Publications

2016
Kevin J. Boudreau and Karim R. Lakhani. 2016. “Innovation Experiments: Researching Technical Advance, Knowledge Production, and the Design of Supporting Institutions.” In Innovation Policy and the Economy, 16: Pp. 135-167. Chicago, IL. Publisher's VersionAbstract

This paper discusses several challenges in designing field experiments to better understand how organizational and institutional design shapes innovation outcomes and the production of knowledge. We proceed to describe the field experimental research program carried out by our Crowd Innovation Laboratory at Harvard University to clarify how we have attempted to address these research design challenges. This program has simultaneously solved important practical innovation problems for partner organizations, like NASA and Harvard Medical School (HMS), while contributing research advances, particularly in relation to innovation contests and tournaments. We conclude by proceeding to highlight the opportunity for the scholarly community to develop a “science of innovation” that utilized field experiments as means to generate knowledge.

Innovation_Experiments.pdf
Kevin J. Boudreau, Eva C. Guinan, Karim R. Lakhani, and Christoph Riedl. 2016. “Looking Across and Looking Beyond the Knowledge Frontier: Intellectual Distance, Novelty, and Resource Allocation in Science.” Management Science, 62, 10, Pp. 2765-2783. Publisher's VersionAbstract

Selecting among alternative projects is a core management task in all innovating organizations. In this paper, we focus on the evaluation of frontier scientific research projects. We argue that the “intellectual distance” between the knowledge embodied in research proposals and an evaluator’s own expertise systematically relates to the evaluations given. To estimate relationships, we designed and executed a grant proposal process at a leading research university in which we randomized the assignment of evaluators and proposals to generate 2,130 evaluator–proposal pairs. We find that evaluators systematically give lower scores to research proposals that are closer to their own areas of expertise and to those that are highly novel. The patterns are consistent with biases associated with boundedly rational evaluation of new ideas. The patterns are inconsistent with intellectual distance simply contributing “noise” or being associated with private interests of evaluators. We discuss implications for policy, managerial intervention, and allocation of resources in the ongoing accumulation of scientific knowledge.

Looking_Across_and_Looking_Beyond_the_Knowledge_Frontier.pdf
Andrea Blasco, Olivia S. Jung, Karim R. Lakhani, and Michael Menietti. 2016. Motivating Effort in Contributing to Public Goods Inside Organizations: Field Experimental Evidence. National Bureau of Economic Research. Publisher's VersionAbstract

We investigate the factors driving workers’ decisions to generate public goods inside an organization through a randomized solicitation of workplace improvement proposals in a medical center with 1200 employees. We find that pecuniary incentives, such as winning a prize, generate a threefold increase in participation compared to non-pecuniary incentives alone, such as prestige or recognition. Participation is also increased by a solicitation appealing to improving the workplace. However, emphasizing the patient mission of the organization led to countervailing effects on participation. Overall, these results are consistent with workers having multiple underlying motivations to contribute to public goods inside the organization consisting of a combination of pecuniary and altruistic incentives associated with the mission of the organization.

Motivating_Effort_in_Contributing_to_Public_Good_Inside_Organizations.pdf
Kevin J. Boudreau, Karim R. Lakhani, and Michael Menietti. 2016. “Performance Responses to Competition Across Skill-Levels in Rank Order Tournaments: Field Evidence and Implications for Tournament Design.” The RAND Journal of Economics, 47, 1, Pp. 140-165. Publisher's VersionAbstract

Tournaments are widely used in the economy to organize production and innovation. We study individual data on 2775 contestants in 755 software algorithm development contests with random assignment. The performance response to added contestants varies nonmonotonically across contestants of different abilities, precisely conforming to theoretical predictions. Most participants respond negatively, whereas the highest-skilled contestants respond positively. In counterfactual simulations, we interpret a number of tournament design policies (number of competitors, prize allocation and structure, number of divisions, open entry) and assess their effectiveness in shaping optimal tournament outcomes for a designer.

Performance_Responses_to_Competition.pdf
Dietmar Harhoff and Karim R. Lakhani. 2016. Revolutionizing Innovation: Users, Communities, and Open Innovation. Cambridge, MA: MIT Press. Publisher's VersionAbstract

The last two decades have witnessed an extraordinary growth of new models of managing and organizing the innovation process, which emphasize users over producers. Large parts of the knowledge economy now routinely rely on users, communities, and open innovation approaches to solve important technological and organizational problems. This view of innovation, pioneered by the economist Eric von Hippel, counters the dominant paradigm, which casts the profit-seeking incentives of firms as the main driver of technical change. In a series of influential writings, von Hippel and colleagues found empirical evidence that flatly contradicted the producer-centered model of innovation. Since then, the study of user-driven innovation has continued and expanded, with further empirical exploration of a distributed model of innovation that includes communities and platforms in a variety of contexts and with the development of theory to explain the economic underpinnings of this still emerging paradigm. This volume provides a comprehensive and multidisciplinary view of the field of user and open innovation, reflecting advances in the field over the last several decades.

