innovation, intra/entrepreneurship, internationalisation and the creative industries. Flanders DC focuses on entrepreneurs, teachers, students, policy-makers and the general public.
or at your event, take part in the De Bedenkers (The Inventors) classroom competition and an online game to discover how you score as an innovative manager.
November 2005, Published in Dutch The Creative Economy: challenges and opportunities for the DC-regions, Isabelle De Voldere, Eva Janssens, Jonas Onkelinx and Leo Sleuwaegen, April 2006, Published in English Spelers uit de televisiesector getuigen:
een verkennende studie in de creatieve industrie, Marc Buelens and Mieke Van De Woestyne, June 2006, Published in Dutch Mobiliseren, dynamiseren en enthousiasmeren van
December 2007, published in Dutch Entrepreneurship and globalization, Italo Colantone and Leo Sleuwaegen, December 2007 published in English HR Tools als stimulans voor creativiteit bij uw werknemers, Kristien Van Bruystegem
April 2008, published in Dutch 5 Foreign direct investments. Trends and developments, Frederik De Witte, Isabelle De Voldere, Leo Sleuwaegen, June 2008
Len De Looze, May 2009, published in Dutch Foreign Direct Investments. Location choices across the value chain, Frederik De Witte, Leo Sleuwaegen, May 2009, published in English Prototypically Branded Innovations.
February 2010, published in Dutch 6 Identifying opportunities in clean technologies, Jan Lepoutre, April 2010, published in English The Legitimation Strategies of Internationalizing Flemish SMES and their Subsidiaries, Christopher Voisey, Jonas Onkelinx, Leo Sleuwaegen, Reinout Buysse,
12 2 Business model innovation in low-tech SMES...14 2. 1. Business model innovation in SMES to sidestep the commodity trap...
14 2. 2. The role of the initial business concept or vision...15 2. 3. Innovate beyond products and services:
the relevance of the experience economy for innovating SMES...22 2. 4. Different ways SMES can create value...
31 3 A dynamic view on business model innovation...37 3. 1. Stepwise discovery of new business models...
37 3. 2. The process of discovering new applications...40 3. 3. Diversify or not?..
45 3. 4. Building and exploiting reputation and brand...51 4 How SMES build new business models through open innovation?..
54 4. 1. Benefiting from open innovation: value creation...54 4. 2 Capturing value in open innovation...
Business model innovation at Curana...38 Figure 6: Case Innovacelli...42 Figure 7: Case Jaga...47 Figure 8:
The current economic crisis has weakened the financial health of many small and medium-sized firms (SMES), especially in industries in which foreign,
and changing their business model. A major liability is that small firms lack the required internal financial resources and technical capabilities.
and services or how they can generate income by licensing their technology to other companies.
Open innovation has been studied mainly in large, multinational enterprises, of which most have large internal R&d departments
and integrating knowledge from external partners to create new products or services. An urgent need exists,
These stories about applying open innovation in small firms successfully can barely be compared with the open innovation ventures of large manufacturing companies, such as Xerox, P&g, Philips, Lego, and IBM.
Instead, small-and medium-sized companies engage in open innovation as a consequence of their search for major changes in their business model to seize new business opportunities and boost profitability.
Chesbrough showed that business models are crucial for unlocking the latent value of new or existing technologies6.
Technology per se has no economic value; indeed, the economic value of technology is realized when companies develop and commercialize it through a particular business model.
In all our interviews, managers emphasized that business models play a primary role in SMES in low-and medium-tech industries, not the technology.
Most SMES we examine in this report did not have internal technological competencies, but they set up new business models to leverage commercial value from technologies that existed in other organizations
or that had been developed co with partners. They developed an open innovation network with several partners
and in this way created value for customers by leveraging their partners'or other organizations'different competencies.
In other words 11 open innovation creates new business opportunities for SMES because they can develop business model innovations without having the required technologies in-house.
Instead, SMES can leverage external technologies by setting up a network with partners who have required the competencies
or own assets to develop and commercialize a new offering. A business model has two important functions:
it must describe the way in which the company creates value but also how it captures part of that value7.
Value creation and value appropriation can be analyzed using a business model framework. Despite the fact that the term business model is used widely in the business world,
academic research is relatively sparse, and there is no consensus because researchers define business models in different ways8.
Applying existing business model (innovation) frameworks to low-tech SMES is not trivial because the open innovation network is at the core of the business model.
The existing business model (innovation) frameworks do not pay attention to strategic partners or they incorporate them as a module in the model without analyzing interactions with other modules in the framework.
We will examine in detail, therefore, how a business model framework must be adapted to fit business model innovations based on open innovation in low-tech SMES.
Examining which implications our findings have for the theoretical modeling of business model innovation, which has received significant attention among strategy scholars,
is beyond the scope of this report. Business model innovations based on an open innovation imply that there are cost-increasing effects of technology sourcing and technology co-development9.
The new revenue streams resulting from business model innovation must be balanced against the costs of setting up
and managing the external network of partners. Moreover SMES have limited financial means to seize new business opportunities.
Accordingly, they may have to work in several consecutive steps, which in some cases look like a bootstrapping strategy.
Business models take thus a central place in analyzing open innovation in small firms. This has implications for the structure of this report.
In Chapter 2, we analyze the business model innovations of the SMES we interviewed. First, we pay attention to how small firms develop strategies to create value for customers.
Several firms faced rapidly increasing commoditization in their product markets and had to find new ways to create value for existing or new customer groups.
We also focus on the role of the experience economy as one way to create value.
Besides value creation we also examine how small firms can appropriate part of the value they create with the new business model.
Appropriating value can be non-trivial for a small company, but most of the firms we examined were successful in crafting new ways to gain significantly more profits with the new business models.
In Chapter 3, we enter the dynamics of business model innovation. The firms that have reached the most spectacular results with their business model innovation realized this in several consecutive steps.
In SMES, new businesses are developed stepwise using new product projects as tools to move forward.
In Chapters 2 and 3 we do not explicitly talk about open innovation. This changes in Chapter 4,
and broader innovation networks to seize new business opportunities. Setting up and managing innovation partnerships for most SMES is a new challenge.
we focus on how fostering a good relationship between the new venture and the company that developed the technology is instrumental in producing a commercially successful venture.
The second example illustrates the opposite case: A small engineering company licensed its technology to a large company to develop a new product for the large company.
In this case, we examine how both parties can negotiate a deal that provides each with ample opportunities to benefit from the new technology.
and deliver products or services. Each of these SMES provided an interesting case to examine how SMES apply open innovation.
and May 2011.14 2 Business model innovation in low-tech SMES Analyzing the open innovation activities of SMES in traditional industries starts with a broader analysis of the business model innovation of those companies.
companies engage in open innovation to create value for customers in new ways and to create a more profitable business.
