Open Innovation in Living Labs: Insights from Digital Living Lab Days

In this article, the phenomenon of open innovation will be examined, starting from its theoretical background and academic studies, moving towards its practical implementation in a Living Lab environment. This paper aims to raise awareness of the importance of open innovation in Living Labs, which could be beneficial both for current and future multistakeholder innovation projects of Laurea University of Applied Sciences.

This article is inspired by insights from Digital Living Lab Days, which is an annual event organized by the European Network of Living Labs (ENoLL). This year, the Digital Living Lab Days event was held online, during 6th-10th September 2021 and introduced by organizers as follows:

“The event offers a space or a platform for public officials, companies, entrepreneurs, academics, living lab representatives, and innovators to connect and work together: to create new products and services, to set the basis for debate and exploration of theories, and to discuss and process policy recommendations within the practical elements of open and user-driven innovation.” (Open Living Lab Days)

Open Innovation: an academic perspective

The open innovation concept has been introduced in the academic literature approx. 18 years ago. Open innovation is understood as the innovation that is “generated by accessing, harnessing, and absorbing flows of knowledge across the firm’s boundaries” (Chesbrough 2017, p. 35). In the beginning, open innovation was examined by focusing on innovative activities between a small number of companies, oftentimes only two. One of the great examples is Procter & Gamble and their use of edible ink produced by an Italian bakery to print text on Pringles chips (see Chesbrough 2017). Today, open innovation is a broader concept, including service innovation, business model innovation, and multistakeholder collaborations, with the goal to improve business performance. Finally, when thinking ahead, “the future of open innovation is more extensive, more collaborative, and more engaged with a wider variety of participants” (Chesbrough 2017, p. 35).

Next, a couple of recent academic studies that focus on business-to-business (B2B) open innovation in the context of emerging markets will be presented. B2B open innovation is being described as mutual collaborative efforts between business partners, throughout which they can get access to various external resources, which then lowers the costs and risks involved, and improves business performance of all involved actors (Chesbrough 2003; Gurca, Bagherzadeh, Markovic & Koporcic 2021).

One of the studies presents a case of a pioneering electric vehicle (EV) manufacturer from India, who focused on producing affordable EVs, by combining components that were available in the firm, off-the-shelf, with elements that could be easily provided by collaborators, without extreme costs. This flexible product design, in combination with hierarchical product architecture (which relies on key subsystems corresponding to competencies, knowledge, and capabilities of each business partner), allowed co-development of the product as a collective open innovation process, including multiple stakeholders (Gurca et al., 2021). The findings of this study indicate the importance of the internal preparedness of the firm for managing open innovation processes in a B2B emerging market environment (Gurca et al., 2021).

Another academic study focuses on B2B open innovation of small and medium-sized enterprises (SMEs) from Bosnia and Herzegovina, as an emerging market country, in the context of the Covid-19 crisis (Markovic, Koporcic, Arslanagic-Kalajdzic, Kadic-Maglajlic, Bagherzadeh & Islam 2021). This study indicates that SMEs from emerging markets are, especially in turbulent times, the most sensitive and vulnerable types of companies. In order to survive such a crisis, the study advises SMEs to engage in B2B open innovations, where they can collaborate with various business partners, and even competitors, to co-create valuable innovations (Markovic et al., 2021). This is especially relevant for the Covid-19 crisis, as it causes innovations to be relatively difficult for SMEs to achieve, especially in-house, due to limited resources and a need for decisive actions during turbulent and fast-changing times. As a result, in times of crisis, companies should increasingly engage in B2B open innovations, to avoid negative consequences of resource scarcity and time constraints (Chesbrough 2020; Markovic et al., 2021).

One of the examples of successful B2B open innovation initiatives is found in a collaboration between GE Healthcare and Ford in producing a large number of ventilators to treat Covid-19 patients, by using a ventilator design from a small company called Airon Corp (Tech Crunch article).This also indicates the importance of developing innovations in a timely manner to achieve the best results (Chesbrough 2020; Markovic et al., 2021).

Open innovation in Living Labs

Besides academic studies on the topic, in the Digital Living Lab Days event, it was mentioned by one of the representatives of the Organisation for Economic Co-operation and Development (OECD) that Living Labs can be described as open innovation ecosystems, which consist of a diversity of different actors. Together, they are developing innovations and experimenting with their implementations in real-world settings. However, what is important to highlight is that Living Labs should recognize the crucial role of end-users in the process of innovation. In other words, Living Labs should pay specific attention to how they can engage users, or civil society, in creating shared objectives of specific targeted societal needs or challenges (Kreiling & Paunov, 2021).

