1.From technology market placesto problem placesFrank T. PillerChair, RWTH Technology & Innovation Management Group, AachenCo-Director, M.I.T. Smart Customization Group, Cambridge, MA tim.rwth-aachen.de | open-innovation.com3The problemof "local search"

2. 4Every innovation process requires two kinds of information,influencing the efficiency and effectiveness of the process. Solution Need InformationInformation marketIdeation launch Doing thingsDoing the right right things Realization concept("R&D",developmentproduct develop.)5Overcoming the two problems of (just) "local search" for solution informationand "stickiness" of need information are crucial for innovation success. Solution Need InformationInformation stickyinformation marketIdeation launch Doing thingsDoing the right right things Realization concept("R&D",developmentproduct develop.)local searchbias 3. 6Local search reduces problem solving effectiveness(Lakhani 2007)Local Search ProblemEvidenceProblem-solvers have different localExperiment (psychology lab): individualknowledge stocks (Hayek 1945; von problem solvers have difficulty adaptingHippel 1994)to new problems (Luchins 1942;Duncker 1945)Problem solvers use their own local Team-based problem solving negativelyknowledge stocks and solution effected by prior experience and newalgorithms even when not appropriate: problems being different from old (Allen& Marquis 1964)Bounded rationality (Simon 1957)Firm & Industry level findings ofnegative effects: - Routines in problem solving Photolithography (Henderson & Clark 1990) (Nelson & Winter 1982) Semiconductor Manufacturing (Stuart & - Competency TrapsPodolny 1995) (Levitt & March 1988) Medical Imaging (Martin & Mitchell 1998) Biotechnology and Semiconductors (Sorensen & Stuart 2000) 7Open Innovation: A set of new methods to manage these twocore problems==> 20 4. 8A good illustrationof open innovation: The Netflix Case11 5. 12 Objective: get root meansquare error (RMSE)