The contributors—including many colleagues of Eric von Hippel—offer both theoretical and empirical perspectives from such diverse fields as economics, the history of science and technology, law, management, and policy. The empirical contexts for their studies range from household goods to financial services. After discussing the fundamentals of user innovation, the contributors cover communities and innovation; legal aspects of user and community innovation; new roles for user innovators; user interactions with firms; and user innovation in practice, describing experiments, toolkits, and crowdsourcing and crowdfunding.

2015
Karim R. Lakhani and Greta Friar. 2015. Havas: Change Faster. Harvard Business School Teaching Notes. Harvard Business School. Publisher's VersionAbstract

Teaching Note for HBS Case 615-702.

As of 2013, Havas was the 6th largest global advertising, digital, and communications group in the world. Headquartered in Paris, France, the group was highly decentralized, with semi-independent agencies in more than 100 countries offering a variety of services. The largest unit of Havas was Havas Worldwide, an integrated marketing communications agency headquartered in New York, NY. CEO David Jones was determined to make Havas Worldwide the most future-focused agency in the industry by becoming a leader in digital innovation. The case explores the tensions within the company as David Jones attempts to change the company to compete in an industry undergoing digital transformation. The case uses the example of the acquisition of Victors & Spoils, a crowdsourcing advertising agency, to examine internal reactions.

Karim R. Lakhani. 2015. Innovating with the Crowd. Harvard Business School Case. Harvard Business School. Publisher's VersionAbstract

This note outlines the structure and content of a seven-session module that is designed to introduce students to the fundamentals of innovating with the "crowd." The module has been taught in a second year elective course at the Harvard Business School on "Digital Innovation and Transformation" and is aimed at students that already have an understanding of how to structure an innovation process inside of a company. The module expands the students' innovation toolkit by exposing them to the theory and practice of extending the innovation process to external participants.

Karim R. Lakhani and Greta Friar. 2015. Nivea (A) and (B). Harvard Business School Teaching Notes. Harvard Business School. Publisher's VersionAbstract

Teaching Note for HBS Cases 614-042 and 614-043.

The first case describes the efforts of Beiersdorf, a worldwide leader in the cosmetics and skin care industries, to generate and commercialize new R&D through open innovation using external crowds and "netnographic" analysis. Beiersdorf, best known for its consumer brand Nivea, has a rigorous R&D process that has led to many successful product launches, but are there areas of customer need that are undervalued by the traditional process? A novel online customer analysis approach suggests untapped opportunities for innovation, but can the company justify a launch based on this new model of research?
The supplementary case follows up on an innovative R&D approach by Beiersdorf, a skin care and cosmetics company. The case relates what happened to the product launched by Beiersdorf, to its Nivea line, following the events of the first case, and how the commercial success of the product informed thinking by leaders in R&D for the future.

Kevin J. Boudreau and Karim R. Lakhani. 2015. “'Open' Disclosure of Innovations, Incentives and Follow-on Reuse: Theory on Processes of Cumulative Innovation and a Field Experiment in Computational Biology.” Research Policy, 44, 1, Pp. 4-19. Publisher's VersionAbstract

Most of society's innovation systems – academic science, the patent system, open source, etc. – are “open” in the sense that they are designed to facilitate knowledge disclosure among innovators. An essential difference across innovation systems is whether disclosure is of intermediate progress and solutions or of completed innovations. We theorize and present experimental evidence linking intermediate versus final disclosure to an ‘incentives-versus-reuse’ tradeoff and to a transformation of the innovation search process. We find intermediate disclosure has the advantage of efficiently steering development towards improving existing solution approaches, but also has the effect of limiting experimentation and narrowing technological search. We discuss the comparative advantages of intermediate versus final disclosure policies in fostering innovation.

'Open'_Disclosure_of_Innovations.pdf
Karim R. Lakhani, Anne-Laure Fayard, Natalia Levina, and Greta Friar. 2015. OpenIDEO. Harvard Business School Teaching Notes. Harvard Business School. Publisher's VersionAbstract

Teaching Note for HBS Case 612-066.

The case describes OpenIDEO, an online offshoot of IDEO, one of the world's leading product design firms. OpenIDEO leverages IDEO's innovative design process and an online community to create solutions for social issues. Emphasis is placed on comparing the IDEO and OpenIDEO processes using real-world project examples. For IDEO this includes the redesign of Air New Zealand's long haul flights. For OpenIDEO this includes increasing bone marrow donor registrations and improving personal sanitation in Ghana. In addition, the importance of fostering a collaborative online environment is explored.

