development projects with knowledgec and solutions in foreign 4 customers industries Off-licensing of products and/or services Joint development projects with to foreign geographical markets 3 suppliers

Investment in other companies 2 Integration of lead user knowledge Commercialization of existing knowledgec and solutions in foreign industries Off-licensing of products and/or services to foreign geographical markets Investment in other companies 1 Joint development projects with

Inside-Out Spin-offs Spin-offs companies in the same industry Application of online ideas generation and/or solution platforms Creativity workshops with experts of foreign industries or knowledge areas 0 Acquisition of additional knowledge through cross-industry M&As Application of online ideas generation Joint development projects with Acquisition of additional knowledge through M&As within own industry and/or solution platforms companies of foreign industries

Outside-In Collection and exchange of knowledge in cross-industry networks Collection and exchange of knowledge in networks within own industry Joint development projects with universities/ research institutions across fields Joint development projects with Creativity workshops with experts of universities/ research institutions within Joint development projects with universities/ research institutions within the own field foreign industries or knowledge areas the own field Joint development projects with companies of foreign industries Joint development projects with companies in the same industry Joint development projects with Acquisition of additional knowledge Integration of lead user knowledge universities/ research institutions across through cross-industry M&As fields

Coupled Joint development projects with suppliers Acquisition of additional knowledge Collection and exchange of knowledge Joint development projects with customers through M&As within own industry in networks within own industry Sharing of cross-field knowledge between a company's BUs Collection and exchange of knowledge in cross-industry networks 0 1 2 3 4 5

Prospector Analyzer Defender Prospector Analyzer Defender

Figure 3: Comparison of single open innovation utilization with respect to the strategic focus (N = 160)

______19 Excellence in Open Innovation

Figure 4: Environmental turbulence regarding technological and market development (N=152)

This evaluation might support companies to Participants in the study consider especially benchmark their degree of openness as well as their technological developments as dynamic. As outlined utilization of single open innovation activities with in academic research, the emergence of new others. Nevertheless, one should always consider technologies often leads to the development of new a company’s strategic focus and orientation when business models, which adequately leverage the benchmarking against others. potential of this technology (e.g., Chesbrough and Rosenbloom, 2002; Rosenbloom and Christensen, Business model innovation 1994). Thus, working in this moderately dynamic environment requires a firm to consider business In our sample, we see the increasing relevance of model innovation as complementary activity within developing new or reconfigured business models, its innovation strategy. beyond established product, process, and service innovations. With a potentially increasing volatility and dynamism in global markets, such a systematic consideration This can be partly attributed to a moderately of reshaping business models might become dynamic environment regarding technological even more important. Therefore, CEOs, managing development and changes in the market structure directors, and innovation managers are likely to (see Figure 4). The latter one refers to frequently ask how to approach and organize this topic within changing customer needs, new competitors, while their companies. technological development captures the speed in which new technologies enter the market (see also Jaworski & Kohli, 1993).

______20 Excellence in Open Innovation

At board/ managementAt board/ management level level Within jointWithin ventures joint heldventures together held with together partners with partners Within independentWithin independent subsidiaries subsidiaries Within centralWithin corporate central corporateor business or developmentbusiness development Within centralWithin R&D central R&D Within an Withinincubator an incubator Within a separatedWithin a separated venture capital venture unit capital unit Within businessWithin unitsbusiness units

0 0 1 1 2 2 3 3 4 4

Sample AverageSample Average

Figure 5: Where does the managerial responsibility for initiatives regarding business model innovation reside? (N=147)

Responsibility for business model innovation

The organizational responsibility for business model Typical functions that hold operating responsibility innovations plays a crucial role, as it is not quite are Corporate R&D, Corporate Development, or clear yet, who is responsible for these innovation even a specific incubator unit. Incubator units activities (Chesbrough, 2010). are independent organizational units that provide a home for start-ups within a company. These The results of our study show that business incubators often offer technical infrastructure, model innovation is organized centrally (see consulting or other services to internal new Figure 5). These activities are driven by corporate businesses for example. In so doing, new ventures management, i.e. CEOs, Chief Innovation Officers, that develop new business models can benefit from strategy heads, and/or other board-level managers. the deep know-how and other resources of the core This again emphasizes the strategic relevance company (Roseno et al., 2013). of the topic.

______21 Excellence in Open Innovation

Capabilities for business model innovation (BMI) Sensing comprises capabilities such as:

Based on dynamic capabilities theory (e.g., Teece, Business model thinking: Companies need to 2007), companies need capabilities to adapt their think beyond their traditional product/service resources in order to address or even induce boundaries and consider the business model (within change. As innovations in business models are an ecosystem or regarding partners) as subject to often radical or disruptive changes, companies innovation. Hence, they should evaluate whether need certain capabilities especially focusing on their current business model serves customer sensing opportunities or threats in the environment needs and leverages technological possibilities as well as designing and implementing new adequately. business models. Market and customer orientation: Current To allow for benchmarking, we identified top business models serve current customer needs. business model innovators within our sample. However, these needs do change and today’s These companies share certain characteristics, buyers might become non-buyers in the future as they: and vice versa. A strong market and customer orientation for the evaluation of current product/ | Systematically consider BMI a core part of their service bundles is relevant to ensure that a business innovation strategy and innovation activities. model fits to evolving customer needs.

| Regularly challenge and evaluate existing Thinking in business ecosystems: Customers business models. do not think in terms of single products or services; customers require that companies deliver | Take more initiatives towards changing the comprehensive solutions to their problems. Hence, current form of “how to do business”. new business models more and more deliver such | Establish new business model successfully solutions instead of providing single products. As on the market. a consequence, the integration of complementary (or substitutable) products is key for recognizing Therefore, these companies systematically opportunities and threats. and purposefully pursue BMI in order to create competitive advantages, foster growth, and Within our sample, we found out that companies address new markets. are already very well positioned regarding market and customer orientation (see Figure 6). However, What are the differences between top business top business model innovators are significantly model innovators and the average sample ahead of the average company. They excel in terms regarding specific capabilities? Our sample shows of thinking in comprehensive, solution-oriented that the top business model innovators have strong business models and considering the business competencies in sensing and seizing business ecosystems as important input to identify relevant opportunities and threats. value propositions for the future.

______22 Excellence in Open Innovation

Evaluation of complementaryEvaluation ofand complementary substitute and substitute products, services products,and technologies services and technologies Business ModelBusiness Thinking Model ThinkingConsideration of businessConsideration ecosystem of business even ecosystem even beyond industry boundariesbeyond industry boundaries Evaluation of existingEvaluation business of modelsexisting business models

Identification of needsIdentification of today’s of non-buyers needs of today’s non-buyers Market and CustomerMarket and CustomerConsideration of (changing)Consideration consumer of (changing) needs consumer needs Orientation Orientation beyond existing productsbeyond andexisting services products and services Evaluation of existingEvaluation products/service of existing products/service bundles bundles

Development processDevelopment for new business process for new business Thinking in BusinessThinking in Business models models EcosystemsEcosystems Identification and evaluationIdentification of technologiesand evaluation of technologies

0 1 2 0 3 1 4 2 5 3 4 5 Top Business ModelTop Innovators Business ModelSample Innovators Average Sample Average

Figure 6: Sensing capabilities for business model innovation (N=159)

Seizing relates to the subsequent step of | Reconfiguration of resources: The resource approaching business model opportunities and base of a company is valuable for a specific time threats that have been identified before. This and within a specific market configuration only. dynamic capability comprises four aspects: Technological changes and market developments require a company to acquire or build new resources | Business model design: To tackle opportunities, such as technological know-how or customer business model innovators propose entirely new knowledge. New business models essentially base business models, not only new products or services. on these new resource configurations. This differentiates them from other companies. For example, Daimler introduced the car sharing | Decision making: To pursue BMI successfully, platform car2go to address the segment of young, a company’s decision-making processes should urban adults. They did not introduce a new car, fulfill certain characteristics, for example being but introduced an entirely new business model to close to the market, allowing for a high autonomy satisfy this market segment’s needs. or systematically focusing on business models.

| Partnering and open innovation: New business Our sample shows that all participating companies models require the companies to integrate partners are rather advanced regarding their partnering and with complementary competencies. Hence, open open innovation approach (see Figure 7). However, innovation and partnering are essential capabilities top business model innovators outperform others for business model innovators. This includes a clear in other capabilities such as business model definition which competencies are that critical that design or resource reconfiguration. Overall, this they should be developed in-house. benchmarking analysis provides insights for companies how to further strengthen their abilities to successfully pursue business model innovation.

______23 Excellence in Open Innovation

Derivation of new business models beyond products and services Business Model Derivation of new business models beyond products and Definition of new business models to addressservices changes DesignBusiness Model Opportunities areDefinition addressed of new with business new business models models to address changes Design Opportunities are addressed with new business models

Configuration of internal resources and capabilities Partnering and Configuration of internal resources and capabilities Open InnovationPartnering andIntegration of partners with complementary capabilities Open Innovation Integration of partners with complementary capabilities

(Re-) Configuration of business structure

Reconfiguration of Systematic (re-) (Re-)combination Configuration of knowledge of business structure Resources Reconfiguration of ReplacementSystematic of relevant(re-) combination abilities of knowledge Resources Replacement of relevant abilities

High autonomy of individual business units

OptimalHigh use autonomy of core competencies of individual business units Decision Making BMI based on customer and/or competitorOptimal perspective use of core competencies Decision Making Systematic exploitationBMI based onof commercialcustomer and/or opportunities competitor perspective

Systematic exploitation of commercial opportunities 0 1 2 3 4 5

0 1 2 3 4 5

Top Business Model Innovators Sample Average

Top Business Model Innovators Sample Average Figure 7: Seizing capabilities for business model innovation (N=152)

Capabilities for cross-industry innovation

Drawing on absorptive capacity theory (Cohen & view of absorptive capacity (Lane et al., 2006) and Levinthal, 1990), the study addressed distinctive applied to the context of cross-industry innovation, capabilities for cross-industry innovation, allowing potential absorptive capacity comprises the process companies to locate and capture specific stages of recognizing, assimilating, and maintaining knowledge or technologies of partners from distant knowledge from other industries to set the beyond established industry boundaries. While stage for future knowledge transfer to occur. the distance between the acquired knowledge On this basis, realized absorptive capacity includes and the problem to be solved is positively related the process stages of recombining new external to exploratory innovation, too much diversity knowledge of other industries with existing hinders efficient knowledge absorption and organizational knowledge and implementing it results in a reduced effect on novelty value in new products, services, or processes (see (Nooteboom et al., 2007). also article by Sebastian Heil about distant Therefore, building potential absorptive capacity collaboration). makes a firm receptive to understanding and To allow for a benchmarking analysis, we identified evaluating distant knowledge. Further, realized top cross-industry innovators within our sample. absorptive capacity reflects a firm’s ability to derive These companies share certain characteristics, as new insights from the combination of existing and they: newly acquired knowledge (Zahra and George, 2002). More specifically, according to the process

______24 Excellence in Open Innovation

RewardReward system system encouraging encouraging employees employees to to seek seek out out and and incorporateincorporate distant distant knowledge knowledge

Multi-stageMulti-stage problem-solving problem-solving process process to to identify identify relevant relevant knowledgeknowledge from from foreign foreign industries industries

InterdisciplinaryInterdisciplinary teams teams with with experts experts from from outside outside the the own own industryindustry RecognizeRecognize ThoroughThorough observation observation of of technological technological trends trends in in other other industriesindustries

DetailedDetailed observation observation of of sources sources of of new new technologies technologies in in otherother industries industries

ThoroughThorough collection collection of of information information across across industries industries

FrequentFrequent acquisition acquisition of of technologies technologies from from foreign foreign industriesindustries

RegularRegular meetings meetings with with external external partners partners from from foreign foreign AssimilateAssimilate industriesindustries

RegularRegular approach approach of of external external institutions institutions outside outside the the own own fieldfield

ThoroughThorough documentation documentation of of relevant relevant knowledge knowledge from from foreignforeign industries industries over over time time MaintainMaintain SystematicSystematic storage storage of of technological technological knowledge knowledge from from foreignforeign industries industries for for future future reference reference

CommunicationCommunication of of knowledge knowledge from from foreign foreign industries industries acrossacross the the units units of of the the firm firm

0 0 1 1 2 2 3 3 4 4 5 5 ■■ Top Top Cross-Industry Cross-Industry Innovators Innovators ■■ SampleSample Average Average 1 1 Figure 8: Antecedents to potential absorptive capacity (N = 133)

Antecedents to potential absorptive capacity

| Pursue cross-industry innovation more Our sample shows that all participating companies intensively and perform more activities towards spend only some effort in recognizing, assimilating, the integration of distant knowledge. and maintaining potentially valuable external knowledge from other industries (see Figure 8). As | Implement cross-industry innovation as a core yet, there seems to be no systematic exploration part of their innovation activities. of distant knowledge. This may be due to the fact that analogical knowledge from other domains | Successfully conducted a multitude of is frequently looked for without the aid of formal cross-industry innovation projects during methods, which help to abstract from the original the past three years. problem and to identify appropriate industries or Hence, these companies have established cross- partners. While this approach is rather efficient, industry innovation as a method to systematically the tendency to only partially access knowledge accomplish exploratory innovation. What are the from other industries may constrain the possibility differences between top cross-industry innovators for creative recombination and increase the risk of and the average sample regarding specific failing to seek out valuable alternative technologies. capabilities? Our sample shows that the top cross- Top cross industry innovators outperform others in industry innovators have stronger antecedents to all antecedents to potential absorptive capacity. In potential and realized absorptive capacity (see the particular, they have in place clearer incentives to following sections).

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Quick recognition of the usefulness of new technological knowledge from other industries

Regular match of new technologies from other industries Recombine with ideas for new products, services, or processes

Distribution of disparate expertise on different industries to develop new products, services, or processes

Quick transformation of technological knowledge from foreign industries into new products, services, or processes Implement Regular application of technologies from foreign industries in new products, services, or processes

Proficient implementation of technologies from foreign industries in new products, services, or processes

0 1 2 3 4 5

■ Top Cross-Industry Innovators ■ Sample Average

Figure 9: Antecedents to realized absorptive capacity (N = 142)

2 encourage distant knowledge absorption, observe of the average sample on all antecedents to technological developments in certain industries realized absorptive capacity; therefore, they may more frequently and approach external partners achieve superior performance by using acquired on a regular base. However, on average, even top knowledge in the innovation process. These cross-industry innovators lack behind an exhaustive interfirm differences are likely influenced by the approach to adapt to their external technological aforementioned differences in the firms’ level of environment. These findings suggest that it may prior related knowledge, determined by the effort be an effective way to promote distant search on that firms undertake to build up their potential an individual level and venture broad observations absorptive capacity. When combining new and about technological developments only in certain existing knowledge, potential absorptive capacity key industries. helps firms to determine the usefulness of new technological knowledge from other industries and Antecedents to realized absorptive capacity convert it into new products, services, or processes. Thus, the realized absorptive capacity is likely to be Within our average sample, we found that limited by the level of potential absorptive capacity. companies are ill-positioned regarding recombining In sum, these benchmarking results show where assimilated knowledge from other industries and and how companies should further strengthen their implementing this knowledge in new products, capabilities for cross-industry innovation to learn services or processes (see Figure 9). Top cross- new insights via knowledge from distant industries. industry innovators are significantly ahead

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ReducedReduced development development cost cost 6 6 81-100%81-100%

DevelopmentDevelopment of new of new business business models models 5 5 61-80%61-80% ShorterShorter development development time time

4 4 41-60%41-60%

3 3 21-40%21-40%

LicensingLicensing revenues revenues and and profits profits out outof of the thecommercialization commercialization of own of own 2 21-20% 1-20% ShorterShorter project project duration duration technologiestechnologies 0 % 0 % 1 1

AccessAccess to new to new customers customers and and RadicalRadical Innovation Innovation marketsmarkets

BetterBetter servicing servicing of existing of existing customer customer IncrementalIncremental Innovation Innovation needsneeds

■ Top■ Top Cross-Industry Cross-Industry Innovators Innovators ■ ■Sample Sample Average Average

Figure 10: Performance effects from cross-industry innovation (N = 120) 3 3

Performance effects from cross-industry innovation

Finally, we see in our sample that top cross- For both, the sample average and top cross- industry innovators outperform the sample mean industry innovators, there is great potential for future in all performance measures (see Figure 10). These development of their cross-industry innovation findings underline the importance of building performance by preparing for distant collaboration potential and realized absorptive capacity for cross- in an even more systematic manner. First of all, industry innovation. The top firms are particularly companies should develop sufficient resources in ahead regarding the reduction of development time recognizing, assimilating, and maintaining external and project duration, but also benefit from cross- knowledge beyond established industry boundaries industry innovation more often in terms of increased to assure a sufficient level of potential absorptive product innovativeness. Overall, performance capacity. Thereby, an excessive focus on only one effects from cross-industry innovation activities process stage will not be sufficient. remain rather modest, especially with regard to the inside-out perspective in terms of licensing revenues and profits out of the commercialization of own technologies.

