Business Model Design Compass (eBook)

JinHyo Joseph Yun, PhD, is a professor of Open Innovation Academy of SOItmC(Society of Open Innovation: Technology, Market, and Complexity, www.openinnovaitontmc.org) , and a tenured principal researcher of DGIST which is one of Korea’s three leading national research and development universities.  His major research topic is new combination, and open relationship between technology and markets, referred to as Schumpeterian Open Innovation. Dr. Yun is also an authority on the new combination between technology and markets, referred to as Open Business Model. He has presented more than 100 papers at diverse international conferences, and has published more than 60 papers at several global top journal. He has published more than 10 books, both monographs and collaborative books. He is the editor in chief of Journal of Open Innovation: Technology, Market, and Complexity(JOItmC, www.jopeninnovation.com) which is the global reprehensive journal in open innovation, open business model, and cyber-physics In addition, he is an associate editor of Asia Pacific Journal of Innovation and Entrepreneurship (APJIE) and Journal of Korea Entrepreneurship. He also serves on the editorial boards of three journals: Journal of Commerce and Information Review, Journal of Technology Innovation, and Journal of Innovation Cluster. He currently is the president of the Society of Open Innovation: Technology, Market, and Complexity(SOItmC) which is world top society in open innovation, open business model, and cyber-physics with World Open Innovation Forum whose founder is Professor Henry Chesbrough..

Preface 6
Acknowledgment 8
Contents 9
Recommendation 15
Part I: Introduction 17
1: Introduction 18
1.1 The Requirements and Method to Vitalize Open Innovation 19
1.1.1 Why Do We Need Open Innovation? 19
1.1.2 How Can We Vitalize Open Innovation at the National Level or Higher? 20
1.2 Locus of Open Innovation 21
1.3 Concrete Existence of Open Innovation 23
1.3.1 Diverse Measures of Open Innovation 23
1.3.2 New Measure of Open Innovation 25
References 27
Part II: Open Innovation in an Economic System and the National Innovation System 30
2: Dynamics of the Open Innovation Economy System 31
2.1 Introduction 32
2.1.1 Capitalism Has Arrived at Its Growth Limits 32
2.1.2 How Do We Conquer the Growth Limits of Capitalism? 33
2.2 Reasons Behind the Growth Limits of Capitalism: Findings from the Literature 33
2.2.1 Discussion in the Nineteenth Century and Early Twentieth Century 34
2.2.2 Discussion in the Late Twentieth Century and Early Twenty-first Century 35
2.2.3 Discussion of the Growth Limits of Capitalism in Korea 36
2.3 Economy Model to Conquer the Growth Limit of Capitalism 38
2.3.1 Open Innovation Economic System with a Good Balance Between Three Subeconomies 38
2.3.2 Three Interactive Relationships in Open Innovation Economy System 40
2.3.3 Theoretical Validation of the Dynamics of Open Innovation Economy System 43
2.4 Simulation of the Dynamics of Open Innovation Economy System 45
2.4.1 Natural Life Cycle 45
2.4.2 Low-Speed and High-Speed Cases 46
2.5 Schumpeterian Dynamics 50
2.5.1 Schumpeterian Dynamics of Open Innovation Economy System 50
2.5.2 New Combinations as the Core in Schumpeterian Dynamics 51
2.5.3 Four Agencies in Schumpeterian Dynamics 52
References 52
3: Economic Effects of Open Innovation 55
3.1 Introduction 55
3.2 Phenomena of Open Innovation 57
3.2.1 Long-Tailed Phenomena 57
3.2.2 App Store Phenomena 58
3.3 Economic Effects of Open Innovation 59
3.3.1 Marginal Product Increasing 59
3.3.2 Economy of Diversity 60
3.3.3 X-Efficiency Enhancement 60
References 61
4: Open Innovation Policy in National Innovation System 63
4.1 Introduction 64
4.2 Open Innovation Policy 64
4.3 National Innovation System Dynamic Model of Open Innovation Policy 66
4.3.1 Model Building 66
