Unravelling The Process From Closed To Open Innovation

Unravelling the process from Closed
to Open Innovation: evidence from

mature, asset-intensive industries
Davide Chiaroni, Vittorio Chiesa and
Federico Frattini
Politecnico di Milano, Department of Management, Economics and Industrial Engineering, Piazza
L. da Vinci 32, 20133 Milano, Italy. davide.chiaroni@polimi.it; vittorio.chiesa@polimi.it;
federico.frattini@polimi.it
Open Innovation has been one of the most-debated topics in management research in the
last decade. Although our understanding of this management paradigm has significantly
improved over the last few years, a number of important questions are still unanswered. In
particular, an issue that deserves further attention is the anatomy of the organizational change
process through which a firm evolves from being a Closed to an Open Innovator. The paper
represents a first step in overcoming this limitation. In particular, adopting a longitudinal,
firm-level perspective, it addresses the following question: which changes in a firm’s organiza-
tional structures and management systems does the shift from Closed to Open Innovation
entail? In answering this question, the paper uses established concepts in organizational change
research to look into a rich empirical basis that documents the adoption of Open Innovation by
four Italian firms operating in mature, asset-intensive industries. The results show that the
journey from Closed to Open Innovation involves four main dimensions of the firm’s
organization, i.e. inter-organizational networks, organizational structures, evaluation pro-
cesses and knowledge management systems, along which change could be managed and
stimulated.
1. Introduction bound Open Innovation, which is the practice of

establishing relationships with external organiza-
O pen Innovation has been one of the most-

debated topics in management research in
the last decade (Chesbrough, 2003; Christensen
tions with the purpose of commercially exploiting
technological knowledge.
Although our understanding of Open Innova-
et al., 2005; Gassmann, 2006; Vanhaverbeke, tion has significantly improved over the last few
2006; West and Gallagher, 2006). It is an emer- years, a number of important questions are still
ging innovation management paradigm com- unanswered (Gassmann, 2006). In particular, an
prised of two dimensions: (i) inbound Open issue that deserves further attention is the anat-
Innovation, which is the practice of establishing omy of the organizational change process
relationships with external organizations or indi- through which a firm evolves from being a Closed
viduals with the purpose of accessing their tech- to an Open Innovator. The literature has ac-
nical and scientific competences for improving knowledged the pervasiveness of Open Innova-
internal innovation performance and (ii) out- tion, which permeates several dimensions of a
222 R&D Management 40, 3, 2010. r 2010 The Authors. Journal compilation r 2010 Blackwell Publishing Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA
Unravelling the process from Closed to Open Innovation
firm’s organization and management systems earlier paradigms (Kuhn, 1962), and it must
(Chesbrough, 2003). Nevertheless, a systematic explain evidence beyond its initial area of inquiry
and longitudinal analysis of the process through to prove external validity (Yin, 2003).
which these dimensions are transformed by the The search for providing evidence to Kuhnian
adoption of Open Innovation is lacking. anomalies informed in particular the recent
The paper represents a first step in overcoming work of Henry Chesbrough (Chesbrough and
this limitation. In particular, adopting a firm-level Crowther, 2006; Chesbrough et al., 2006) and
perspective, it addresses the following main ques- other authors (e.g., Maula et al., 2006; West and
tion: which changes in a firm’s organizational Gallagher, 2006; Perkmann and Walsh, 2007),
structures and management systems does the shift who have mostly reflected on the theoretical
from Closed to Open Innovation entail? In an- implications of Open Innovation. This focus of
swering this question, the paper reports and recent research has left the issue of how Open
comments on a rich empirical basis that docu- Innovation is implemented in practice rather
ments the adoption of Open Innovation by four under-researched. Only scattered anecdotic evi-
Italian firms operating in mature, asset-intensive dence is indeed available about the process
industries. These data represent a source of valu- through which firms shift their organizational
able insights for research and development and managerial systems from a Closed to an
(R&D) managers who are interested in under- Open Innovation paradigm. For instance, Huston
standing and weighting the implications that a and Sakkab (2006) describe the different types of
shift towards a more open approach to innova- networks, either developed specifically to facil-
tion implies, as well as the organizational and itate innovation activities or already existing and
managerial solutions that might streamline this joined by the firm (e.g., InnoCentive) and the
pervasive transformation process. strategic planning processes that are at the heart
Change from Closed to Open Innovation is a of Procter & Gamble’s (P&G) model of Open
rather unexplored topic in both high-technology Innovation. Dodgson et al. (2006) further elabo-
and asset-intensive industries. However, our em- rate on the case of P&G by discussing the role
pirical and theoretical knowledge of the charac- played by information technologies (data mining
teristics of Open Innovation in low-tech and searching, simulation and modelling, virtual
environments remains very limited in comparison and rapid prototyping) in supporting the adop-
with high-tech environments (Chesbrough and tion of Open Innovation. Haour (2004) and
Crowther, 2006; Vanhaverbeke, 2006; van de Dittrich and Duyster (2007) focus on the way in
Meer, 2007). Our decision to focus on firms which networks for innovation are created and
belonging to mature, asset-intensive industries is managed, analysing the cases of the ‘distributed
believed therefore to make a stronger contribu- innovation’ system at Generics and the develop-
tion to the debate on the use and diffusion of ment of new-generation mobile phones at Nokia.
Open Innovation. Finally, Gassmann and Enkel (2004) identify
The paper is structured as follows: Section 2 three core innovation processes (outside-in, in-
reviews the relevant literature on the implementa- side-out and coupled processes) that explain the
tion of Open Innovation, with a focus on mature, adoption of Open Innovation in practice.
asset-intensive industries. Section 3 develops a As far as the issue of external validity of Open
theoretical framework that was used as a lens to Innovation is concerned, it remains an open ques-
gather and interpret the data on the process of tion whether its underlying concepts apply to
implementation of Open Innovation. Section 4 lower technology or more mature industries.
motivates the design of the research and describes Only very recently have a few attempts been
how the case studies have been conducted. Section undertaken to study Open Innovation in low-
5 presents and discusses the results of the empirical tech, mature industries. Chesbrough and Crowther
analysis, whereas conclusions and future avenues (2006) survey 12 firms in the United States, identi-
for research are described in Section 6. fied as ‘early adopters’ of Open Innovation, in the
aerospace, chemicals, inks&coatings and consumer
packaged goods industries. The authors find that,
2. Literature review even if Open Innovation concepts are not wide-
spread in use, the firms in the sample clearly
In order to be recognized as a new paradigm for increased their leverage on external sources of
industrial innovation, Open Innovation must ac- innovation to complement their internal R&D
count for anomalies that are not fully explained in activities. Vanhaverbeke (2006) and van de Meer
r 2010 The Authors R&D Management 40, 3, 2010 223