The analysis of the business model innovation, therefore, logically comes first, and the usefulness of open innovation hinges on the role it plays in achieving broader strategic goals.
In the next section, we illustrate how the different companies we interviewed sidestep the commoditization pressure by changing their business model.
Next, we focus on the initial entrepreneurial act to initiate such a business model change. In section 2. 3, we look at how several companies transitioned from products or services to experiences in their search to offer more value to the customer.
Finally we examine the different drivers that enable SMES to accomplish these major business model changes. 2. 1. Business model innovation in SMES to sidestep the commodity trap Many SMES face severe commoditization pressure in their markets.
Just as each product or technology has a life cycle, price competition and commoditization pop up and start dominating market dynamics at a particular point in time.
When products or services commoditize, price competition becomes predominant and results in intensive price battles and industry shake-outs.
or capitalize on new growth opportunities beyond their existing business. As the burgeoning management literature on business model innovation has shown during the last decade,
SMES can take different approaches to reshaping offerings and seizing new growth opportunities. A business model defines the way companies deliver value to a set of customers at a profit.
It consists of tightly interlocking elements: companies create a customer value proposition, identify key resources
and processes needed to deliver that value, and design a profit formula. 11 The attractiveness
and financial viability of a business model erodes over time as price competition starts to dominate. Sooner or later, firms'existing businesses are prone to commoditization.
Firms subsequently engage in so-called strategic innovation or business model innovation to find new ways to create value for customers.
Business success comes from satisfying real, although frequently latent customer needs, but a customer value proposition must also deliver value for the firm as well.
Companies that are successful in business model innovation gain a unique position in the competitive space that is difficult for others to imitate.
White space represents the business opportunities outside a company's current businesses that require a different business model to exploit.
and models to implement business models and business model innovations. SMES that successfully sidestepped the commodity trap have changed their existing business model successfully to deliver more value for the customer at a profit.
In contrast with large firms, SMES 15 sometimes develop their business model in a rather intuitive way, based on strong but informed vision, conviction or basic insight.
We observed in all the SMES we interviewed that open innovation is embedded always in the company's broader strategic goals.
when these innovation activities are placed within the SMES'overall strategy or business model. We thus explore the strategy of innovating SMES in this
The economic value of a technology only emerges when it is commercialized in some way. 14 It is the business model that determines the economic value of a new technology by indicating how customer value will be created
and how the company can capture value from that technology. In contrast with other innovation reports,
but when isolated from SMES'strategies and business model development, they are useless in explaining why
or vision Developing a start-up's business model or reinventing the existing strategy of an SME usually starts with developing basic insight into how a company can deliver value for a specific target customer.
the business model's customer value proposition for the customer of Isobionics (see p 81), the Dutch start-up Janssen established in 2008,
indeed, the company delivers existing flavours at reduced costs to customers in the flavour and flagrance market.
therefore also not surprising that it took Toine Janssen only a week before he decided to pursue the venture.
In other cases, it takes more time to articulate the customer value proposition of a new business model in small firms.
Large companies may detect new business opportunities by carefully analysing market trends, spotting new technologies with promising applications, and so on.
Small companies do not have required the resources in-house to analyse new growth opportunities systematically.
and the environment would increase the need for sustainable solutions. Sustainability is entrenched in each part of the company, even in its logo.
the company creates products that have a minimal impact on the environment (Product Sustainability; and it creates new concepts
and that customers would be willing to pay a premium for high-quality sleep. Consequently the two entrepreneurs defined their business as a provider of healthy sleep,
Despite their conviction that providing healthy sleep was a useful way to discover a new business opportunity,
Providing a healthy sleep should be considered the value proposal that the company makes to its potential customers.
QOD offers customers a new meaning to the product of quilts. Quilts have always been considered a product that keep people comfortably warm in bed.
because the customers were not able to envisage that the properties of a functional quilt such as TEMPRAKON could actually benefit their ability to sleep well.
The QOD case illustrates that developing a successful business model that ultimately changes the industry starts with nothing more than the conviction of a well-informed entrepreneur.
It took a stepwise approach of more than three years before the business model for a functional quilt was developed in great detail.
the more rewarding it is for companies to differentiate their product to deliver value to customers in a way they could not anticipate themselves.
Curana (see p 24) is another example that illustrates how developing a new business model is a gradual process that can take years.
always responding to the customers'requirements. Curana competes in a highly competitive market and since the 1960s the market has experienced continuous pressure to consolidate.
but it was increasingly difficult to make profits as price competition intensified over the years. The competitive landscape changed drastically in the mid-1990s
Facing rapidly declining profits, Dirk Vens, CEO of Curana, decided to change the firm's strategy drastically.
and developing a new business model. Sometimes, the business model is straightforward, as we have seen in the case of Isobionics.
This represents an instance when the company is replacing existing product offerings with a new one at considerably lower production costs.
and articulating a business model is a more complex process requiring months and years to get the details just right.
We have examined thus far several ways to develop a business model. Some companies such as Devan Chemicals, start with key concepts that act as fundamental guidelines for many years.
what customers might value. Business model innovations start with articulating a customer value proposition. 17 During our interviews
all managers underlined that creating value for customers is the first and most important element in generating new business.
That does not imply, however, that unique customer value propositions are developed by questioning existing customers.
In many cases, this would be a good recipe for incremental changes, but not for game-changing and highly profitable business model innovations. 18 Next, business models cannot be anticipated fully in advance
and articulating them may take time. Innovative business models are sometimes hard to articulate because too many questions remain unanswered.
The needs of the target customer might not be explicit. Or it might not be clear how value can be created for the customer group.
however, that SMES should wait to innovate until they have a full business plan. Game-changing business model innovations cannot be planned analytically
because many of the variables relevant to their success are unknown at the outset. In contrast, SMES have to experiment to discover new business models.
Moreover, experimentation is path-dependent; that is, early experiments and choices shape the trajectory for to evolve the business mode further. 19 New opportunities will be discovered each time the company achieves a new step in realizing its business model. 19 Figure 1:
Case Devan 20 21 22 2. 3. Innovate beyond products and services: the relevance of the experience economy for innovating SMES New offerings can create value for customers in different ways.
A company might increase the functionality and reliability of a product; the company can offer more convenience to the customers;
or the company can reduce costs and thus the price of a product or service.
In today's service economy, many SMES wrap additional services around their products to increase customer value in exchange for a premium price.
Although selling additional services might be a viable strategy in many industries, several of the successful SMES we analysed preferred to offer genuine experiences to their customers as a new source of value.
