Publications

2014
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
Karim R. Lakhani, Katja Hutter, Stephanie Healy Pokrywa, and Johann Fuller. 2013. Open Innovation at Siemens. Harvard Business School Case. Harvard Business School. Publisher's VersionAbstract

The case describes Siemens, a worldwide innovator in the Energy, Healthcare, Industry, and Infrastructure & Cities sectors, and its efforts to develop and commercialize new R&D through open innovation, including internal and external crowdsourcing contests. Emphasis is placed on exploring actual open innovation initiatives within Siemens and their outcomes. These include creating internal social- and knowledge-sharing networks and utilzing third party platforms to host internal and external contests. Industries discussed include energy, green technology, infrastructure and cities, and sustainability. In addition, the importance of fostering a collaborative online environment and protecting intellectual property is explored.

Karim R. Lakhani, Kevin J. Boudreau, Po-Ru Loh, Lars Backstrom, Carliss Y. Baldwin, Eric Lonstein, Mike Lydon, Alan MacCormack, Ramy A. Arnaout, and Eva C. Guinan. 2013. “Prize-based Contests Can Provide Solutions to Computational Biology Problems.” Nature Biotechnology, 31, 2, Pp. 108-111. Publisher's VersionAbstract

In summary, we show that a prize-based contest on a commercial platform can effectively recruit skilled individuals to apply their knowledge to a big-data biomedical problem. Deconstruction and transformation of problems for a heterogeneous solver community coupled with adequate data to produce and validate results can support solution diversity and minimize the risk of sub-optimal solutions that may arise from limited searches. In addition to the benefits of generating new knowledge, this strategy may be particularly useful in situations where the computational or algorithmic problem, or potentially any science problem, represents a barrier to rapid progress but where finding the solution is not itself the major thrust of the investigator’s scientific effort. The America Competes Act passed by the US Congress provides funding agencies with the authority to administer their own prize-based contests and paves the way for establishing how grant recipients might access commercial prize platforms to accelerate their own research.

Prize-based_Contests_Can_Provide_Solutions.pdf
Andrew King and Karim R. Lakhani. 2013. “Using Open Innovation to Identify the Best Ideas.” MIT Sloan Management Review 55 (1). Publisher's VersionAbstract

As innovation becomes more democratic, many of the best ideas for new products and services no longer originate in well-financed corporate and government laboratories. Instead, they come from almost anywhere and anyone.1 How can companies tap into this distributed knowledge and these diverse skills? Increasingly, organizations are considering using an open-innovation process, but many are finding that making open innovation work can be more complicated than it looks. PepsiCo, the food and beverage giant, for example, created controversy in 2011 when an open-sourced entry into its Super Bowl ad contest that was posted online featured Doritos tortilla chips being used in place of sacramental wafers during Holy Communion. Similarly, Kraft Foods Australia ran into challenges when it launched a new Vegemite-based cheese snack in conjunction with a public naming contest. The name Kraft initially chose from the submissions, iSnack 2.0, encountered widespread ridicule, and Kraft abandoned it. (The company instead asked consumers to choose among six other names. The company ultimately picked the most popular choice among those six, Vegemite Cheesybite.) Reports of such problems have fed uncertainty among managers about how and when to open their innovation processes. Managers tell us that they need a means of categorizing different types of open innovation and a list of key success factors and common problems for each type. Over the last decade, we have worked to create such a guide by studying and researching the emergence of open-innovation systems in numerous sectors of the economy, by working closely with many organizations that have launched open-innovation programs and by running our own experiments.2 This research has allowed us to gain a unique perspective on the opportunities and problems of implementing open-innovation programs. (See “About the Research.”) In every organization and industry, executives were faced with the same decisions. Specifically, they had to determine (1) whether to open the idea-generation process; (2) whether to open the idea-selection process; or (3) whether to open both. These choices led to a number of managerial challenges, and the practices the companies implemented were a major factor in whether the innovation efforts succeeded or failed.

Kevin J. Boudreau and Karim R. Lakhani. 2013. “Using the Crowd as an Innovation Partner.” Harvard Business Review 91 (4), Pp. 61-69. Publisher's VersionAbstract

From Apple to Merck to Wikipedia, more and more organizations are turning to crowds for help in solving their most vexing innovation and research questions, but managers remain understandably cautious. It seems risky and even unnatural to push problems out to vast groups of strangers distributed around the world, particularly for companies built on a history of internal innovation. How can intellectual property be protected? How can a crowdsourced solution be integrated into corporate operations? What about the costs? These concerns are all reasonable, the authors write, but excluding crowdsourcing from the corporate innovation tool kit means losing an opportunity. After a decade of study, they have identified when crowds tend to outperform internal organizations (or not). They outline four ways to tap into crowd-powered problem solving — contests, collaborative communities, complementors, and labor markets — and offer a system for picking the best one in a given situation. Contests, for example, are suited to highly challenging technical, analytical, and scientific problems; design problems; and creative or aesthetic projects. They are akin to running a series of independent experiments that generate multiple solutions—and if those solutions cluster at some extreme, a company can gain insight into where a problem’s “technical frontier” lies. (Internal R&D may generate far less information.)