Journal compilation r 2010 Blackwell Publishing Ltd
Davide Chiaroni, Vittorio Chiesa and Federico Frattini
(2007) study Dutch innovative SMEs operating in zational change involves variation in both current
different mature industries (e.g., food and bever- modes of action and cognition, in order to enable
age, chemicals, machinery and equipments) the organization to take advantage of internal
and find that the use of ‘importing mechanisms’ and external opportunities (Gioia and Chitti-
for accessing external sources of innovation is peddi, 1991); (ii) overcoming the Not-Invented-
rather diffused, whereas serious barriers are still Here and Not-Sold-Here syndromes is key in
perceived in the adoption of ‘exporting mechan- successfully introducing Open Innovation (Ches-
isms’, through which technologies are externally brough, 2003). Similarly, research has shown that
exploited. Taken together, these contributions inertia is the most challenging barrier towards
clearly indicate the prevalence of the inbound effective organizational change (e.g., Sastry, 1997;
over the outbound dimension of Open Innovation Armenakis and Bedeian, 1999); (iii) both the
in mature industries. adoption of Open Innovation and successful
This article addresses both these limitations of organizational change require the development
the extant literature, studying the process of im- of new organizational routines, e.g., evaluation
plementation of Open Innovation in firms belong- procedures and metrics of performance (Mar-
ing to mature and asset-intensive industries. In shak, 1993; Chesbrough, 2006); (iv) firms imple-
particular, its focus is on inbound Open Innova- menting Open Innovation have to undergo a
tion, because previous research has shown that it continuous process of experimentation, adapta-
is the prevailing dimension in these companies. tion and learning to pro-actively define their
business environment, as it occurs in organiza-
tional change initiatives (Burnes, 1992). There-
3. Reference framework fore, it is reasonable to conceive the journey from
Closed to Open Innovation as an organizational
In this section, we describe the reference frame- change process and hence to use the approaches
work that was used as a guide to gather and and instruments developed by organizational
interpret the empirical evidence collected through change research to unravel its characteristics.
the case studies. This framework has been devel- The way in which companies change their
oped by looking into both organizational change organization is a central topic in organizational
and Open Innovation research. studies. Van de Ven and Poole (2005) attempt to
organize different approaches used by scholars,
tracing them to different ontological views about
organizations (i.e. whether they are viewed as
3.1. Process of implementation of Open consisting of things or of processes) and different
Innovation epistemologies about the methods for studying
Implementing Open Innovation has a deep change (i.e. through variance theory, where
impact on the organization and management change is represented as a dependent variable
systems of the innovating firm. As noted by and statistically explained by a set of independent
Christensen (2006, p. 35), ‘Open Innovation can variables, or through process theory, where
be considered an organizational innovation’. change is explained as a temporal order and
Similarly, the barriers that IBM, P&G and Air sequence of events). Their analysis clearly indi-
Products had to overcome in their journey from cates that approaches conceiving of the organiza-
Closed to Open Innovation (Chesbrough, 2006) tion as made of things (which are dominant in
closely resemble the dynamics underlying organi- empirically grounded organizational and social
zational change, as noted also by Deck (2008). science research) and explaining change as a
Differently put, an interesting parallel can be temporal order and sequence of events (which
drawn between the characteristics of organiza- are better suited to understand ‘how’ the process
tional change processes and the challenges that of change takes place) are more appropriate for
firms are confronted with in their journey towards the purpose of our multiple case-study analysis
Open Innovation: (i) Open Innovation does not (Tsouskas and Chia, 2002).
merely require a firm to intensify its relationships An established research stream on process
with external organizations throughout its inno- methods conceptualizes the process of change as
vation processes. Rather, it involves the use of the a sequence of interconnected phases or stages
business model as the cognitive device through (Fisher, 1970), which allows for ‘encapsulating
which decisions about innovation are evaluated the essentials of the richness of processes
and taken (Chesbrough, 2006). Similarly, organi- in a simpler account of stepwise development or
224 R&D Management 40, 3, 2010 r 2010 The Authors

typical activities’ (Van de Ven and Poole, 2005). A They could also indeed be conceived as manage-
number of phase models have been developed rial levers on which a company can intervene to
over time (e.g., Kotter, 1995; Galpin, 1996). streamline its journey towards Open Innovation.
Armenakis and Bedeian (1999), in their review
of theory and research on organizational change, 3.2.1. Networks
show that all these models have originated from Empirical evidence clearly shows that firms imple-
the early work of Lewin (1947), who conceptua- menting Open Innovation require the establish-
lized the change process as progressing through ment of extensive networks of inter-organiza-
three main phases, namely unfreezing, moving tional relationships with a number of external
and institutionalizing. The first phase is con- actors, in particular universities and research
cerned with the establishment of a sense of institutions (Perkmann and Walsh, 2007), suppli-
urgency for change, the establishment of a ‘guid- ers (EmdenGrand et al., 2006) and users (von
ing coalition’ (Kotter, 1995) for championing it Hippel, 2005; Simard and West, 2006). Laursen
and the creation and communication of the new and Salter (2006) identify two variables that
vision to both internal and external stakeholders. describe the characteristics of a network for
The second phase concerns the actual implemen- innovation, namely its search breadth, which is
tation of change, through the establishment of defined as the number of external sources or
new procedures and patterns of behaviour con- search channels that firms rely on, and its search
sistent with the new vision, eventually acting on depth, which is defined as the extent to which
budget constraints, targets, schedules and reward firms draw from the different external sources or
systems. This phase is usually characterized by an search channels. Working on these variables,
experimental approach, through which the solu- increasing both search breadth and depth, firms
tions that are best suited to the firm’s endeavour are able to implement inbound Open Innovation.
are identified. Finally, the third phase involves the
institutionalization of the new order, through 3.2.2. Organizational structures
consolidating improvements achieved to prevent Effectively managing externally acquired knowl-
a slip back to the antecedent status quo. Arme- edge requires the development of complementary
nakis and Bedeian (1999) go further by suggesting internal networks (Hansen and Nohria, 2004), i.e.
that the Lewin’s model should be used as an organizational systems focused on accessing and
integrated and simplified framework to support integrating the acquired knowledge into the firm’s
further research into organizational change. innovation processes. Evidence shows that this
Consistent with Armenakis and Bedeian internal reorganization might concern: (i) organi-
(1999), we decided to adopt Lewin’s model as zational structures, e.g., the establishment of
an instrument to examine the journey from independent ‘Open Innovation’ business units
Closed to Open Innovation undertaken by the (Kirschbaum, 2005), or task forces and dedicated
firms in our sample. This choice was suggested cross-functional teams (Huston and Sakkab,
especially by the parsimony of the model, which 2006). (ii) Organizational roles, e.g., champions
divides the organizational change process into who lead the process of transition from Closed to
only three phases, thus improving the reliability Open Innovation (Chesbrough and Crowther,
of our empirically grounded research (Yin, 2003). 2006), or gatekeepers who manage the interface
between the firm and its external environment
(Tushman, 1977). (iii) Rewarding and incentive
systems, which should include more open-or-
3.2. Managerial levers for Open
iented goals and metrics (Chesbrough, 2003).
Innovation
Understanding the anatomy of the process from 3.2.3. Evaluation processes
Closed to Open Innovation requires identification Another key dimension where change entailed by
of the dimensions along which change occurs, in Open Innovation becomes manifest is the process
the three phases of the organizational change adopted to evaluate innovation opportunities and
process. Our framework identifies four dimen- projects. The openness of the innovation system
sions (namely networks, organizational struc- complicates this evaluation, because it determines
tures, evaluation processes and knowledge higher levels of technical and market uncertainty.
management systems) along which the change Under these circumstances, firms should learn to
required to become an Open Innovator takes play ‘poker’ as well as ‘chess’ (Chesbrough et al.,
place and, most importantly, can be stimulated. 2007), i.e. they need to use new evaluation criteria

to focus more on external sources of innovation. the use of IP protection systems enables inbound
As far as inbound Open Innovation is concerned, Open Innovation, as it prevents the opportunistic
the evaluation process should be designed to behaviours of the actors with which the firm
manage the higher uncertainty that analysing collaborates (Chesbrough, 2003).
technologies and opportunities developed outside The elements of the reference framework that
the firm’s boundaries entails. In this respect, have been discussed in the last paragraphs are
systems to systematically scan and continuously integrated and represented in Figure 1.
monitor the range of technologies available in the It is important to note that changes occurring
external environment (van de Vrande et al., 2006), along one of the four managerial levers that lie at
as well as new forms for the involvement of the heart of our framework necessarily have an
external sources of innovation through the stra- impact along the other levers. Although it is
tegic use of corporate venturing (Keil, 2002), beyond the scope of this paper to systematically
appear to have increasing importance. assess how each dimension is connected to each
other, it is important to comment on the nature of
3.2.4. Knowledge management systems their linkages and provide some examples of them
Finally, knowledge management systems repre- that are grounded in the existing literature. With
sent another area where Open Innovation im- the growth in the scope and size of the network of
pacts. Open Innovation is in fact all about external organizations or individuals from which
leveraging and exploiting knowledge generated to in-source knowledge and technologies, a firm
inside and even outside the firm, to develop and needs to develop dedicated ICT and, more
exploit innovation opportunities. Implementing broadly, knowledge management systems to sup-
Open Innovation requires therefore the use of port its operation (link between ‘networks’ and
knowledge management systems able to support ‘knowledge management systems’). This is exem-
the diffusion, sharing and transfer of knowledge plified by the cases of P&G with its Connect &
within the firm and with the external environ- Develop innovation management model (Dodg-
ment. For the purpose of this paper, we consider son et al., 2006) and the development of ‘The
both the use of Information and Communication Sims’ computer game (Prugl and Shreier, 2006).
Technology platforms and Intellectual Property Similarly, a timely and accurate evaluation of a
(IP) management systems. The role of ICT in high volume of technological opportunities and
supporting a shift towards Open Innovation has innovation projects generated in an Open Inno-
been widely acknowledged in the literature (Hus- vation environment requires the development and
ton and Sakkab, 2006; Piller and Walcher, 2006). use of dedicated ICT and knowledge management
The largest part of these technology platforms is systems (link between ‘evaluation processes’ and
used with the main purpose of facilitating the ‘knowledge management systems’). For instance,
inflow of knowledge from outside sources. This is both P&G (Huston and Sakkab, 2006) and BMW
the case, e.g., of the IT infrastructure used by (Stahl and Bergfeld, 2008) had designed centra-
P&G to collect ideas throughout its suppliers lized databases (respectively named Eureka and
network (Huston and Sakkab, 2006). Similarly, Technis) and automated ICT flow systems for
INBOUND OPEN INNOVATION
Unfreezing Moving Institutionalizing
Networks Networks Networks
Evaluation Knowledge Evaluation Knowledge Evaluation Knowledge

