Publications

2015
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, 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 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 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.
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.

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.
Karim R. Lakhani, Wesley M. Cohen, Kynon Ingram, and Tushar Kothalkar. 2014. Netflix: Designing the Netflix Prize (B). Harvard Business School Case Supplement. Harvard Business School. Publisher's VersionAbstract

This supplemental case follows up on the Netflix Prize Contest described in Netflix: Designing the Netflix Prize (A). In the A case, Netflix CEO Reed Hastings must decide how to organize a crowdsourcing contest to improve the algorithms for Netflix's movie recommendation software. The B case follows the contest from the building of the platform in 2006 to the awarding of the highest prize in 2009. The B cause also considers the aftermath of the contest, and the issues of successfully implementing a winning idea from a contest.

Karim R. Lakhani, Johann Fuller, Volker Bilgram, and Greta Friar. 2014. Nivea (A). Harvard Business School Case. Harvard Business School. Publisher's VersionAbstract

The 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?

Karim R. Lakhani, Johann Fuller, Volker Bilgram, and Greta Friar. 2014. Nivea (B). Harvard Business School Case Supplement. Harvard Business School. Publisher's VersionAbstract

This 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 A case, and how the commercial success of the product informed thinking by leaders in R&D for the future.

Karim R. Lakhani, Katja Hutter, and Greta Friar. 2014. Prodigy Network: Democratizing Real Estate Design and Financing. Harvard Business School Case. Harvard Business School. Publisher's VersionAbstract

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.

Karim R. Lakhani, Marco Iansiti, and Kerry Herman. 2014. Samsung Electronics: TV in an Era of Convergence. Harvard Business School Case. Harvard Business School. Publisher's VersionAbstract

From the late 1990s to 2006/2007, Samsung Electronics moved from one of 170 TV manufacturers to gain dominant TV market share year over year from 2007-2013. As digital technologies increasingly converged in 2013-2014, the industry faced new questions: What was the future of TV? The case considers Samsung Electronics TV Group's product development processes, as the company's mobile and TV offerings increasingly converged and consumer demands and behavior pushed the historically clear boundaries of product, content, engagement and interaction.

Karim Lakhani and Greta Friar. 2014. Victors & Spoils: 'Born Open'. Harvard Business School Teaching Plan. Harvard Business School. Publisher's VersionAbstract

This teaching plan provides an 80 minute class plan for the case Victors & Spoils: "Born Open".

Victors & Spoils (V&S), located in Boulder, Colorado, was the first advertising agency built on open innovation and crowdsourcing principles from the ground-up. V&S was co-founded in 2009 by John Winsor, Claudia Batten and Evan Fry, all former members of the advertising agency Crispin Porter + Bogusky (CP+B). V&S crowdsourced creative ideas for its ad campaigns through Agency Machine, its proprietary online platform. CEO John Winsor wanted to change the way that advertising was done, a difficult task in an industry entrenched in traditional models. The case follows Winsor as he prepares to scale his business and must determine the best way to do so. He has an offer from Havas, a leading global advertising company interested in acquiring V&S, which would give V&S access to unprecedented resources. However, Winsor and the V&S team have concerns about how their innovative processes may be affected by partnering with a large, traditional company.

Karim R. Lakhani and Michael L. Tushman. 2014. Victors & Spoils: 'Born Open'. Harvard Business School Multimedia/Video Case. Harvard Business School. Publisher's VersionAbstract

Victors & Spoils (V&S), located in Boulder, Colorado, was the first advertising agency built on open innovation and crowdsourcing principles from the ground-up. V&S was co-founded in 2009 by John Winsor, Claudia Batten and Evan Fry, all former members of the advertising agency Crispin Porter + Bogusky (CP+B). V&S crowdsourced creative ideas for its ad campaigns through Agency Machine, its proprietary online platform. CEO John Winsor wanted to change the way that advertising was done, a difficult task in an industry entrenched in traditional models. The case follows Winsor as he prepares to scale his business and must determine the best way to do so. He has an offer from Havas, a leading global advertising company interested in acquiring V&S, which would give V&S access to unprecedented resources. However, Winsor and the V&S team have concerns about how their innovative processes may be affected by partnering with a large, traditional company.