4.3.2 Different Levels of Open Innovation Policy 67
4.4 Scope of Open Innovation Policy 69
4.5 Issues of Open Innovation Policies 70
4.5.1 Open Innovation as a Democratizing Innovation 70
4.5.2 Open Innovation Is “Very Unique” 71
4.5.3 Open Innovation Needs Enough R& D Investment
4.6 Conclusion 72
References 73
Part III: Open Innovation Strategy of Firm 75
5: Concept, Structures, and Decision Factors of Open Innovation 76
5.1 Emergence of Open Innovation 77
5.2 The Structure of Open Innovation 79
5.3 Factors of Open Innovation of SMEs 80
5.4 The Difference of Open Innovation According to Product Life Cycle 82
5.4.1 Product Life Cycle 82
5.4.2 Level of Open Innovation According to the Product Life Cycle at Sectorial Innovation System Level 83
5.4.3 Difference of Open Innovation Effect According to the Product Life Cycle at the Firm Level 85
5.4.4 Rethinking the Relationship Between Open Innovation and Product Life Cycle 85
5.5 The Role of Internal Open Innovation Attitude 87
5.5.1 Internal Open Innovation Attitude 87
5.5.2 Deep Relation Between Internal Open Innovation Attitude and External Open Innovation 88
5.5.3 The Function of Internal Open Innovation Attitude to External Open Innovation 89
5.6 The Difference in Open Innovation Depending on Whether a Firm Is Modular or Not 90
5.6.1 The Relation Between Module and Open Innovation 90
5.6.2 The Difference in Open Innovation in Interdependent or Modular Architecture 90
5.7 The Difference in Open Innovation According to Regional Innovation Systems or Clusters 94
References 96
6: Real Contents and Channels of Open Innovation 99
6.1 Introduction 100
6.2 Open Innovations of Fuel Cell SMEs 100
6.2.1 Contents and Channels of Open Innovation by YLJO 100
6.2.2 Contents and Channels of Open Innovation by DSN 101
6.2.3 Contents and Channels of Open Innovation by OT 102
6.3 Open Innovation of SMEs in Medical Instruments and Intelligent Robot Industries 103
6.3.1 Contents and Channels of Open Innovation by OGV 103
6.3.2 Contents and Channels of Open Innovation by DTS 104
6.3.3 Contents and Channels of Open Innovation by YJM 105
6.4 Closed Innovation of SMEs 107
6.4.1 Cases of Closed Open Innovation of Large-Scale Process Industries 107
6.4.2 Risks of Self R& D Under Closed Innovation System
6.4.3 Closed Innovation of Local Subsidiary Company of Original Technology-Based Industry 108
References 110
7: Dynamics of Open Innovation 111
7.1 Introduction 111
7.2 Model Building 115
7.3 Construction of OCE Model 119
7.3.1 Open Innovation in the OCE Model 119
7.3.2 Complex Adaptive Systems in the OCE Model 121
7.3.3 Evolutionary Change in the OCE Model 123
7.4 Applying OCE Model 125
7.4.1 Who Can Use OCE Model? 125
7.4.2 How Can We Use the OCE Model? 126
References 126
Part IV: Relation Between Open Innovation and Business Model 130
8: The Relationship Between Open Innovation, Entrepreneurship, and Business Model 131
8.1 Introduction 131
8.2 The Relation Among Three Factors 133
8.2.1 The Relationship Between Open Innovation and Introduction of a New Business Model 133
8.2.2 The Relationship Between Entrepreneurship and Open Innovation 133
8.2.3 The Relation Between Open Innovation and RIS or National Innovation System 134
8.2.4 The Relation Among Three Factors 135
8.3 Difference of Three Factors According to RISs and National Innovation Systems 136
8.3.1 The Difference Between Seoul RIS and Daegu RIS in Korea 136
8.3.2 The Difference Between Korean National Innovation System and Indonesia National Innovation System 137
References 140
9: Business Model and Open Innovation Conditions for the Sustainable Growth of SMEs 142
9.1 Introduction 143
9.1.1 Why Do Some Firms Grow Sustainably and Others Disappear in the Short Term? 143
9.2 The Relationship Between Business Model and Open Innovation 144
9.2.1 In Advance Discussions, Knowledge Strategies, and Business Models 144