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The three best open innovation companies 2012

At the Innovat ion 2012, one of Europe’s leading of cross-industry and business model innovation innovation conferences, the Dr. Manfred activities were written by Prof. Enkel and her team Bischoff Institute for Innovation Management and delivered to an expert committee for evaluation. of EADS together with a renowned practitioner In a third step, the top five companies from the consortium elected Henkel, J.W. Ostendorf, and anonymous case study phase were selected for a Ravensburger for excellence in open innovation. site visit. On the basis of these full-day visits, which took place in September and October 2012, the The expert jury was formed by Andreas Clausen and three winners were chosen. Prizes were awarded Dr. Stefan Biel (Beiersdorf AG), Dr. Grit Enkelmann in the categories „best overall implementation of and Olivier Schneller (Otto Group), Reinhold Huber open innovation in a large company,“ „best overall (Binder + Co AG), and Dr. Heinrich Schäperkötter implementation of open innovation in an SME“ and and Dr. Bruno Scherb (Schaeffler Technologies „anticipatory open innovation”. GmbH & Co. KG). From the scientific side, the study was accompanied by Prof. Ellen Enkel and Best practice in open innovation - The winners her team. Henkel operates worldwide with leading brands Increase of innovation performance within and and technologies in three different business areas: beyond open innovation Laundry and Home Care, Beauty Care as well as Adhesive Technologies. Henkel was founded in The winning candidates were selected from more 1876 and today, holds a leading market position than 150 companies from Germany, Austria and in the consumer and industrial business with Switzerland, which participated in our innovation well-known brands such as Persil, Schwarzkopf study until autumn 2012. Thereby, the central and Loctite. Both product and business model selection criteria was not how much a business innovations are of strategic importance, as practices open innovation, but how systematically Henkel regards innovations to be the basis for the and purposefully it does with regard to innovation company’s long-term success. Today, about a third culture, business model innovation and cross- of Henkel’s turnover results from new and innovative industry innovation. products. In this context, open innovation initiatives meaning the early involvement of external actors in Out of the participating companies in the quantitative the innovation process play an important role for study, the top 15 companies were asked for Henkel. interviews based on several objective ranking criteria. Further, case studies, including examples

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The three best open innovation companies 2012 Prof. Dr. Thomas Müller-Kirschbaum, who is the Innovation Lounge. Here, employees can present head of R&D/Technology/Supply Chain of the and explain new ideas which are evaluated by Laundry and Home Care division at Henkel, sees defined cross-functional experts in a next step. open innovation as excellent orchestration and Finally, the best entries will be presented to the top option for linking internal and external competencies. management. Henkel pursues numerous open innovation approaches. Apart from the collaboration with Under the umbrella of Open Service Innovations, selected suppliers, start-up companies and with Henkel continually develops new business areas in an extensive network of university professors, the the Laundry and Home Care division. In this context, early and systematic integration of cross-industry Henkel has established a new service concept innovation partners delivers the greatest value for around Persil to strengthen the brand name. This Henkel. Through the establishment and on-going new service concept (or even new business model) exchange with the own cross-industry innovation has been implemented through partnerships with network (including companies, universities, numerous medium-sized cleaning businesses. research institutes, knowledge brokers and other In the B2B sector for example, “Persil service” competent partners), Henkel has successfully shall address individuals who have little time for launched a variety of radical innovations during doing their laundry at home. Consequently, these the past years. Furthermore, a targeted monitoring individuals can bring their dirty clothes to special of cross-industry trends regarding new consumer service points at the workplace and collect the demands is also part of Henkel’s strategic clean clothes after work. Furthermore, “Wash & innovation management. For this purpose, creative Coffee”, which was established in cooperation with meetings with consumers and other external actors the company Bosch, is another service concept take place on a regular basis. with similar objectives.

Especially in the Laundry and Home Care division, J.W. Ostendorf is a leading manufacturer of Henkel has systematized its cross-industry decorative paints and varnishes for do-it-yourself innovation approach in order to promote new stores, retailers and the industry. JWO covers product development and to incorporate new a broad value chain from the development and technologies in another context. Employees, who production of decorative paints to the marketing have a broad experience in predefined target at the point of sale. This includes the development industries, operate as technology scouts to identify and expansion of retail customer brands, so-called technologies in more or less distant industries. „private labels“, as well as its own JWO brands. In These newly identified technologies might then be all its business processes, JWO emphasizes the useful for Henkel’s future innovations. concept of sustainability. In 2011 the company employed around 650 people and realized sales Through the concept of the so-called “Innovation of 350 million euros. In the case of brand strategy Days”, all employees at Henkel have the regarding its retail customers, JWO is not pursuing possibility to exchange new findings, knowhow a me-too-approach, but sets frequent trends in and information about new trends across industry its business segments, with which the company boundaries. Additionally, Henkel invites external responds to the changing consumer needs. partners from different sectors to the company’s Foundation of the company‘s success is the „Innovation Fairs“ every six months to discuss professional innovation management, including a relevant future innovation topics and trends. continuous review of the range and development With respect to the long-term documentation of process. Environmental awards such as The Blue knowledge (incl. cross-industry knowhow), Henkel Angel, the EU Ecolabel, Nordic Swan and numerous has set up a comprehensive information technology awards by the Stiftung Warentest and Ökotest were system. Furthermore, all three divisions have also achieved for the innovation measures. established a global internal online network, called

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To meet the needs of the product’s end user and business model is the „Plug & Spray“-system of achieve the highest possible quality level at the JWO´s own brand named „Signeo“. In this case the desired price-performance ratio, JWO involves convenience-based model of Nespresso, which is the expertise of numerous external partners in its positioned in the premium segment, served as an development processes. The use of innovation cross-industry analogy. To address the needs of networks and the cooperation with the commodity the do-it-yourself-user, the enterprise searched for industry over the entire value chain provides the an innovative business model approach and found, company a significant additional value. Cross- through its cross-sectoral search, the Nespresso linking with partners from other industries enjoys business model in the food industry. „Signeo Plug a high priority at JWO. Executives from the & Spray“ is a design-oriented and simple-to-use research and development department work in system, where color cartridges are inserted in a different sectoral and cross-sectoral networks and spray pistol similar to the Nespresso capsules. The associations, such as the Start-Up cluster Münster product idea was realized in cooperation with a or the „Netzwerk Oberfläche NRW” (surface leading company in the spray equipment industry technology network in North Rhine-Westphalia, and won the „red dot design award 2010“. Germany). Here, representatives of different sectors such as raw material suppliers, user industries (e.g. The games publisher Ravensburger is a leading furniture), plastic mold makers, manufacturers, European manufacturer of jigsaw puzzles, games and universities and research institutions are active. activity products. With production facilities in Germany In specific search fields, JWO follows a problem- and the Czech Republic, the group also includes a centered strategy with the aim to identify lead book publisher and other business areas, such as the industries which help to solve the problem. JWO „Ravensburger Spieleland“ or „Ravensburger Digital“, integrates the knowledge of external institutions, which develops and merchandises smart phone and which accompany the development process on online-based games. a scientific and analytical way, through creative Ravensburger considers itself as a premium workgroups. JWO adopts Open Innovation manufacturer and is ambitious to hold its leading, systematically for product innovation as well as for quality oriented market position in the business of process and business model innovation. In addition, traditional toys, as well as to develop new growth the integration of end users and market operators fields by incremental and radical innovations. The from the do-it-yourself sector is an important source company’s philosophy of quality covers in particular for innovation. The use of Netnography plays a the production of elaborate, intelligent and educational significant role in the consumer segment. Thereby, plays and ideas which distinguish themselves. In specifically relevant forums are followed as well as daily business the company strives to ensure that all customer feed-back and customer needs collected products express values such as joy, education and and analyzed. community.

At JWO, Open Innovation is lived and communicated Caused by the historical roots as a traditional through the culture, structures and processes of the publishing house, a high willingness to open towards company. In order to develop ideas or to improve external idea givers is anchored in the company culture. existing ideas, the company holds innovation “Open innovation and the long-term cooperation workshops in which own employees, external with partners are basic for us“, Clemens Maier, stakeholders from various disciplines, industries board member of the Ravensburger group, explains. and countries participate regularly. In addition, Beside the integration of these inventors, different the company has a suggestion system which other partners such as universities or consultancies employees use regularly to communicate new are integrated. The aim of these projects is not only ideas to the top management. New ideas will be the drafting of concrete innovation contents, but also awarded according to their potential for innovation a “learning from the partner“ to be able to use the and communicated to all employees within the acquired abilities in later projects again. company. For Ravensburger, its established industry Business model innovations play a central role experiences great change within the classical in this company. An example for a radically new

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play market due to the increasing digitalization. To maintain the traditionally open culture and to open With foresight on this change the company builds and systematize the innovation activities further, a systematically on open innovation activities. Here, central innovation management was installed four the innovation strategy is based on three columns years ago. The innovation management deals with all „classical board games and jigsaw puzzle“, activities regarding the innovation process, starting „hybrid play concepts“ which integrate electronic with the generation of ideas and ending up with the components, as well as „digital plays“. Especially in market launch. In order to define concrete projects the hybrid sector, very successful innovations were and to develop these through a stage-gate-process, launched during the last years. For example, Tiptoi® is the determination of specific innovation goals and an electronic pencil which can be used in combination innovation strategies belongs to the major tasks. with books, plays and jigsaw puzzles and extends Today, the innovation management consists of two these with tones and noises as well as interactive plays employees who exchange themselves regularly, in and learning contents. This innovation was realized so-called innovation and interlinking meetings, with together with a developing partner and addresses, the different business divisions as well as functional with enduring effects, the increasing digitization. departments of the company about current and future The generation of ideas for such innovations occurs projects, consumer trends as well as cross-sectoral through specific integration of external partners plans. Among other things, a defined field of tasks and the use of exploratory approaches such as the is the linking of the existing offline products with „Blue Ocean strategy“. Within the same innovation new technologies. Through this institutionalization project, other new business and product ideas, which the sustainable integration of partners for the are partly already introduced in the market, were development of contents and methods as well generated. The digital supplement of jigsaw puzzle as the stabilization of an open innovation culture by the „Augmented Reality contents“, which can be Ravensburger addresses the upcoming change in activated by smartphones and tablets, is exemplarily paradigms in a very farsighted way. for this again.

Best Open Innovator Award ceremony at the Management Circle conference in Munich 2012. Dr. Weintz (Best Open Innovator SME), Dr. Scherb (Schaeffler Technologies, jury member), Prof. Dr. Enkel, Prof. Dr. Müller-Kirschbaum (Best Open Innovator Enterprise), Dr. Biel (Beiersdorf, jury member) and Herr Müller (Best Sustainable Open innovation Approach, Ravensburger Spieleverlag)

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Technology manager’s absorptive capacity of external knowledge

The capability of a technology manager to capture managers are finding themselves under pressure to knowledge from outside the firm is a critical not only act as ‚technological gatekeepers‘ (Allen, element of a firm’s innovation capability. However, 1977) but also as carriers of external ideas into and former research has tended to overlook the roles across the firm (Mowery, 2009) – that is, technology that technology managers play in identifying, managers. assimilating, and utilizing external knowledge. By examining absorptive capacity at the individual Moving from technological gatekeepers to level, we seek to enrich the understanding of how technology managers technology managers learn from their external Our current image of R&D managers’ role is technological and market environment and how tied to concepts of technological gatekeepers. such efforts are linked to the technology strategy Technological gatekeepers act as funnels of in their fields. information from external to internal sources. Technology manager’s absorptive capacity as a However, this concept does not offer a complete critical element of a firm’s innovation capability picture on how individuals reshape and champion external knowledge to ensure its absorption by the As competition intensifies and the pace of change wider organization. In a review of the literature on accelerates, firms are increasingly compelled to absorptive capacity, Volberda et al. (2010) come renew themselves by exploring and exploiting to the conclusion that research has overlooked potentially valuable external knowledge for the role that individuals play in absorbing external innovation (Jansen et al., 2006; Floyd & Lane, 2000; knowledge. In other words, the understanding March, 1991). External knowledge provides greater of how technology managers should identify, prospects for the combination and recombination assimilate and utilize external knowledge to of knowledge in order to innovate (Leiponen & facilitate innovation remains incomplete. Current Helfat, 2010; Laursen & Salter, 2006; Fleming challenges to technology managers are: & Sorenson, 2004; Rosenkopf & Nerkar, 2001). In Cohen & Levinthal’s (1990) seminal paper on | Identifying useful external knowledge is costly absorptive capacity, individual R&D managers were in terms of resources to keep track of changing seen to be at the frontlines of allowing organizations technological opportunities and market to learn from external sources of knowledge. demands (Cockburn & Henderson, 1998; Fundamentally, the absorptive capacity of a firm Katila & Ahuja, 2002; Laursen & Salter, 2006) depends on the ability of its members to recognize | Assimilating new external knowledge to existing valuable external knowledge in the environment, knowledge is exacerbated, as it entails cognitive align it with existing organizational capabilities distance (Nooteboom et al., 2007) and does and promote its utilization within the organization. not align with existing organizational categories Staying close to the original logic of this concept, (Lane & Lubatkin, 1998) individual-level absorptive is defined as “the level of effort that individuals undertake to identify external | Utilizing an external idea internally is particularly knowledge, assimilate it and utilize it to commercial difficult as a result of the Not-Invented-Here ends” (ter Wal et al., 2011, p. 4). (NIH) syndrome (Katz & Allen, 2007) Figure 1 represents the different process stages However, many firms still rely predominantly on of individual-level absorptive capacity. Even more, internal sources of knowledge, as transferring technology strategy is influencing the degree of knowledge within the organization remains much excellence in which these capabilities are crucial easier than transferring it across organizational for the individual company. boundaries (Kogut & Zander, 1992). Hence, R&D

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“The firm’s absorptive capacity depends on the individuals who stand at the interface of either the firm and the external environment or at the interface between subunits within the firm.” Cohen & Levinthal,“ 1990, p. 132

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Technology strategies

We assume that the quality of those capabilities More specifically, exploratory technology strategies is strongly related to the company´s technology deal with searching for new, technological strategy. Fundamentally, a firm’s technology knowledge at a higher cognitive distance. Thus, we strategy includes the basic decision which argue that this requires individuals to strengthen technological knowledge to incorporate into a their capabilities to identify external knowledge, firm’s technology portfolio (Porter, 1985; Ford, assimilate it and utilize it to commercial ends. By 1988). Following previous literature, we distinguish contrast, given the characteristics of exploitative between exploratory and exploitative technology technology strategies, with their focus on strategies, which can be classified along two contextually localized search, we do not expect that domains: (1) the proximity to existing technologies, individual-level absorptive capacity is as important products, and services, and (2) the proximity to as in exploration. In exploitation, absorptive existing customer or market segments (Jansen capacity may be built up of more experience- et al., 2006; Benner & Tushman, 2003; Danneels, based, tacit knowledge that already resides within 2002; Abernathy & Clark, 1985). Accordingly, the firm and within relations with trusted suppliers exploratory technology strategies comprise the and customers. development of radical innovations which require new technological knowledge, thereby departing In conclusion, it is important for technology from a firm’s existing knowledge base. Conversely, managers to understand the importance and exploitative technology strategies include the execution of searching for new, technology based development of incremental innovations which business opportunities. Moreover, technology build on related technological knowledge, thereby managers need to be aware that employing broadening a firm’s existing knowledge base. exploratory technology strategies, driven by the goal to benefit from distant search, comes ata Linking technology strategy and individual-level risk of decreasing efficiency of search activities absorptive capacity (Nooteboom et al., 2007). To deal with this, technology managers need to improve their Raisch et al. (2009) note that explaining why some capabilities to effectively locate and capture managers are better prepared to adapt to the novelty value in their technological environment level of exploration and/or exploitation activities when moving beyond local search. in their technological fields may depend on the individual-level absorptive capacity. In a similar Technology manager survey vein, Nooteboom et al. (2007) assume a differential effect of a firm’s technology strategy on absorptive To empirically examine how technology managers capacity depending on the strategy’s extent of learn from their external technological environment exploration versus exploitation. From the viewpoint and how such efforts are linked to the technology of cognitive distance between knowledge sources, strategy in their fields, we conduct a large-scale in exploration the role of absorptive capacity survey of R&D scientists and engineers across is supposed to be different than in exploitation different industries (for participation see below). (Nooteboom et al., 2007).

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Technology managers Technological gatekeepers

Identification Assimilation Utilization

. Stay up-to-date on market . Process external knowledge to . Overcome internal resistance to developments get a sense of its value guarantee the external idea is brought to fruition . Monitor the global environment . Evaluate external knowledge and keep track of emerging against business needs . Show strong commitment, effort trends and new developments and persistence to utilize external . Excite peers about external knowledge . Become aware of external knowledge technological opportunities . Take risks to pursue adoption and . Recombine external knowledge capitalization of external . Aggressively seek out new with internal knowledge knowledge opportunities through interaction . with others Make external knowledge . Gain support and buy-in from Individual effort Individual effort intelligible into a form management . Define new search fields to understandable to colleagues address changes in the . Take action to make sure company’s local and global . Internally communicate, share potential of external knowledge is environment and transmit external knowledge realized

Figure 1: Individual-level absorptive capacity (adapted from ter Wal et al., 2011; Enkel & Heil, 2012; Jansen et al., 2005; Danneels, 2008; Teece, 2007) 1

Further readings Participation invitation – Are you working as a technology manager? Enkel, E. & Heil, S. (2012) Technology manager’s absorptive capacity of external knowledge: Approaches to exploratory and/or exploitative Find out how to effectively learn from external innovation (forthcoming). knowledge within your technological field!

Your study participation: www.zu.de/tm-survey

| Receive an benefit from an individual self-assessment and

| an exclusive final eportr with all research results.

The survey takes about 15 minutes. All data Your contact person for collected is used for academic research only individual-level and we guarantee the confidential treatment absorptive capacity of your data. Please do not hesitate to contact Sebastian Heil ([email protected]) in case of any questions.