processes mgmt. systems processes mgmt. systems processes mgmt. systems
Organizational Organizational Organizational
structures structures structures
Figure 1. Theoretical framework.

rapidly collecting, processing and evaluating in- facilitate the achievement of a critical mass in this
novation ideas and technologies emerging from activity (link between ‘organizational structures’
different sources both inside and especially out- and ‘knowledge management systems’). This link-
side the firm. Putting into practice these processes age is the subject of an entire chapter of the most
for the evaluation of technologies and innovation recent book by Henry Chesbrough (2006), where
opportunities emerging from external and hetero- the cases of Qualcomm, UTEK and Intellectual
geneous sources increases the need for a firm to Ventures are described.
establish dedicated organizational roles such as
technology gatekeepers and innovation cham-
pions (Gemunden et al., 2007). Similarly, new 4. Research methodology
organizational units are often created or re-con-
figured with the aim of concentrating heteroge- We decided to use case-study research as an
neous competencies and decisional authority (link overall methodological approach for our empiri-
between ‘evaluation processes’ and ‘organiza- cal investigation. As suggested by a number of
tional structures’). This is clear for instance in scholars, this is in fact a very powerful method for
the case of the Dutch multinational company building a rich understanding of complex phe-
DSM reported in Kirschbaum (2005) and in the nomena (Eisenhardt and Graebner, 2007) that
case of Generics discussed by Haour (2004). requires the capability to answer to ‘how’ and
Similar changes at the organizational level are ‘why’ questions (Yin, 2003). In particular, we
also needed if a firm wishes to reduce the costs used a multiple case-study design, which was
involved in the operation of a broad and hetero- chosen as it allows both an in-depth examination
geneous network of external technology sources of each case and the identification of contingency
and to maximize its capability to capitalize on it variables that distinguish each case from the other
(link between ‘organizational structures’ and ‘net- (Eisenhardt, 1989).
works’). In this respect, Gassmann and Enkel The study involved four Italian firms from
(2004) describe how the re-configuration of the different industries (cement, concrete and steel
IBM R&D laboratory in Rüschlikon was needed pipes, chemicals, automotive brake systems) that
to improve the integration in the innovation were studied during the last year (see Table 1,
process of a broad network of customers and where real names have been blinded for confiden-
suppliers. Finally, improving IP management tiality reasons). In the beginning, a preliminary
capabilities and developing an IP-enabled busi- screening of Italian newspapers (see Chesbrough
ness model require a firm to establish both orga- and Crowther, 2006), carried out using a profes-
nizational roles that oversee the generation and sional database (see http://www.lexisnexis.com),
deployment of its IP and dedicated units that allowed us to identify 10 firms from mature, asset-
Table 1. Preliminary information about the studied firms

Firm Industry Annual Employees Annual Number of Role of
sales investments employees interviewed people
(2007) in R&D in R&D
(% sales)
Company A Cement and h6.0 bn 23,700 0.5 250 Former head of corporate
concrete R&D Head of the IP office
Head of corporate R&D
Company B Steel pipes h10.0 bn 21,700 0.6 300 Head of corporate R&D
Coordinator of R&D and
technological innovation
projects Divisional product
development manager
Company C Adhesives h1.2 bn 4,700 6.7 170 Head of corporate R&D
and sealant Head of technical assistance
for buildings Coordinator of network
innovation projects
Company D Automotive h0.9 bn 4,300 5 400 Head of corporate R&D
brake systems Head of the IP office

intensive industries, which could be considered as 5. Results and discussion

early adopters of Open Innovation in Italy. Man-
agers from these companies were invited to take Evidence collected through the case studies is
part in a workshop, where they could illustrate mapped along the dimensions of our reference
their approach to innovation. For the empirical framework in Table 2. The firms that we studied,
analysis, we selected the four firms that have in at the beginning of the change process described
fact initiated and carried out an evolutionary in Table 2, were characterized by a Closed ap-
process towards Open Innovation. As we sus- proach to innovation and by:
pected, it emerged that these firms had in fact
A strong but very narrow scientific and tech-
implemented only the inbound dimension of
nical body of competencies, in their own area
Open Innovation. In this respect, the choice to
of interest.
focus only on this dimension in the paper is
R&D carried out, in a very unstructured
consistent with our empirical setting.
fashion, inside organizational units devoted
We gathered information mainly through direct
to technical assistance activities.
interviews; in particular, we followed these steps:
A focus on markets where customers are
At the outset of each case, a relationship was relatively low demanding in terms of product
established with the manager who took part in innovation and where competition is rather
the workshop. He or she was informed about weak.
the research project through a written sum-
This indicates the magnitude of the change
mary and a telephone meeting. During this
required by the implementation of Open Innova-
meeting, we identified the most adequate re-
tion in these firms.
spondents for our analysis. Our first key
In the following, a detailed discussion of the
informant was the head of corporate R&D,
anatomy of the organizational change process the
but we also interviewed people with different
studied firms have undergone to adopt Open
roles and responsibilities in innovation (see
Innovation is provided, distinguishing between
Table 1), to reduce the risk of retrospective
the three phases of unfreezing, moving and in-
and personal interpretation biases.
stitutionalizing.
Then we personally interviewed the selected
informants; we undertook two semi-struc-
tured interviews for each of them (each inter-
5.1. Unfreezing
view lasted on average one and a half hour) in
order to gather the information required to This phase of the organizational change process is
pursue the objectives of the research. Direct characterized by the following aspects:
interviews followed a semi-structured replic-
The key role of top management in triggering
able guide, which comprised a set of open
change, i.e. in contributing to overcome the
questions for each of the relevant constructs in
firms’ organizational inertia. This ‘enabling’
our reference framework (e.g., organizational
role is well established in the literature on
structures, inter-organizational networks).
radical organizational change (see, e.g., Good-
Secondary information was collected in the
man and Dean, 1982; Kaplan et al., 2003). In
form of company reports and project documen-
all the four cases, the critical role of top
tation. These secondary information sources
management is clearly evident, even if the
were integrated, in a triangulation process,
discontinuities to be faced were rather differ-
with data drawn from the direct interviews, in
ent in nature: the sudden increase of competi-
order to avoid post hoc rationalization and to
tion caused by the blurring of boundaries
ensure construct validity (Yin, 2003).
between geographical markets for company
All interviews were tape-recorded and tran-
A, a corporate restructuring process following
scribed; generally, at this stage, a telephone
relevant corporate acquisitions for companies
follow-up with the respondents was conducted
B and C and finally the access to large inter-
in order to gather some important missing data.
national markets for company D.
The following section reports and discusses the The re-design of the organizational structure,
empirical evidence we gathered for the four com- which represents the first managerial dimen-
panies. It is used to illustrate the anatomy of the sion interested by the implementation of Open
organizational change process through which they Innovation and leads to the establishment of
have transformed from Closed to Open Innovators. an independent unit devoted to R&D activ-

