Bazaar of Opportunities for New Business Development

The following sections are included:

• Preface

• About the Authors

• Contents

Think about a place where you can find the missing piece of knowledge to develop the offering for a new business opportunity. Think about a place where you can create and capture value for your unused ideas and intellectual property (IP) through finding an actor who is interested in applying them in their business offering. Think about a place where you can find other actors who share your vision, who are willing to open and share their knowledge with you to jointly explore new business opportunities and works towards making these identified opportunities happen. Would such a “Bazaar of Opportunities” be a fantastic place to supplement your own business development efforts? In the Bazaar of Opportunities for New Business Development¹ you do not have to do everything by yourself. Instead, you can deal with numbers of known and unknown actors and gain from their knowledge, IP, business relationships, visions, and opportunities. You may not yet be there in your business ecosystem, but with this book you are a step closer…

Most of the readers may have heard ad nauseam how in the present business environment fast-changing global competition requires firms and other network actors to look for new models to innovate. Uncertainty, complex products, distributed knowledge as well as social media have been listed as the main factors why firms cannot be innovative and competitive alone. Furthermore, Open Innovation has formed the latest popular fad, although most of the ideas behind the concept are not new.¹ The Open Innovation literature argues that the future belongs to those who do the best job of integrating the best of their internal ideas and knowledge with the best external ideas and knowledge. In the words of Henry Chesbrough: “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. [This paradigm] assumes that companies 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.”²…

Within the Bazaar of Opportunities firms’ possibilities and motivation for business development and innovation is always connected to both external and internal factors. Networked innovation environments are one-of-a-kind from every actor’s viewpoint. Each firm also has its own set of knowledge, part of which might be protected with intellectual property rights (IPR). One of the typical problems — likely to be familiar to all readers — is that the value of potential knowledge or IPR seems to be extremely hard, if not impossible, to estimate with any reasonable accuracy. Notwithstanding the inherent challenges in valuing long-term research or development projects with payoffs directed well into the future, the perceived problems in knowledge management and valuation may also partly reflect the fact that the broader objectives for different knowledge are not adequately defined in a company’s strategy. The key questions in the valuation of innovation initiatives should always be: “What do we hope to gain from this effort?” and “How does that support our present and future business development targets?” Chapter 6 goes through these key questions related to IP strategy and valuation within networked innovation. In this chapter we will reflect on how the knowledge type, the development targets and motivation influence the choice of collaboration models.

In order to study the motivation of network actors and its influences to the choice of collaboration models, this chapter bridges the concept of networked innovation with strategic knowledge management. A strategic approach to knowledge management¹ is needed in order to describe what a firm knows and must know about its present networked business environment and competitive position. In order to be successful in the Bazaar of Opportunities the strategic considerations about the future competitive edge form an important groundwork. However, our intention is to highlight the fact that you must consider both the internal factors as well as external drivers in order to define the game, the players, your own position and possibilities to set the rules of the game within the Bazaar of Opportunities.

IP management in the Bazaar of Opportunities is about protection of knowledge that is important for a firm’s business and about controlled sharing of knowledge with other, often selected, actors in the Bazaar in order to support the business targets of the firm. In Chapters 4 and 5 we focus on the IP management in open and networked innovation from legal perspectives. Chapter 4 “IP in Networks” considers the subject from the standpoint of IP law and Chapter 5 “Contract and IP Management in Networked Innovation” is from the standpoint of private ordering.

In business, a contract is often understood as a written document,¹ which is concluded in order to bind the two or more contracting parties and safeguard them from risks or inconvenient contingencies as well as opportunistic behaviour of the other party. Contracts, however, can be very different from each other depending on the business model in question. For instance, in ordinary sale of goods the rights and duties of contracting parties are contradictory, while in collaboration contracts the parties have joint targets. Oral agreements can be as binding as written ones, and written contracts can contain a lot of important appendices. Contracts can also be chained with other contracts (subcontracting) or be connected in a business network. Some contracts are multilateral having a lot of contracting parties. Contract law, however, has been developed for transaction contracts, the model of contract law being ordinary sale of goods, where interests of the (mostly two) parties are contradictory.² As intellectual property law is designed for protecting clear innovations without multiple interests or multiple stakeholders, contract law is also designed for clear transactions from one party to another. When the scope of a contract gets more complicated and the time period longer, the protection of contract law decreases. In the Bazaar of Opportunities it is crucial for collaboration partners to understand clearly what they actually have agreed both in written documents and in oral agreements. In Chapter 5 we take a closer look at contracts and contracting in networked innovation, especially from the standpoint of IP management.

