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Opening Up the Innovation Process (continued)

However, Raasch and von Hippel note that there are downsides to leaning too heavily on process benefits to motivate and reward participants. “Potential project volunteers who are 100 percent rewarded by innovation process benefits may have reduced concern for the quality of the output they create,” they write, “since they themselves do not have any use for that output.” So what can companies do? They advise project sponsors to “tie project participation rewards tightly to the quality of the output created, from the sponsoring organization’s perspective.”

 In general, Raasch and von Hippel conclude that “designing innovation projects with individual volunteers’ innovation process benefits in mind can amplify total investment in R&D and innovation in societies by making it attractive for some consumers to devote some fraction of their leisure time to that purpose. “The net effect is to make innovation cheaper from the societal perspective and also from the perspective of an innovation project sponsor,” they write. “And the net effect of that is that there will be more viable innovation opportunities and more innovation.”

ABOUT THE RESEARCHERS

The Fall 2013 issue of MIT Sloan Management Review features research by several MIT Sloan alumni and faculty in a special report entitled, “Leveraging External Innovation.”

  • Alan MacCormack, SM ’92; Fiona Murray; and Erika Wagner, SM ’02, PhD ’07 are the authors of the article, “Spurring Innovation Through Competitions”. MacCormack, who received an SM from MIT Sloan and a DBA from Harvard Business School, is the MBA Class of 1949 Adjunct Professor of Business Administration at Harvard Business School. Murray is the associate dean for innovation, and the Alvin J. Siteman (1948) Professor of Entrepreneurship at the MIT Sloan School of Management, and faculty director of the Martin Trust Center for MIT Entrepreneurship. Wagner, who earned a master’s degree in aeronautics and astronautics at MIT as well as a PhD in bioastronautics from the Harvard/ MIT Division of Health Sciences and Technology, is the business development manager at Blue Origin in Kent, Washington.
  • Andrew King, PhD ’94 and Karim R. Lakhani, SM ’99, PhD ’06 co-wrote the article, “Using Open Innovation to Identify the Best Ideas”. King, who earned a PhD from MIT Sloan, is a professor of business administration at Dartmouth’s Tuck School of Business. Lakhani is the Lumry Family Associate Professor of Business Administration at Harvard Business School. He earned a PhD from MIT Sloan.
  • Christina Raasch and Eric von Hippel are the authors of “Innovation Process Benefits: The Journey as Reward”. Raasch is a professor of technology management at Technische Universität München, TUM School of Management. In 2010 and 2012, she was a visiting researcher at MIT Sloan. von Hippel is the T. Wilson (1953) Professor in Management at the MIT Sloan School of Management.