Sebastian Heil, Dipl Kfm Thank you in advance for your participation. Doctoral candidate Tel. +49 7541 6009-1288 Email: [email protected]

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Balancing open and closed innovation: Business strategy as determinant

This chapter deals with the question if and how proactive strategy archetypes towards innovation in a company’s business strategy might impact its our research. degree of openness and its innovation performance. Based on the original Miles and Snow (1978) How does a firm’s strategic orientation affect its strategy typology which was extended by market innovation approach and its balance with respect to and innovation orientation characteristics (DeSarbo an open or closed innovation paradigm? et al., 2005; Fiss 2011; Slater and Mohr, 2006), Introduction we could deduce distinct innovation strategies, behaviors as well as collaborative innovation Despite an approved affiliation between strategy formats affecting innovation performance. and innovation (Gianiodis et al., 2010), the impact of Businesses vary in performing opportunity search strategy on the application of diverse collaborative and in opening up towards the external environment innovation formats has not been satisfactorily (Laursen and Salter, 2006). Certain companies investigated yet (Keupp and Gassmann, 2009). exploit collaborative innovation formats to skim a Nevertheless, the examination of this relationship range of ideas and insights from external actors, is fundamental, as it significantly affects a firm’s whereas others emphasize in-house R&D and innovativeness (Droge et al., 2008) and financial rarely cooperate with external actors. Via a multiple performance (Fiss, 2011). Research is still not case study analysis it shall be examined if business clear about the balance between open versus strategy determines the balance of open versus closed innovation leading firms to achieve a certain closed innovation and shall demonstrate if and how innovation performance. With respect to the degree firms can successfully deduce this balance from of openness, business strategy might act as their strategic orientation. determinant. In this context, case studies analyzing distinct strategic archetypes help with approaching Methodology this question. In order to classify prosperous firms with different Theoretical concept business strategies for a multiple case study In order to analyze dissimilar business strategy forms analysis, data of a non-compulsory innovation considering both market orientation and internal survey of the years 2010 and 2011 (N=241) was structures and processes, the Miles and Snow (1978) considered. Thirteen successful companies strategy concept provides the core structure. Since with different business strategies were selected its introduction, this conceptualization has been considering their market position, turnover and among the most extensively investigated and reputation in the market. These multiple cases confirmed strategy frameworks (Fiss, 2011; were analyzed in detail (Eisenhardt, 1989) and Hambrick, 2003). Hence, the business landscape could be categorized according to the Miles and can be represented via three proactive strategic Snow (1978) strategy typology. Both big companies archetypes which we redefined as the “opportunity- as well as small and medium-sized enterprises seeking Prospectors”, the “market segment securing with different industry affiliations were included to Defenders” and the “dual-oriented Analyzers” as study polar types (Eisenhardt and Graebner, 2007). hybrid in between. Due to the fact that the “Reactors” In order to augment validity, data collection was as fourth archetype do not act proactively, but based on semi-structured interviews and combined rather reactive, innovation as such does not play an with information from firm-internal documents and important role. Consequently, we focus on the three archival data (Yin, 2003).

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Results

The multiple case study analysis supported The dual-oriented Analyzers are positioned the existence of the three proactive strategic between the two other strategic extremes. In some archetypes which deduct different innovation marketplaces they emphasize the strategy of an practices from strategy. The opportunity-seeking opportunity-seeking Prospector, while in other Prospectors aspire technology leadership and markets they behave as a genuine market segment broadly open up to the environment. Scouting securing Defender. This duality sometimes results activities and early trend identification are crucial in a profitability problem if the top management for this archetype which cooperates with a variety of is not able to deal with the complexity of this external partners. Opportunity-seeking Prospectors dual strategic orientation. However, since we only frequently include their propensity towards open selected profitable dual-oriented Analyzers for innovation within their strategy formulation. Due to our multiple case study analysis, they excellently the fact that they are experienced with respect to dealt with this issue. In contrast to the opportunity- diverse open innovation formats, they commonly seeking Prospectors and market segment securing utilize a well-elaborated system for measuring and Defenders, the dual-oriented Analyzers put an benchmarking the success of their open innovation emphasis on the collaboration with other firms efforts. Based on this archetype’s willingness and business units, especially across industry to take risks, its willingness to cannibalize and boundaries. According to the findings from our its future orientation, the opportunity-seeking multiple case study analysis, we discovered that Prospectors usually gain a substantial percentage internal and external cross-industry innovation is of their revenues from radical innovations. typical for the dual-oriented Analyzers. With regards to commonly well-established partnering concepts, The market segment securing Defenders are dual-oriented Analyzers often utilize dissimilar KPIs positioned at the other strategic end, since they for measuring the success of their partnerships. go for market segment leadership. Furthermore, they put an emphasis on maintaining their existing Implications market shares. As a result, market segment securing Defenders strive for cost leadership and We consider our empirical results to be germane attempt to considerably optimize their internal for theory and practice in order to understand processes. Regarding this objective, a great degree that innovation management should be geared to of firm openness is not essential. In its place, a firm’s business strategy. It is apparent that all market segment securing Defenders concentrate three proactive strategic orientations can lead firms on the results of their in-house R&D and the internal to success if they closely educe their innovation production depth. Because of efficiency reasons, practices from strategy. There is no need for broadly this archetype predominantly integrates current and deeply opening up to the external environment customers or suppliers in the internal innovation if a firm follows the strategy of a market segment process if opening up. Our analysis shows that securing Defender. Instead, the company should especially a close and adjacent linkage with the exercise purposive innovation practices to enhance current customers is crucial for the market segment resource efficiency, accelerate time-to-market and securing Defenders. Other external knowledge create a product or service in close collaboration sources are less important and are hardly exploited. with current customers or suppliers. This orientation and the propensity towards However, if a firm acts as opportunity-seeking efficiency bring the market segment securing Prospector or dual-oriented Analyzer and Defenders to create a significant percentage of continuously searches for methods to revolutionize their revenues via incremental innovations.

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markets, it is likely to maintain a greater degree Outlook: Future research regarding strategy of firm openness. Frequently, these firms use archetypes of collaborative innovation more progressive open innovation formats, e.g. cross-industry innovation, cooperative business | What is the influence of certain innovation modeling, netnography and others. Consequently, cultural aspects on the degree of firm openness R&D managers should always consider a firm’s regarding dissimilar strategy archetypes? strategic orientation and its vision, when executing | What do successful strategic “Best Practices” (radical) changes in its innovation management look like with respect to innovation cultural Hence, we were able to approach the question attributes? to which extent companies should balance their open and closed innovation activities in order to be successful.

At a glance – Summary | A company’s innovation management should be geared to its business strategy.

| Although the innovation approaches of the three proactive strategy archetypes differ from each other, all three types can achieve a great success in the markets.

| The opportunity-seeking Prospectors successfully utilize a variety of open innovation formats, whereas market segment securing Defenders tend to focus on their internal R&D and on the integration of current customers and suppliers.

| With respect to their duality, the Analyzers frequently use cross-industry innovation approaches. Internally, they frequently rely on collaborations across business units, whereas externally, innovation projects with partners of distant industries are characteristic.

Further readings Your contact person for innovation strategies Enkel, E. & Bader, K. (2012): Balancing open and closed innovation: Business strategy as determinant (under review at International Journal of Innovation Management).

Karoline Bader, MA Doctoral candidate Tel. +49 7541 6009-1285 Email: [email protected]

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Search strategies for cross-industry innovation

Development of a multi-job multi-method How BMW’s technology managers find out matrix with BMW relevant knowledge outside the core in a targeted way The realization of the overriding principle of sustainable mobility requires a fundamental The search for promising technologies from outside change in technology management in automotive the core is dominated by uncertainty, oscillation sector. Viable technologies for energy-efficient and between different sources of new technologies, and powerful vehicles need to be developed quickly, analogical transfer. We aimed at the systematization applying already existing technologies from other of several search strategies to increase technology industries to avoid time-consuming and costly manager’s effectiveness in the identification developments. Moreover, the automotive industry of potentially valuable technologies from both is known for its distinctive vertical R&D alliances adjacent and distant industries. To this end, a between manufacturers and suppliers and the focal so-called multi-job multi-method matrix based position automobile manufacturers (OEMs) play on search approaches that serve as a synopsis therein. However, vertical R&D alliances between of search strategies for cross-industry innovation OEMs and suppliers trap OEMs in a setting where was developed (see Figure 1). The matrix suggests they are increasingly running the risk of failing the appropriate use of search methods and their to seek out alternative technologies. Ultimately, functional consequences according to different job automotive OEMs’ may miss opportunities for definitions: innovation and their innovativeness may suffer substantially. Cross-industry innovation prevents | Optimization of cost and quality: E.g., electric firms from becoming locked in to a specific field mobility requires efficient, safe, affordable and through combination of distant pieces of knowledge powerful battery systems; on the other hand, and interaction with „idea suppliers“ from distant reductions must be made in weight, volume, and technological domains. In this age, a systematic and charging time. Innovation in this field will come integrated approach in technology management from information and communication technology across industries is a prerequisite for success. enterprises. IBM, for example, is currently on a For example, in the field of electric mobility, links pioneering challenge to produce the very first between vehicle manufacturing and renewable commercially viable metal-air battery in the energy industries will help to take advantage of world. spillovers from mutual learning processes. | Solving of concrete problems: E.g., the reduc- The BMW Group consistently worked on tion of energy consumption and CO2 emissions technological innovations to increase energy requires alternative bearing concepts to improve efficiency and is in the process of professionalizing energy efficiency. Here, the innovation impetus its external technology sourcing even further. With will come from firms in renewable energy indus- many years of experience in conducting open and try optimizing bearing concepts for wind power cross-industry innovation projects in the automotive plants, for example. sector, we support BMW in optimizing its outside- | Generation of technology stimulated innova- in technology management. In recent cooperation tions (see section on “Search strategies in use”). with BMW’s central unit for outside-in technology management, which is under the management of Across all job definitions, relevant methods Christian Huber and part of BMW’s research and are scenario planning, patent snapshot, mass development department, we have touched upon screening (publication search and bibliometrics), the question: How to systematically search for patent search, pyramiding (expert search), and radical inputs across industries in the front-end of cross-industry workshops. Thereby, the chances technology management? of identifying analogous solutions are increased if

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the problem with the job definition is abstracted With these terms in mind, the team members were to the level of its key technical functions, allowing able to build associations with different kinds of abstract search terms to be generated. In a joint technologies, applications and industries in which workshop, we presented techniques to help the absorption and transformation of energy succeed in desk research, as well as tools for is crucial. Thereby, identification of analogical searching technological know-how and experts. solutions was facilitated using systematic-discursive creativity methods such as the Osborn checklist as Search strategies in use well as results from our network analysis (see article by Sebastian Heil about distant collaboration). With respect to the job definition of generating The latter inspired technology managers in which technology stimulated innovations, a pilot project industry an appropriate technological solution for the development of a cross-industry map of might lie. The team members then started to search patent data for the field of energy management was patent databases with the focus on the previously conducted. identified key terms and target industries. In this In the course of the analysis, the project team first way, they identified several promising technologies developed abstract search terms such as ‘energy of distant areas such as low-energy houses, white absorption’ and ‘transformation of kinetic energy’. goods and aeronautics.

Search scope

Job Strengthening of Alterna5ve solu5ons for Alterna5ve solu5ons to defini-on technology s5mulated departmental challenge op5mize cost and quality Method innova5ons

Scenario Planning Ini(a(on func(on

Search fields Patent Snapshot Orienta(on func(on

Mass Screening Technological know-­‐how (Publica5on Search, Bibliometrics) Informa(on func(on Experts

Technological know-­‐how Patent Search Informa(on func(on Experts

Techn. know-­‐how & Experts Techn. know-­‐how Pyramiding (Expert Search) Solu(on func(on Informa(on func(on Experts

Techn. know-­‐how Techn. know-­‐how Cross-­‐Industry Workshop Solu(on func(on Informa(on func(on

Figure 1: Multi-job multi-method matrix

Your contact person for outside-in technology management

Sebastian Heil, Dipl Kfm Doctoral candidate Tel. +49 7541 6009-1288 Email: [email protected]

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“We borrow with pride“: Cultural and structural capabilities for systematic cross-industry innovation

This chapter delivers first insights into a mutual Moreau, 2002, Herstatt and Kalogerakis, 2005) research project with the company Henkel. Due to having a positive effect on firm performance as well the fact that Henkel has successfully systematized (Gavetti et al., 2005). Due to the fact that a solution its cross-industry innovation strategy, this case has already worked effectively in a distant industry, shall serve as “Best Practice” providing useful uncertainty and risk are significantly cut down in the findings for both theory and practice. innovation process (Enkel and Gassmann, 2010).

Relevance of cross-industry innovation Theoretical concept

During the last years, cross-industry innovation has In order to systematize cross-industry innovation gained in significance. Cross-industry innovation within a company, certain organizational describes the process of how a firm systematically antecedents need to be established. Apart from integrates external know-how from more or less cultural aspects like willingness to cannibalize distant domains in its innovation processes in and willingness to take risk, aspects regarding a order to foster product, service or business model business’s management structure should also be innovations (Herstatt and Kalogerakis, 2005; Enkel considered. First, these aspects are assumed to and Mezger, 2013). Particularly in new product impact a company’s opportunity search across development, cross-industry innovation counts industry boundaries. Second, an effect on a as appealing approach for creating both radical reactivation and recombination of distant know- and incremental innovations (Kalogerakis et al., how in future innovation projects is assumed (Enkel 2010, Nooteboom et al., 2007, Wuyts et al., 2005). and Heil, 2012). The process-related set-up of this activity can be described by (1) the abstraction of a problem The willingness to cannibalize describes the scope uncoupled from the own industry, (2) the creation of to which a company is willing to cut down current analogical solutions on an abstract level discovered or prospective investments in its resource base in distant industries, and (3) the final adaptation of and organizational routines (Chandy and Tellis, a cross-industry solution within the own industry 1998; Tellis et al., 2009). The willingness to take risk (Gassmann and Zeschky, 2008). appears if a company is prepared to take hazardous or rather risk-averse project decisions (Herzog and Cross-industry innovation approaches are Leker, 2010). If a firm behaves in a very risk-averse of particular interest, as specifically the way and sets up a lot of risk filters, this action might conceptualizations of absorptive capacity and drastically decelerate an innovation project’s flow analogical thinking support firms in achieving a (Smith and Reinertsen, 1991). Such a behavior competitive advantage over rivals (Kalogerakis et could even lead to missing great possibilities and al., 2010). This is true, since absorptive capacity pioneering trends in different markets (Calantone enables firms to “recognize the value of new et al., 2003). Although a firm’s employees information, assimilate it, and apply it to commercial continuously try to reduce innovation project risk, ends“ (Cohen and Levinthal, 1990, p. 128). a certain degree of risk is regarded to positively affect a firm’s innovation outcome. Nevertheless, a Previous research highlights that the creation of positive innovation result can only be achieved, if a radical innovations can strongly be enhanced via firm’s cultural capabilities match with its strategic cross-industry innovation approaches (Dahl and

______41 Cross-Industry Innovation

orientation and the final innovation behavior (e.g. systematic opportunity search and recognition degree of firm openness) (Herzog and Leker, 2010). in distant industries as well as by a systematic Hence, this leads to the existence of different reactivation and recombination of distant archetypes of collaborative innovation which we knowledge streams in future innovation projects. call opportunity-seeking Prospector, dual-oriented However, such an effect can only be achieved Analyzer and market-segment securing Defender if a particular level of systematization is actually (Enkel and Bader, 2012). accomplished.

The construct of management and leadership Methodology and analysis structure comprises several aspects concerning the control of resources, the level of routinization Due to the fact that the company Henkel shows and the degree of formalized hierarchies (Brown typical characteristics of an opportunity-seeking et al., 2001). Depending on the above-mentioned Prospector (see Enkel and Bader, 2012) and innovation archetypes, these characteristics are has achieved great success via its systematic more or less pronounced. On the one hand, the cross-industry innovation strategy in the past, we market-segment securing Defender strongly selected Henkel’s Laundry and Home Care division controls its resources building on routinization and for a single case study analysis. Although a single formalization. On the other hand, the opportunity- case study approach is frequently criticized with seeking Prospector uses flexible structures respect to generalizability, it makes sense for our and flexible forms of resource allocation, asa research to describe a “Best Practice” case. We quick response to new trends in the markets is strove for a sounder understanding of the described necessary. The dual-oriented Analyzer as hybrid relationships by analyzing a company which counts strategy positions itself in the middle between the as an expert regarding cross-industry innovation other two extremes adopting characteristics of (Siggelkow, 2007). both Prospectors and Defenders (Enkel and Bader, Furthermore, we created a special case by choosing 2012; Miles and Snow, 1978; Olson et al., 2005). a mixed methods approach to explore how Henkel The willingness to cannibalize and take risk as well has systematized its cross-industry innovation as the stated structural capabilities are hypothesized strategy. First, a questionnaire was designed which to positively influence an opportunity-seeking was filled in by 38 employees at Henkel working in Prospector’s systematic cross-industry innovation the area of Laundry and Home Care and specifically approach which we measure via two statistical in R&D and Marketing. Second, interviews with constructs. The first variable regarding opportunity leading employees in the field of strategy and search and recognition in distant industries includes innovation were conducted in order to support the a company’s established, cross-industry specific statistical results via further in-depth information. incentive system as well as the regular exchange with more or less distant business and institutional So as to analyze the questionnaire data, structural partners (Arbussà and Coenders, 2007). The equation modeling with Bayesian estimation and second variable regarding the reactivation and the corresponding credibility intervals was applied. recombination of distant knowledge relates to Due to the fact that Bayesian estimation does not the employees’ skills in exploiting stored, distant rely on large sample theory, it delivers an adequate know-how for future innovation projects. In this solution for our collected data (Muthén and context, firms need to cope with the preservation of Asparouhov, 2012). In order to avoid the Heywood acquired and already assimilated know-how which Case with respect to the limited sample size, we permanently should be accessible for a business’s created Bayesian factor score estimates and employees (Lane et al., 2006; Marsh and Stock, factor score standard errors for all latent variables 2006). in our model. In this context, all variables except the financial success variable were concerned. Furthermore, we hypothesize the three defined The Bayesian factor score estimates utilized the organizational capabilities to have an effect on plausible values utility in order to calculate the a company’s financial success, mediated by a

______42 Cross-Industry Innovation

Figure 1: Bayesian structural equation modeling results

posterior mean for every latent variable (Asparouhov zero. This means that the two boundary values of a and Muthén, 2010). credible interval are either positive or negative.

