1. Pénin Julien BETA – Université de Strasbourg penin@cournot.u-strasbg.fr DIMETIC Lecture April, 2009 Open source innovation: Rethinking the concept of openness in innovation studies

2.  Open innovation (Chesbrough)  Disintegrated or distributed innovation (Kogut, McKelvey)  Collaborative innovation  Collective invention (Allen, Nuvolari)  Collegial innovation (Mendonca)  Free innovation (FLOSS)  Open knowledge disclosure (Pénin)  Free knowledge disclosure (von Hippel, Harhoff) All the same meaning?

3. Open versus closed innovation “I call the old paradigm Closed Innovation. It is a view that says successful innovation requires control. Companies must generate their own ideas and then develop them, build them, market them, distribute them, service them, finance them and support them on their own. This paradigm counsels firms to be strongly self- reliant, because one cannot be sure of the quality, availability, and capability of others’ ideas: “If you want something done right, you’ve got to do it yourself” […] For most of the twentieth century, this paradigm worked, and worked well, as evidenced by the spectacular successes of central R&D organizations such as AT&T's Bell Labs.” (Chesbrough, 2003a, p. xx and xxi)

4. Open innovation: A new paradigm in management sciences? « Today, though, the internally oriented, centralized approach to R&D is becoming obsolete in many industries. Useful knowledge is widely disseminated, and ideas must be used with alacrity. If not, they will be lost. Such factors create a new logic of open innovation, in which the role of R&D extends far beyond the boundaries of the enterprise. Specifically, companies must now harness outside ideas to advance their own businesses while leveraging their internal ideas outside their current operations.” H. W. Chesbrough (2003) « Open Innovation: The New Imperative for Creating and Profiting from Technology »

5. Open innovation: A new paradigm in management sciences? (2) “The Open Innovation paradigm can be understood as the antithesis of the traditional vertical integration model where internal research and development activities lead to internally developed products that are then distributed by the firm […] Open Innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. Open Innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology” (Chesbrough, 2006, p. 1; in Chesbrough et al., 2006)

6. Open innovation: A new paradigm in management sciences? (3) Closed innovation : “projects can only enter in one way, at the beginning, and can only exit in one way, by going into the market” Open innovation : “there are many ways for ideas to flow into the process, and many ways for it to flow into the market” (Chesbrough, 2006, p. 2 and 3; in Chesbrough et al., 2006) Joy’s Law:“No matter who you are, most of the smartest people work for someone else” (Bill Joy, Sun Microsystems cofounder)

8. Open innovation vs. Innovation open  Is open innovation really open? –In house vs outsourced R&D –Open innovation is: spin-in and out, licensing in and out, buy-out, alliances, joint ventures, etc. –Yet, knowledge is not available to all (it flows within closed circuit)  Open innovation is synonym to desintegrated, distributed innovation, in the sense that innovation is not retained into the hands of a single actor but distributed over a wide range of actors  Open innovation does not mean that knowledge is open, in the sense of available to all

9. On the meaning of openness in innovation studies What is « open » and what is not?  “a resource is “free” or “open” if (1) one can use it without the permission of anyone else; or (2) the permission one needs is granted neutrally” (Lessig, 2001; p. 12). This suggests therefore that one can distinguish between two levels of openness, a weak and a strong one:  In a strong perspective, open means that one does not have to ask for permission in order to use a resource. The resource is not owned by someone who could control for its access.

10. On the meaning of openness in innovation studies (2)  In a weaker sense, one may have to ask permission, but this permission is not granted at the discretion of an owner, who could therefore choose arbitrarily to refuse or grant access to others. Permission is granted “neutrally”.  The contrary of an open world is therefore a world of permission, of command or of control. –Lessig: « The future of ideas » (2001); « free culture » (2004)

11. On the meaning of openness in innovation studies (3)  Following this definition, an innovation or a piece of knowledge is open only if it is available to all, i.e. all interested parties are given access to it.  It is not retained into the hand of one or several individuals who would control for its access.  Knowledge exchange within alliances or joint ventures is not open because it is not available to outsiders  According to our weak definition of openness, access to an open resource needs not automatically to be free of charge  Of course: “any positive price for access to intellectual property potentially restricts access” (Cohen and Walsh, 2008, p. 9)  Yet, if the price is “reasonable” and non discriminatory we consider knowledge as being open in a weak sense.