Why is there the need to attach the word “strategy” to issues concerning IP management when dealing in the Bazaar of Opportunities? As discussed in the previous chapters of the book, the creation and management of knowledge inside and outside of a company as well as knowledge between companies involves many decisions, the impact of which can be permanent or long term at least. At first, creation of new knowledge is a time-consuming and costly process, while it is only too easy to lose that same knowledge in a short time due to, for example, ill-conducted collaboration, vaguely worded contracts, or with loss of key company employees. Yet, in the typical stylistic depiction of open innovation in the literature, the innovation funnel, illustrated in Fig. 2.1, knowledge transfer can perhaps too easily be understood as simple symmetric one-off transactions in and out of the company. Secondly, as we have already said: “…open innovation is all about sharing…” It means that IP management in the context of open and networked innovation is not only about protection of knowledge, but it is also about controlled sharing of knowledge. We also recall that in the Bazaar of Opportunities the term “intellectual property” may not only include IP rights that are granted and protected by the laws, but also the knowledge and other intangible resources whose use may be controlled by contracts, policies, organization and process routines and norms, both physically and technically.

There are numerous ways in which competitive or corporate strategy can and has been viewed in the literature.¹ In addition, the word strategy itself can—or so often it seems—be linked to almost any kind of activity that is performed inside or between companies. Likewise, in the area of intellectual property management, strategy can refer to various topics. We view long-term and systematic processes as the key features distinguishing a strategic approach from an ad hoc basis. In this chapter, therefore, we broaden the examination of collaboration and networked innovation perspectives to IP management to the strategic level of view. The chapter, however, does not aim to be an all-encompassing treatise on strategy-level issues concerning intellectual property management. Rather, we seek to connect the ideas of networked innovation presented in the previous chapters to the discussion of higher-level objectives of IP management. We examine the impacts of increased interdependence and collaboration within the context of knowledge creation and transfer between companies, and highlight the resulting implications to IP strategy.

In the earlier chapters of this book we discussed open and networked innovation, IP management and strategies in the context of networked innovation, and the role of contracting in the various forms of networked innovation. Firms that have been successful in the Bazaar of Opportunities have managed to link these capabilities together and with their business. A reader may already have noticed how deeply the perspectives of networked innovation, IP management, contracting, strategies, and business are connected together. In this chapter we continue the discussion about the combined view of network, IP, contracting, and business perspectives and consider three separate topics where the perspectives have or should be strongly connected together, if the firm is going to be successful. At first, we consider the business of system integration. After that we discuss IP valuation in the Bazaar of Opportunities. Finally, we analyse the levels of openness in the Bazaar in more detail than in Chapter 2. All these three topics bridge networked innovation, IP, and business.

In Chapter 3 we presented three questions (see Fig. 3.1) which can be used by a firm to consider if dealing in the Bazaar of Opportunities for New Business Development would be beneficial for them:

(1) Why? That is, analysis concerning knowledge required to reach the target, which could be, for example, an identified opportunity for really a new business or a renewal of existing business.

(2) How is it possible to obtain the knowledge, and what criteria should we use to assess how we obtain it? That is, could the knowledge be generated internally through a firm’s own R&D, or should we consider the using of external partners, and, if using external partners, with whom should we collaborate and could their interests and targets be aligned with us?

(3) What would be the collaboration model to be used in innovation? That is, negotiations with potential actors about the details of collaboration model, including among other things, choice between different collaboration and business models, levels of openness, issues related to IP management, sharing of costs, risks and benefits…

The following sections are included:

• Appendix I List of Publications from the IPOB (Intellectual Property in Open Business Models) Project
  • Journal Articles
  • Conference Papers
  • Theses

• Appendix II List of the Organizations in the Interview Study

• Appendix III IPOB Industry Project

• Index