Additionally, the hermeneutic interview data were Accordingly, the willingness to cannibalize has a systematically examined (Mayring, 2002) to derive significant effect on the opportunity search and deeper insights into innovation cultural aspects and recognition in distant industries [CCI= 0.287, 0.786] aspects regarding the management structure and as well as on the reactivation and recombination internal innovation and communication processes. of distant know-how for future innovation projects By combining the statistical and hermeneutic [CCI= 0.012, 0.552]. The willingness to cannibalize analyses, we were able to exploit all advantages of displays significant effects in the structural model, a mixed methods approach. as firms like Henkel occasionally need to be willing to abandon familiar products, services Statistical results or processes and be open for new methods, technologies and capabilities which might even The findings of our Bayesian structural equation come from distant industries. Henkel does not model (see Figure 1) show that there are certain only utilize cross-industry solutions for its product organizational antecedents of systematic cross- innovations, but also for its new business models. industry innovation behaviors. The 95% credible This is true, since new cooperative business intervals or central credibility intervals (CCI) models like “Wash&Coffee” or “Persil Service” were support that in several stated relationships we established via insights from distant industries and achieve a 95% probability that the population value now considerably strengthen Henkel’s product Θ ranges within the bounds of the confidence brands. intervals (Jackman, 2009). Consequently, there is a statistical significant difference between the Correspondingly, it is necessary that Henkel is willing populations, if the credible intervals do not contain to take risk in order to come up with pioneering

______43 Cross-Industry Innovation

solutions and stay competitive in the markets. cognitive distance between the industries, the Consequently, the statistical findings show that level of innovativeness and the expected market the willingness to take risk has a significant effect success. on both the opportunity search and recognition in distant industries [CCI= 0.006, 0.607] as well as With respect to the mediating construct of the on the reactivation and recombination of distant reactivation and recombination of distant know- know-how for future innovation projects [CCI= how for future innovation projects we cannot 0.246, 0.818]. Our interviewees also supported this prove any significant indirect effects on Henkel’s effect. financial success (see Figure 1). The information gained from the interview data exhibited that the Interestingly, we demonstrate that the two maintenance, reactivation and recombination innovation cultural antecedents, namely willingness of distant knowledge is not yet as systematic as to cannibalize and willingness to take risk, do not the opportunity search and recognition in distant have direct effects on Henkel’s financial success, industries. There are some differences among the but significant indirect effects through the mediating departments, as some departments store distant construct of the systematic opportunity search knowledge more systematically than others within and recognition in distant industries (see Figure Henkel. 1). This result exhibits that Henkel’s systematic cross-industry search significantly contributes to Three years ago, the Technology Department the firm’s financial success, setting Henkel apart established a project- and task-related technology from competitors. thesaurus with keyword search. In this technology database the employees can continually add all Antecedents in practice forms of more or less distant problem solutions and process cycles for future innovation projects The division Laundry and Home Care has in order to be able to revert to it and reactivate it successfully systematized the cross-industry again. Additionally, the project or task creators’ innovation approach by primarily having defined names are saved as contact persons for further a set of distant lead industries such as food and questions if necessary. Almost all employees within beverages, plastic materials, pharmaceuticals, the division Laundry and Home Care can access medical engineering, printing, electronics and the technology database without restrictions. electronic devices as well as robotics. These lead industries were marked, as the division In addition to this technology database, the achieved great success with distant technological department Technology Development also installed solutions from those industries in the past. The an intelligent online documenting system which division employs a variety of technology scouts contains all information of the preceding innovation with specialized capabilities and knowledge projects. Subsequently, no information gets lost. in the defined industries. The responsible Due to the fact that both systems have differing scouts continuously scan their focus industry orientations, the combination of both systems is independently from each other trying to discover highly valuable. creative innovation approaches and to solve difficult innovation problems which cannot be solved with Moreover, the division Laundry and Home Care already known methods. provides an online grid with the profiles of all technology scouts. In so doing, the reactivation On top of this, Henkel motivates all employees and and recombination of distant knowledge can be not only the scouts to continuously scan distant promoted more easily, as the right employees can industries. As a result, the firm grants the “Borrow directly be addressed within Henkel. Furthermore, with pride” award on a yearly basis. With this prize the cross-divisional and cross-departmental a single employee or a group of employees is exchange within Henkel is advanced via the awarded for having transferred and assimilated a company’s fixed InnoDays in which employees radical technological solution, process or business of different departments and business divisions idea from a distant industry to the own industry. participate in order to discuss and brainstorm A jury selects the award winners regarding the on future innovation projects. Via Henkel’s

______44 „

„With our systematic cross-industry innovation approach we were able to generate an impressive number of product innovations during the last years in the area of Laundry and Home Care. Each of these pioneering innovations was highly successful in the markets.“ Dr. Juan-Carlos“ Wuhrmann Henkel AG &Co. KGaA Laundry & Home Care Corporate Director Global R&D Management

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InnoLounge the company-wide knowledge or processes and if it is not prepared to accept a exchange and recombination is also fostered certain risk level, an effective systematization of online. cross-industry innovation is unlikely to work within such a business. Furthermore, managers can learn Implications from our interview data that companies require the capabilities to recognize, assimilate, preserve and We regard our empirical findings to be relevant for utilize external know-how if a systematic cross- both theory and practice showing that the right industry innovation approach is aspired. If a firm’s combination of specific organizational antecedents top management does not foster these processes and a systematic cross-industry innovation equally, cross-industry innovation will work less approach has an effect on the financial success of effectively as intended (Lane et al., 2006; Zahra and a firm’s product and service program. Additionally, George, 2002). we could demonstrate that a systematic cross- industry innovation approach is an effective method Additionally, firms should not underestimate for firms like Henkel to significantly improve their the value of cross-industry innovation, as it is innovation output. a challenging approach to imitate (Enkel and Gassmann, 2010; Song et al., 2005). Businesses There are certain organizational antecedents performing cross-industry innovation make inciting a company to perform cross-industry themselves stand out from competitors due to the innovation successfully. If a firm is not willing to fact that they solve problems differently and often cannibalize actual resources, products, services produce more radical and pioneering solutions.

At a glance – Summary | „Borrow with pride“ is not just a yearly award at Henkel, but a philosophy which is lived by all employees throughout the company.

| The willingness to cannibalize and to take risk and the well-elaborated partnering concept are important antecedents of systematic cross-industry innovation at Henkel.

| The importance of a structured and systematic opportunity search in distant industries should not be underestimated with respect to a company’s financial success.

| Employee development towards cross-industry and cross-field thinking is crucial.T esting the capability of thinking across field and industry boundaries is continuously in the focus of scouts and all other employees.

Further readings Your contact person for innovation strategies Bader, K. & Enkel, E. “We borrow with pride” – Organizational antecedents of systematized cross-industry innovation (work in progress).

Karoline Bader, MA Doctoral candidate Tel. +49 7541 6009-1285 Email: [email protected]

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Radical innovation from beyond established industry boundaries: How to prepare for distant collaboration

Cross-industry innovation entails distinctive The raised issues suggest that much more remains innovation opportunities and challenges according to be understood about how cognitive distance to the knowledge heterogeneity between the between cross-industry partners can be assessed collaborating firms, their cognitive distance. While and utilized in order to generate radical rather than recent theory suggests cognitive distance is incremental innovation. We aim at closing this gap positively related to radical innovation, too much by our research investigating (1) how cognitive diversity hinders efficient knowledge absorption and distance between partners from different industries results in a reduced effect on novelty value. To deal can be assessed before patent results are created with this and profit from cross-industry innovation in and (2) which specific capabilities firms engaging in terms of radical innovation, we provide insight how distant collaboration possess in order to succeed. firms can find collaboration partners that are at an optimal cognitive distance and improve their ability Preparing for distant collaboration to understand and evaluate distant knowledge. To address this challenge, we developed a new, Cross-industry innovation potential empirical-based measure that can be used ex ante in order to identify the industry of potential Cross-industry innovation, i.e. the application of partners according to the intended outcome established knowledge or technologies of partners of the collaboration. Using survey data on 215 from outside the own value chain, has been bilateral cross-industry collaborations between identified as a key driver of innovation performance firms from a variety of industries, we conducted a in new product development (Enkel & Gassmann, network analysis and captured cognitive proximity 2010; Gassmann et al., 2010). Whether a partner (the inverse of distance) in terms of knowledge in a cross-industry collaboration gains incremental redundancy between firms, based on an industry or radical results depends on the knowledge level analysis of structural equivalence. Two heterogeneity between the collaborating firms, industries are structurally equivalent to one another referred to as the organizational cognitive when the aggregate firms from these industries are distance. Nooteboom (1992, 1999) propose an connected to the same other industry firms in the inverted U-shaped relation between differences in cross-industry network. cognitive distance and innovation performance. Subsequently, he and others find out that the The network graph shown in Figure 1 illustrates innovation potential increases with the increase the collaboration patterns among industries based of cognitive distance (Nooteboom et al., 2007; on our network analysis. The graph represents Wuyts et al., 2005; Gilsing et al., 2008). However, the network as a series of nodes, which denote when cognitive distance reaches a certain degree, industries, connected by linear ties, indicating the effect on novelty value reduces as too much the presence and strength of a relationship. diversity hinders efficient absorption (Cohen & Furthermore, the network structure indicates that Levinthal, 1990). The crucial implication of these the nodes automotive and mechanical engineering, opposite effects is that firms engaging in distant for example, have similar ties to other industries  collaboration have to perform the dual task of ( cognitive proximity, their knowledge overlaps), developing access to heterogeneous sources whereas there is a strong tendency for automotive of knowledge and, at the same time, of ensuring to have ties to industries that pharmaceuticals does  that distant knowledge, once accessed, can be not, and vice versa ( cognitive distance, their adequately absorbed. knowledge does not overlap).

______47 Figure 1: Cross-industry network graph (Blue ties link automotive with mechanical engineering and pharmaceuticals through mutual partner industries; ICT: Information and communication technology)

Second, successful cross-industry innovation, Consequently, a highly developed potential particularly when applied over higher distances, absorptive capacity allows a firm to increase its requires a firm to be able to exhibit a high potential cognitive distance to external partners in cross- absorptive capacity (Zahra & George, 2002; Cohen industry innovation, as illustrated in Figure 2. & Levinthal, 1990) and combine distant pieces of knowledge for radical innovation. Potential absorptive capacity makes firms receptive to understanding and evaluating external knowledge. It prevents them from becoming locked in to a specific field, running the risk of failing to seek out alternative technologies, by providing them Potential Novelty with the strategic flexibility to adapt in various absorptive value industry contexts. In the context of cross-industry capacity innovation, potential absorptive capacity comprises the process stages of

| recognizing potentially valuable external Learning knowledge from other industries,

| assimilating valuable new knowledge and

| maintaining it over time to set the stage for future knowledge transfer to occur (Zahra & George, 2002; Lane et al.; 2006). Thereby, Zahra & George (2002) propose a positive Optimal cognitive distance Cognitive distance relationship between a firm‘s exposure to various and complementary external areas of expertise and Figure 2: Implications of coordination antecedents on its potential absorptive capacity. potential absorptive capacity and cognitive distance (adapted from Nooteboom et al., 2007)

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We further examined how firms develop higher found by applying a narrow search scope (Katila & potential absorptive capacity for managing Ahuja, 2002; Fleming 2001). In other words, firms high distance collaboration. In order to identify with a resource efficiency approach run the risk of antecedences to capability development, we missing opportunities for innovation but are more studied seven companies by conducting interviews resource efficient than companies following the and gathering secondary data. The analysis of all innovation flexibility approach. case study data reveals three alternative approaches of coordination antecedents that enhance a firm’s Most interestingly, firms with a centralized potential absorptive capacity in order to nurture technology sourcing and reasonable resource radical innovation at higher distance: investments are also limited in search scope, but stay focused on certain key industries while making Firms with a decentralized, well-funded technology additional use of more intelligent mechanisms for sourcing and a large business unit portfolio apply recognizing and assimilating distant knowledge. a wide search scope and make regular use of a They gain a combinatorial advantage by applying broad range of mechanisms for recognizing and a targeted recognition and assimilation of distant assimilating distant knowledge. This ‘innovation knowledge while simultaneously complementing flexibility approach’ implies an increase in the their external search activities via broadcasting variability of distant knowledge that can result in problem information to a diverse community, for both more exploratory innovation and failure (Katila example. This ‘combinatorial approach’ allows for & Ahuja, 2002; Fleming, 2001). The larger the scope a proper balance between the costs of searching of external search activities, the more likely the firms and the benefits of acquiring a variability of distant are to identify valuable external knowledge that can knowledge. On the one hand, given the infinite be combined with internal knowledge in a novel size of the technological search space outside the way (Gary et al., 2012; Fleming & Sorenson, 2001). industry’s boundaries, concentration allows firms Similarly, decentralization of decision authority may to spot opportunities that are really valuable. On the lead to a larger volume of diverse information as it other hand, mechanisms that efficiently leverage broadens communication channels and increases external scope in recognizing and assimilating the quantity of ideas and knowledge retrieved for distant knowledge deepen the awareness of what problem solving (Jansen et al., 2006). Furthermore, type of external knowledge the firm may need. In a wide scope on searching for novelty through many turn, they help to develop a more refined filter when decentralized activities increases the proportion actively searching the technological environment of new knowledge to be integrated into a firm’s for valuable knowledge. knowledge base (Ahuja & Katila, 2004). In conclusion, all approaches have yielded Potential Novelty absorptive value In contrast, firms with a centralized technology promising results, enabling different types of capacity sourcing and low resource investments show a innovative firms to prepare for distant collaboration. much smaller number of mechanisms and apply a Thus, studying certain developmental approach problem-oriented, narrow search. When adopting of potential absorptive capacity offers important Learning this ‘resource efficiency approach’, the costs insights for both researchers and practitioners of search and integration of distant knowledge about how firms may develop important sources of decrease (Henderson & Clark, 1990) while there is radical innovation. a limit to the number of new insights that can be

Optimal cognitive distance Cognitive distance

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At a glance – Summary | Cross-industry innovation entails distinctive innovation opportunities and challenges according to the knowledge heterogeneity between the collaborating firms, their cognitive distance.

| Cognitive distance between firms from different industries determines whether a partner in the cross-industry collaboration gains incremental or radical results.

| Our network analysis helps technology managers to assess cognitive distance with potential partners from different industries and guides partner selection according to the intended outcome of the collaboration.

| Moreover, firms should develop sufficient resources in recognizing, assimilating, and maintaining external knowledge beyond established industry boundaries to enhance potential absorptive capacity and set the stage for future knowledge transfer to occur.

| Thereby, firms may adopt a certain developmental approach that enhances their potential absorptive capacity in order to nurture radical innovation at higher distance.

Further readings Your contact person for cross-industry innovation Enkel, E. & Heil, S. (2012): Assessing and managing cognitive distance in cross-industry innovation. R&D Management Conference (RADMA), Grenoble, France.