Another interesting presentation from the conference was done by Fernando Vilanrino (Chairperson of ENoLL), where he presented a multiple helix approach on Open Innovation Ecosystems. This presents a theoretical perspective on Living Labs as a citizen-centric, multi-stakeholder approach, built from a systematic user co-creation perspective while integrating research and innovation processes from different communities. This multiple helix approach consists of four parts, being Government, Industry, People, and Academia. In addition, it has the following basic features: co-creation, multi-method approach, active user involvement, orchestration, multi-stakeholder participation, and real-life settings. During Fernando’s presentation, it has been argued that the following logic should be used: “Test before invest”. The basis of the “test before invest” approach is that Living Labs are providing real-life settings for active user involvement, which ultimately results in a co-creation of open innovation ecosystems. In order to create a successful alignment of its different components, in a systematic approach to innovation, it is crucial to understand that:

Through Industry, new products and services are being produced and delivered;
Through Academia, knowledge is being generated;
Through Government, public procurement and regulatory adaptations are being secured and updated in accordance with new innovations;
All with the purpose to satisfy the user-centric needs and opportunities of People.

Moreover, it is important to mention a new initiative of the European Commission, as a great example of open innovation in Living Labs, which was presented at the conference by the representative of the European Commission: New European Bauhaus: beautiful, sustainable, together. This initiative aims to create a policy document called Commission Communication. This document will present the set of key principles that summarize the ideas and contributions collected and turn them into ideas for action. At the same time, partners of the New European Bauhaus will be working together on “furthering the reach of the New European Bauhaus and on building an open community to articulate international cooperation with local action”.

As Ursula Von der Leyen (President of the European Commission) states about this project: “I want NextGenerationEU to kickstart a European renovation wave and make our Union a leader in the circular economy. But this is not just an environmental or economic project: it needs to be a new cultural project for Europe.” (European Commission) This open innovation initiative is thus interdisciplinary in nature and creative, based on a multistakeholder perspective on co-creation of knowledge and open innovation between cities, which are seen as Open Living Labs, Universities, research institutions, SMEs, NGOs, and other actors. This initiative “brings the Green Deal to our living places and calls for a collective effort to imagine and build a future that is sustainable, inclusive and beautiful for our minds and for our souls.” (European Commission)

Conclusions

There are many benefits of using Living Labs as open innovation platforms, thus, Universities of Applied Sciences, such as Laurea, are encouraged to seize these opportunities. Knowledge and values are co-created (see more on this topic in Koporcic 2021), and innovation disseminated in these multistakeholder environments. As a result, there can be many unpredictable happy coincidences, which can trigger new innovations and further developments.

However, at the same time, there are some surprises and challenges that occur from time to time, that need to be taken into account. As Living Labs present connections between complex phenomena, there might be challenges in feedback loops between different phases, science and innovation, or technologies. The need for a holistic approach can be very demanding for Living Lab orchestrators, especially when there are certain unresolved needs or problems. Oftentimes, it is hard to find a balance between the opportunities and risks of different projects. This is especially complicated if there are certain political, ethical, or other issues and solutions that need attention. To overcome issues, Living Lab orchestrators (such as e.g., Laurea’s researchers and project managers), need to be aware of where the risks and pitfalls lie. At the same time, they should experiment with co-creation, to find the right solution and to gain an understanding of the complexity of issues at hand. They should also not be afraid to make mistakes and fall forward, as that is the best way to learn and discover what works and what does not.

About the author:

Dr. Nikolina Koporcic earned her Ph.D. in Economics and Business Administration in 2017, at the Åbo Akademi University. Currently, she is a Senior Researcher at Laurea University of Applied Sciences. In addition, she is a Visiting Assistant Professor at the Luleå University of Technology, Adjunct Professor at the University of Turku, and holds an affiliation with Åbo Akademi University.

Nikolina’s research areas include co-creation of value, open innovation, corporate branding, entrepreneurship, business relationships and networks. In particular, she is studying the importance of Interactive Network Branding for small firms in business markets. Nikolina has published 15 peer-reviewed academic articles, 2 books, 7 book chapters, and 16 conference proceedings. orcid.org/0000-0001-5050-3819

Reference list:

Chesbrough, H. (2003). Open innovation: The new imperative for creating and profiting from technology. Harvard Business Press.
Chesbrough, H. (2017). The future of open innovation: The future of open innovation is more extensive, more collaborative, and more engaged with a wider variety of participants. Research-Technology Management, 60(1), 35-38.
Chesbrough, H. (2020). To recover faster from Covid-19, open up: Managerial implications from an open innovation perspective. Industrial Marketing Management, 88, 410-413.
Gurca, A., Bagherzadeh, M., Markovic, S., & Koporcic, N. (2021). Managing the challenges of business-to-business open innovation in complex projects: A multi-stage process model. Industrial Marketing Management, 94, 202-215.
Koporcic, N. (2021). Co-Creation in Living Labs: Insights from Digital Living Lab Days. Laurea Journal. https://journal.laurea.fi/co-creation-in-living-labs-insights-from-digital-living-lab-days/#4a23e458
Kreiling, L. and C. Paunov (2021). Knowledge co-creation in the 21st century: A cross-country experience-based policy report. OECD Science, Technology and Industry Policy Papers, No. 115, OECD Publishing, Paris.
Markovic, S., Koporcic, N., Arslanagic-Kalajdzic, M., Kadic-Maglajlic, S., Bagherzadeh, M., & Islam, N. (2021). Business-to-business open innovation: COVID-19 lessons for small and medium-sized enterprises from emerging markets. Technological Forecasting and Social Change, 170, 120883.