12. In short: openness in innovation  The notion of openness must deal with the availability and condition of access to a resource  A resource is open if it is available to all on conditions that are « reasonable » and non-discriminatory.  Open does not necessarily mean free of charge Open access at a fee: With respect to patented research tools created by industry research, my concern is less with open use at a fee, but with decisions not to make the tools widely available” (Nelson, 2005, p. 137). Open access at a fee: Example  The Cohen-Boyer patent

13. On the importance of openness in innovation studies  Innovation is cumulative  Innovation is built on former knowledge, which must therefore remain easily available  Core issue for upstream knowledge (basic science, research tools in biotech, etc.) “I do not know of a field of science where knowledge has increased cumulatively that has not been basically open.” Nelson (2004, p. 463) “A free culture supports and protects creators and innovators. It does this directly by granting intellectual property rights. But it does so indirectly by limiting the reach of those rights, to guarantee that follow-on creators and innovators remain as free as possible from the control of the past” (Lessig, 2004, p. xiv)

14. Open source innovation: A tentative of definition  Our concept of openness is different than Chesbrough’s one, i.e. our definition of open innovation will not meet Chesbrough’s definition  To take this difference into account we introduce the concept of open source innovation. An innovation is open source if and only if it meets the three following criteria: (i) Voluntary knowledge disclosure from “participants” (ii) Knowledge is open (“spillovers are not controllable”) (iii) Continuous and dynamic interactions among “participants”

15. Open innovation and open source innovation  Open source innovation is always open innovation  Open innovation may not be open source  Example: alliances, joint ventures, etc.  The case of crowdsourcing? Not always OSI –no ongoing collaborations between the mass (example: InnoCentive)

16. Open source innovation: examples  Open science (Dasgupta and David, 1994; Stephan, 1996) / open, voluntary and collaborative efforts of scientists  Users centered innovation (von Hippel, 2005; Shah, 2005)  Community based innovation: “In stark contrast to the proprietary model, the community based model relies neither on exclusive property rights nor hierarchical managerial control. The model is based upon the open, voluntary, and collaborative efforts of users” (Shah, 2005, p. 2).  Collective invention (Allen, 1983; Nuvolari, 2004)  FLOSS  Human genome project (HGP)

17. The case of Collective invention: Allen (1983) « In collective invention settings, competing firms freely release to one another pertinent technical information on the construction details and the performance of the technologies they have just introduced. Allen has noticed this type of behaviour in the iron industry of Cleveland (UK) over the period 1850-1875 » (McLeod and Nuvolari, 2008) «....if a firm constructed a new plant [more specifically, a blast furnace] of novel design and that plant proved to have lower costs than other plants, these facts were made available to other firms in the industry and to potential entrants. The next firm constructing a new plant built on the experience of the first by introducing and extending the design change that had proved profitable. The operating characteristics of the second plant would then also be made available to potential investors. In this way fruitful lines of technical advance were identified and pursued » (Allen, 1983, p.2)

18. « Formal presentations through papers presented to engineering societies was the second channel through which information was released [...] Papers were presented which disclosed considerable detail about the design and efficiency of different plants. The papers and the subsequent discussion were printed in the proceedings of the society [...] Since most of these ironworks contained furnaces of several vintages and the authors of the papers tried to use the resulting data to estimate the impact of increasing height and temperature on fuel consumption, an impressive amount of useful information was made available to potential entrants. » (Allen, 1983, p. 8–9)

19. The case of FLOSS  The 70s’: open environment  Tradition of collaboration and code sharing within developers community  The leading role of AT&T (Unix)  End of the 70s’: surge of appropriation in software (creation of a market)  Fear: Closure of the code prevent collective work and improvements  Richard Stallman, FSF (1984) – GNU GPL (copyleft) -Tradition of collaboration and exchanges within developers community (share codes) -Closure of the code prevent collective work and improvements -Viral license: Access to source code only if agreement to keep modifications free  Aim: To warrant the freedom (not gratuity) of the code for further research and thus to favour collaborations and knowledge exchanges  Major success: GNU-Linux, Apache, Sendmail

20. Three dimensions of FLOSS  Technical (source code open)  Legal (protection through special kind of licences, ex: copyleft)  Organisational (agora or bazaar mode) Source code open Collaboration Protection: copyleft Purpose Mean The law enables an organisation of innovation on the mode bazaar

21. Extension: patents to secure open innovation  Objective: to preserve the freedom of a technology (prevent appropriation by others)  Patent or defensive publication?  The control of downstream innovations  « Legal jujitsu » (Benkler, 2006)  Patent in a copyleft style (grantback mechanism)  Viral license  The BIOS case

22. 22 The BiOS initiative Research Tools Applications RT1 RT2 RT5 RT3 RT4 RT6 Freedom of RTs Appropriability of applications

23. Open source innovation as a platform  Everything cannot be open source  Open source and closed innovation are complementary  « republic of science » and « kingdom of industry »  Where to put the cursor?  Open innovation provides a platform, a springboard for private profits –Ex: FLOSS. New BM based on complementary assets  Firms have incentives to preserve and feed the common platform –Ex: creative industries. Video-Game industry (Cohendet & Simon, 2007)  The problem of free-riding? –Limited: to benefit from the platform you have to contribute

24. Conclusion: work in progress…  Open innovation vs. Innovation open  Chesbrough defines a weak form of open innovation  Co-evolution of open innovation and corporate innovation  Open sphere central to innovation  Creativity needs openness (Lessig, Christensen)  Open as an efficient management mode  Strength? Weaknesses?  The patent issue: threat? Part of the solution?  Open science vs. Science open  University patent