Table 2. Summary of the case studies
Company A Unfreezing (1991–1994) Moving (1995–2005) Institutionalizing (2006–)
Background information Networks At the beginning of the 1990s, the Leveraging on the social network The participation of the company
company retained a limited number of the head of R&D, the company to EU-funded research projects
The wave of globalization hit the of formal relationships with key started to establish formal allowed to involve a European
r 2010 The Authors

cement industry at the beginning suppliers, not related to innovation relationships with a number of Italian network of universities, thus
of 1991, when also the evolution activities. universities and research centres enlarging the original
of norms ruling the European Customers, who were characterized (among others, Politecnico di Torino, relationships with Italian
Union lowered the barriers of by a relatively low demand of Politecnico di Milano, CNR). academic professors.
entry for foreign players in innovation, were not involved in The creation of this network followed A formal system and a set of
national markets. research and development project. the starting of a pilot project based on procedures and templates have
The only network that seems to play the idea to use cement to reduce been created for managing these
Top management of company A a role since the beginning is not the pollution by introducing photo- collaborations.
was aware of the fact that in order one at the firm level, but the social catalytic elements.
to remain competitive in a more network of the new head of R&D, Indeed, although the idea was
geographically open contest the involving on an individual basis a generated within the company, it

firm needed to significantly number of Italian university clearly lacked knowledge of photo-
increase its scale and its presence professors. catalysis, which is, as a chemical
in other markets. process, quite distant from those
As these objectives had to be adopted in the cement industry.
achieved rather quickly, the Organizational At the beginning of the 1990s, the The role and competences of the The R&D function had been
company started the process of structures CEO (also a member of the internal project managers grew restructured by establishing the
acquisition of another large player company’s founding family) used to significantly, together with the so-called sector heads. Seven
of the industry at European level. say in internal meetings: ‘We have number of personnel with a technical sector heads, who were chosen
At the time of acquisition, the been so far leader on the Italian or a scientific degree: the normal among the most experienced
target company had nearly three market leveraging the undoubted turnover of retirees was indeed used project managers, have the role to
times the productive capacity of reliability of our products, but in to hire higher skilled people, coordinate innovation projects
the acquirer and a wider presence order to be a leader in the future maintaining the overall number close belonging to certain areas (e.g.,
in other European countries. globalized market we need to find a to 100. cement, additive, concrete), to
The acquisition had been finalized new way to nurture our innovation, The head of R&D then decided to identify the right project manager
in April 1992. looking more and more outside the open a small research centre in South to be entitled with the
The company still in 1990 held no boundaries of our company’. Italy with nearly 10 people. The aim responsibility of each project, to
patents even if it was also active in In 1992, once the acquisition was of the centre was to promote research support the head of R&D in the
basic (academic) research. completed, a new Group Technical projects, involving Italian and foreign evaluation process of innovative
The head of the technical support Center (CTG) was established universities, to be funded by the projects, to manage the
centre, employing nearly 100 merging the previous technical European Commission under the relationships between the different
people, was a university professor, services of both firms. Within the Framework Programmes. functions within the firm (also
and together with the other three CTG, a separate R&D function was In 2001, a new small research team of ensuring the involvement of
graduate people of the centre, established, for the first time in the three people was established for commercial units) and finally to
R&D Management 40, 3, 2010

published a number of papers in history of the firm setting a developing new additives to be used nurture and expand the
academic journals and distinction between technical especially for the cement produced by innovation network of the
conferences. assistance and R&D activities. the company. Additives are used, e.g., company.
229
Table 2. (Contd.)
230
As head of R&D a new manager In 2007, to further support the

to increase the speed of the process of
was appointed purposively hired in cement consolidation or to make it work of sector heads, a new
1991 with 30 years of previous more resistant to particular organizational unit called
business experience in other environmental conditions (e.g., heat,Competitors Group was set up
industries and also bringing a strong moisture). Before 2001, additives hadwith two people under the
social network of researchers and been simply acquired from external supervision of the Intellectual
scientists in Italian universities. suppliers. Property Office. The Competitors
In 1993, an Intellectual Property Group constantly monitors the
Office was created within the R&D activities of competitors regarding

function. The head of the the introduction of new products
Intellectual Property Office, with and has also the role of scouting
previous experience in the most promising technological
pharmaceutical industry, was also advances done in universities in
hired in 1993 together with other the relevant areas for the
five professionals belonging to the company.
existing social network of the head A new small research centre has
of R&D. been established in a scientific
park named Kilometro Rosso
with the aim to exploit cross-
fertilisation between research labs

of firms in different industries
(e.g., automotive, aerospace,
biotechnology).
A new organizational structure,
independent from R&D and
employing 10 people, has been
established and called Innovation
Directorate, with the aim of
favouring strengthening the link
between R&D and the other
company’s function.
Evaluation In 1992, the first project managers In the period 1995–2005, the number The relevance of the new approach
processes were appointed and cross- of innovation projects implemented to innovation has been formalized
functional teams – even if limited to each year more than doubled, from in the development of an ad hoc
R&D, technical assistance and nearly seven to eight per year in 1995 indicator, called ‘innovation rate’,
production – were created to follow to more than 20 in 2004 and 2005. measuring the percentage
the development of the first As a consequence, explicit evaluation contribution to the overall
innovation projects. procedures had been introduced to revenues of innovative products
In 1993, a scientific committee was assess the potential for accessing that reach the market every year.
created with six Italian academic external sources of knowledge, A target value of 5% is set for the

r 2010 The Authors
Table 2. (Contd.)
particularly within the existing

professors. The role of the scientific year 2013 and additional measures
committee was to revise in two network. These procedures have been and targets have been derived for
meetings during the year the initially tested in the pilot project on project managers and the other
r 2010 The Authors

progress of innovation projects and photo-catalytic cement. personnel of R&D.
to validate their scientific basis. The culture of project management The Innovation Directorate
Regular meetings were also held was well diffused at that time within became an active player of the
with the heads of R&D and of the the company and also the personnel process of project evaluation, in
Intellectual Property Office to in R&D started being evaluated, even most cases representing a key go-
discuss practical problems and to if still informally, on project no go gate for those projects
evaluate the potential for filing a performance. In particular, the ability involving the development of
patent. of creating a network of contacts products intended for widespread
outside the company was regarded as use within the company and even
critical for the appointment and beyond.
subsequent evaluation of a project

manager.
‘It was like creating an incentive for
them to stay at the conference venue
talking with other people instead of
going around in the city’ said the
former head of R&D.
Knowledge The use of information technologies The increase in the number of -
management in supporting innovation activities projects also led to the adoption of
systems was rather limited. ICT systems for project planning, and
In the years 1992–1994, a few particularly for managing cross-
patents were filed, mostly based on functional teams across different
technical knowledge previously countries (e.g., videoconference
developed in the company. devices), and for database searching
on scientific publications and patents.
Recalling this period, the head of the
Intellectual Property Offices said: ‘for
long time the firm competed with
universities in publishing works in
journals and conferences . . . so we
were not used to cooperating with
external organizations. However, we
then needed to protect our knowledge
to start relationships and to manage

contractual stuff . . . finally project
managers fully understood the role of
the IP Office and began to work more
231
closely with it’.
Table 2. (Contd.)
232
Company B Unfreezing (2002–2003) Moving (2004–2005) Institutionalizing (2006–)
Background information Networks Once appointed head of the newly Based on the social network of the In 2006, the company started a
created R&D unit, the new manager head of R&D, the company started a programme for creating a more
In the year 2002, recognizing an started involving in innovation number of formal relationships with established network with its key
increase in global competition, top activities a number of university main universities and research suppliers, making the transition
corporate management decided to professors and researchers he had centres. In Italy, this network rapidly from an ad hoc project-by-project
reorganize and concentrate all the previously met during his education grew in the years 2004–2005 to involvement towards a more
activities related to steel pipes, and his long career in the company include nearly 50 universities and structured involvement based on
which were previously distributed (when he was in charge of managing public research labs and consortia. potential for knowledge transfer in
in a number of loosely coupled basic research activities). Relationships were also established at given scientific and technological

local companies. an international level with top US areas.
As a result, a specialized company technological universities and other Despite the efforts made in this
(company B in our case) was research centres closed to the programme, there are still several
created within a much diversified subsidiaries of the company in problems mainly due to the fact
corporation. Argentina, Mexico and Japan. that most of the key suppliers are
In 2002, the company still held no However, all the relationships were small companies rather reluctant
patents even if it was active in managed directly by the Italian R&D to the formalization of long-term
basic research. central unit. relationships.
In 2005, a dedicated organizational At the end of 2007, nearly 30
structure was created to manage these companies have been involved in
relationships. Interestingly, other the programme.

