This paper offers a framework for optimizing a companies’ innovation network architecture and the composition of individual networks, so to maximize value creation for its stakeholders. It is the result of a research project conducted by and for Companhia Paulista de Força e Luz in Brazil in 2009.
1. Introduction
With open innovation concept becoming more common, Brazilian companies, encouraged by governmental laws and tax benefits, are focusing increasingly on the creation and maintenance of external networks for innovation [1]. Much has been written about innovation networks and their management. Most of these studies though focus on managing and measuring the performance of either internal knowledge networks, social networks and formal alliances [2],[3],[4],[5]. Some look at how management of external networks differs from the more traditional way of managing strategic alliances, where others search to measure the effectiveness of specific networks. Little has been written, however, about the organization of innovation networks and partnerships in an integrated and strategic perspective. A need exists to link the different types of networks to organizational strategic goals and define methodologies to optimize network composition and architecture. It requires a portfolio view of networks and its compositions.
The goal of this research is to define the principal attributes that impact the formation and optimization of innovation networks, based on the networks objectives and the combination of the characteristics of the network’s participants. We will show in this article how Brazilian companies in general have not yet implemented ample innovation network management and argue for the implementation of such framework to be applied not only in Brazil, but also in other countries.
2. Innovation Networks
Traditionally, Research and Development at large organizations have been handled internally. Large R&D organizations were seen as important assets to their companies and focused on discovering, developing and commercializing technologies and products internally. This type of R&D is called “closed innovation”[6].
However, the complexity of current Research, Development and Innovation activities, ever increasing cost of these activities, more sophisticated customer demands, shorter product life cycles, have raised the gap between the need for innovation and what companies can deliver internally [7],[8],[9].
This situation has stimulated companies to create innovation models based on collaboration with external sources, such as universities, clients, companies from other sectors, or even competitors, searching to improve their innovative capacity and performance. This new framework is being referred to as “Open Innovation” [7].
External collaboration can be used in different parts of the innovative process, from the generation of ideas through the development of solutions and commercialization of products and technologies, as shown in the following model.
Figure 1 Framework for Open Innovation
Source: adapted from CHESBROUGH, 2003 [10].
The definition of the type of relationship and its focus should be determined by strategic innovation objectives. Five main business objectives are common in the development of partner
networks for technological collaboration, as shown in the table 1 [11].
Table 1 Objectives for external collaboration in Research, Development and Innovation
Source: adapted from Chesbrough e Schwartz (2007) [11].
Combining the objectives for external collaboration and the type of competence the company is searching for, helps determine which type of partner should be searched for, [11],[12],[13], such as shown in table 2.