Pine and Gilmore20 have analysed in detail how‘experiences'are a new economic offering. Experiences are as distinct from services as services are from goods. Experiences have always been around (in the entertainment business
for instance), but they have gone largely unexplored as a major driver for strategic innovation in SMES, in both manufacturing and services.
As products and services increasingly become commoditized, experiences have emerged as a next step in creating value for customers.
Commoditization makes it increasingly difficult for SMES to operate profitably in established markets where scale
and scope economies become the dominant driver to gain and sustain competitive advantages. As the next examples will show,
some SMES have grown profitably by transforming existing products or services into experiences for the customer.
Curana is a great example that illustrates how commodities such as mudguards and other bike accessories can be used to transform bicycle riding for the end consumers into an engaging experience.
Currently many consumers consider bicycles part of their lifestyle. Mountain bikers, racers, recreational bikers, and 65-and-older bikers, for example, all have their own bicycle style.
Bike accessories with a sleek design help shape the unique look of a bike considerably.
one of its major customers. Although growth and profitability were exceeding the expectations of the company,
producing accessories according to specifications and prices customers set. Moving from an OEM to an ODM allowed Curana to set its own price
and create value for its customers producing products with a customized design. Being an ODM would not differentiate Curana from other ODMS, however.
proposing its own ideas and prototypes to bicycle manufacturers. The innovative and unusual concepts and designs made Curana a well-known brand.
visitors would like more opportunities to assist the patient and an infrastructure that allows them to stay in the patient's neighbourhood.
PROF is an all-inclusive concept that tries to provide answers to these questions by focussing on the patient and his environment, with durability, functionality, usability,
the range and quality of individual services (nurses, doctors, cleaning services) is not the main qualifier;
indeed, more services can be quite bothersome for patients. Instead, Prof is centred a customer approach using the patient room as a stage to improve the patient's hospitalisation experience drastically.
Their innovation adds value to customers and helps retailers reduce costs. In fashion rent is the most important cost factor.
if customers could experience shopping and buy fashion in a novel way. Nor is optimized shopping from a customer's perspective.
Finally, customers cannot check whether the clothes they are buying in the shop really coordinate with those they have at home.
DNA Interactif Fashion proposed a new business model for fashion shopping. It changes shopping for fashion goods into a completely new experience for the customer.
After scanning, customers see themselves on large screens as a virtual, three-dimensional model dressed in clothes from various collections that the shop offers.
Customers can also be welcomed by a stylist with whom they discuss their personal style, but the software also can make choices for the customer depending in the skeleton, weight, age,
and evaluate the clothes the customers selected before they purchase. This process is called‘istyling'.'It creates new ways to change shopping
Customers experience an additional advantage: purchases are stored in a personal, virtual wardroom, which can be consulted any time.
Moreover, customers can see online at home how they might look in a new collection. This innovation is all about experiencing fashion;
Stylists even guide their customers through a transforming or restyling experience, subsequently changing, adapting, or upgrading prior dressing habits to professional standards So,
far we have focused on how small companies develop new business models and how this move allows them to sidestep the commodity trap.
We narrowed our attention in this chapter to the role of the business concept and the potential of turning business models that are product
and service oriented into more profitable business models based that generate experiences for customers The role of open innovation is not in business model innovation is discussed not here.
This is the subject of chapter four in which the role of open innovation in new business development is analysed in detail. 29 Figure 3:
Curana innovated its business model primarily in response to these shifts in the marketplace. In fact, Curana changed its business model
and embraced an ODM model and later a proactive design strategy as a competitive driver.
This change in strategy created value for its customers and was highly profitable for the company.
Changes on the demand side however, are sometimes slow and steady. Think about the growing awareness of companies to develop environmentally friendly or sustainable products or the increase in prominence of healthcare and wellness in our lives.
Devan Chemicals'philosophy is to be an innovate company in the textile chemicals industry by introducing chemicals that are less harmful to the environment
thus important to identify entrepreneurial opportunities for small companies. Likewise the emergence of new technologies and disruptive technological developments offer similar opportunities for small firms.
Many venture capital-backed high-tech ventures have been established to explore business opportunities that can be exploited based on a new applications of technologies.
Isobionics is one of those start-ups that have the potential to change competitive dynamics in a traditional industry such as the flavour and fragrances market.
It is interesting to note that small ventures such as Isobionics need not have required all the technology in-house.
and lead-customers. New technologies thus offer opportunities for small firms even in the so-called low-tech industry such as textiles
furniture, bicycles, food, and so on. Science or technology driven strategies are fruitful for small firms under several conditions.
First, small firms profit from pursuing markets that are too small (at least initially) to interest large companies.
thus a moving target that requires the small firm to migrate from one technological opportunity to another.
Third, when new technological developments drive competition, small firms can prosper only when they collaborate with a range of knowledge partners:
and the role the complementary assets play in a particular industry. 21 Shifts in government policies targeted at the business environment are another important driver of business model innovations in SMES.
In other cases, regulations may open new opportunities for small business, endangering the position of large established firms.
Changes in the environment are thus an important reason small companies experiment with new business models to revamp
or grow their business. However, we must also look at value drivers to explain successful business model innovations in SMES.
Small firms can benefit from having several advantages compared to large companies depending on the activities that drive profits in different industries.
We found that SMES can have a considerable advantage because they can react quickly to changes in the market,
changes in customers'needs, and in offering customized products and services to clients (particularly in business-to-business industries).
Segers & Balcaen (see p 35) is a small Belgian plastics packaging company that continuously identifies new packaging needs among its customers. 33 For many other companies,
Segers is preferred a supplier because they continuously innovate in order to offer new packaging solutions. In several cases, Segers has created customized packaging according to specific customer needs.
New technologies also provide opportunities for small companies. New technologies often find their first applications at the edge of markets or in niche markets
not amidst the mainstream. 22 Mainstream customers will only buy a technology product when the new technology has been proven,
and offer great opportunities for SMES to pursue embryonic markets that are too small to attract large firms.
therefore, developing technology based business opportunities should no longer be limited to university and corporate spin-offs. Start-ups can use their organizational agility, application know-how,
what customers need from technology that is available from different types of knowledge partners. Small firms are successful as innovation champions
because they know how to bundle the right expertise of different technology agencies to solve a problem for their customers.
Their relational capital is crucial in explaining their success as innovators. Devan Chemicals, Quilts of Denmark,
Some small firms sidestep commoditization by turning products or services into experiences. Jan Kriekels, CTO of Jaga (see p 47), expressed it this way:
People buy Jaga heaters because they care about the environment or because they want a sleekly designed radiator as an eye catcher in their home or business lounge.
and about customers'self-image. Similarly, the founders of Quilts of Denmark intended to be providers of a healthy sleep, not quilts-makers.
and developing a new business model. A business model defines the way a company delivers value for a specific customer group at a profit.