than developing joint research
programmes, the company financed a
number of PhD programmes with the
aim of both achieving research results
of interest in the area of steel making
and establishing further relationships
with top scientists (and universities)
in the field.
Organizational The decision to concentrate all In 2004, the R&D unit further In 2006, a formal role (‘customer
structures activities on steel pipes in a single concentrated on innovation activities, representative’) was created within
company was strongly supported by also after quality control procedures the R&D unit with the aim of
the top management at the (that were previously in charge of ‘bringing the vision’ of key
corporate level. The next step R&D) were allocated to the technical customers into project teams.
envisioned in this restructuring assistance centre. Customer representatives
process concerned the increase in In the same year, a small independent periodically visit key customers
the innovation potential of the organizational unit was established to together with people of the
company. Managers were used to manage relationships with marketing unit for directly
claim that ‘now that we can really universities. The unit, other than ‘translating’ into technical
exert a clear control over all monitoring the development of joint requirements major needs of the
activities, we must prove we are able research project, focused on the customers.

r 2010 The Authors
to leverage our assets for becoming development of PhD programmes In 2007, a small team of
Table 2. (Contd.)
the most innovative company in this (and associated grants) in the main technicians (‘gatekeepers’) within
field’ scientific areas of interest for the the technical assistance centre was
In the year 2002, a new independent company. created to constantly monitor new
r 2010 The Authors

R&D unit was split from the products developed by
technical assistance centre and competitors. The results of this
entitled of all product innovation scouting activity are periodically
activities. reported to project managers in
The head of R&D was chosen the R&D unit.
among the most experienced
managers of the company. His
appointment was particularly
supported by top management,
given the fact that for the first time
in the history of the company a key

managerial position was taken by a
non-member of the company’s
founding family.
In the following year, an Intellectual
Property Office was created within
the company and under the direct
control of the head of R&D. The
Intellectual Property Office
established since its beginning tight
relationships with a network of
professionals in the field.
Evaluation processes At the beginning of 2002, the In the period 2002–2004, cross- The evaluation process was
evaluation process used by the functional teams increased in strengthened by explicitly
company for assessing innovation number, also involving people introducing the assessment of
projects was still rather informal belonging to subsidiaries other than accessing external sources in
and mostly based on the periodical to the Italian headquarters. innovation activities. To this end,
interaction between the head of the Quarterly review meetings were the Intellectual Property Office
technical assistance centre and the established to review the progress of developed a number of procedures
head of the marketing unit. innovation projects. A key role in and standard formats that quickly
The head of R&D since his these meetings was played by the became a day-by-day tool for
appointment started holding regular head of the Intellectual Property project managers. One of our
meetings involving people from Office, whose task was to evaluate the interviewees pointed out that: ‘I
different units and the head of the potential for filing patents out of never even think to contact

Intellectual Property Office. project results. someone in a company or in a
university for proposing a
collaboration of any type without
233
Table 2. (Contd.)
234
having in my bag the right format

for signing the agreement’.
A number of indicators (e.g.,
number of new patents, number of
new projects, a number of new
products) are currently under
development to measure
innovation activities within the
company. The coordinator of the

R&D and technological
innovation projects said: ‘even if
we are still far from having a
reward scheme for our researchers
based on innovation performance,
we all know this will be the case in
the next two or three years’.
Knowledge The company started in these years The increase in the number of The company consolidated its
management systems filing a few patents leveraging projects led also to the adoption of patenting activity by filing nearly
existing knowledge, particularly in ICT systems for project planning. 50 patents per year.
the field of steel pipes connections. Moreover, the company invested in A system of collection of project
gaining the access to scientific ideas from all employees (called
databases (e.g., Cilea, Science Direct) ‘long list’) was developed on the
and patent databanks, made company’s Intranet. Ideas
available to all employees through the collected are then screened once a
company’s Intranet. year by a pool of project managers
and the resulting ‘short list’ is
inserted into the normal
evaluation process for innovation
projects. The heads of R&D said:
‘we know Ibm does the same, and
even much better than us, but we
are still young in using such tools’.

r 2010 The Authors
Table 2. (Contd.)
Company C Unfreezing (1995–1997) Moving (1998–2005) Institutionalizing (2006–)
Background information Networks The new head of R&D started its In 1998, a formal programme was The network with universities was
activities in the company with a started with Politecnico di Milano further enlarged by including
In the year 1994, the company clear programme in mind: ‘Without and Scuola Normale di Pisa to offer CNR – National Centre for
r 2010 The Authors

reshaped significantly its business accessing fresh knowledge from the two PhD grants per year on research Research, Università Federico II
model by acquiring one of its outside, having (as we do) up-to- areas of interest for the company. The in Naples, Università di Torino. A
larger suppliers (and also the date facilities and skilled personnel aim was to further strengthen number of contractual agreements
largest European producer) of is not enough. We are a large relationships with the faculty of the have been formalized for
polymers for the building company in our industry, but if we two universities and to gain access to facilitating the development of
industry. The integration towards talk of research we are still a small highly skilled personnel to be later joint research projects. Training
the supply of basic materials was chemical company and we lack the employed in the company. Even if the programmes for undergraduate
considered the first step for critical mass for pursuing latter goal was not completely and postgraduate students have
starting the development of truly innovation by ourselves’. achieved (with only a few PhDs also been developed.
innovative products, allowing the He started a collaboration with a currently working for the company)
company to expand its products’ leading university professor in the the programme allowed to deepen the

range and to address new markets. field of rheology whom he met company’s knowledge on key
Despite having subsidiaries in during his previous career in the research areas.
more than 10 countries and being research centre of Eni (the largest Starting from the year 2000, the
renowned for its ability to adapt Italian oil&gas company). network of universities involved in
the main features of its products to Moreover, existing contacts had innovation process grew in number
local environments, the company been activated at Politecnico di and also from a geographical point of
in 1994 held no patents. Milano and Scuola Normale di view, by including Università di
Pisa, thus creating the first bulk of Padova (Italy), Miami university and
the company’s innovation network. Penn State university (US).
In the year 2005 the network counted
more than 10 universities in five
countries.
Organizational In the year 1995, the Technical In 1998, the R&D unit was entitled to In 2006, the son of the CEO, and
structures Assistance unit, which had been, till carry out a project aimed at member of the company’s
then, centralized at the corporate introducing nanotechnologies into founding family was appointed
level, was drastically re-organized. company’s products. The need for head of R&D, thus further
First of all, an R&D unit was accessing external knowledge was signalling the commitment of top
created by collecting top technicians then clear to the head of R&D ‘This is management towards the
and researchers within the company not such a battle we can win alone’. innovation.
with the aim of increasing its The head of R&D appointed himself The previous head of R&D was
innovation potential. The CEO of responsible for the management of nominated coordinator of
the company used to say ‘We are the network, while the most network projects. His main task is
growing rapidly. We do not have to experienced researcher in the to consolidate and further develop

miss the opportunity of this growth company was appointed project the relationships with universities
for investing in our future. And our manager. and research centres to be
future is more products and more Starting from 2002, a new involved in the company’s
235
Table 2. (Contd.)
236
innovative products. We need a organizational role was defined innovation projects.

best-in-class R&D’ within the Technical Assistance units, A new organizational role, named
The remaining part of the Technical particularly those in foreign technology promoter, was
Assistance was further organized by subsidiaries. Named technology establish with the aim of ensuring
product line (at that time, three lines scout, it has the objective to report to an efficient and effective
of products were marketed) and the R&D unit information on how knowledge transfer from and
small technical centres had been customers used in practice the towards R&D and the other
created in each foreign subsidiary, company’s products (e.g., if they use company’s units.
with the aim of keeping them close a particular mixture of products, if A small group of researchers has

to the final customer. they follow the instruction for use). been established in 2007 working
The head of the newly created R&D in the field of organic chemistry
unit was entrusted to an experienced and serving as internal reference
R&D manager belonging to the point for most of basic innovation
R&D centre of Eni. The manager projects.
was purposively hired to create a
discontinuity with the tradition of
technical assistance and to
introduce a truly R&D approach.
In the year 1997 a long-term
agreement was signed with a Patent