9.2.2 Relationship Framework Between Business Model and Open Innovation 149
9.3 Changing of Open of SMEs 151
9.4 Conclusion 152
References 154
Part V: Developing a Business Model 157
10: The Way from Open Innovation to Business Model 158
10.1 The Relationship Between Open Innovation and Business Models 158
10.2 Business Models as New Combinations Between Technology and the Market 159
10.2.1 Technology Aspects of Business Models 159
10.2.2 Market Types of Business Models 160
10.2.3 Quadrants of the Combination of Technology and the Market 162
10.3 Four Perspectives of Business Models from the Open Innovation Knowledge Funnel 162
10.4 Five Key Factors of Business Models 164
10.5 Good Habits for Developing Capabilities of Creative Business Models 166
10.5.1 Walking and Meditation 166
10.5.2 Taking a Trip 166
10.5.3 Enjoying Movies and Reading Books 167
References 168
11: Customer Open Innovation-Based Business Model Developing Circle 170
11.1 Cases 170
11.1.1 Dyson Vacuum Cleaners 170
11.1.2 Han Kyung Hee Steam Cleaner 171
11.2 Customer Open Innovation-Based Business Model Developing Circle 173
11.2.1 Who Is in Addition? 173
11.2.1.1 Key Points 173
Creative Performance of Interested Consumers 173
The Philosophy of Customer Segmentation 175
11.2.1.2 Customer Segmentation for the Customer Open Innovation Business Model Circle 175
11.2.2 What Should Be Solved? 176
11.2.2.1 Key Factors 176
MVPs with Feedback Loop 176
11.2.2.2 Value Proposition for the Customer Open Innovation Business Model Circle 177
11.2.3 How Should the Technological System Be Constructed? 177
11.2.3.1 Key Factors 177
Key Resources, Key Activities, and Key Partnerships Are Included in a Technological System 177
Make Your Business Model Difficult to Copy 177
Technological System for Connecting, Inspiring, and Transforming 178
11.2.3.2 Technological System for the Customer Open Innovation Business Model Circle 179
11.2.4 Why Should You Establish a Start-Up? 179
11.2.4.1 Key Factors 179
Cash Flow of Start-ups 179
Short-term Revenue and Long-term Distribution Cost 179
11.2.4.2 Cost and Revenue for the Customer Open Innovation Business Model Circle 180
11.2.5 When and Where Does One Meet Customers? 181
11.2.5.1 Key Factors 181
The Get, Keep, Grow Funnel for Customer Business Models 181
Sophisticated Customer Channels and Relationships Are the Highlights of Customer Business Models 182
11.2.5.2 Channels and Customer Relations for the Customer Open Innovation Business Model Circle 183
References 184
12: User Open Innovation-Based Business Model Developing Circle 185
12.1 Cases 185
12.1.1 Nike+ (Nike Plus) 185
12.1.2 Starbucks 187
12.2 User Open Innovation-Based Business Model Developing Circle 189
12.2.1 Who Demands Our Firms for Additional or Different Substance? 190
12.2.1.1 Key Points 190
Customer-driven Supply Chain Open Innovation 190
The Innovation Community 191
12.2.1.2 Customer Segmentation for the User Open Innovation Business Model Circle 192
12.2.2 What Should Be the Countermeasures Against Demands or Expectations? 193
12.2.2.1 Key Factors 193
Identify Other Customers by Identifying Nonconsumers and Overshot Customers 193
Gain Customer Insights 193
12.2.2.2 Value Proposition for the User Open Innovation Business Model Circle 195
12.2.3 How Should Firms Recombine Between Technologies and the Market? 195
12.2.3.1 Key Factors 195
Co-creation Platforms 195
Co-creation Sectors and Firms 196
12.2.3.2 Technological System for the User Open Innovation Business Model Circle 197
12.2.4 Why Should Firms Observe the Reconfiguring Process? 198
12.2.4.1 Key Factors 198
From a Product-driven Business Model to a Service-driven One 198
Open Services Innovation Concept Map 198
12.2.4.2 Cost and Revenue for the User Open Innovation Business Model Circle 200
12.2.5 When and Where Does One Meet New or Additional Customers? 201