Sebastian Heil, Dipl Kfm Doctoral candidate +49 7541 6009-1288 [email protected]

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When distant partners become your closest friends: Ambidexterity through cross-industry collaboration projects

Inter-firm collaboration has become central ambidexterity has drawn on multiple theoretical to the value creation in large firms’ innovation lenses, however, most prevalent the organizational processes. In particular, research on ambidexterity learning perspective assumes the ability to has prescribed inter-firm collaboration, the ability absorb knowledge and adapt subsequently to to alleviate the tensions that the simultaneous maintain a competitive advantage (March, 1991). conduct of radical and incremental innovation Consequently, maintaining competitiveness is bears. However, while prior research stipulates profoundly determined by the firm’s ability to their structural, temporal or contextual separation source beyond the corporate environment and to in inter-firm projects, we ask whether and how both complement its knowledge with external sources. innovation types may originate simultaneously in As a result, inter-firm collaboration has received single project settings. Focusing on cross-industry increased attention to define how to leverage innovation, we analyze eleven case studies on new external knowledge sources to drive organizational product development (NDP) projects. Our findings ambidexterity (Lavie & Rosenkopf, 2006). suggest that individual learning potentials differ for the collaboration partners, acting as a function of We define inter-firm ambidexterity as the pursuit the initial knowledge distance, project objective of exploitative and exploratory activities through and subsequent process architecture. collaboration to generate both incremental and radical innovation. In this paper, we developed a Why cross-industry collaboration can lead to holistic understanding to explain how organizations ambidexterity balance exploration and exploitation in single collaboration architectures. Applying the concept In today’s volatile markets adaptability determines of cross-industry innovation, the empirical the survival or failure of an organization (Bettis & findings suggest that exploration and exploitation Hitt, 1995). As presented by Foster and Kaplan require the configuration of the new product (2001), the lifespan of S&P 500 organizations has development process to differ with respect to the dropped by 75%. Whereas these companies still inter-organizational collaboration’s function and the faced an average lifespan of 90 years in 1935, collaboration partners’ attributes. The majority of results published by McKinsey in 2005 revealed research assumes that exploitation and exploration an average current life expectancy of only 15 years are at opposing ends of a continuum, competing (O’Reilly & Tushman, 2007). Despite this rather for scarce resources and managerial attention disillusioning perspective, there are companies (Ahuja, 2000; Davis, Furr & Eisenhardt, 2006). This that seem to manage high levels of change that paper contributes to the limited perspective that originate outside their organization’s boundaries. proclaims that exploitation and exploration can indeed nurture each other rather than being mutually In the attempt to clarify the factors that differentiate exclusive (Im & Rai, 2008; Lavie & Rosenkopf, these companies, the concept of ambidexterity has 2006; Raisch & Birkinshaw, 2008). Linking the generated considerable theoretical and managerial established ambidexterity discussion with the new significance (Li, Vanhaverbeke, & Schoenmakers, field of cross-industry innovation contributed to 2007; Raisch & Birkinshaw, 2008). By ambidexterity our understanding of how partners from different we denote the balance of exploiting existing knowledge domains can contribute to exploratory knowledge for incremental innovation and and exploitative results. exploring novel impulses to develop more radical innovations as a decisive factor of a firm’s survival and performance (March, 1991). Research on

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Methodology

This paper draw on inductive theory building through collaboration differentiators. As Madhavan and multiple case study analysis to provide insight in Grover (1998) assert, learning can be described the structural and procedural mechanisms that as a function of project design. We apply this logic underlie cross-industry collaborations to generate to cross-industry collaborations and suggest that organizational ambidexterity. We have collected both innovation objective and design influence the data from eleven cross-industry NPD projects in potential to generate exploitative and exploratory different industries, as shown in table 1. The cases learnings within single inter-organizational projects. were chosen for their companies’ acknowledged Finally, the learning outcome varies as a function of outstanding innovation performance and specific each partner’s initially defined process features and recognition of their cross-industry developments. individual knowledge distance. All case studies were undertaken within a ten year timeframe from 2002 to 2011. We conducted a total At the process level, this paper contributes of 81 interviews, using a semi-structured interview towards a clearer understanding of how processes, guideline. In approximately three joint workshops collaboration objective, and learning interact in per company, we discussed these interviews, order to nurture inter-firm ambidexterity (Beckman, made several site visits to each company, and had Haunschild, & Phillips, 2004; Dodgson, Gann, access to internal documents. We reported our & Salter, 2008; Rothaermel & Deeds, 2004). It findings to the interviewed companies and sought illustrates that collaborations based on broad their feedback to correct possibly erroneous problem statements benefit from integrated, interpretations. Following our logic of differentiation continuous innovation processes, thereby nurturing between collaboration objective, process and secondary individual exploratory learning for both learning, we were able to cluster the cases and collaboration partners. While Lavie and Rosenkopf develop archetypes that support ambidexterity in (2006) found that alliance partners may generate each type of collaboration. ambidexterity over a long-term perspective, we provide evidence that the right setting and partners Results: How companies pursue ambidexterity from distinct industries yet potentially overlapping knowledge structures may induce both exploitation The synthesis of the data from our case studies and exploration on single projects. This is due to served as the basis to explain how companies each partner learning from the project’s overall employ different collaboration processes to derive activities to develop their individual knowledge distinct exploitative and exploratory learning endowment. Conversely, clearly defined problem- mechanisms. Our analysis suggests that there oriented collaborations feature modular, sequential are three distinct components that influence the processes that prohibit a potentially extended overall collaboration outcome. First component learning effect. is the collaboration objective, in which the focal organization defines its strategic intent for the Our results pertaining to the knowledge collaboration. In this phase, we found that possessed by collaboration partners, particularly collaboration decisions were defined in accordance complementary knowledge in exploratory with both partners’ body of knowledge and the processes, and distinct knowledge pools in precision of the problem statement anteceding exploitative processes are counterintuitive. While the collaboration. Second, during the actual theory suggests that absorptive capacity (Cohen & collaboration process, team structure and process Levinthal, 1990) decreases with a higher degree of mechanisms were particularly highlighted as cognitive distance between partners (Nooteboom

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Managerial contribution et al., 2007), our results illustrate that partners While these insights hold clear benefits for research, with distinct knowledge backgrounds typical of a they also hold practical implications in the form large cognitive distance reach exploitative results. of normative guidelines for management. The In the same vein, the generation of exploratory propositions we put forward suggest that there is innovation with partners that provide for a common no universal approach to innovation collaboration knowledge base questions earlier results regarding and that the characteristics of particular innovation the correlation between partner distance and projects require different processes. As our findings innovation performance and degree of radicalism. suggest, ambidexterity can be achieved in single inter-organizational collaborations, providing This paper also provides evidence that universal management with a further indication that driving propositions on innovation process architectures incremental and radical innovation requires multiple do not reflect the diversity and complexity of parallel collaborations. The findings support previous innovation processes. These propositions provide research that shows that organizations generate insights into the context dependency of particular higher performance impacts through exploration innovation types in accordance with tailored and exploitation within single inter-organizational collaboration architectures that allow the inherent collaborations than through single focus alliances. learning potential to be leveraged (Madhavan Most importantly, the framework indicates that & Grover, 1998). These rich results could only management can leverage the cost and time-frame be obtained through qualitative data instead of involved in exploration projects by linking them to quantitative analysis, as these data are established exploitative innovations, thereby increasing the in ambidexterity literature (Davis et al., 2006; output generated from exploration objectives. On Dussauge et al., 2000; Gulati, 1995). the other hand, exploitation-oriented collaborations provide the basis for nurturing exploratory ideas that are the basis of future developments.

Further readings

Rosenkranz, N. & Enkel, E. (2012): Influence of cognitive distance on Cross-Industry Collaborati- on. European Academy of Management (EURAM) conference, Rotterdam, Netherlands.

Prof. Dr. Ellen Enkel Head of the Institute phone: +49 7541 6009-1281 email: [email protected]

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Cross-industry innovation: Why should a marine biologist cooperate with a chemical company in an innovation project?

This chapter exhibits distinct motivational factors The three predictors are adapted towards cross- with respect to participating in cross-industry inno- industry innovation in a way that characteristics vation and particularly in cross-industry innovation like cognitive distance (Nooteboom et al., 2007), workshops. It explains why external experts of strategic intent (Gassmann and Zeschky, 2008) and more or less distant fields or industries contribute analogical thinking (Kalogerakis et al., 2010) are in innovation projects which go beyond their own considered. The attitudes regarding cross-industry industry boundaries. innovation are either positive or negative and relate to an expert’s experiences with previous projects Introduction across industry or field boundaries. The subjective norms refer to what third parties (e.g. the top In order to foster cross-industry innovation, it is management or the direct supervisor) think about an crucial to integrate experts of distant industries expert’s participation in cross-industry innovation and diverse backgrounds who contribute in the projects. The perceived behavioral control regards generation of novel, radical ideas and innovations an expert’s self-efficacy with respect to his or (Enkel and Gassmann, 2010). The experts’ reasons her capabilities to abstract and create analogies. to participate are likely to differ from those of Additionally, an expert’s perceived probability of customers, suppliers and online contributors who coming up with solutions for a problem in a distant often contribute in open innovation activities. field or industry is considered. Although literature already reveals motivational factors for the latter group of contributors (Franke In a next step, these three predictors are regressed and Shah, 2003; Jeppessen and Frederiksen, on the experts’ behavioral intention regarding 2006), the motivational factors for participating in cross-industry innovation as well as on the experts’ cross-industry innovation activities have not been final commitment or denial concerning the cross- covered, yet. Why do or why don’t experts from industry innovation workshops, arranged by the analogous industries participate in cross-industry chemical company (see Figure 1). innovation efforts? Method and analysis Theoretical concept By arranging a series of cross-industry innovation Ajzen’s (1991) theory of planned behavior is applied workshops with a leading chemical company, in order to analyze the motivation and subsequent expert-related data of diverse fields such as behavior of cross-industry experts. As this biotechnology, chemistry, oceanography, nutrition theoretical and empirically tested framework has technology, bionics and renewable primary not yet been applied to innovation management in products could be collected. Then, these data the fuzzy front-end, it shall help to understand why could be used to approach the existing research external experts are motivated to participate in ideas gap. Before participating in the workshops, the workshops across industry boundaries. As a result, experts were interviewed on the telephone with their attitudes, subjective norms and perceived respect to their attitudes, subjective norms and behavioral control regarding cross-industry their perceived behavioral control regarding cross- innovation are targeted to predict their behavioral industry innovation. Both scientific and business intention and final commitment or denial. experts who finally joined and who did not join in

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Attitude towards cross- industry innovation

0.280*

Subjective norm regarding n.s. Intention of participating in Participation in cross- cross-industry innovation cross-industry innovation 0.902*** industry innovation

0.350**

Perceived behavioral control regarding cross-industry innovation

Overall model fit: χ2/df = 1.054; CFI = 0.998; RMSEA = 0.040; SRMR = 0.0233. ***ρ < 0.01; **ρ < 0.05; *ρ < 0.1; n.s. = not significant

Figure 1: Structural equation modeling results

the cross-industry workshops were embraced in fit according to established fit measures (χ2/ the sample. df = 1.054; CFI = 0.998; RMSEA = 0.040; SRMR = 0.0233). Furthermore, both convergent and In total, 52 potential experts were identified and discriminant validity could be proven. Additionally, called. Since only 35 experts volunteered for an the experts’ hermeneutic answers were analyzed in interview, we achieved a response rate of 67.3%. detail (Mayring, 2002) to derive specific motivational In order to also perform statistical analyses with the factors and to exploit all advantages of this mixed interview data, an integrated qualitative-quantitative methods approach. research design was applied (Srnka and Koeszegi, 2007). Three researchers autonomously coded Results and implications the experts’ hermeneutic answers into numbers before consolidating the coded results. The Based on the external experts’ attitudes, subjective three predictors, namely attitudes, subjective norms and perceived behavioral control regarding norms and perceived behavioral control regarding such a cross-industry innovation approach, the cross-industry innovation, were created from the intention and the behavior can be predicted with a arithmetic means of the suitable items’ sums. Within high degree of accuracy (see Figure 1). In particular, the specific predictors all items were weighted the variable perceived behavioral control verifies equally. We selected this approach to diminish the a significant influence (β=0.350; ρ<0.05) on the amount of free parameters in the structural model experts’ behavioral intention of participating in the (Bagozzi and Yi, 1988). cross-industry innovation workshop.

Structural equation modeling was used for the One major motivation of participating in cross- statistical analyses demonstrating an excellent industry innovation activities might result from the

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experts’ individual qualification assessment and the led to a non-significant result with respect to this self-efficacy considering their own capabilities and relationship. By having focused on business experts competences across fields. Despite Ajzen’s (1991) only, this relationship might have shown a different theory, the perceived behavioral control does not result. Furthermore, our findings demonstrate that show a significant effect on the final behavior. In the experts’ first behavioral intention towards cross- this context, we learnt from the expert interviews industry innovation has a significant influence on that the firm’s strict non-disclosure agreement led the final commitment in such workshops (β=0.902; to some denials, although the experts felt highly ρ<0.01). self-confident with respect to their cross-industry thinking. We contribute to theory and practice, as this empirical research verifies Ajzen’s (1991) framework The predictor perceived behavioral control in a new context. In addition, it delivers new seems to even have a stronger impact than insights in the field of cross-industry innovation. the attitudinal factors regarding cross-industry Furthermore, our results support firms in effectively innovation (β=0.280; ρ<0.1). Due to the fact finding qualified and motivated external experts that scientific experts and particularly university for such innovation activities. This might result in a professors work independently and do not have higher quality of generated workshop ideas. supervisors, the subjective norms regarding cross-industry innovation hardly play a role. This

At a glance – Summary | Positive experiences with projects across fields or industries have a significant influence on the participation in a cross-industry format.

| An expert’s self-efficacy in his or her capabilities to abstract a problem and to create analogies has a strong influence on the behavioral intention regarding cross-industry innovation.

| External experts might also be motivated through potential networking and learning effects in distant fields which can be useful for future projects.

| Subjective norms towards cross-industry innovation might become an important motivational factor with respect to business experts, but not for scientific experts (e.g. university professors).

Further readings Your contact person for cross-industry workshops Enkel, E. & Bader, K. (2012): Why do experts contribute in cross-industry innovation? A structural model of motivational factors, intention and behavior (under review at Industry and Innovation). Karoline Bader, MA Doctoral candidate Tel. +49 7541 6009-1285 Email: [email protected]

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Guidelines on where to search appropriate collaboration partners

In open innovation it is important to search and of the firm, followed by thirty-one interviews with find the appropriate external partner. In a two-year executives engaged in the eight selected projects. research project our institute analyzed cross- industry innovation projects of Henkel. As a result In cross-industry innovation, already existing we were able to specify search approaches on knowledge, technologies or concepts from one project level and to identify three cross-industry industry are creatively imitated and adopted to the archetypes. The results are of importance not only applying industry (Herstatt and Engel, 2006; Enkel for research but also for practice. and Gassmann, 2010). Thus, the identification and the access to the most appropriate external source Innovation is mostly grounded in the combination of are of major importance. In our research we build existing knowledge and ideas. This knowledge and upon insights from the research field of search. the pool of ideas within one company is however However, existing research has largely focused limited. For this reason, an increasing number on search strategy itself and revealed insights on of companies are following an open innovation search dimensions. The latter basically cover the approach. By doing this, external resources add parameters breadth and depth (Katila and Ahuja, new elements of knowledge for new and possibly 2002; Laursen and Salter, 2006), where breadth unique recombinations. The effectivity of open represents the diversity of knowledge sources and innovation has been proven by research, i.e., by depth measures the intensity of search activities. demonstrating the positive impact on innovation Although studies indicated that firms are able to success (Laursen and Salter, 2006). use various search approaches simultaneously (Katila and Ahuja, 2002), no one has yet elaborated Open innovation, however, spans across a huge search mechanisms on individual project level such variety of tools and practices, starting from as cross-industry innovation projects. customer and supplier integration, over lead user innovation to cross-industry innovation. As a result from our research project we were able Furthermore, each individual practice provides to transfer findings from firm level to project level. various options of externals to be integrated. This Surprisingly, our findings partly contradict with poses a major challenge to today’s managers: not existing research on firm level. As a main contribution only the most appropriate practice, but also the from our work we identified three different best fitting external source needs to be activated. archetypes of cross-industry innovation reflecting different search approaches. These archetypes In a two-year research project our institute are shown in the figure below. The cross-industry collaborated with Henkel, an international archetypes represent different search approaches. player within the fast-moving consumer goods Therefore, our findings not only support but also industry with well-known brands such as Persil, extend earlier findings that firms may use various Schwarzkopf and Loctite. Henkel is known for search approaches (Katila and Ahuja, 2002). With its open innovation activities and has lately been our study we provide insights on how to search awarded the open innovator’s award 2012. Within depending on the problem at hand. We therefore the scope of our research we focused on eight cross- also enrich earlier views that managers selectively industry innovation projects at Henkel, which we exploit external sources depending on their specific studied in depth mostly relying on semi-structured problem (Grimpe and Sofka, 2010). Our archetypes interviews. In total, we collected qualitative and may also help managers to optimize their search quantitative data from fifteen interviews with senior approaches in innovation projects. R&D managers as well as with senior executives

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Figure 1: Archetypes of cross-industry innovation

Further readings Your contact person for search mechanisms Horváth, A.; Enkel, E. (2012): When general recommendations fail: how to search in cross- industry innovation (under Review in R&D Management Journal)

Annette Horváth Doctoral candidate Email: [email protected]

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Increasing digitalization enables and demands new digital business models

Digitalization is an increasing phenomenon The eBook has already outperformed market influencing customers´ behaviour, market demands penetration of paper books in many segments and and technological possibilities. Digitalization executive education will be connected to “serious consists of three aspects: Content is becoming gaming”. Here, the content is designed as a game digital (e.g. in books) and the value chains (e.g. to increase the motivation of learners. Furthermore, production, distribution) as well as the information- there is no single American university that does not based economy are breaking up. Those trends experiment with online courses in order to improve demand changes in organizations in terms of the level of education. technological competence, product functionalities as well as new digital business models to meet The increasing demand for changing business the already established behaviour of customers. according to the digitalization was also formulated Historically, the impact of digitalization is at the IT summit 2012. Germany´s federal minister comparable with the impact of industrialization. of economics, Philipp Rösler, demands that In industrialization, man power was replaced by German should conquer one of the top positions in machines, and processes were automatized. Today, digitalization by 2020. „The digital economy is the digitalization automatizes knowledge. growth driver of all industries“, so Rösler. Already one fifth of productivity growth in all industries of Never before, the internet has been closer to the the economy is related to the increasing application user as through smart phone, tablets and PCs in of IT and this number will grow further in future, nearly every work or private space. Results from concludes a study presented at the IT summit. This a recent survey (See Markt-Media-Studie Internet fourth industrial revolution, or industry 4.0, is “the Facts, September 2012) show that information, biggest chance” for Germany, so German chancellor communication and shopping are the primary Angela Merkel. The energy industry is exemplary. activities which users utilize the devices for. While Growth impulses come from the development of emailing is still the major activity for online users intelligent nets in central infrastructures of energy, (86%), searching the web with search machines in order to direct transportation flows more easy such as Google and web-catalogues becomes and the production of energy according to demand. more and more important (83%); this is followed Furthermore, transportation and health are also by gaining information about weather (71%) and key industries affected by digitalization. The world news (69%). Online shopping has already following table shows the industries already hit by conquered position no. 5 in online activities, done digitalization: by every two of three users. Overall, acceptance of online media is high across generations and gender.

