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The next bit of topicality concerning Open Innovation Strategy stems from agreeing to cover this in one of several blog posts meant to introduce the paper. OI and Intellectual Property was a red hot subject not so long ago. It remains very important, but I have noticed a shift in that it no longer emerges as the leading topic of interest in the OI community; at least in terms of what it means to search for recent articles on the subject.  In fact, Stefan Lindegaard beats me to this with his own observations on 15Inno this week and I think his remarks align with much of what I’e seen and heard as of late too.

As you explore the Open Innovation space you are certain to gain some interesting and useful perspective from both academic researchers’ and practioners but much of what gets written tends to explore the topic as a lit review of the prior works or further advocates for the expected or desired output that is possible through Open Innovation. This is why I was happy to offer readers in my last post, at least one link out to a more interesting discussion (from 2009) about the importance of paying attention to the inputs needed to make OI possible.  An OI strategy is more likely to succeed in helping the firm to optimize what it derives from OI practices when it is not pursued in such an insular fashion at the individual program level or driven solely out of a single organization inside the firm.

There must be a broader way to orchestrate the flows of information stemming from all of the OI activities so that the firm can optimally benefit from the tacit knowledge capture and exchange.  In The Plugged-In Manager  from Terri Griffith, you are introduced to how important this ability to participate in a broader range of knowledge flows really is, just by reading the forward of her book penned by John Hagel.  Mid way throught he forward, John introduces Terri’s belief that the plugged-in manager is one who learns to harness knowledge in ways that create growing economic value over time. This is accelerated from tapping into external ideas and directing this flow of information back into the firm in ways that will increase its absorptive capacity.

Getting back to intellectual property and OI, I was encouraged from Stefan’s post where he heard remarks from a knowledgeable IPR attorney describing the importance of the business case and that this should dominate potential legal issues and risks and not be the other way around. I’ve heard this often enough too. The business manager needs to decide what is right for the business.  The attorney assigned to support the manager then advises upon what the potential risks are and/or develops language to provide the necessary legal protections.  It may frequently work this way at an executive or board level but it would appear that business executives are more than interested to solicit strategy guidance from in-house council to ensure that the firm’s crown jewels (core intellectual properties) are protected at all costs.

This places the focal point upon risk reduction and risk management. Operationally, this might then result in the firm becoming closed off to opportunities to explore whether integration of the core to some form of IP originating from outside the firm or possibly assigning it to another business model outside the firm could lead to significant new revenue simply because mid-level business managers are given guidance with respect to where the IP boundaries are and that presenting business cases that will cross these boundaries may not always be open to consideration.  There is no fault in this if by protecting the core IP means to establish a platform that allows innovation to happen outside of this core can flourish. This robust innnovation effort may be ideal in that it grows the use of the platform and drives revenue for all those innovating over top of it.  While there may also be additional interest  to explore openness with the core, this is something open innovation practioners can explore only if there is a business case to support it.

In my paper, I’ve suggested that an attempt to implement a comprehensive open innovation strategy must coincide with the firm’s intellectual property strategy and matters of appropriability. If the open innovation effort is to produce results that will evade conflict between how the firm pursues its openness with partners and customers and what it expects to own and control with respect to its IP, then it will become easier to correctly communicate the firm’s open innovation strategy.  

Open innovation strategists are generally interested to discover useful and compelling ways in which to cultivate innovation stemming from ideas and IP originating outside the firm. What they must keep at the forefront of such considerations is to understand what the degrees of freedom are for the firm to pursue open innovation in instances that challenge the strategy of the business relative to IP it expects to own and control. The reality for the technology firm is that not only does it need to aggressively pursue ownership of IP to improve its position with competitors but it must also prevent the IP from one day being used against it.  Much gets written in the open innovation space about controlling rights and ownership and that if two parties are truly interested in co-innovation that it should produce work that is jointly-owned. In theory this sounds straightforward, but the reality is that joint ownership can become very complicated in that it typically raises questions about litigation and royalties.  

While there is sure to be public evidence of successful joint ownership of IP between technology firms, it is not necessarily a pervasive behavior. Such arrangements can certainly result in success but the outlying risk still exists. Nonetheless, research continues on the subject as evident in the open software systems and in the realm of developing software standards. If this interests you, check out some of the papers published by Timothy Simcoe from Boston University. While his work largely explores IPR in the context of Standards Setting Organizations, the issues of what gets protected versus shared are grappled with in similar ways.

The open innovation strategist will benefit from wise interpretation of how the firm views appropriability with respect to its business goals and to understand how it serves to create the correct contractual framework to support open innovation. The lead guidance to those tasked with managing OI initiatives is to fully understand the business strategy and the business model and how IP ownership and freedom of action supports it as this will facilitate how to correctly form the firm’s OI strategy. Doing so will also equip the OI manager to bring attention to any disconnect between openly stated OI objectives deemed important to the board and limitations related to matters of appropriability.

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