12.2.5.1 Key Factors 201
Open Source as a Revitalizer of Open Innovation and Creative Business Models 201
12.2.5.2 Channels and Customer Relations for User Open Innovation Business Model Circle 203
References 204
13: Engineer Open Innovation-Based Business Model Developing Circle 205
13.1 Cases 205
13.1.1 Elon Musk with Tesla Motors and SpaceX 205
13.1.2 Larry Page and Sergey Brin with Google 207
13.2 Engineer Open Innovation-Based Business Model Developing Circle 209
13.2.1 Who Are the Relevant Persons When Chasing the Market Problem? 210
13.2.1.1 Key Points 210
The Relationship Between an Invention or Technology and Business Models 210
13.2.1.2 Customer Segmentation for the Engineer Open Innovation Business Model Circle 211
13.2.2 What Will Take Place If New Technology Is Applied to the Modern Market? 212
13.2.2.1 Key Factors 212
Open Innovation-friendly Industries and Technologies 212
Keep the Business Model Innovation Principles in Mind 213
Build Adjacent Innovation Platforms 213
13.2.2.2 Value Proposition for the Engineer Open Innovation Business Model Circle 214
13.2.3 How Should Firms Combine New Technology and a New Market? 215
13.2.3.1 Key Factors 215
Enablers and Blockers of Radical Innovation 215
Similarities Between Technology Levers and Business Model Levers 215
Balance Between Creativity and Value Capturing 216
13.2.3.2 Technological System for the Engineer Open Innovation Business Model Circle 216
13.2.4 Why Should Firms Observe This Combination? 217
13.2.4.1 Key Factors 217
Dynamics Among Opportunities, Resources, and Teams 217
Capturing the Window of Opportunity 218
13.2.4.2 Costs and Revenues for the Engineer Open Innovation Business Model Circle 218
13.2.5 When and Where Does One Meet New or Additional Customers? 219
13.2.5.1 Key Factors 219
Quadrants Between a Channel and a Product 219
The Changes of Channels in Health Care 220
Changes in the Channels of Education 220
13.2.5.2 Channels and Customer Relations for the Engineer Open Innovation Business Model Circle 221
References 222
14: Social Entrepreneur Open Innovation-Based Business Model Developing Circle 223
14.1 Cases 223
14.1.1 Burro Battery 223
14.1.2 Microfinance in Bangladesh 225
14.2 Social Entrepreneur Open Innovation-Based Business Model Developing Circle 226
14.2.1 Who Is in Need of Social Value? 228
14.2.1.1 Key Points 228
Nonprofit Enterprises Have Business Models as Well 228
Technology Follows Ideas or Social Business Models 228
14.2.1.2 Customer Segmentation for the Social Entrepreneur Open Innovation Business Model Circle 228
14.2.2 What Should Be Provided to Solve a Social Problem? 229
14.2.2.1 Key Factors 229
Social Entrepreneurship That Can Capture Social Value 229
The Entitlement Approach to Social Problems 229
14.2.2.2 Value Propositions for the Social Entrepreneur Open Innovation Business Model Circle 230
14.2.3 How Should the System for Producing and Consuming Social Value Be Constructed? 230
14.2.3.1 Key Factors 230
The World Is Remarkably Unequal 230
The Process of Social Business Model Development 231
14.2.3.2 Technological System for the Social Entrepreneur Open Innovation Business Model Circle 232
14.2.4 Why Choose a Social Enterprise? 232
14.2.4.1 Key Factors 232
Social Return on Investment Beyond the Social Value Proposition 232
The Zero-marginal-cost Society 232
Finding Capitalism’s Generative Ideas 233
14.2.4.2 Cost and Revenue for the Social Entrepreneur Open Innovation Business Model Circle 233
14.2.5 When and Where Does One Meet Social Value Customers or Social Capital Providers? 234
14.2.5.1 Key Factors 234
Let Us Become the Adaptable Giver with a Generous Tit-for-tat Strategy 234
Socioeconomic Development Sharing and Collaboration 234
14.2.5.2 Channels and Customer Relationship for the Social Entrepreneur Open Innovation Business Model Circle 235
References 236
Index 237