Karim R. Lakhani and Greta Friar. 2015. Prodigy Network: Democratizing Real Estate Design and Financing. Harvard Business School Teaching Notes. Harvard Business School. Publisher's VersionAbstract

Teaching Note for HBS Case 614-064.

This case follows Rodrigo Nino, founder and CEO of commercial real estate development company Prodigy Network, as he develops an equity-based crowdfunding model for small investors to access commercial real estate in Colombia, then tries out the model in the U.S. U.S. regulations, starting with the Securities Act of 1933, effectively barred sponsors from soliciting small investors for large commercial real estate. However, the JOBS Act of 2013 loosened U.S. restrictions on equity crowdfunding. Nino believes that crowdfunding will democratize real estate development by providing a new asset class for small investors, revolutionizing the industry. The case also follows Nino's development of an online platform to crowdsource design for his crowdfunded buildings, maximizing shared value throughout the development process. Nino faces many challenges as he attempts to crowdfund an extended stay hotel in Manhattan, New York. For example, crowdfunded real estate faces resistance from industry leaders, especially in regards to the concern of fraud, and SEC regulations on crowdfunding remain undetermined at the time of the case.

Kevin J. Boudreau and Lars B. Jeppesen. 2015. “Unpaid Crowd Complementors: The Platform Network Effect Mirage.” Strategic Management Journal, 36, 12, Pp. 1761-1777. Publisher's VersionAbstract

Platforms have evolved beyond just being organized as multi-sided markets with complementors selling to users. Complementors are often unpaid, working outside of a price system and driven by heterogeneous sources of motivation—which should affect how they respond to platform growth. Does reliance on network effects and strategies to attract large numbers of complementors remain advisable in such contexts? We test hypotheses related to these issues using data from 85 online multi-player game platforms with unpaid complementors. We find that complementor development responds to platform growth even without sales incentives, but that attracting complementors has a net zero effect on on-going development and fails to stimulate network effects. We discuss conditions under which a strategy of using unpaid crowd complementors remains advantageous.

Unpaid_Crowd_Complementors.pdf
2014
Marco Iansiti and Karim R. Lakhani. 2014. “Digital Ubiquity: How Connections, Sensors, and Data Are Revolutionizing Business.” Harvard Business Review, 92, 11, Pp. 90-99. Publisher's VersionAbstract
When Google bought Nest, a maker of digital thermostats, for $3.2 billion just a few months ago, it was a clear indication that digital transformation and connection are spreading across even the most traditional industrial segments and creating a staggering array of business opportunities and threats. The digitization of tasks and processes has become essential to competition. General Electric, for example, was at risk of losing many of its top customers to nontraditional competitors—IBM and SAP on the one hand, big data start-ups on the other—offering data-intensive, analytics-based services that could connect to any industrial device. So GE launched a multibillion-dollar initiative focused on what it calls the industrial internet: adding digital sensors to its machines; connecting them to a common, cloud-based software platform; investing in software development capabilities; building advanced analytics capabilities; and embracing crowd-based product development. With all this, GE is evolving its business model. Now, for example, revenue from its jet engines is tied to reduced downtime and miles flown over the course of a year. After just three years, GE is generating more than $1.5 billion in incremental income with digitally enabled, outcomes-based business models. The company expects that number to double in 2014 and again in 2015.
Karim R. Lakhani and Greta Friar. 2014. Bioinspiration at the San Diego Zoo. Harvard Business School Teaching Plan. Harvard Business School. Publisher's VersionAbstract
This teaching plan describes an 80 minute class plan for the case Bioinspiration at the San Diego Zoo.
Traditionally, human ingenuity has been considered the main source of innovation. However, recent research and the development of new products by firms as diverse as P&G, Speedo and Nike has shown that nature can provide inspiration for new innovative products. The San Diego Zoo, which has established a Center for Bioinspiration, defines bioinspiration as a methodology in which biological systems, processes, and elements are studied to draw analogies that can be applied to human design challenges in a sustainable manner.
Karim R. Lakhani, Vish V. Krishnan, and Ruth Page. 2014. Bioinspiration at the San Diego Zoo. Harvard Business School Multimedia/Video Case. Harvard Business School. Publisher's VersionAbstract

Traditionally, human ingenuity has been considered the main source of innovation. However, recent research and the development of new products by firms as diverse as P&G, Speedo and Nike has shown that nature can provide inspiration for new innovative products. The San Diego Zoo, which has established a Center for Bioinspiration, defines bioinspiration as a methodology in which biological systems, processes, and elements are studied to draw analogies that can be applied to human design challenges in a sustainable manner.