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Industry Examples of increased digitalization

Media Books (e.g. gamification): Book publishers and video games producers join forces to develop products like the Sony Wonderbook as new periphery tool for PS3 console, which connects content with technique and narrative styles in computer games; books as multimedia product through the integration of video sequences Newspapers / magazines: Beyond digitalization of content, additional services such as recognition and linking of outfits of celebrities to online marketplaces or articles produced by non-professional individuals and communities, selection of content by readers Music: Digital ecosystems such as Apple’s iPod and iTunes are the de-facto standard in the music industry today, new releases are offered on digital platforms such as Youtube and rarely on CDs Imaging / Video: Digitalization almost completed here, the market of analogue film- based cameras is only a niche market today Film / TV: Online download platforms for blockbusters gain market share compared to traditional, stationary DVD rental stores Marketing: Internet marketing has outperformed TV marketing already. The internet is the highest revenue driver in entertainment and media market with 23%, as a recent study of PWC shows. Just in 2011, the online marketing revenue increased by 12%.

Retailing E-Commerce: e.g. Zalando and Lieferheld Information/ New technologies: e.g. Social networks like facebook, Xing; Cloud computing communication technologies Travel and Online marketplaces: price comparison and online booking gain market share in transportation comparison to traditional travel agencies Car sharing / ride sharing: Mobility concepts like Daimler’s Car2go combine telecom- munication and web services to identify rentable cars close Gaming industry PC / video games: Free-to-play, online games, Facebook games Board games: Traditional designers of board games increasingly deploy digital content and technology, e.g. Ravensburger TipToi®, an electronic pen which recognizes pictu- res in books or on board games and links them to digital games and music, etc. Financial Online payment solutions such as PayPal services

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But, most of these industries still lack successful business model innovators from others (see also business models. There are questions that need to chapter 1 about benchmarking). These capabilities be addressed in all above mentioned industries. include aspects such as thinking in ecosystems or the identification of needs of current non-buyers. For | How to change the current business models in example, new business models require companies order to adapt towards changing demands and not only to care about their core product, but to how to profit from digitalization? consider complementary products and services as well. Digital business models are more and more | How to develop new business models to focused on providing “nothing-to-worry-about additionally address other, more online-affine solutions”. Current non-buyers might be attracted customer groups? by new compositions of digital business models, | How to decrease costs and time to market by e.g. via online shopping portals and at-home- adding digital elements in analogue business delivery. Decision-making for new business models models? should focus on customer needs and should adapt to the speed of the Internet. | How to learn from successful digital business models for the own industry? On a more operational level, digital business modeling requires ideas and creativity. In that sense, Therefore, the executive Master in Digital Pioneering learning from already successful industries is a key (eMA DIP) at Zeppelin University focuses on how method to find radically new solutions. “Leading to gain the skills and competencies in order to industries” have introduced digital business models develop digital business models. The eMA DIP and have proven their value. For example, fashion covers such topics in modules like “Business Model shops lead the e-commerce world, and new start- Design”, “Digital value chains in B2B & B2C”, or ups of different industries more and more reflect “Consumer behavior and marketing of digital their own business ideas against the successful goods”. Furthermore, there is a strong emphasis practices of Amazon.com and Zalando. Hence, on corporate entrepreneurial culture, thinking and looking across the boundaries of formerly narrow development for all participants. So, the students market segments enables companies to innovate need to develop, present and implement their own their business model (see the next chapter). business idea which is evaluated by practitioners, entrepreneurs and other pioneers within the digital However, digital business models also differ from world. analogous business models, as they comprise new aspects such as “how firms do business”. Value In order to develop new digital business models, propositions move from products to solutions, companies have to build up their portfolio e.g. consumers do no longer buy jeans, t-shirts of competencies on different levels. First, and jackets separately, but take out clothes digitalization requires companies to handle change subscriptions or buy entire outfits which are suited and to identify new opportunities and threats. to their needs and tastes. Moreover, information Companies need dynamic capabilities to address and communication are core aspects of e.g. social these challenges (e.g. Teece, 2007), whether the networks or information providers such as Google. companies are “digital natives”, i.e. start-ups within Mobility-oriented solutions gain in significance. the digital world, or whether digitalization disrupts industries with previously “analogous” business Moreover, revenue models are evolving – freemium, models. Companies that want to take advantage free-to-play, advertising-based solutions have of the digitalization and (re-) configure their digital become more relevant today. In internet-based business models need specific competencies for business models, especially the management of business model innovation. Our current research two-sided markets becomes more fundamental indicates which capabilities differentiate successful (e.g. Apple’s AppStore with developers and users

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as two sides of the market). “Freemium” serves Moreover, the partner management is another as an example for one particular type of business key topic in two-sided markets in which one side model in two-sided markets. The majority of users provides complementary products (e.g. Apps in receive the product or service for free, while another, the AppStore). Thus, in our on-going research we more demanding group of users pays for additional look more closely on how successful companies functionality or capacity. manage their partner network in the business models of two-sided markets. Xing with its free and premium accounts counts as such a freemium model. Here, our research clearly To provide more advice to companies which indicates the high relevance of differentiating the are facing the issues linked with the increase of specific product characteristics available to these digitalization and the emergence of new digital user groups (free product vs. paid product) in order business models, we currently approach several to generate a strong customer base on both sides. research areas besides the topics outlined above.

Further readings

Mezger, F. & Enkel, E. (2012): „Borrow with pride“: Digitale Geschäftsmodellinnovationen durch branchenübergreifende Imitation, in: Frank Keuper, Kiumars Hamidian, Eric Verwaayen, Torsten Kalinowski (Ed.): Digitalisierung und Innovation, Wiesbaden, Gabler (forthcoming). Prof. Dr. Ellen Enkel Head of the Institute phone: +49 7541 6009-1281 email: [email protected]

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Designing radical business models by looking across industry boundaries

Radically new business models enlarge value service ideas and essentially create profits. In such creation (Amit & Zott, 2001) and create competitive cases, already established business models in advantages (Mitchell & Coles, 2003). Creative other industries provide answers to the following imitation provides a highly relevant approach questions: for designing such radical business models by recombining existing business model components | How can we reshape the value proposition to of a source industry or a source market segment with address customers adequately? new business ideas, products, and services within the target industry. The systematic consideration of | Which revenue models do other industries use? cross-industry business models is not only relevant | How can we design a sustainable and valuable for traditional industries and companies, but also customer relationship? for start-ups, e.g. in the Internet domain. Leveraging cross-industry innovation in these Innovation through imitation situations enables companies to find radically new While cross-industry innovation has become an business model deviating from the established accepted method within product and technology concepts of “how to do business”, which all other innovation, it is still in its early stages regarding competitors still follow. It also speeds up the business model innovation. However, our research implementation process and eases communication sheds light on the possibilities and potential of to future customers and investors. As some business looking across industry and market boundaries, model components have been successfully when designing and implementing radically new established, both customers and investors have the business models. In this context, we are not chance to see the basic principles of the business talking about “copy cats”, i.e. a mere duplication model in the source industry. This facilitates the of successful business models (e.g. StudiVZ as “proof of concept” for the new business model, a copy of Facebook), but a systematic search for which ensures a fast understanding by customers analogies in other industries followed by creative and secures financing from investors. recombination of different business model Imitation at work: An example components. This form of imitation overcomes the barriers of dominant logic (Prahalad & Bettis, 1986) J.W. Ostendorf, a producer of paint and finishing and industry recipes (Spender, 1989) and creates products, serves as an example how this approach new, valuable business models. works. The company traditionally serves male customers by producing private label paints for When to use imitation do-it-yourself retailers. Recently the company Start-ups and established companies face searched for a new business model in order increasing pressures to introduce new business to specifically address women as customers. models in ever changing industries, which Through a targeted search in other industries, the are for example subject to digitalization or company found the business model of Nespresso. commoditization. Companies need to address J.W. Ostendorf imitated the “convenience”-aspect new customer needs, emerging niche markets, of this business model based on an easy-to-use or new international markets that differ from their combination of a coffee machine (hardware) established market segments. Furthermore, start- and capsules (consumables). They developed ups have to find ways to monetize their innovative a new “Plug-and-Spray”-System that allowed a convenient application of newly design colors in

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Key What is the value proposition of your target business model? How will you deliver this value proposition to your customers? questions How does the business model create value?

Commercial opportunity or threat Business Model Enter new, different market Business Model Development and Design Latent customer need Implementation … Leverage industry- or market segment-crossing business models

Identification of Abstraction Adaptation Analogies

Activities Definition of target value (Cross-industry) Search Build business model proposition for potential analogies through transfer (and Derivation of generic based on search terms adaptation) of relevant aspects of value about customer needs components or basic proposition and or value proposition principles from source customer needs Evaluate solution industry candidates for similarities and differences

Figure 1: Imitation process for business model innovation business model innovation (Source: adapted from Enkel & Mezger, 2013)

special capsules (consumables) through a spraying provide the search terms to look across industry system (hardware) designed by a partner company. boundaries.

The new marketing and distribution model targets Within the analogy identification phase, companies the convenience- and lifestyle-oriented market compare these generic customer needs with segment – similar to Nespresso. value propositions companies in other industries or market segments offer. Once an industry is A systematic process for imitation found that addresses structurally similar aspects (e.g. Nespresso’s convenience- and lifestyle- To pursue this approach systematically, we propose oriented business model for premium coffee), the a three-stage process, similar to technology- company can evaluate whether the business model related cross-industry approaches (e.g. Gassmann components providing this value proposition might & Zeschky, 2008). The three structural phases are be also valuable to implement the new business abstraction, analogy identification, and adaptation model in the target industry. (see Figure 1). In the last phase, adaptation, customer-oriented Abstraction reduces a problem to its core aspects business model components (e.g. customer and formulates a highly abstract reference relationship or revenue model) are transferred in point necessary for recognizing and identifying order to implement the new value proposition. It is analogous solutions (Weiß, 2004). For business not always possible to transfer specific components model innovation, a company has to define a new directly. However, cross-industry searches can value proposition, based on its core product but also provide ideas how business models look like also serving some generic customer needs (e.g. in other industries and how principle mechanisms “convenience” at J.W. Ostendorf). This forms and interactions between different components of the base of their targeted new business model. these business models, e.g. for revenue creation, These generic aspects of the value proposition work. can typically be found in various industries and

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When imitation creates value Ostendorf to leverage strong incentives for rebuying as their spraying system are ideally aligned with the If companies creatively adapt business model paint capsules. At the same time customers are components from other industries, they enlarge willing to pay an extra charge for this premium- value creation in their own industry. By adapting the positioned product. value proposition to the specific needs of a target market segment, more sustainable and valuable Hence, imitation of business models across customer relationships are created. The adaptation industry- or market-boundaries provides a starting of the Nespresso business model enabled J.W. point to achieve profitable growth in new or changing markets.

At a glance – Summary | Business model innovation complements a firm’s innovation activities regarding product, process, and service innovation. | Imitation of business models from other industries or market segments can be approached through a systematic three-step-process. | “Abstraction” identifies generic customer needs that can be found in a variety of industries, “analogy identification” searches and evaluates business models of other industries, which serve the previously identified customer needs. Finally, “adaptation” transfers these business model components to the target industry.

Further readings Your contact person for business model Enkel, E. & Mezger, F. (2013): Imitation processes innovation and their application for business model innovation: An exploratory study, International Journal of Innovation Management, Vol. 17 (1) (forthcoming).

Enkel, E. & Mezger, F. (2012): Disruptive Business Florian Mezger, M.A. HSG Model Innovation: Exploring the Potential of Doctoral Candidate Cross-Industry Adaptation, Paper presented at the Tel. +49 7541 6009-1287 E-Mail: [email protected] 12th EURAM conference, Rotterdam.

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Flying high or low: Capabilities for business model innovation in the highly competitive airline industry

The rise of low-cost carriers, consolidation waves carrier services. In-depth interviews with strategy and the fact that various prestigious airlines have departments or CEOs reveal insights about the faced bankruptcy during the past years, have led business models in place and especially activities of to the questioning of current business models of sensing change and seizing opportunities to re-new established airlines. The industry has become the existing business models. A cross-case analysis more competitive and profit margins are amongst helps to reveal similarities and point out crucial the lowest compared to other industries. Airlines differences. have to rethink their strategy and moreover rebuild their business model to ensure survival in the near Sensing the change, not seizing the future. In this regard, business model innovation opportunities and especially dynamic capabilities are essential Although almost all airlines understand the for the future success of an airline. importance of business model innovation, the Facing a competitive environment capabilities of perceiving change and transforming these insights into new features or renewed business The airline industry has changed enormously over models is less developed especially amongst the past years: Customer expectations vary more legacy carriers. Carriers understand changing than ever and the supply side of air transportation customer behavior and recognize trends as well has become more dynamic as traditional network as regulatory changes. However, as the seizing carriers have to face new, cost-efficient airlines. of upcoming opportunities is not well developed, Both rising costs as well as declining revenues have airlines lack to factor in those economic, social forced legacy carriers to reconsider their business or ecological upheavals. The results of the study models. The research paper ‘Dynamic Capabilities indicate that the industry’s changes and the renewal and their Relevance for Business Model Innovation in of business models are mainly driven by changing the Airline Industry’ analyses the airline industry and customer expectations. Technological evolutions especially the ability of different airlines to cope with and regulatory interventions are mentioned as well. the exogenous changes the airline industry currently Accordingly, business models have to be adoptable faces. Accordingly, the research paper examines to new customer expectations and should be different airlines and studies their ability to innovate responsive enough to react as fast as possible. their business models. The paper draws on the As many legacy carriers were state-owned in the theories of business model innovation (Chesbrough, past, organizational and systemic structures as 2007, 2010) and dynamic capabilities (Teece et well as mature labor agreements hinder the renewal al., 1997; Teece, 2007, 2010) as its driving force. of business models. Especially airlines that did Six airlines are selected, which represent various not innovate their business model over the past business models with different degrees of maturity. years and tend to follow the same principles and The sample consists of legacy carriers, which strategies and thus rely on an existing system, prior were state-owned and provide full network have difficulties in realizing dynamic capabilities for carrier services. Also, so called niche carriers are seizing opportunities. In comparison, airlines with selected, which specialize in a certain niche of the flexible and decentralized structures as well asa airlines industry, like low-cost segment or regional high degree of customer orientation, more easily

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adapt their way of doing business to changing path dependency is assumed to influence the customer expectations or changing environmental development and existence of dynamic capabilities conditions. Furthermore, organizational learning to a great extent. Inertia, which is caused by capabilities as well as constant measurement of key inflexible structures and size or legal burdens and performance indicators like customer satisfaction obligations, is revealed as a main reason for the or quality perception are named as indispensable inability to react to the fast changing environment factors of business model in-novation capabilities and erratic customers. by airline executives. Apparently, less mature airlines tend to be more flexible and thus have This finding indicates that especially legacy carriers developed dynamic capabilities to a greater extent have less dynamic capabilities and thus have more compared to their legacy competitors. difficulties to further develop and innovate their business models. As this result is in line with the Implications and recommendations for airlines current economic situation of many legacy carriers, those airlines are recommended to overcome their The presumption of Teece and his colleagues that inertia find its ideal relative size, leave well-trodden dynamic capabilities enable and support business paths and invest in the development of dynamic model innovation was worked out and confirmed capabilities, innovate their business models, in this study. But, as pointed out, the research establish a competitive advantage and operate paper revealed differences amongst the airlines both profitable and sustainable in future. and showed that more specialized airlines like the sample of niche carriers have developed dynamic Extract from master thesis of Michael Mandery capabilities to a greater extend. Accordingly, (Spring 2012)

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How to systematize business creation: The case of Europe’s largest aerospace company

EADS (the European Aeronautic Defence and already existing business ideas are elaborated Space Company) is Europe’s largest aerospace within interdisciplinary, interdivisional and even company, achieving a turnover of €49.1 billion in intercultural teams. Usually, a middle management 2011 with 133,151 employees. EADS operates in jury has already approved the business ideas, stable industries such as aerospace and defense since they frequently stem from a company-wide and security systems with relatively long product ideas competition. In order to systematically build life cycles. Due to the exceptional structure and a working business model around such business format of the aerospace industry, cost leadership ideas, the “Business Model Elaboration Workshops” needs to be taken into consideration, but is not the provide the necessary structure. company’s key objective. To offer an adequate workshop frame, the Walt Resulting from an increased competition and Disney Method delivers the basic structure for reduced or at best stable budgets in governmental these “Business Model Elaboration Workshops.” markets, the company opened up to increase The Walt Disney method is a classical role play in potential solutions and create new businesses, which one or more individuals are invited to view based on an internally acknowledged and widely and discuss a specific topic from three different applied “EADS Business Model Innovation perspectives: the visionary, the reviewer and the Framework“ (see Enkel et al., 2012). This framework idealist. Due to the fact that such a workshop helps and process was established in 2010 and since to build on an already existing business idea, some then, has been promoted via a bottom-up approach general conditions are already set. across several EADS divisions. In the “visionary” phase, an interdisciplinary group of Based on the elaborated framework, two major employees brainstorms with respect to the already ways of conducting business model innovation defined business idea. Criticism is not permitted at EADS can be described. On the one hand, during this phase allowing all kinds of ideas to be individuals or teams sit together in so-called presented. In order to structure the brainstorming “Business Model Idea Creation Workshops” to session to some extent, the established “EADS perform brainstorming sessions in a guided and Business Model Innovation Framework” serves as systematic way. In such workshops, the teams template to frame an idea. The employees can write emphasize the creation of disruptive ideas, and set all their ideas on sticky notes and attach each one up novel potential business concepts by neglecting to the suitable business model component within problems regarding the feasibility in a first step. In the framework. For instance, one sticky note might this context, an established business model manual consider a specific convenience or customization helps the teams to discuss the most important aspect which could be allocated to the model’s aspects with respect to business modeling. In so value proposition component. Another sticky note doing, the creation of new business concepts and might specify a partner without whom the new business models can be accelerated within the business model could not survive. This partnership distinct EADS business divisions. should then be allocated to the component called partner network. Before delving into the next phase, On the other hand, EADS conducts “Business all ideas shall be presented in the group. Model Elaboration Workshops” in which

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“A mediocre technology pursued within a great business model may be more valuable than a great technology exploited via a mediocre business model.” „Chesbrough, 2010 “

In a following step, the group examines all ideas must select the most relevant business model from the “reviewer” perspective. Now for the first component aspects to prepare the “sales pitch” time, criticism is allowed and all ideas (sticky notes) corresponding to a short presentation in front of are critically discussed. In order to again provide the top management. This final step is important the necessary structure, changes, adaptations to focus on the most relevant business model as well as opportunities and threats are written characteristics, when trying to sell a new business down on customized “Business Model Elaboration model idea. Furthermore, the group creates a Cards”. After having filled in the cards, they can be timeline with milestones serving as a first draft of allocated to the “EADS Business Model Innovation the new business model launch. Framework” to generate a full picture. It is clear that all three phases are equally important, In the final phase, the “idealist” phase, all as the quality of the “sales pitch” as well as the elaborated ideas are viewed again. Now, the group preparation for critical questions finally decide

______69 about the continuation of a potential business of these “Business Model Elaboration Workshops.” model. EADS has realized that providing a great Apart from the described workshop organization, business model with a specific technology is the EADS Nursery Fund – attached to the EADS at least as important as the technology itself Corporate Technical Office – also applies this (Chesbrough 2010). Thus, specific EADS divisions structured approach for elaborating its disruptive have already started to systematize the application innovation projects.