The value of open innovation activities in SMES can only be estimated correctly within the context of their broader strategic objectives.
New strategic objectives of a company should be analyzed via a business model innovation framework. All firms have in common that their efforts are focused on creating value for a particular target customer.
what customers might value. Business model innovations start with articulating a customer value proposition. Creating customer value through game-changing
and highly profitable business models will usually not be developed by questioning existing customers. Sometimes the business model is straightforward.
In the other cases, conceptualizing and articulating a business model is a more complex process. It may take months
and even years to clearly articulate the customer value of an idea. Innovative business models are sometimes hard to articulate
because the needs of the target customer might not be explicit, uncertainty might exist about which technologies to use and
which partners to team up with. However, SMES should wait to innovate until they have a full business plan.
Game-changing business model innovations cannot be planned analytically because many of the variables relevant to their success are unknown at the outset.
In contrast SMES have to experiment to discover new business models. It is driven a discovery process.
Most of the SMES use business model innovation to fight commoditization of their products. They can increase functionality or reliability of the products,
they can create more convenient products for the customers. SMES may also wrap additional services around their product or offer genuine experiences to the customers.
Turning businesses under the threat of commoditization into genuine experiences for customers is a difficult target for SMES
but it is one of the most profitable strategies in the long term and a way to gain more power in the industry.
Drivers for change may be quite diverse. We identified the following drivers: o New substitutes and new players in the market sharp increase in competition o Public policies changing the market conditions forcing SMES to overhaul their strategy. o Slow, steady changes in demand:
Growing concerns for sustainability and health impact are long term trends that offer great business opportunities for innovative SMES. o New technologies who have the potential to disrupt incumbents in an industry are an interesting business driver for high-tech start-ups.
Their technology should not necessarily be developed in-house (chapter 4). SMES may have compared some advantages to large companies:
and therefor offer opportunities for SMES to pursue embryonic markets that are too small to attract large companies. o SMES have greater capability to specialize than large firms to offer customized service to customers. o Small companies may offer completely new
experiences for customers. These radically new ways of offering value for customers takes time to develop
and there are too many unknowns at the outset to guarantee a market big enough to attract big companies. 35 Figure 4:
Case Segers & Balcaen 36 37 3 A dynamic view on business model innovation Business model innovation should
In this chapter, we analyze some aspects of business model innovation in SMES. First, we look at the possibility of changing business models.
Change may not occur just once, but several times, moving stepwise toward a business model that creates more interesting value propositions and results in higher profitability.
Second, we examine the process of discovering new applications after a small firm has introduced a new technology to solve a problem in its existing product markets.
We pay special attention to the role of customers and innovation partners in this process. Finally, several SMES have built a corporate reputation or brand as part of their strategy as a way to fight commoditization.
Developing a dynamic view on business model innovation is also important to understand the dynamics in the open innovation networks of the companies we examined.
These open innovation aspects will be described in detail in the next chapter 3. 1. Stepwise discovery of new business models In the previous chapter,
Why did he change the business model several times? Some managers continuously probe new business models, with each new model building on the strength of its predecessor.
Switching to a new business model creates opportunities to change it again for a second or a third time.
It is a path-dependent process in that opportunities to change the business model into a more profitable model can only be detected after the previous business model has materialized fully.
SMES thus change their business model in a stepwise way. To illustrate this concept, we take the example of Curana
and use a scheme suggested by Dirk Vens (see figure 5, p 38. The scheme shows his company's business model innovations between 1999 and 2010.
Curana, a small, family-owned bicycle accessories manufacturer started as a typical OEM: it produced steel mudguards and other accessories according to specs from bike manufacturers in Belgium and surrounding countries.
The customers (manufacturers) determined the prices, and the company could not add value because the product was easy for other bike accessory manufacturers to imitate, often at the same price.
which is why Dirk Vens chose to change his company's business model. 38 Figure 5:
Business model innovation at Curana The transformation from an OEM to an ODM model was made possible through a new product development project,
The B Lite enabled Curana to change its business model from an OEM model to an ODM model.
and price reverted to Curana based on the premium customers want to pay for a unique and exclusive design.
Customers started to realize that Curana was becoming an important partner for their own success. Over the years,
Most SME-managers would be inclined to stick to this new business model because avoiding the commodity trap
and price competition are their main concerns. Once Curana was recognized as an ODM, however, it fine-tuned a new strategic direction.
and changed its business model again. It established an internal design office because design had become the heart of the company.
Curana organized information sessions to promote its new ideas among potential customers. In this way, the company received valuable feedback from potential customers.
Realization is the fourth step. For Curana, this step started with 39 developing a high-end, three-dimensional model of the concept in collaboration with an (external) engineering partner.
Curana and its innovation partners started from a vision based on new opportunities derived from global trends,
It is driven a vision approach where direct interaction with potential customers is delayed until a later stage in the process.
Customers are still important, but they are not driving the company's innovation strategy. Through this strategy, Curana created bike accessories that were unique to the industry.
and create pull-trough demand. Three strategic changes in a single decade may appear to be too much turbulence,
Dirk Vens was searching for a new business model that would bring growth and profitability. He started with one product development project that resulted in the successful launch of the B Lite and the start of the ODM business model.
The B lite, however, was invented not in a straightforward or linear way. The company and its innovation partners continuously probed new solutions;
New opportunities to create and capture value are discovered step-by-step, and each previous step is necessary to move to the next.
Let's look again at the four business models in figure 5 (p. 38. Once Curana had adopted the ODM model,
Only at that point did the company realize that it could increase the uniqueness of its designs (and the value for customers) further by switching to a proactive innovation strategy.
This change in strategy gave the company more degrees of freedom to act (customers were no longer taking the initiative)
if the company had remained with the ODM business model, several competitors might already be imitating Curana's strategy.
Curana's successive business model changes also offered it a unique position in the market. Curana develops new concepts and designs,
however, offered several other technical advantages that were translated slowly into new business opportunities. First, mercury barometers have a minimum length of 90 cm to be effective,
Philips spent significant energy educating customers about how to make the fries tasty and crispy in an Airfryer;
essentially, customers had to learn to fry again because hot air frying differs from frying in regular fryers.
With Philips communicating with customers via its My Kitchen Web site, different customers are already experimenting with new ingredients, meals, and so on.
and the Airfryer, explaining to customers how they could optimize the device for several frozen snacks.
The food separator allows customers to fry an entire meal and can inspire snack producers to develop different combinations with the same frying time as a ready-to-eat meal.
The new possibilities the Airfryer and its Rapid Air Technology present only emerged after customers started to use the device and when other players in the market, such as snack producers, envisioned new market opportunities.