Office of patent professionals and
attorneys based in Milan. The
agreement allowed the company to
access on a demand basis the
services of the Patent Office to
manage its IP.
Evaluation processes The evaluation process used by the In the period 1998–2005, the The evaluation process was
company to asses innovation company implemented a completely further strengthened and a great
projects was based in practice on the new evaluation process. First of all, it effort was expended in convincing
interaction between the head of increased the cross-functionality of researchers that external and
R&D and the CEO about the the process by involving, other than internally generated projects have
directions where to pursue the R&D, also Technical Assistance and to be considered in the same way.
research effort of the company. Marketing units, under the direct Evaluation metrics for researchers
supervision of the CEO. Moreover, a have been established explicitly
two-step evaluation was introduced. including the number of new
In the first step, projects are evaluated contacts established during the
on a very general basis looking at year and the degree of
their main goal (e.g., introducing new participation to ‘external’ projects.
products in a given product line, The current head of R&D said: ‘A
opening up a new product line) and few years ago, external projects

r 2010 The Authors
Table 2. (Contd.)
assessing their strategic fit. In the were considered as potentially

second step, projects are evaluated on dangerous as they might have
their technical and economical drained financial resources for
r 2010 The Authors

feasibility. In this step of the internal projects. Now our
evaluation, key peers of the network researchers know that we are
are also involved. willing to reward them as much as
Periodically review meetings were they are able to deal with these
established to review the progress of project. They started to
innovation projects. understand the real value of
external projects for the
company’.
Knowledge The company had no patents and The interaction with universities on The company strengthened its
management systems also the use of ICT systems was basic research projects forced the patenting activity by filing nearly
rather limited. company to adopt IP management 10 patents per year.

procedures, with the help of the
external Patent Office (with which it
signed an agreement in 1997). The
first patents were filed in 1998.
In the years 1998–2000, the company
completely renewed its IT
infrastructure, creating an Internet
website (with confidential sections for
employees only), and acquiring
video-conferences and instant
messaging systems for connecting its
subsidiaries with the corporate
centres.

237
Table 2. (Contd.)
238
Company D Unfreezing (2000–2002) Moving (2003–2005) Institutionalizing (2006–)
Background information Networks The company had a strong network The network was further In 2007, a cross-industries
including key players in the strengthened by increasing the consortium, named Intellimech,
Starting from the year 2000, in automotive industry. However, with number of collaborations with was established by the company
response to an increase in global the partial exception of racing universities (University of Munich, involving 18 industrial partners.
competition in the automotive teams, the involvement of Università degli Studi di Milano). The aim of the consortium was to
components market, the company customers in the innovation process Key customers, particularly high-end develop mechatronics solutions
decided to strengthen its presence was rather limited. automotive manufacturers, started for a number of potential
in foreign markets. The company In 2002, the new head of R&D becoming involved in innovation applications, even outside the
acquired manufacturing plants in started creating an innovation projects. automotive industry.

Brazil, established a joint venture network by initially involving
in South Africa for the production universities (Politecnico di Milano,
of brake disks, acquired a small Università di Bergamo) in basic
UK company with a long tradition materials and mechanical research
in the production of brake systems projects, leveraging his personal
for motorcycles and finally contacts.
established a joint venture with a The involvement of universities also
Chinese manufacturer of was of help for the new head of
automotive brake systems to R&D in gaining acceptance among
access the fast growing market of company’s researchers, who felt
Far East. proud of collaborating with well-

The company was organized by respected academics.
product lines and, despite being Organizational In the year 2000, the CEO (member In 2003, the company started a In 2006, a new organizational role,
recognized as one of the leading structures of the company’s founding family) project involving a top German named ‘focal point’, was
companies in the industry, R&D promoted a strong re-organization automaker and a number of established within the R&D unit.
activities were rather limited. Only of internal R&D activities: ‘A universities with the aim to develop a The head of R&D said: ‘The
the business unit dedicated to auto company that still in 2000 operates new product line of high-performance ultimate goal of focal points is to
races (started in 1975) had a like in the 1990s is doomed to fail. ceramic brake systems. The project continuously scout ideas from the
research team of about 50 people, We need new approaches both on was chosen by the head of R&D as a external environment and
clearly separated from the rest of the market side and on the research pilot testing field for implementing a particularly from research labs
the company, focused on the side’. new approach towards innovation. and universities and to benchmark
development of innovative brake A new corporate R&D unit was The research team working on the our marketed products. Every
solutions. created with the aim of project was located in a fully time they see something that
The current head of R&D concentrating innovation efforts equipped facility separated from the appears better than what we do,
described the situation of the other and forcing the development of company, in a scientific park named an alert is sent to R&D’.
business units at that time: ‘Every radical rather than marginal Kilometro Rosso near Bergamo. The
BU has its own product innovations. The best researchers aim of the project, other than
development team. The aim of and technicians from product obviously developing a new product
these teams was to adapt the development team were selected as line, was to gather as much external
products to the need of customers, personnel of the R&D unit, whereas knowledge as possible, even looking
eventually by introducing small the remaining members of the outside automotive and components

r 2010 The Authors
Table 2. (Contd.)
Company D Unfreezing (2000–2002) Moving (2003–2005) Institutionalizing (2006–)
improvements. We were far, existing product development teams industries.

however, from talking of an had been devoted to technical In the following year, an independent
innovation process’. assistance activities. R&D sub-unit, named Advanced
r 2010 The Authors

The head of the new R&D unit was Research Development, was created
chosen within company managers. to leverage external knowledge for
However, in contrast with the sustaining basic research projects.
company’s tradition, he was not Whereas the remaining R&D
selected among managers of activities were further concentrated
product development teams, but in on applied research.
the manufacturing function. The In the year 2005 a small Intellectual
head of R&D was therefore Property Office with four people was
confronted with two main created to manage the growing
challenges: (i) to implement new company’s IP.
procedures and processes for

increasing the innovation potential
of the company, and (ii) to set his
leadership over company’s
researchers.
Evaluation processes The evaluation process for new Innovation projects increased in The evaluation process was
projects was rather informal and number and in cross-functionality, further formalized by introducing
mostly in charge of the head of also involving people belonging to a stage-gate model, where the
R&D. other subsidiaries other than the potential marketability of the
In most cases, initial innovation Italian headquarters. project results is first evaluated
projects addressed basic research Starting from the year 2005, and then, for those projects that
issues of resistance of materials and pass the gate, technical feasibility
evaluation meetings had been held on
interaction of mechanical parts. a regular basis also with the issues are assessed.
They were used more to test the participation of members of the The head of the Intellectual
potential of the company in radical Intellectual Property Office. Property Office said: ‘Our
innovations rather than for researchers now feel that they are
pursuing real products’ innovations. working in an open, international
and challenging research
environment, very far from the’
provincial ‘environment they
experienced a few years ago’.
Knowledge The head of R&D said: ‘We looked A knowledge database (with data on The company consolidated its
management systems at our competitors and found that contacts and project results) was patenting activity by filing nearly
their IP portfolio was growing . . . in created and made accessible to 20 patents per year.