At a glance – Summary | Employees shall be incited to work with the established business model innovation framework (both individually and in teams). | It is necessary to create a solid innovation culture and adapt a firm’s incentive system towards new business creation approaches. | The bottom-up communication and persuasion should not be underestimated with respect to introducing new innovation methods. The employees need to realize the added value of the novel business creation approach themselves. | The utilization of a workshop structure and the integration of creativity methods (e.g. Walt Disney Method) might help a firm to guide the business creation process and to guarantee a good structure.

Further readings Your contact person for structured business Enkel, E., Bader, K., Gies, O. & Commin, P. (2012). creation approaches Geschäftsmodellentwicklung zum Erobern neuer Märkte. In: Ili, S. (Ed.) Innovation Excellence – Wie Unternehmen ihre Innovationsfähigkeit syste- matisch steigern. Symposion Publishing GmbH, Düsseldorf. Karoline Bader, MA Enkel, E. & Bader, K. (2012). Klein oder innovativ? Doctoral candidate Innovativ mit Hilfe von Geschäftsmodellinnovatio- Tel. +49 7541 6009-1285 nen. Innovationsmanager, September 2012: 76-77. E-mail: [email protected]

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How to “fight” Amazon and Google: Business model innovation in the specialized publishing industry

Established publishing companies have to face Dynamic capabilities, business model innovation up to multiple problems regarding the position and transformation in their industry, their business models and their future course of actions. Digitalization significantly Specialized publishers nowadays often have to disrupts traditional value chains regarding authors, compete with global corporations as Google, publishers, distribution channels and readers. New Amazon or Apple as well as with small, innovative competitors are entering the market by offering start-ups which offer new approaches for “self-service” publication channels to authors. customers and users. With their experience and Considering these developments it becomes expertise about their content and their target essential to cope with such changes and adapt groups, though, specialized publishers can provide to the new situation, a matter for which dynamic unique and valuable products and services when capabilities and business model innovation can be they adapt their processes and structure. This seen as key factors. applies particularly for very specific target groups, local information and complex, individualized Changing industry landscape solutions. In this context, specialized publishers have advantages over new entrants and can build Due to an ongoing digitalization, changing customer their business models on these value propositions. and user needs, the specialized publishing industry However, they cannot effectively seize such faces severe structural upheavals (Steinröder business opportunities without adapting to the & Pitz, 2009). With traditional business models new situation in the industry and reconfiguring their becoming less efficient, new approaches are own resource base. By analyzing the interviews it needed and specialized publishers have to became clear that such a transformation process is undertake a transformation. This paper investigates extremely difficult and can be influenced by various these changes and the responses of traditional and factors, varying from structural inertia in a company new companies within the specialized publishing to mental models from managers. industry by using the theories of dynamic capabilities and business model innovation (Teece Recommendations for change et al., 1997; Teece, 2010). The aim of the paper is to analyze and evaluate the potential of the The findings show e.g. that specialized publishers participating firms to sustain a successful long-term have understood the importance of business performance in the field of specialized publishing. model innovation. In contrast to start-ups and In-depth interviews with experts from specialized technological companies from other industries, publishers were conducted to gain insights about however, it is not a vital issue. Moreover, it is the structure, actions, perceptions and business problematic for specialized publishers to recruit models of companies operating this industry. All people who are capable of business model interviewees were executives from established innovation and are familiar with digitalization and companies and new participants in the industry its effects. Thus, it becomes essential to change to gain insights about the structure, actions, organizational structures, to become more dynamic perceptions and business models of companies and innovative and to find new business models operating this industry. which are more suited to a digital industry and customer and user behavior in this environment.

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It became apparent that companies need to know collaboration between different departments within exactly what their customers and users want and a company or cooperation between companies can apply effective feedback and exchange processes play an important role, since both forms enable firms with customers and users. One element of achieving to foster knowledge exchange and transfer and a constant feedback and exchange process could help to work with limited resources. Furthermore, it be the usage of tools like Google Analytics for digital seems to become crucial to possess technological products and services. Moreover, the identification and digital resources and competencies in order of substantial trends by deploying a systematic to provide targeted products and services. Thus, innovation management is a crucial task. Such an companies have to build these resources and innovation management can also test new business use them to move beyond their existing business models. models. Although transformation is a complex undertaking, it is necessary when traditional Business model innovation has been named as business models and approaches prove to be less one central aspect for sustaining success in the and less effective. future and companies should dedicate sufficient resources to this topic. Here, the regular application Extract from master thesis of Florian Schild of dynamic and iterative trial and error processes (Spring 2012) can be a central step to quickly test new products, services and business models. However, such trial and error processes have to be combined with fast feedback and decision processes. Similarly, another proposition states that one potential approach for companies within the specialized industry may be to actively look across industry boundaries. With the usage of cross industry innovation firms may find valuable business models which can be adapted to the specialized publishing industry.

Another critical issue is the modularity of content which describes the fact that print, digital and mobile content should not be treated as completely separate areas. Instead, companies should try to establish processes and structures to provide modular content for all channels and devices from one operational unit and by this use their resources more efficient. In this context, collaboration

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Research brand equity

Research Brand Equity is a joint project with Theoretical background various sub-projects where a bunch of different perspectives is involved – Innovation Research Particularly for multi-product and high-involvement (Prof. Dr. Ellen Enkel, Jun. Prof. Dr. Marco Hubert), markets the development of innovative products Marketing (Prof. Dr. Peter Kenning; Zeppelin and product extensions which satisfy consumers’ University) and Psychology (Prof. Dr. Arnd Florack; needs could be such a signal that helps the University Vienna) – with the goal to analyze the consumer to make his decision. Due to the impact of perception on a firms performance as development of innovative products the whole well as economic values like willingness to pay or brand might be perceived as innovative and the firm specific performance indicators (i.e. market value, may be able to realize a competitive advantage. Tobin´s q). Moreover, studies investigating processes and Relevance and motivation forms of brand extensions have shown that there exist positive but also negative main, moderating The decision-making process of consumers for a and interaction effects (Keller, 2002), i.e. fit of specific product is often characterized by a high characteristics (Aaker and Keller, 1990), similarity degree of complexity. For companies it is therefore and dissimilarity effects, context effects (Wänke very important to generate signals that are able to et al., 1998) or effects of prototype and exemplar simplify the buying decision by reducing the level fit (Mao and Shanker Krishnan, 2006) regarding of complexity. the evaluation of a brand extension and its parent brand. Within this research, especially the Studies have shown that a consumers perception existence of a flagship-product as distinguishing of a firm as innovative has an evident impact on the mark could generate a highly interacting impact on success of a firm in new markets (Keller and Aaker, the perception of a specific brand (firm) and may 1997, Shankar et al., 1998), the credibility and also be able to simplify consumer decision making. perceived expertise of the firm (Golder and Tellis, 1993), the perceived quality and buying intention Hypotheses for its products (Keller and Aaker, 1997) and the stability of a buyer-seller-relationship (Falker, Against this background, the questions arise, Wagner, 2011). a) if the existence and the acknowledge of a flagship-product has an impact on the perceived Because of the different possibilities firms have to innovativeness of a firm in general (H1a), b) if there innovate and to create new products or product exist differences between industries (H1b) and c) extensions (Beverland, Napoli, Farrelly, 2010) if the perception of the known flagship-product the interdisciplinary combination of marketing, and the evaluation as typical has an impact on the innovation research and consumer psychology perceived innovativeness of a firm (H2). could shed light on the importance of (perceived) innovativeness of a company. This interdisciplinary Method and analysis approach could also help to investigate how To increase variance in perception and knowledge the perceived innovativeness of a firm depends of different flagship-products and firms, we on specific flagship-products and how the investigated three different industries (Cars (C), innovativeness of flagship products and the Electronics (E), and Pharmaceutics (P)) and three (perceived) overall innovativeness of a firm interact: different firms (C1/C2/C3, E1/E2/E3, P1/P2/P3) Project I: Effects of Flagship-Products on Consumer within each industry. Each subsample consists of Innovativeness Perceptions of a Firm – First Insights 150 participants with 50 participants per known for Three Different Industries firm, which leads in consequence to a total of

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450 participants. In an online-questionnaire Mean(yes)=4.79, SD=1.005; Mean(no)=4.31, each participant had to answer items for their SD=0.99; F(1, 267)=5.958, p=.015) but no significant specific firm-industry combination (C1/C2/ main effect for industry (F(2, 266)=1.280, p=.280) as C3, E1/E2/E3, P1/P2/P3) with regard to their well as no significant interaction effect for flagship- innovativeness perception of the firm (7 items, product*industry (F(1, 266)=.052, p=.949) alpha=.950, KMO=.932, AVE=77.125), if they know a specific flagship-product, their innovativeness Regarding hypothesis H2, to measure the influence perception of the known flagship-product (8 of the innovativeness perception of the flagship- items, alpha=.975, KMO=.932, AVE=84.998) and product and the identification with the firm, we the interacting identification (typicality) of the entered innovativeness ratings of the firm as flagship-product with the firm (5 items, alpha=.920, dependent variable into a general linear model with KMO=.884, AVE=76.045). Additionally they had industry as factor and perceived innovativeness to answer questions regarding their individual of a flagship-product and identification as consumer innovativeness (6 items, alpha=.910, covariates. Here we found a significant effect of KMO=.869, AVE=69.455) as well as general socio- the innovativeness perception of the flagship- demographical questions (i.e. gender, age, net product (F(1, 267)=8.880, p=.003) and a significant income). interaction effect of industry*innovativeness perception of the flagship-product*identification The analysis included only those participants (F(2, 266)=3.998, p=.020). We found no main who could name respective couldn’t name a effect for industry ((2, 266)=2.843, p=.061) and specific flagship-product (binary variable: yes, no) identification (F(1, 267)=3.564, p=.061) as well within their firm-industry combination. Overall, as no main interaction effect of innovativeness 269 participants (124 female; Mean(age)=38,94, perception of a flagship-product*identification (F(1, SD=12.9, participants(C)=73; (E)=87;(P)=109 ) were 267)=1.933, p=.166). included within the analysis. We controlled for gender differences as well as differences in age and Summary consumer innovativeness and found no significant These results show, that there is 1) a general main effects between the industry-subsamples relationship between a known flagship-product for gender (Chi²(2, 266)=.159, p=.924), age (F(2, and the perception of a firm as innovative in 266)=.782, p=458) and consumer innovativeness general and this holds true for the industries, but (F(2, 266)=.226, p=.798). 2) there is a difference between the industries on Results firms innovativeness perception regarding the impact of perceiving the product as innovative and Regarding hypothesis H1a, to measure an overall additionally evaluating this product as typical for a effect of knowing a flagship-product on the specific brand. perceived innovativeness of a firm, we entered innovation ratings over all industries into an one- In a similar vein, if we assume the importance of way (flagship-product: yes, no) ANOVA and found a firms perception as innovative we we have to a significant main effect for flagship-product analyze the impact of innovativeness perceptions (Mean(yes)=4.896, SD=1.31; Mean(no)=4.40, on economic and financial values: SD=1.07; F(1, 267)=10.387, p<.001). Project II: Determinants of perceived Regarding hypothesis H1b, to measure industry- innovativeness and the effect on consumer dependent effects we entered innovation ratings as willingness to pay dependent variable into a general linear model with Relevance and motivation flagship-product (yes, no) and industry (electronics, cars, pharmaceutics) as factors and found again Research in marketing and innovation science a significant main effect for flagship-product shows that firm innovativeness (Rubera and Kirca, ((Cars): Mean(yes)=4.79, SD=1.27; Mean(no)=4.40, 2012) determines several economic variables SD=1.11; (Electronics): Mean(yes)=5.04, SD=1.52; such as firm values (e.g. Tobins Q, Stock Market Mean(no)=4.68, SD=1.28; (Pharmaceutics):

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Performance), market values (e.g. sales, sales and 4) how actual and perceived innovatiovenss growth, market share) or the financial position (e.g. can add to better explain economic performance ROA, ROI, ROE, ROS) (Rubera and Kirca, 2012). indicators.

Furthermore, research provides evidence that Methods and analysis from a consumer perspective the perceived innovativeness of a firm which can among others A first study was conducted to analyze be influenced by a companys communication specific determinants of consumers perceived strategy is positively correlated with 1) the success innovativeness of a firm. We investigated 450 of a company in new markets (Keller and Aaker, participants, investigated three different industries 1997, Shankar, Carpenter, and Krishnamurthi, (Cars, Electronics, and Pharmaceutics) and three 1998), 2) the credibility and perceived expertise of a different firms within each industry (for more details company (Golder and Tellis, 1993) 3) the perceived see notes to project 1). Participants were asked quality and buying intention of the products (Keller within a questionnaire of how innovative they and Aaker, 1997) and 4) the stability in the buyer- perceive the service, price setting, employees, seller relationship (Falker, Wagner, 2011). environment, quality and marketing of a specific firm and the firm itself. Research questions Within a second study we investigated 746 Up to now it still remains unclear 1) which participants and 27 companies from different determinants drive the perception of innovativeness, industries (cars, electronics, pharmaceutics, 2) how investments in research and develoment insurances etc.). Here people were asked how they lead to changes in the perception of consumers and perceive the innovativeness of the given firm, the other stakeholders 3) if there is a discrepany or fit quality of the products and their general willingness between the actual and perceived innovativeness, to buy those products for the given firm.

Results

Figure 2: Perceived innovativness as moderator

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Figure 1: Research model as connection of study 1 and 2

Next Steps: Your contact person for innovation marketing | Collection of various performance indicators, i.e. firm value, market position or financial position

| Analysis of mediating or moderation effects of the perceived innovativeness on the causal connections between firm innovartiveness and firm value, market position and financial position Jun. Prof. Dr. Marco Hubert Junior Professor for Innovation and Entrepreneurship, especially innovation communication and behavioral science Tel. +49 7541 6009-1274 Email: [email protected]

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Brand Creators

Introduction and theory

The field of brand research is concerned with This conceptualization of a brand includes that examining the important influence of brand groups different from the original producer of a information on decision-making (Ailawadi & Keller, good or service can be involved in the building 2004). A prominent concept within the framework process of brands as well. In that function these of brand research is “brand personality” (Aaker, other groups have to be taken into consideration 1997). Advertising often applies this construct by as direct determinants of brand personality. That is using product descriptions that correspond to why we hypothesize that different brand builders humanlike traits. Therefore it is quite obvious, that lead to different perceptions of brand personalities an emotional and symbolic benefit of a brand can be by consumers. an important factor to discriminate oneself against competitors in saturated markets. That is why Against this background, the aim of our study is to marketers are increasingly embracing alternative use an experimental design to reveal the influence forms of brand-building activities. Although it would of different brand builders on the concept of brand be rather intuitive to think of the original producer as personality and subsequently, the impact of brand brand builder or brand owner, new forms of brand personality on relevant outcome variables (Figure builders emerge to date (Pennington & Ball, 2009). 1). We address this topic because we believe that brand builders act as additional direct drivers of From a theoretical perspective, the occurrence of brand personality. They are involved in or even new forms of brand builders can be explained – absorb the entire process of creating a unique among others – by the relationship model (Fournier, name and image for a product, good or service 1998). This model regards a brand as an active and should be considered as a significant and element, an active partner of consumers that they differentiated presence in the building process can enter a relationship with – just like human of a brand with the aim to attract and retain loyal partnerships (Fournier, 1998). customers (Paharia et al. 2011).

Figure 1: Hypothesized research model

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Methods and analysis

Stimulus material consisted of a new German wine In total 347 subjects participated in the main study. brand. The wine market in Germany is characterized Those were randomly assigned to the WG-group by almost unlimited different brands and wine is and to the OC-group. Within the WG-group we had seen by the consumer as an extraordinary “difficult” 174 participants (92 male; 82 female; Mage = 32.95; product with a lot of information that the average SD = 12.11). Within the OC-group we had 173 consumer cannot process in advance of the actual subjects (78 male; 95 female; Mage = 32.72; SD = purchase. This leads to a simplified purchase 13.62). Neither significant age differences between decision based on rather little information (Lockshin both groups could be observed (t(345) = 0.171 et al. 2006). We manipulated the brand building with p-value = .864) nor significant differences in history of the wine brand in the experimental product involvement (t(345) = 0.063 with p-value conditions using a message framing approach = .950) or product knowledge (t(345) = 0.878 with (Figure 2; e.g., Blanton, Stuart & V. d. Eijnden 2001). p-value = .381).