Each firm stayed focused on its product markets and customers. The most interesting example in this respect is Curana.
The innovation and design capabilities these companies built over time gave them definite opportunities to diversify into other markets.
including its customers. Outside that open innovation network, the company cannot rely on its reputation and it has to start from scratch to build its network of partners
and customers. 27 Open innovation networks thus enable a company to deliver value in completely new ways to its customers.
however keep the company tied to the existing innovation partners and customers. In a phrase, innovation networks enable,
and some provide a more hygienic or healthier living environment. The race into ever more complex applications of chemicals coincided with a continued focus on the same type of customers and applications.
Furthermore, the innovation partners were involved in long-term contracts and formed a stable network of trusted partners that had known one another for years or decades.
The PROF business model brings together several companies with complementary competencies to develop a new idea or concept for a particular end consumer (patient or the elderly.
They stick to their value chain partners or customers. In several cases, the innovation network is one of the factors that limit the options to change over time.
The innovation network is an enabling factor in generating new products or services, but it also limits the number of options for the company to change and diversity. 47 Figure 7:
and SMES usually do not have the money to make this investment. Less expensive alternatives exist
Just as in the case of QOD, Dirk Vens, CEO of Curana, was a highly sought-after speaker for seminars and conferences to address design, entrepreneurship,
which is granted to European companies that use design to create added value for their customers
it becomes an additional asset in for developing new business opportunities. Today, Jan Kriekels has a worldwide reputation as a thinker and evangelist of the cradle-to-cradle philosophy.
This organization analyzes the investments required for a building to reduce energy consumption to a minimum. Combining people with strong ideas and reputation with green technology projects is an interesting recipe for successful new ventures.
Jaga is certainly an extreme example of how a company can build a reputation over time.
The idea was that 25 small profit centers could work with a relative autonomy to increase creativity and customer orientation.
It is thus too early to evaluate its effects on the company's bottom line. 53 Key learning points Successful SMES do not remain with one business model forever.
They are continuously probing new business models. Each new business model builds on the strength of the previous business model
and improves its value proposition and profitability. This constitutes a path-dependent process because new opportunities to transform the business model into being more profitable can only be detected after the previous business model has materialized fully.
In business model innovation too much uncertainty exists to plan analytically a way to move forward. Indeed, SMES change their business model in a stepwise way.
Business model innovations are designed to create more value and generate more profits, and increasing profitability can be the result of several changes.
We have emphasized innovating SMES can increase profitability by increasing the number of control points and creating a unique offering.
In the case of Curana, the company gained control points to differentiate itself from the competition.
In addition, its accessories were incorporated unique great designs, and combined new materials in a way no other single producer could copy.
If a company faces serious problems in its existing markets it will look for a (technological) solution to solve the problems.
They stick to their markets, customers, and partners. Open innovation networks enable a company to deliver value in a completely new ways to its customers,
but they also keep the company tied to the existing innovation partners and customers. Innovation networks enable,
but they also bind. Small companies must use relatively inexpensive but credible ways to develop a reputation or brand.
and other inexpensive means. 54 4 How SMES build new business models through open innovation? In the previous chapters, we explored how small firms can boost their competiveness in the long run by changing their business model.
So far, we have not been emphasizing the role of the innovation partners in enabling or supporting these changes.
In this chapter, we examine how SMES integrate open innovation as they develop new business models. We have explained already why the business model approach is useful in the context of SMES that want to improve their competitive position28.
Business models also play a central role in open innovation as the continuous sourcing from and collaboration with partners can add value for the focal organization29.
The business model literature however, has been marginalizing partnerships to outsourcing or acquiring particular activities or assets.
A major shortcoming in the existing literature, therefore, is to analyze how open innovation and collaboration with external partners can add value to the business model of SMES.
A business model describes how an SME creates value for a particular customer group and how it captures a portion of that value.
Open innovation uses the division of innovation labor to both create and capture value. We will look first at how the companies we interviewed jointly create value with their innovation partners.
small firms are by default open in their search for innovations and new business opportunities.
Innovation in SMES is hampered by lack of financial resources, scant opportunities to recruit specialized workers
Business model innovation starts with discovering or recognizing new forms of value creation for a particular customer group.
and referring to any factor that enhances the total value created by a change in the business model.
Examples as we have seen in Chapter 2 are reducing costs for customers (e g.,, Isobionics), increasing time efficiency, solving problems (e g.,
, DNA Interactif Fashion), increasing the attractiveness of the customers'products or services (e g.,, Curana), and providing new functionalities and increasing emotional value (e g.,
and commercialize the new product or services. Most SMES we studied rely heavily on value chain partners
In these industries, innovations are usually the outcome of recognizing new market opportunities, with technology push innovations playing only a minor role.
Each firm we examined started its open innovation adventure with a new concept about how to serve customers better.
In some cases, customers identified a problem themselves; in other cases, the entrepreneur devised a new concept.
Starting with the simple conviction that providing a healthy sleep was a useful way to discover new business opportunities,
Because Outlast was the engineering partner in this venture, its technical competencies were crucial in developing the microcapsules.
Later on, Curana established strong bonds with suppliers, the designer community, knowledge centers, and customers. Working with external partners over the length of the value chain (from design to production and sales) leveraged the business to new opportunities that could not have been seized without collaboration.
Open innovation was a direct consequence of Curana's strategy: By offering new concepts proactively to the market, it had to be the vanguard for developing new products
which it could transform into extraordinary solutions for its customers. The network was a powerful tool in speeding up the innovation process and in combining novel designs with new materials.
and in this way stayed ahead of the competition. In this way, Jaga got in touch with promising technologies to develop low CO2 emission radiators, Jaga's so-called Energy Savers.
create, and present a product prototype or product idea on a flyer. In an official contest, in which professional and nonprofessional designers were divided into two groups,
and would be assigned dedicated engineers that could help build a prototype. In this way, the Product Days would have a more open character,
PROF members (Patient Room of the Future)( see p 59) jointly created value for customers in yet another way.
and commercialize innovative products or services for specific customers33. PROF is different: It starts from the patient's room as customer-centric concept
and analyzes it via a set of keywords regarding how the overall concept of a patient room should be changed to deliver value for the different stakeholders involved.
Stakeholders are, in this case, the patient, nurses, doctors, family of the patient, and so on. PROF was structured in such a way that it could progress with the new concept for a patient room and stay in tune with the stakeholders.
PROF includes both a small and a large consortium. The small one consists of a well-58 selected group of architects
or deliver services that were necessary to develop a new concept of the patient room.
and think in an innovative way about a patient room that could add significant value to all the stakeholders involved.