several cases with solutions that we company’s employees through a
also developed for our products . . . dedicated intranet system.
but that we never thought before to
239
ities (which is separated from technical assis-

tance) and of an IP Office, aimed at managing
the existing and new knowledge basis. This is
Institutionalizing (2006–)
fairly evident in all the four cases. These

changes at the organizational structure level
were effective in triggering the change process
because: (i) they made the change immediately
visible to everyone within the firm, i.e. they
represented a strong sign that the status quo
had been unfrozen to enable change; (ii) they
did not interfere with the basic processes and
routines of the firm, i.e. they did not conflict
directly with the status quo. Moreover, the
first small projects formally launched within
the R&D unit and the first patents filed by
leveraging existing knowledge represented the
early wins (Kotter, 1995), very often needed to
Moving (2003–2005)
signal the company that implementing change

can lead to tangible results.
The adoption of a jump-in approach (Kotter,
1995; Clark et al., 1997) for identifying man-
agers in charge of the newly created R&D unit
and IP Office, with the aim of creating the
sense of urgency and the right environment of
excitement and energy to nurture the change
patents were filed with the help of a
communication systems had been

strengthened. Video conferencing
protect by filing a patent’. A few
patent attorney in the year 2002.
(Chesbrough, 2006). This goal can be achieved

connections between company’s
subsidiaries and joint ventures.
either by hiring new managers with a strong

developed also to favour the
headquarters and its various

The ICT infrastructure was
professional experience in more open-oriented

Unfreezing (2000–2002)
companies or by creating a discontinuity in

systems and we-based
‘traditional’ internal career paths for manage-

rial positions. The first solution is well exem-
plified in the cases of companies A and C,
where the new heads of R&D had both pre-
viously worked in the research labs of the
largest Italian industrial company. The crea-
tion of a discontinuity in the career paths is
clear, on the contrary, in the cases of compa-
nies B and D, where the direction of R&D (i.e.
a key managerial position) was entitled for the
first time since the creation of the company to
a non-member of the founding family (com-
pany B) and to a corporate manager never
involved before in R&D activities, thus break-
ing the tradition of selecting R&D managers
only within divisional research units (com-
pany D). The discontinuity caused by the
jump-in approach in companies A and D is
also reinforced by the introduction of a new
‘cultivation’ management style (Orlikowski
Table 2. (Contd.)
and Hofman, 1997).

The marginal role played by the firm’s estab-
Company D
lished network of customers and suppliers in

shaping the initial phases of adoption of Open
Innovation. This aspect is rather new in the
Open Innovation literature that, on the con-

trary, has almost always stressed the pivotal adoption of nanotechnology to improve the
role of the firm’s network as a key enabler of resistance of outdoor adhesives in company C.
the adoption of the new paradigm. In our The establishment of a firm-level inter-orga-
cases, it emerges that initially, it is the social nizational network, by leveraging the personal
networks of the managers in charge of R&D social networks of R&D managers. This net-
activities that allowed the firm to access im- work is mainly explorative in nature (March,
portant sources of technologies and innova- 1991), as companies need to explore new areas
tion rather than the firm-level one. This social of knowledge, different from the ones they
network comprises mostly relationships with have traditionally mastered. This implies that:
scientists at universities. Consistent with the (i) the depth of the network (Laursen and
perspective suggested by Perkmann and Salter, 2006) clearly prevails on its breadth, as
Walsh (2007), these inter-personal networks firms need to establish long-term formal re-
acted as antecedents to firm-level relation- lationships to maximize learning effects
ships. (March, 1991); (ii) the preferred partners are
universities. Relationships with universities,
In this unfreezing phase, it emerges that acting indeed, are less risky in terms of potential
on the firm’s knowledge management system to spillovers than others involving suppliers, cus-
improve IP management capabilities requires a tomers or even competitors. Focusing on uni-
firm to establish an independent organizational versities as external sources of technical
unit and dedicated organizational roles, which is knowledge is therefore consistent with the
an example of the link between the ‘organiza- low attitude of the companies towards IP
tional structures’ and the ‘knowledge manage- protection. In some cases (namely in compa-
ment systems’ dimensions of our framework. nies B and C), even an ad hoc organizational
structure has been created with the aim of
managing research collaborations with uni-
5.2. Moving versities in the relevant scientific areas.
The introduction of a more formalized eva-
In the moving phase of the transformation pro-
luation process for innovation projects de-
cess, after the need for a new approach to
signed to challenge the ‘traditional’ belief in
innovation has been fully established and com-
the superiority of the firm as the central locus
municated, Open Innovation is put into practice.
of innovation (Chesbrough, 2006), through
This step of the process is characterized by the
explicitly establishing procedures to assess
following aspects:
the potential and the opportunity to access
The establishment of an experimental field, i.e. external sources of technology, even beyond
a pilot project, for testing the practical im- the existing exploration network. In this eva-
plementation of Open Innovation. Around luation process, a relevant role is played by the
this project, the first bulk of the firms’ innova- IP Office, which defines mechanisms for facil-
tion network is created, mainly leveraging on itating knowledge transfer and for protecting
the existing social network of the Open In- companies from opportunistic behaviours
novation champion, and the solutions most (Chesbrough, 2006).
adequate to the characteristics of the firm are The introduction and empowerment of infor-
identified. The pilot project needs both to have mation technologies (Dodgson et al., 2006) for
the characteristics (in terms of the degree of supporting both project management activ-
innovativeness and requirements for accessing ities (e.g., videoconference devices, company’s
external sources of competences) that make it intranet, virtual project workspaces) and in-
a trustable testing field for the new approach novation scouting activities (e.g., scientific
to innovation and to be as clearly separated databanks, prior art and patent databanks).
from the rest of the innovation activities of the
company as to allow an independent measure The analysis shows how managing a growing
of its success or failure (Galpin, 1996; Arme- network of relationships with an external actor
nakis and Bedeian, 1999). This is the case for requires the establishment of a dedicated organi-
instance of the project on the development of zational unit to which the responsibilities for this
cement with photo-catalytic elements to be activity are concentrated. This exemplifies the
used for reducing cities’ pollution undertaken close link between the ‘networks’ and ‘organiza-
by company A, or the project about the tional structures’ dimensions in our framework.

5.3. Institutionalizing roles in charge of managing the evaluation and

development processes of innovation opportu-
The results achieved in the implementation of the
nities generated in an Open Innovation environ-
inbound dimension of Open Innovation are con-
ment. This exemplifies the need to contemporarily
solidated and institutionalized in a last distinct
intervene on both the ‘organizational structures’
phase of the change process, which is character-
and the ‘evaluation processes’ dimension to in-
ized by:
stitutionalize the transition from Closed to Open
The partial re-design of the organizational Innovation.
structure. More specifically, in this phase, Table 3 synthesizes the commonalities in the
new organizational roles (instead of new struc- implementation of the inbound dimension of
tures) are introduced. In particular, gate- Open Innovation in the studied cases, hence
keepers (Tushman, 1977), who are given the drawing a tentative anatomy of the organiza-
responsibility over innovation scouting activ- tional change process through which a firm in a
ities, and innovation champions (Chakrabarti, mature, asset-intensive industry moves from
1974), who administer and streamline the eva- being a Closed to an Open Innovator.
luation and development of innovation pro-
jects in a given scientific or product area, are
established. In other words, the change agents 6. Conclusions
(Galpin, 1996) who – as individuals – in the
previous phases of the implementation process This paper adopts a longitudinal, firm-level per-
contributed to pilot testing and rolling out spective, to analyse the changes in a firm’s orga-
recommendations about how to adopt the in- nizational structures and management systems
bound dimension of Open Innovation, are now that the shift from Closed to Open Innovation
consolidated into well-defined organizational entails. In particular, it uses established concepts
roles (and therefore made independent from in organizational change research to look into a
individuals). The introduction of these roles is rich empirical basis that documents the adoption
clear in all our cases even if they go under very of Open Innovation by four Italian firms operat-
different names: ‘sector heads’ in company A, ing in mature, asset-intensive industries. The
‘customer representatives’ and ‘gatekeepers’ in analysis shows that the journey from Closed to
company B, ‘coordinators of network innova- Open Innovation involves four main dimensions
tion projects’ and ‘promoters’ in company C of the firm’s organization, i.e. inter-organiza-
and ‘focal points’ in company D. tional networks, organizational structures, eva-
The adoption of performance measures expli- luation processes and knowledge management
citly aimed at evaluating the results of the systems. The changes occurring along each of
company and its innovation activities, under these dimensions in the three phases into which
an Open Innovation perspective. Early cases the organizational change process can be divided
of firms implementing Open Innovation out- are synthesized in Table 3.
side high-tech industries (Chesbrough and Although the paper should be better conceived
Crowther, 2006) show that ‘companies using in an exploratory fashion, we believe it holds
Open Innovation to extend their enterprise do interesting implications for both scholars and
not create new processes and metrics; instead practitioners. As far as research implications are
they layer an Open Innovation perspective concerned, our article is one of the first contribu-
onto existing processes’. On the contrary, tions, to the best of the authors’ knowledge, to
and therefore more interestingly, at least for adopt a longitudinal perspective to comprehen-
companies A and C, there is evidence that the sively look into the implications that the adoption
firms have undergone a profound change in of the Open Innovation paradigm has over the
terms of the evaluation metrics that are used organization and management systems of the
to inform the management activities and re- innovating firm. The model that is put forward
source allocation in R&D. Furthermore, for in the paper can be used hopefully as a reference
all the studied firms, a clear willingness to framework to gather and interpret further em-
move forward in this direction emerged. pirical evidence on the topic. Second, the paper
also contributes to organizational change re-
It emerges that, in order to avoid a quick slip search, as it applies the established Lewin’s model
back to the traditional, Closed Innovation ap- to study the characteristics of a particular change
proach, it is useful to establish new organizational process, namely the journey from Closed to Open