Karim R. Lakhani and Michael L. Tushman. 2014. Havas: Change Faster. Harvard Business School Multimedia/Video Case. Harvard Business School. Publisher's VersionAbstract

As of 2013, Havas was the 6th largest global advertising, digital, and communications group in the world. Headquartered in Paris, France, the group was highly decentralized, with semi-independent agencies in more than 100 countries offering a variety of services. The largest unit of Havas was Havas Worldwide, an integrated marketing communications agency headquartered in New York, NY. CEO David Jones was determined to make Havas Worldwide the most future-focused agency in the industry by becoming a leader in digital innovation. The case explores the tensions within the company as David Jones attempts to change the company to compete in an industry undergoing digital transformation. The case uses the example of the acquisition of Victors & Spoils, a crowdsourcing advertising agency, to examine internal reactions.

Karim Lakhani and Michael Tushman. 2014. Havas: Change Faster. Harvard Business School Teaching Plan. Harvard Business School. Publisher's VersionAbstract
This teaching plan describes an 80 minute class plan for the case Havas: Change Faster.
As of 2013, Havas was the 6th largest global advertising, digital, and communications group in the world. Headquartered in Paris, France, the group was highly decentralized, with semi-independent agencies in more than 100 countries offering a variety of services. The largest unit of Havas was Havas Worldwide, an integrated marketing communications agency headquartered in New York, NY. CEO David Jones was determined to make Havas Worldwide the most future-focused agency in the industry by becoming a leader in digital innovation. The case explores the tensions within the company as David Jones attempts to change the company to compete in an industry undergoing digital transformation. The case uses the example of the acquisition of Victors & Spoils, a crowdsourcing advertising agency, to examine internal reactions.
Michael L. Tushman, Hila Lifshitz-Assaf, and Kerry Herman. 2014. Houston, We Have a Problem: NASA and Open Innovation (A). Harvard Business School Case. Harvard Business School. Publisher's VersionAbstract
Jeff Davis, director of Space Life Sciences Directorate at NASA, has been working for several years to raise awareness amongst scientists and researchers in his organizations of the benefits of open innovation as a successful and efficient way to collaborate on difficult research problems regarding health and space travel. Despite a number of initiatives, SLSD members have been skeptical about incorporating the approach into their day-to-day research and work, and have resisted Davis's and his strategy team's efforts. The (A) case outlines these efforts and the organization members' reactions. The (B) case details what Davis and the SLSD strategy team learned, and how they adapted their efforts to successfully incorporate open innovation as one of many tools used in collaborative research at NASA.
Michael L. Tushman, Hila Lifshitz-Assaf, and Kerry Herman. 2014. Houston, We Have a Problem: NASA and Open Innovation (B). Harvard Business School Case. Harvard Business School. Publisher's VersionAbstract
Jeff Davis, director of Space Life Sciences Directorate at NASA, has been working for several years to raise awareness amongst scientists and researchers in his organizations of the benefits of open innovation as a successful and efficient way to collaborate on difficult research problems regarding health and space travel. Despite a number of initiatives, SLSD members have been skeptical about incorporating the approach into their day-to-day research and work, and have resisted Davis's and his strategy team's efforts. The (A) case outlines these efforts and the organization members' reactions. The (B) case details what Davis and the SLSD strategy team learned, and how they adapted their efforts to successfully incorporate open innovation as one of many tools used in collaborative research at NASA.
Karim R. Lakhani, Wesley M. Cohen, Kynon Ingram, Tushar Kothalkar, Maxim Kuzemchenko, Santosh Malik, Cynthia Meyn, Greta Friar, and Stephanie Healy Pokrywa. 2014. Netflix: Designing the Netflix Prize (A). Harvard Business School Case. Harvard Business School. Publisher's VersionAbstract
In 2006, Reed Hastings, CEO of Netflix, was looking for a way to solve Netflix's customer churn problem. Netflix used Cinematch, its proprietary movie recommendation software, to promote individually determined best-fit movies to customers. Hastings determined that a 10% improvement to the Cinematch algorithm would decrease customer churn and increase annual revenue by up to $89 million. However, traditional options for improving the algorithm, such as hiring and training new employees, were time intensive and costly. Hastings decided to improve Netflix's software by crowdsourcing, and began planning the Netflix Prize, an open contest searching for a 10% improvement on Cinematch. The case examines the dilemmas Hastings faced as he planned the contest, such as whether to use an existing crowdsourcing platform or create his own, what company information to expose, how to protect customer privacy while making internal datasets public, how to allocate IP, and how to manage the crowd.

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