All product and services innovations were aligned with and integrated in the new patient room concept,
Integrating different products and services into a new patient room concept also implied that their value for the usability groups was several times higher than
Open innovation allows companies to implement business models that generate more profits. We provide illustrations from the SMES we have analyzed.
and with lead customers on the other hand is essential for understanding how the company can continue to make profits in this way.
Other companies make money using open innovation to move from commodity products to highly differentiated products.
if they could offer customers the experience of a healthy sleep by adding new functionalities.
Eco-radiators appeal to some customers because they reduce the carbon-footprint of heating houses and buildings.
because some customers value a nicely designed radiator such as the Heatwave (see figure 6). This radiator is developed by an artist, Joris Laarman, and Jaga.
and Quilts of Denmark successfully sidestepped the commodity trap and now capture more value by focusing on how they can offer highly differentiated products and unique experiences to the consumer.
because customers make a clear distinction between companies that offer the authentic experience and those that are copying it 34.
How do the manufacturers profit from participating in PROF? First, they gain direct access to potential customers
although they are not in a sales mode in PROF and receive valuable information about the needs of nurses and hospital management.
In addition, a showroom presents the brand new idea of a patient room to potential customers.
Visiting the showroom has the additional advantage that potential customers can invite different manufacturers at the same time.
and that Curana would try to pass part of the price increase to its customers. In an innovation network, partners are interconnected
Cross-disciplinary and cross-industry communication around specific projects released energy and creativity among the partners involved.
Take for instance, the example in which a company grants exclusive designs or products to its customers.
Curana, for instance, experienced serious pressure to adapt its business model in 2011 when it was exploring the potential of a new,
therefore how to change its business model to benefit from this promising technology in a different way. 5. Open innovation also means openness in communication and in reporting among the innovation partners.
Partners have to trust each other to charge a reasonable price for the products or services they offer to innovation partners in the network.
but also about sharing profits equitably. 71 6. Developing an open innovation network also requires that partners manage the balance between internal management of the company and external management of the network.
Serious frictions among partners concerning their ambition to growth together in the long term open opportunities for competing companies to take market share. 8. Cost control is another important management issue related to open innovation.
and send invoices for their research, prototypes, tests, and services to the central firms. Each partner is preoccupied with his own part of the new concept,
whereas the central firm must keep an eye on the overall picture. Keeping costs under control is essential, and the central firm has to discuss with its innovation partners how to set priorities
and scaling up the production of TEMPRAKON quickly enough to meet the worldwide demand was a major challenge.
and stay focused on the joint value they create. 74 Key Learning Points Open innovation as an integral part of business model innovations In the past,
Rather, they focus on major changes in their business model to seize new business opportunities and to boost profitability.
Additionally, the benefits of open innovation-based business model changes differ from the classic open innovation benefits identified for large firms.
Creating value Small firms are by default open in seizing new business opportunities because they do not have the necessary competencies
Innovation in SMES is hampered by lack of financial resources, scant opportunities to recruit specialized workers, poor understanding of advanced technology, and so on.
therefore, must rely on innovation partners to realize major business model changes. Open innovation is a direct consequence of a small firm's ambition to change its business model.
A business model describes how a firm creates value for a particular customer group and how it captures a portion of that value.
We examined a range of possibilities how small firms jointly create value with their innovation partners.
With which small firms a company innovates is determined largely by the new business model the central firm wants to implement.
and the sequence of collaborating with partners are defined by the business model. Most of the small firms that collaborate intensively do so with value chain partners and less with technology partners.
when they discover new business opportunities, usually based on market or customer insights. Developing technology can be very important in realizing the business model,
but it is always a supporting activity. More radical business model changes combine knowledge from unrelated fields.
Companies pull in expertise from industries and fields that have never been related previously to the current industry to
If direct customers are the target customer, then the innovation network will most likely be small and easy to manage.
and they can change over time. 75 Capturing value Good business models also guarantee profitability. The SMES we interviewed work together with different innovation partners to create
There are many ways open innovation helps in executing business models with higher profitability. We enumerate a few possibilities:
Moving away from commodity-like products and offer highly differentiated products (or experiences) that combine the expertise of several partners,
thus changing the relationship with customers profoundly. The combination of different fields of expertise to develop a new offering can lead to attractive profits
as long as the company can protect (or hide) a specific part of the total solution from its partners and potential imitators.
In this way, increasing profits is the result of building control points for the innovating firm.
Profitability through open innovation can be built in consecutive steps as we have seen in Chapter 3. Curana has changed its business model three times
The PROF example shows that firms can explore new business opportunities taking a significant detour of so-called customer-centric consortia.
they should be able to extract more value from the venture. The most important take-away is that value cannot be extracted from the collaboration to the detriment of the partners.
That implies that some partners may have to be compensated for losses, investments, or risks they take. 3. Innovation networks need to be activated continuously.
when innovation networks are the locus of innovation. 76 5. Open innovation also means openness in communication and in reporting among innovation partners.
or services they offer to innovation partners in the network. 6. Manage the balance between internal management of the company and external management of the network.
Adapting the arrangements to collaborate comfortably for all partners is necessary in most collaborative ventures.
SMES have limited for instance ability to profit from their intellectual property because they lack enforcement power,
Moreover, there are more and more opportunities for collaboration between large and small companies. Underlying drivers for this trend toward open innovation are the shortening of product lifecycles
increasing international competition, and growing technological complexity. More and more large companies rely on both internal and external knowledge sources to create new business37.
Small (high-tech) companies, usually financed by venture capital funds, represent another interesting wellspring of external knowledge for large companies.
large companies have a strong incentive to become a preferred partner of these high-tech ventures.
which allows them to attract the ventures with the best technology. Open innovation also implies that large companies have to monetize their unused technology38.
selling it, spinning off a venture, or even divesting a new venture that is ready to sell its first products.
Several large companies succeeded in increasing the productivity of its knowledge base 78 by searching for different external paths to the market.
Some companies have a corporate venturing department, which among other activities spins off internal ventures.
Unused technologies in large companies represent a fertile opportunity for individual entrepreneurs or small firms to start a new business,
whereas the technology transfers might still require significant investments from engineering. Furthermore, large firms that license technologies risk knowledge leaks with adverse competitive effects as a consequence.
The first, Isobionics, illustrates how an external entrepreneur can establish a successful venture by licensing technology from a large firm.
In this way, the business unit can balance the risk of increased competition in the market with the royalty income it receives from licensing the technology.
After analyzing the idea and zero order business plan, he concluded that synthesizing flavor and flagrances using DSM's biotechnological process was a promising,
The development cost of the microorganisms that could produce a specific flavor was the single largest investment for Isobionics;
Competition among companies producing biotechnological F&f was limited. At that time, Isobionics had two main competitors, but with 3, 000 flavors it was easy to avoid competition.