Table 3. Anatomy of the organizational change process from Closed to Open Innovation in mature, asset-intensive
industries
Inbound dimension
Unfreezing Moving Institutionalizing
Networks Exploitation of individual Creation of an exploration Establishment of long-

social networks, network, through a switch term forms of
particularly for developing of existing individual collaboration with
relationships with social networks to the firm universities and research
universities and research level. centres.
centres.
Organizational Achievement of a strong Establishment of a Creation of the role of
structures commitment from the dedicated organizational gatekeepers for
firm’s top management. unit for managing monitoring the
Separation of R&D collaborations with development of
activities from existing universities. technologies and scientific
technical assistance. Identification of a pilot advances in the areas of
Creation of an project (well defined and interest for the firm.
independent Intellectual separate from the rest of Identification of the main
Property Office within the the firm’s innovation areas of research and
firm activities) to serve as establishment of
Identification, eventually experimental field for the innovation champions for
through a jump in- implementation of Open each of them.
approach, of an Open Innovation.
Innovation champion.
Evaluation processes Establishment of regular Introduction of explicit Adoption of general
meetings for validating evaluation procedures to indicators and eventually
and monitoring assess the potential for of derived innovation
innovation projects accessing external sources performance measures for
developed within the firm. of knowledge, particularly project managers.
within the existing
exploration network.
Knowledge Start to file patents Adoption of ICT systems Assessment of patenting
management systems leveraging knowledge (videoconference, project activities, eventually
already existing within the management tools) for explicitly included into the
firm. increasing project team firm’s strategic plan.
interoperability.
Innovation, that has specific characteristics (e.g., voted to the management of innovation projects
the need to coordinate change at the level of both seems to be a strong signal that the status quo has
the firm’s internal and external organization), been unfrozen, although they do not interfere
which make it an interesting avenue of research. with established organizational processes and
As far as managerial implications are con- routines; (ii) the pivotal role of the social network
cerned, the model developed in the paper, and of the Open Innovation champion, which appears
especially the rich empirical basis that it discusses, to act as an antecedent and enabler of firm-level
provides R&D managers with a number of in- inter-organizational relationships; and (iii) the
sights that are useful to properly assess the importance of identifying a pilot project that
implications (and the costs) that a shift towards serves as a field test for the Open Innovation
a more open approach to innovation implies. procedures and practices to be fine tuned, become
Furthermore, they are provided several clues accepted and extended later on to the whole
about how to design and put into practice orga- organization.
nizational and managerial solutions able to Obviously, the paper has a number of limita-
streamline the pervasive transformation process tions that call for future research. First of all,
towards Open Innovation. In this respect, the because of the methodology that it uses, the
main points that deserve attention appear to be: results cannot be statistically generalized to other
(i) the fact that the journey towards Open In- firms with characteristics different from the ones
novation is triggered by a change in the organiza- that we studied. Future research is therefore
tional structure of the innovating firm. The needed to investigate, through either extensive
creation of independent organizational units de- surveys or, better, comparative multiple case

studies, whether and how the model developed in tion in mobile telephony. Journal of Product Innova-
this paper can be applied to companies operating tion Management, 24, 6, 510–521.
in technology-intensive industries, and in other Dodgson, M., Gann, D. and Salter, A. (2006) The role
countries different from Italy or, more interest- of technology in the shift towards open innovation:
ingly, outside Europe. A fascinating aspect to the case of Procter & Gamble. R&D Management,
investigate could also be the role played by the 36, 3, 333–346.
Eisenhardt, K.M. (1989) Building theories from case
firm’s governance system. In particular, it could
study research. Academy of Management Review, 14,
be interesting to answer the following ques-
4, 532–550.
tion: does the fact of being a private held (or Eisenhardt, K.M. and Graebner, M.E. (2007) Theory
even a family-owned) or a publicly traded com- building from case studies: opportunities and chal-
pany affect the propensity of a firm to initiate the lenges. Academy of Management Journal, 50, 1, 25–32.
transition towards Open Innovation or top man- EmdenGrand, Z., Calantone, R.J. and Droge, C.
agement’s commitment in the change process? (2006) Collaborating for new product development:
selecting the partner with the maximum potential to
create value. Journal of Product Innovation Manage-
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Unravelling The Process From Closed To Open Innovation

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Unravelling the process from Closed

to Open Innovation: evidence from

1. Introduction bound Open Innovation, which is the practice of

O pen Innovation has been one of the most-

r 2010 The Authors R&D Management 40, 3, 2010 223

224 R&D Management 40, 3, 2010 r 2010 The Authors

r 2010 The Authors R&D Management 40, 3, 2010 225

INBOUND OPEN INNOVATION

Unfreezing Moving Institutionalizing

Networks Networks Networks

Evaluation Knowledge Evaluation Knowledge Evaluation Knowledge

Figure 1. Theoretical framework.

226 R&D Management 40, 3, 2010 r 2010 The Authors

Table 1. Preliminary information about the studied ﬁrms

r 2010 The Authors R&D Management 40, 3, 2010 227

intensive industries, which could be considered as 5. Results and discussion

228 R&D Management 40, 3, 2010 r 2010 The Authors

r 2010 The Authors

Journal compilation r 2010 Blackwell Publishing Ltd

R&D Management 40, 3, 2010

As head of R&D a new manager In 2007, to further support the

R&D Management 40, 3, 2010

fertilisation between research labs

Journal compilation r 2010 Blackwell Publishing Ltd

particularly within the existing

r 2010 The Authors

Journal compilation r 2010 Blackwell Publishing Ltd

R&D Management 40, 3, 2010

R&D Management 40, 3, 2010

relationships. Interestingly, other the programme.

Journal compilation r 2010 Blackwell Publishing Ltd

r 2010 The Authors

Journal compilation r 2010 Blackwell Publishing Ltd

R&D Management 40, 3, 2010

having in my bag the right format

R&D Management 40, 3, 2010

Journal compilation r 2010 Blackwell Publishing Ltd

Company C Unfreezing (1995–1997) Moving (1998–2005) Institutionalizing (2006–)

r 2010 The Authors

Journal compilation r 2010 Blackwell Publishing Ltd

R&D Management 40, 3, 2010

innovative products. We need a organizational role was deﬁned innovation projects.

R&D Management 40, 3, 2010

agreement was signed with a Patent

Journal compilation r 2010 Blackwell Publishing Ltd

assessing their strategic ﬁt. In the were considered as potentially

r 2010 The Authors

Journal compilation r 2010 Blackwell Publishing Ltd

R&D Management 40, 3, 2010

R&D Management 40, 3, 2010

Far East. proud of collaborating with well-

Journal compilation r 2010 Blackwell Publishing Ltd

improvements. We were far, existing product development teams industries.

r 2010 The Authors

Journal compilation r 2010 Blackwell Publishing Ltd

R&D Management 40, 3, 2010

ities (which is separated from technical assis-

fairly evident in all the four cases. These

signal the company that implementing change

communication systems had been

patent attorney in the year 2002.

(Chesbrough, 2006). This goal can be achieved

subsidiaries and joint ventures.