2012
Kevin J. Boudreau and Karim R. Lakhani. 2012. “The Confederacy of Heterogeneous Software Organizations and Heterogeneous Developers: Field Experimental Evidence on Sorting and Worker Effort.” In The Rate and Direction of Inventive Activity Revisited, edited by Scott Stern and Josh Lerner. Chicago, IL: University of Chicago Press. Publisher's VersionAbstract

This chapter reports on an actual field experiment that tests for the influence of “sorting” on innovator effort. The focus is on the potential heterogeneity among innovators and whether they prefer a more cooperative versus competitive research environment. The focus of the field experiment is a real-world multiday software coding exercise in which participants are able to express a preference for being sorted into a cooperative or competitive environment—that is, incentives in the cooperative environment are team based, while those in the competitive environment are individualized and depend on relative performance. Half of the participants are indeed sorted on the basis of their preferences, while the other half are assigned to the two modes on a random basis.

Confederacy_of_Heterogeneous_Software.pdf
Karim R. Lakhani and Meredith L. Liu. 2012. Innovation at Charlotte-Mecklenburg Schools. Harvard Business School Case. Harvard Business School. Publisher's VersionAbstract

Following its 2011 win of the Broad Prize, the most prestigious award available for urban school districts, Charlotte-Mecklenburg Schools must hire a new superintendent. This case examines the context of a large urban public school district and how its Board of Education and superintendent were able to create an environment that successfully fostered innovation, using a variety of tools including policy, structure, tools, and culture. It explores the particular constraints and barriers of public education and how the district leadership navigated them. Covers issues such as the resistance to innovation in the public sector, the importance of leadership in building a culture of innovation, the use of autonomy and accountability to encourage individual creativity, the difficulty of managing multiple stakeholders, and the challenge of sustaining improvements over changes in leadership.

Kevin J. Boudreau. 2012. “Let a Thousand Flowers Bloom? An Early Look at Large Numbers of Software App Developers and Patterns of Innovation.” Organization Science, 23, 5, Pp. 1409-1427. Publisher's VersionAbstract

In this paper, I study the effect of adding large numbers of producers of application software programs (“apps”) to leading handheld computer platforms, from 1999 to 2004. To isolate causal effects, I exploit changes in the software labor market. Consistent with past theory, I find a tight link between the number of producers on platform and the number of software varieties that were generated. The patterns indicate the link is closely related to the diversity and distinct specializations of producers. Also highlighting the role of heterogeneity and nonrandom entry and sorting, later cohorts generated less compelling software than earlier cohorts. Adding producers to a platform also shaped investment incentives in ways that were consistent with a tension between network effects and competitive crowding, alternately increasing or decreasing innovation incentives depending on whether apps were differentiated or close substitutes. The crowding of similar apps dominated in this case; the average effect of adding producers on innovation incentives was negative. Overall, adding large numbers of producers led innovation to become more dependent on population-level diversity, variation, and experimentation —while drawing less on the heroic efforts of any one individual innovator.

Karim R. Lakhani, Anne-Laure Fayard, Natalia Levina, and Stephanie Healy Pokrywa. 2012. OpenIDEO. Harvard Business School Case. Harvard Business School. Publisher's VersionAbstract

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.

2011
Kevin J. Boudreau, Nicola Lacetera, and Karim R. Lakhani. 2011. “Incentives and Problem Uncertainty in Innovation Contests: An Empirical Analysis.” Management Science, 57, 5, Pp. 843-863. Publisher's VersionAbstract

Contests are a historically important and increasingly popular mechanism for encouraging innovation. A central concern in designing innovation contests is how many competitors to admit. Using a unique data set of 9,661 software contests, we provide evidence of two coexisting and opposing forces that operate when the number of competitors increases. Greater rivalry reduces the incentives of all competitors in a contest to exert effort and make investments. At the same time, adding competitors increases the likelihood that at least one competitor will find an extreme-value solution. We show that the effort-reducing effect of greater rivalry dominates for less uncertain problems, whereas the effect on the extreme value prevails for more uncertain problems. Adding competitors thus systematically increases overall contest performance for high-uncertainty problems. We also find that higher uncertainty reduces the negative effect of added competitors on incentives. Thus, uncertainty and the nature of the problem should be explicitly considered in the design of innovation tournaments. We explore the implications of our findings for the theory and practice of innovation contests.

Karim R. Lakhani. 2011. InnoCentive.com (A) (TN). Harvard Business School Teaching Notes. Harvard Business School. Publisher's VersionAbstract

Teaching Note for HBS Case 608-170

InnoCentive.com, a firm connecting R&D labs of large organizations to diverse external solvers through innovation contests, has to decide if it will enable collaboration in its community. Case covers the basics of a distributed innovation system works and the advantages of having external R&D. Links how concepts of open source are applied to a non-software setting. Describes the rationale for participation by solvers in innovation contests and the benefits that accrue to firms. Raises the issue if a community can be shifted to collaboration when competition was the basis of prior interaction.

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