We selected two groups of brand creators and For the analysis of our data regarding the effect randomly assigned participants to one of the of different brand biographies on the perception scenarios: In the first scenario the whole brand of brand personality, we used two samples was built by the winegrower himself (WG-group), independent t-tests (Figure 3a). To identify in the second scenario the brand was built by an differences in outcome variables due to different online community (OC-group). The two scenarios brand biographies, see Figure 3b. In a next step, were presented credible, informative and short. we used multiple linear regression to reveal the Brand personality was measured using the brand influence of different brand personality facets on personality dimensions introduced by Mäder the outcome variables (Figure 4 for regressions with (2005). the dependent variable “price premium”).

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Results

Figure 3: Multiple regression model “Winegrower”

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Figure 2: Multiple regression model “online community”

Conclusion

The results of our exploratory experimental study Your contact person for show that (1) that there are significant differences brand creation between both brand creators (winegrower and online community) and the perception of brand personality dimensions. Here, a producer-driven brand creation approach is associated with higher levels of reliability, stability or naturalness whereas a consumer-driven brand creation approach is Jun. Prof. Dr. Marco Hubert associated with higher levels of dynamics and Junior Professor for Innovation and creativity (spirit). In addition, facets of brand Entrepreneurship, especially innovation personality influence economic outcomes like communication and behavioral science price premiums differently dependent on the group Tel. +49 7541 6009-1274 “winegrower” or “online-community”. Email: [email protected]

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Research & teaching at the institute

The Dr. Manfred Bischoff Institute of Innovation subject. As part of practical cooperation, the students Management of EADS, is named after its founder, then work on tasks and challenges of the real world European Aeronautic and Space Company, and business practice, which need to be solved with the this company’s “architect” Dr. Manfred Bischoff. It help of the prepared theoretical foundations and, of is headed by Prof. Dr. phil. Ellen Enkel and consists course, the students‘ creativity and expertise. of two chairs (a full professorship and a junior Courses professorship not occupied in 2011), as well as PhD candidates and student assistants. The Chair for Innovation Management offers a wide range of courses for bachelor, master and executive Fields of research master students (eMA DIP): The institute researches within the area of | Introduction to Innovation & Technology Ma- innovation management for businesses based nagement (BA, CME) on the interaction of strategy, organization and financing. By combining theory and practice | Open Innovation (BA, CME) of technology and innovation management we | Business Modelling (BA, CME) examine influencing factors, actors and processes | Advanced Open Innovation (MA, CME) for successful product, service and business model | Knowledge Management (MA, CME) innovations. Our fields of research encompass | R&D Metrics & Creativity (MA, CME) open innovation and cross-industry innovation, | Innovation & Technology Management (eMA DIP) cooperative innovation processes in networks, | Digital Business Modeling (eMA DIP) business model innovation as well as innovation | Introduction to Management and Economics metrics and culture. Theoretical focal points are (eMA DIP) resource- and knowledge-based business theories. | Networks and Collaboration (eMA DIP) The chair works preferably practice- and | New Technologies & New Markets for application-oriented and tries to gain insights Digitalization (eMA DIP) from practice and to develop, to implement and to optimize new concepts on a theoretical basis Course example: R&D metrics & creativity through a close cooperation with companies. Our As part of the master module „Creativity, publication formats range from practical journals Knowledge and Innovation“, this course covers the up to internationally recognized journals. measurement of R&D input and output as well as Teaching methodology the increase in innovative capacity of companies. During the theoretical part of the course, students Our teaching focuses on innovation and technology discuss the topics portfolio management, R&D management in bachelor, master and executive metrics, R&D controlling, innovation culture and master programs. We include the latest findings from different creativity techniques. The subsequent research in the courses. Since the best way to learn practice phase allows to collaborate with companies and to understand a theory is to apply it to illustrative to work in intensive workshops in order to define cases, the teaching concept of the Chair of Innovation improvement levers for those. Specific tasks were Management is based on a close link between theory jointly defined, processed by students working and practice. Hence, we often collaborate with one in small groups and at the end of the course the or more companies to achieve knowledge transfers results were presented to high-level representatives between theory and practice. of the collaboration partners. The results were not A seminar will be structured as in the following: the only scientifically sound analysis and concepts, but students develop the theoretical foundations of the also approaches relevant for corporate practice.

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Further publications of the institute

Refereed journal articles: Brock, C., Blut, M., Evanschitzky, H., Kenning, P., & Hubert, M. (2012). Don‘t care about Service Recovery - Inertia Effects buffer the Impact of Complaint Satisfaction. Advances in Consumer Research (in press). Eberhardt, T., Linzmajer, M., Hubert, M., Hubert, M., & Kenning, P. (2012). The nature of price-thresholds: An fMRI study on price processing in the brain. Proceedings of the European Marketing Academy Conference (EMAC) (in press). Enkel, E. & Bader, K. (2012): Strategy archetypes of collaborative innovation: The mediating role of strategic orientation towards innovation (in revise & resubmit at Research Policy). Enkel, E. & Bader, K. (2012): Why do experts contribute in cross-industry innovation? A structural model of motivational factors, intention and behavior (under review at Industry and Innovation). Enkel, E. & Bader, K. (2012): Balancing open and closed innovation: Strategy as determinant (under review at International Journal of Innovation Management). Enkel, E. & Goel, S. (2012): Creating Procedural Clarity – Smoothing the Path to Corporate Venturing. Journal of Business Strategy, 33 (3): 30-39 Enkel, E. & Heil, S. (2012): Preparing for distant collaboration: Antecedents to potential absorptive capacity in cross-industry innovation (under review at Technovation). Enkel, E. & Horvath, A.: An empirical exploration of motives of Cross-Industry Experts (under review at Creati- vity and Innovation Management). Enkel , E. & Mezger, F. (2013): Imitation processes and their application for business model innovation: An exploratory study. International Journal of Innovation Management, Vol. 17 (forthcoming). Enkel, E., Perez-Freije, J. & Gassmann, O.: Towards a Capability-based View of an Innovation Controlling System‘s Design (in “revise & resubmit” at Research Policy). Enkel, E., Wagener, Ch. & Perez-Freije, J.: Performance Measurement of R&D Networks (in “revise & resub- mit” at International Journal for Innovation and Technology Management). Heil, S. & Bornemann, T. (2012): Collaborative innovation and shareholder value: The moderating impact of strategic R&D emphasis alignment and product innovativeness (under review at Journal of Product Innovation Management). Hubert, M., Linzmajer, M., Hauck, J., & Prügl, R. (2012). How different brand creators affect dimensions of brand personality in new product development: An empirical study. Proceedings of the European Marketing Academy Conference (EMAC) (in press). Hubert, M., Linzmajer, M., Riedl, R., Kenning, P., & Hubert, M. (2012). Introducing connectivity analysis tor NeuroIS research. Proceedings of the International Conference on Information Systems (ICIS; Completed Research Paper), (in press). Horváth, A. & Enkel, E. (2012): When general recommendations fail: how to search in cross-industry innovati- on (in “revise & resubmit” at R&D Management Journal). Linzmajer, Marc, Hauck J., Hubert M., & Prügl, R. (2012): Who is the brand creator? The effect of different brand biographies on the perception of brand personality. Advances in Consumer Research (in press). Linzmajer, M., Hubert, M., Hubert, M., & Kenning, P. (2012). The perception of lower and higher price- thresholds: Implications from consumer neuroscience. Advances in Consumer Research (in press).

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Linzmajer, M., Hubert, M., Riedl, R., & Kenning, P. (2012). Where does toulmin‘s theory of argumentation reside in the brain? The neural mechanisms underlying trustworthiness in online-buying. Proceedings of the European Marketing Academy Conference (EMAC) (in press). Rosenkranz, N. & Enkel, E.: When distant partners become your closest friends: Ambidexterity through Cross – Industry Collaboration Projects (under review at Journal of Management). Rosenø, A., Enkel, E. & Mezger, F. (2013): Distinctive Dynamic Capabilities for New Market Creation: Sensing, Seizing, Scaling and Separating (forthcoming). Trautmann, K. & Enkel, E.: Success factors of strategic communication of corporate innovativeness towards financial analysts (in “revise & resubmit” at International Journal of Innovation Management).

Managerial press and book chapters: Enkel, E. (2012): Einflussfaktoren auf das Innovationscontrolling. In: Ili, S. (Ed.) Innovation Excellence – Wie Unternehmen ihre Innovationskraft systematisch steigern. Symposion Publishing GmbH, Düsseldorf: 329-362. Enkel, E. (2012): Knowledge Networks. The Palgrave Encyclopedia of Strategic Management (forthcoming). Enkel, E. & Bader, K. (2012): How much does business strategy influence innovation performance? Ernst & Young Performance Journal 4(3): 46-55. Enkel, E. & Bader, K. (2012). Klein oder innovativ? Innovativ mit Hilfe von Geschäftsmodellinnovationen. Inno- vationsmanager, September 2012: 76-77. Enkel, E. & Bader, K. (2012). Wie viel Strategie gehört ins Innovationsmanagement? Ernst & Young Perfor- mance Journal, 1.2012: 44-53. Enkel, E., Bader, K., Gies, O. & Commin, P. (2012). Geschäftsmodellentwicklung zum Erobern neuer Märkte, in: Ili, S. (Ed.), Innovation Excellence – Wie Unternehmen ihre Innovationsfähigkeit systematisch steigern. Symposion Publishing GmbH, Düsseldorf. Enkel, E. & Heil, S. (2012). Das Potenzial der Gegensätze: Partnersuche im Cross-Industry Netzwerk. IFAM Management Letters, October 2012. Enkel, E. & Heil, S. (2013). Knowledge networks as driver for innovation, in: Gassmann, O., Schweitzer, F. (Eds.), Management of the Fuzzy Front End of Innovation (forthcoming). Mezger, F. & Enkel, E. (2012): Geschäftsmodellinnovationen: Inspiration durch Imitation. Innovationsmanager, (forthcoming). Mezger, F. & Enkel, E. (2012): „Borrow with pride“: Digitale Geschäftsmodellinnovationen durch branchen- übergreifende Imitation, in: Keuper, F., Hamidian, K., Verwaayen, E. & Kalinowski, T. (Eds.): Digitalisierung und Innovation, Wiesbaden, Gabler, (forthcoming).

______85 Conference publications: Enkel, E. (2012): Open Innovation in Germany, Switzerland and Austria. Intellectual Capital Conference (IC 8), World Bank, Paris, France. Enkel, E. & Bader, K. (2012): Balancing open and closed innovation: Strategy and culture as determinants. International Society for Professional Innovation Management Conference (ISPIM), Barcelona, Spain. Enkel, E. & Bader, K. (2012): Motivational factors for participating in cross-industry innovation: A path analy- sis. R&D Management Conference (RADMA), Grenoble, France. Enkel, E. & Bader, K. (2012): Strategy archetypes of collaborative innovation: The mediating role of strategic orientation towards innovation. International Product Development Management Conference (IPDMC), Man- chester, UK. Enkel, E. & Heil, S. (2012): Assessing and managing cognitive distance in cross-industry innovation. R&D Ma- nagement Conference (RADMA), Grenoble, France. Enkel , E. & Mezger, F. (2012): Imitation processes and their application for business model innovation: an ex- plorative study. 19th International Product Development Management Conference (IPDMC), Manchester, UK. Enkel , E. & Mezger, F. (2012): Disruptive business model innovation: exploring the potential of (cross-industry) imitation. 12th European Academy of Management (EURAM) Annual Conference, Rotterdam, Netherlands. Rosenkranz, N. & Enkel, E. (2012): Influence of cognitive distance on Cross-Industry Collaboration. European Academy of Management (EURAM) conference, Rotterdam, Netherlands. Rosenø, A., Enkel, E. & Mezger, F. (2012): Dynamic Capabilities for New Business Creation: A Cross-Industry Study. XXIII. International Society for Professional Innovation Management (ISPIM) Conference, Barcelona, Spain.

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Cooperation in practice

Ever since the founding of the Chair of Innovation Current projects Management we have closely worked and researched together with the practice, either on | Henkel, derivation of specific organizational site at the company, in the context of creativity capabilities in order to systematize a cross- workshops or practical tasks for the students in industry innovation strategy. seminars at Zeppelin University. | BMW, optimization of the outside-in technology Opportunities for collaboration management, especially from beyond establis- hed industry boundaries. | Bilateral projects for conceptual design and implementation of current and relevant individual | Friesland Campina, optimization of the open issues in your company innovation metric system. Identification of meaningful direct and indirect key performance | Partners in one of our consortia projects (wor- to measure impact. king groups, benchmarking, work-shops) | Astrium, application of a joint ESA project in | In-house seminars on Innovation, Technology order to evaluate and adapt space technologies and Knowledge Management and Entrepreneur- for terrestrial use. ship

| Practical lectures in workshops with business partners or in courses

| Involvement in courses (e.g. examination of your company’s knowledge management) and development of recommendations for improve- ments through a supervised group of students

| Company specific processing of bachelor and master topics by our students as well as place- ment of engaged interns

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Team

Research team Ellen Enkel is professor for innovation management Karoline Bader works as research fellow and PhD and head of the Dr. Manfred Bischoff Institute candidate at the Chair for Innovation Management. of Innovation Management of EADS at Zeppelin She received her bachelor’s degree in “International University in Friedrichshafen. Since 2008 she holds Business – Intercultural Studies“ at Heilbronn the Chair for Innovation Management at Zeppelin University in 2009. Following, she graduated at University. Zeppelin University in “Corporate Management and Economics“ and finished her master studies with Prior to that, she has been researching for more distinction in 2011. During her studies, the German than 10 years in different roles at the University National Academic Foundation supported her. of St.Gallen, Switzerland. There, she managed At the institute, she investigates the relationships the Competence Center Open Innovation at the between innovation culture, innovation strategy and institute of Technology Management as well as specific open innovation formats. Since September the Competence Center Knowledge Source at the 2011, Karoline Bader works as lecturer at Zeppelin Institute of Information Management and at the University and is responsible for the course “Open Institute of Management. Innovation“. Her research focus comprehends the topics open Sebastian Heil works as a research fellow and PhD innovation and cross-industry innovation, business candidate at the Chair for Innovation Management. model innovation, intra- and inter-company He received his graduate diploma in business innovation networks, innovation metric systems and administration with distinction from the University of strategic communication of innovativeness as well as Mannheim. His research focuses on antecedents and entrepreneurial culture. Prof. Enkel disposes of broad consequences of collaborative innovation, especially experience by the collaboration with enterprises beyond established industry boundaries (cross- such as BMW, Unilever, IBM, BASF, Alcan and industry innovation). He is lecturer responsible for Henkel. Until now she has published four books and the course “Innovation & Technology Management” numerous articles in academic and practical journals at Zeppelin University and engages in cooperation regarding technology and innovation management. projects with firms across industries to develop new Marco Hubert is junior professor for innovation theory-based concepts and gain new insights from and entrepreneurship at the Dr. Manfred Bischoff managerial practice. Institute of Innovation Management of EADS at Annette Horvàth is PhD candidate and about to Zeppelin University in Friedrichshafen. Prior to finalize her dissertation. Her research focuses that, he has been researching and working as a especially on open and cross-industry innovation as Ph.D. candidate at the Chair of Marketing (Zeppelin well as on motivational factors. Before, Annette was University,Friedrichshafen). leading an international production project for a fast His interdisciplinary focus connects topics from moving consumer good company and employed in innovation research, marketing, psychology and a consulting company. neuroscience. Currently his research comprises Florian Mezger is PhD candidate at the Chair for questions regarding the communication of Innovation Management. After studying business innovation, the perception of innovativeness, administration with a specialization in corporate innovation metric systems, e-commerce, consumer finance, management accounting, and strategic behavior and foresight. Jun.-Prof. Hubert has worked management at the University of St.Gallen, in cooperation-projects with enterprises such as Switzerland, he worked for more than two years MARS or IP Germany. He already has published as a consultant at The Boston Consulting Group. numerous articles in highly ranked academic Currently, his research focuses on business model journals. innovation and dynamic capabilities. He is lecturer at the bachelor and executive master level.

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Katja-Maria Prexl is PhD candidate working with innovation, the responsiveness of companies and Junior Professor Marco Hubert in the area of innovation culture and behavior. Innovation Communication and Behavioral Science. Extended team After various academic stations in Mannheim, Newcastle Upon Tyne and Friedrichshafen in the Sabine Marx is administrative head of the institute. field of economics, communications and cultural After an employment of 25 years in facilities for the science, she worked for several companies and handicapped, she passed a triennial training for start-ups across industries and was engaged in a management. Since September 2008, she works at research project about brand-rituals. Currently, she Zeppelin University. is starting a course about „Foresight and Design Currently, the Bachelor student Jana Kremer Thinking“ with Junior Professor Marco Hubert and supports the institute. She assists in single research Dr. Ulf Pillkahn. Her research focuses on mankind projects and also fulfills other administrative duties in the center of innovation, foresight and design as student assistant.

We look forward to exploring these and further issues with you in 2013!

Picture 1: Scientific team of the Dr. Manfred Bischoff Institute: Sebastian Heil, Prof. Ellen Enkel, Karoline Bader, Junior Prof. Marco Hubert and Florian Mezger (Annette Horvath as well as Katja-Maria Prexl are missing)

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The institute goes international

RADMA in Grenoble, France

EURAM in Rotterdam, Netherlands

Summer School in Cambridge, UK

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IPDMC in Manchester, UK

Research visit in Berkley, USA

ISPIM in Barcelona, Spain

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References

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