Still entry barriers are given considerable the proprietary technology and the years required developing the technology.
Second, Toine Janssen had to secure the required investments for his start-up once the business plan was drafted.
the start-up was need in of considerable investments to advance the technological development and commercialization of the first flavors.
Classic venture capital funds (VCF) were somewhat reluctant to finance Isobionics at the time it was established,
because the venture needed considerable investments which were too big a risk for VCFS 80 in an early investment stage42.
The start-up was financed combining investments from VCFS, a regional venture capital investor in which DSM participated, bank loans,
and are eager to work with the venture. Finally, Toine also had to license the technology from DSM.
Isobionics illustrates how a promising venture can be established by licensing unused technology of a large company.
Isobionics profits from the collaboration with DSM in different ways: First, it got access to a game-changing technology
DSM, in turn, did also win from its investment in Isobionics. First, it had the opportunity to follow the evolution of Isobionics.
In this way, it gained valuable lessons about the F&f applications of its technology which it could apply in other industries.
Finally, the indirect participation of DSM also implies that Isobionics can be acquired in case its business is becoming an interesting investment area for DSM.
because excessive investments in complementary assets are required43. Examples of complementary assets include large-scale manufacturing, brands,
corporate venturing investments, co-development agreements, and acquisitions. Licensing agreements imply that the licensor and licensee share revenues,
In 2006, Philips had a prototype, but the engineers were struggling to transform the technology into a feasible consumer product.
and he succeeded in building a prototype based on existing technologies. Subsequently, the company was granted a patent for this invention.
It still took two years to develop a prototype that could be demonstrated to potential customers.
and coordinated a demonstration at the Kitchen appliances business of Philips. The commercial people saw the technology as an opportunity.
Most customers and health authorities perceive that the Airfryer is a highly innovative product that drastically reduces the need for oil
and/or monetize unused technology by licensing the technology or spinning off internal ventures. Consequently, new opportunities exist for small companies,
but the collaboration can only be successful if the relationship is managed in an appropriate way.
This experience gives the top manager a credible reputation among managers in the partnering company demonstrating that he understands how to present a business plan that makes sense for all parties.
The venture manager, therefore, must be experienced in finding the innovation champions in the company and contact the decision makers directly to keep the project on top of the pile.
Let your partner pursue business opportunities in areas that do not fit your business model. In the Airfryer case, this translated into opportunities for both partners,
one focusing on the consumer market the other one on the professional market. 89 6 Conclusion Many small companies today are confronted with harsh market conditions.
The current economic crisis has weakened their financial health, especially in industries that are globalizing rapidly. These changing market conditions force them to look for new ways to differentiate their products
and services or create new businesses. Because they lack the required internal resources SME's often collaborate with external partners to innovate successfully
SMES in the low-and medium-tech industries we examined indicate clearly that firms that know how to manage a network of innovation partners can seize new business opportunities become key players in growth industries and turn themselves into highly profitable companies.
First, SMES create the majority of the jobs in these industries in Western economies. Moreover, globalization and commoditization threaten many jobs
and integrating knowledge from external partners to create new products or services. Fourth, managing and organizing open innovation in SMES is quite specific,
Frequently, a (radically) new vision of entrepreneurs or managers is the starting point for the business model of SMES.
which the company brings to potential customers (not necessarily existing ones). A radically new value proposition may offer customers new meaning to the product or service offering.
The network of partners: Common in all cases is that the SMES establish a network of external partners.
or services the SME wants to launch. 90 Networks of partners have to be managed as well,
Partners may have to bear considerable risks or investments in dedicated complementary assets. In open business models,
therefore, one has to analyze the joint value creation together with the value distribution among the different partners.
Business model innovations are high-risk ventures because a firm must search for new technologies and develop new products.
the customers'reaction is not easy to predict. In addition, the SME depends significantly on its partners'commitment.
because partners will ask for a return on their technology investments. Worldwide licensing deals can be challenging for SMES
This, in turn, may endanger the open innovation venture. Licensing deals can also be negotiated in a way that allows both partners to profit maximally from the technology.
SMES change their business model in a stepwise way. In most cases, companies begin with a (radically) new product or service,
Therefore, some SMES unfold their business model innovation in several consecutive steps, building new competencies and a stronger financial position at the same time.
Finally, a business model change creates opportunities to change a second and a third time. Curana switched from an OEM to an ODM business model.
Once the company was recognized as an ODM, it changed its business model again by proactively designing bicycle parts.
Because of this change, the company was recognized in the industry as a trendsetter. This in turn, triggered Curana to build a brand-based strategy.
If the company stayed tuned to the ODM business model, it would already be confronted with several competitors imitating the ODM move.
The benefits and cost of relational capital. Relational capital plays a central role in developing an open innovation based business model.
The competitive strength of the SMES is no longer (only) related to its internal competencies, but also) to its network of relationships.
In the long run, companies that face stiff competition have to reinvent their businesses, looking for new ways to reposition their products and services.
Some of the SMES we described opened new market space, which made their competition irrelevant (at least for several years).
They started with a strong vision or conviction that was cultivated by their excellent knowledge of the industry.
Remember, we are not talking about a business plan for the next five or 10 years. What you need is a strong idea for a new product or business.
and made investments. Imagining a new product is one thing, whereas starting the venturing process is another.
He perceives the new business opportunities, and his personal commitment and conviction help determine the success and development of the innovation network.
We did not examine the entrepreneurship literature to analyze open innovation in SMES. Clearly, potential exists to connect the two literature streams to strengthen the analysis further.
which emphasizes the role of experimenting in new venture management. Finally, the cases point to the need to integrate different management disciplines to understand open innovation in SMES.
entrepreneurship, and strategy is urgent to understand the richness of these open innovation cases. The three disciplines have been developing largely independently.
market sources (suppliers of equipment (i), customers (ii), competitors and other firms with similar activities (iii), commercial labs, private R&d organizations, and consultants (iv;
the acquisition of readymade products/services developed by third parties (i; the acquisition of processes set up by external parties (ii;
Variable Small and medium-sized enterprises (N-SME=792) Large firms (N-large=175) Mean Standard deviation Mean Standard deviation Difference Search intensity
MA and Chesbrough, H. W. 2006), Open business models: How to thrive in the new innovation landscape, Harvard Business school Press, Harvard:
MA and Chesbrough, H. W. 2006), Open business models: How to thrive in the new innovation landscape, Harvard Business school Press, Harvard:
MA. 7 Chesbrough, H. W. 2007), Why companies should have open business models, MIT Sloan Management Review, 48 (2),
22-28.8 There are different approaches to business models. Different authors have analyzed the business models along different frameworks.