2013
Andrea Blasco, Kevin Boudreau, Karim R. Lakhani, Michael Menietti, and Christoph Riedl. 2013. “Do Crowds Have the Wisdom to Self-Organize?”.Abstract

The “self-organizing” of online crowds — or workers, more generally — into teams is a non-trivial problem of coordination and matching, in a context in which other parties are simultaneously competing for partners. Here, we experimentally investigate the capacity for workers in online crowds to self-organize into teams, within a scientific crowdsourcing contest. We compare matching outcomes and performance to those in a comparison group in which we eliminate the coordination and matching problem altogether (by directly assigning individuals to Pareto efficient teams). Online crowd members do remarkably well relative to the benchmark achieving 13% more functioning teams. Teams also tended to be more effective, by several measures. (We found no evidence these levels depending on the size of the self-organizing pool of workers.) Conditional on having formed, the self-organizing teams also benefit from several advantages in performance.

Eva C. Guinan, Karim R. Lakhani, and Kevin J. Boudreau. 2013. “Experiments in Open Innovation at Harvard Medical School.” MIT Sloan Management Review 54 (3). Publisher's VersionAbstract

This article examines an experiment in open innovation applied to scientific research on Type 1 diabetes at Harvard Medical School. In the traditional research process in academic medicine, a single research team typically carries through each stage of the process — from generating the idea to carrying out the research and publishing the results. Harvard Catalyst, a pan-Harvard agency with a mission to speed biomedical research from the lab to patients' bedsides, modified the traditional grant proposal process as an experiment in bringing greater openness into every stage of research. Participation was successfully extended to nontraditional actors. With support from Dr. William Chin, the executive dean for research at Harvard Medical School and a former vice president of research at Eli Lilly (an early adopter of open innovation), Harvard Catalyst started with the front end of the innovation system by opening up the process of generating research questions. Instead of focusing on identifying individuals who might tackle a tough research problem, Harvard Catalyst wanted to allow an open call for ideas in the form of a prize-based contest to determine the direction of the academic research. This might lead to potentially relevant questions not currently under investigation or largely ignored by the Type 1 diabetes research community. Harvard Catalyst partnered with the InnoCentive online contest platform to initiate the idea generation process. Participants had to formulate well-defined problems and/or hypotheses to advance knowledge about Type 1 diabetes research in new and promising directions. In the end, 150 new hypotheses and research pathways were proposed. Teams were invited to propose projects on the 12 most promising of these; today, seven teams are carrying out the research. The Harvard Catalyst experience suggests that open-innovation principles can be adopted even within a well-established and experienced innovation-driven organization.

Karim R. Lakhani, Hila Lifshitz-Assaf, and Michael L. Tushman. 2013. “Open Innovation and Organizational Boundaries: Task Decomposition, Knowledge Distribution and the Locus of Innovation.” In Handbook of Economic Organization: Integrating Economic and Organizational Theory, edited by Anna Grandori, Pp. 355-382. Edward Elgar Publishing, Inc. Publisher's VersionAbstract

This chapter contrasts traditional, organization- centered models of innovation with more recent work on open innovation. These fundamentally different and inconsistent innovation logics are associated with contrasting organizational boundaries and organizational designs. We suggest that when critical tasks can be modularized and when problem- solving knowledge is widely distributed and available, open innovation complements traditional innovation logics. We induce these ideas from the literature and with extended examples from Apple, the National Aeronautics and Astronomical Agency (NASA) and LEGO. We suggest that task decomposition and problem- solving knowledge distribution are not deterministic but are strategic choices. If dynamic capabilities are associated with innovation streams, and if different innovation types are rooted in contrasting innovation logics, there are important implications for firm boundaries, design and identity.

Open_Innovation_and_Organizational_Boundaries.pdf

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