Prominent approaches are: Afuah, A (2004), Business models: A strategic management approach, Mcgraw-hill; Morris, M. and Schindehutte, M. 2005), The entrepreneur's business model:
Toward a unified perspective, Journal of Business Research, 4, 123-128; Osterwalder, A. 2004), The business model ontology a proposition in a design science approach, Ph d. Thesis University Lausanne, Ecole des Hautes Etudes Commerciales HEC. 173 p;
Osterwalder, A.,Pigneur, Y. and Tucci, C. L. 2005), Clarifying business models: Origins, present, and future of the concept, Communications of the Association for Information systems, Vol. 16,1-25-25;
Shafer, M. S.,Smith, H. J. and Linder, J. C. 2005), The power of business models, Business Horizons, 48 (3), 199-207.
Chesbrough, H. W. and Rosenbloom, R. S. 2002), The role of the business model in capturing value from innovation:
evidence from Xerox Corporation's technology spin-off companies, Industrial and Corporate Change, 11 (3), 529-555;
Johnson, M. W.,Christensen, C. M, . and Kagermann, H. 2008), Reinventing your business model. Harvard Business Review, December, 51-59.;
and Johnson, M. W. 2010; Seizing the white space: Business model innovation for growth and renewal, Harvard Business Press, Boston:
MA. 9 Faems, D.,de Visser, M.,Andries, P. and Van Looy, B. 2010; Technology Alliance Portfolios and Financial Performance:
Value-Enhancing and Cost-Increasing Effects of Open Innovation, Journal of Product Innovation Management, 27: 785-796.10 See for instance Yin, R. K. 1994), Case study research:
Opportunities and challenges, Academy of Management Journal, 50 (1), 25-32. Qualitative, in depth cases are also valuable for theory building
Chapter 2 11 A business model can be defined in different ways. A. Osterwalder and Y. Pigneur (2009), Business model Generation is one of the most influential books on business model innovation besides M. W.
Johnson (2011) Seizing the white space: Business model innovation for growth 96 and renewal, Harvard Business Press, Harvard:
MA. The core ideas of this book are summarised in the following HBR article: Other definitions of open innovation have been provided by Johnson.
M. W.,Christensen, C. M. and Kagermann, H. 2008), Reinventing your business model. Harvard Business Review, December, 51-59.
Other definitions have been provided by A. Afuah (2003), Business models: A strategic management approach, Mcgraw-hill Irwin. Boston:
and Rosenbloom and H. W. Chesbrough (2002), The role of the business model in capturing value from innovation:
and make te competition irrelevant, Harvard Business Review Press, Harvard: MA. 13 Johnson. M. W. 2011), Seizing the white space:
Business model innovation for growth and renewal, Harvard Business Press, Harvard: MA. 14 The role of the business model creating economic value from technological inventions is one of the central themes in Chesbrough, H. W. 2003), Open innovation;
The new imperative for creating and profiting from technology, Harvard Business school Press, Harvard: Boston; and Chesbrough, H. W. and Rosenbloom, R. S. 2002), The role of the business model in capturing value from innovation:
Evidence from Xerox Corporation's technology spin-off companies, Industrial and Corporate Change, 11 (3), 529-555.15 In reality, the customer value proposition is a bit more complex.
Isobionics'customers, notably food manufacturers, can use Biovalencene--the first commercialized flavour by Isobionics to create natural citrus flavours and fragrances for their products without worrying about quality issues that plague natural extracts.
M. W.,Christensen, C. M. and Kagermann, H. 2008), Reinventing your business model. Harvard Business Review, December, 51-59.18 See, for instance, Govindarajan, V. and Trimble
and seizing new business opportunities. See R. Mcgrath and I. C Macmillan (2009), Discovery driven growth:
and seize opportunity, Harvard Business Press, Boston: MA.;R. Mcgrath (2010), Business models: A discovery driven approach, Long Range Planning, 43,247-261.20 Pine, B. G. and Gilmore, J. H. 2011), The experience economy, Harvard Business Review
Press, Boston: MA.;Pine, B. G. and Gilmore, J. H. 1998), Welcome to the experience economy, Harvard Business Review, July-August, 97-105;
GILMORE, J. H and B. J. Pine (2007), What consumers really want: Authenticity, Harvard Business school Press, Boston:
MA. 97 21 These conditions have been analysed in detail by Gans, J. S and Stern, S. 2003), The product market and the market for ideas:
Marketing and selling technology products to mainstream customers, Harpercollings Publishers, New york. Chapter 3 23 See previous chapter for a more detailed description how Curana developed the B Lite.
and seize opportunity, Harvard Business Press, Boston: MA, p. 13.25 Barometers used for meteorological purposes are calibrated always
The role of the business model in capturing value from innovation: evidence from Xerox Corporation's technology spin-off companies, Industrial and Corporate Change, 11 (3), 529-555;
. and Allen, J. 2005), The entrepreneur's business model: toward a unified perspective, Journal of Business Research, 58,726-735;
Shafer, S m.,Smith, H. J.,Linder, J. C. 2005), The power of business models, Business Horizons, 48,199-207;
Osterwalder, A.,Pigneur, Y.,Tucci, C. L. 2005), Clarifying business models: origins, present and future of the concept, Communications of the Association for Information systems.
Chapter 4 98 29 Chesbrough, H. 2007), Why companies should have open business models, MIT Sloan Management Review, Winter 2007,48, 2, 22-28;
Gassmann, O.,Enkel, E. 2004), Towards a theory of open innovation; three core process archetypes, R&d Management Conference RADMA, Lisbon, Portugal. 30 Larsen P. and Lewis, A. 2007), How award-winning SMES manage the barriers to innovation, Creativity
and computer engineers called Bellkor's Pragmatic Chaos. The group developed software that is at least 10%more accurate than Netflix's current software (Cinematch) at predicting which movies customers will like based on their past preferences.
and Allee, V. 2008), Value network analysis and value conversion of tangible and intangible assets, Journal of Intellectual Capital, 9, 1, 5-24.34 Gilmore, J. H and B
Technology Ventures, Defense mechanisms and Corporate Relationships, Administrative Science Quarterly, 53: 295 332.36 See National Research Council (2004:
The Predatory Use of Preliminary Injunctions, The Journal of Law and Economics. Vol. XLIV, no. 2, 2001,573-603) for an analysis of how smaller firms are disadvantaged disproportionately by high IP litigation costs. 37 See Chesbrough, H. 2003) Open Innovation:
which an optimal environment can be created for microorganisms to grow and reproduce. Cultivating these mirco-organisms yields a desirable substance.
and pharma ventures. 43 Two inspiring articles to understand how complementary assets play a role in the value appropriation of innovations are Teece, D. J. 1986).
and seize opportunity, Harvard Business Press, Boston:
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