TAMPERE UNIVERSITY OF TECHNOLOGY

Tampere School of Business and Technology

MANUEL VELAZQUEZ VEGA

COMMUNITIES FOR INNOVATIONS: Integrating Communities to Create

Value.

Seminar Report

ii

ABSTRACT

Innovations and the means for their enhancement demand participation within

parties outside companies’ boundaries. The following paper presents how

communities can be integrated into the process of an innovation to mainstream

benefits and risks among different parties. The present paper clarifies the meaning

of and related practices between “innovation” and “communities”. There are many

examples in the literature that sustain that these two practices are strongly

interrelated and that the interactions among communities impact the realization of

innovations.

Yet this review just shows a different perspective of a knowledge exchange

dilemma that companies face when looking for value creation means out of their

boundaries. The dilemma between innovation and communities is based on the

practices of explicit knowledge sharing, and the risk of compromising exploitable

tacit knowledge resources within particular contexts. Today both practices are

addressed in a different way due to higher rates of integration of value networks

and open collaboration. This current integration founded in open science principles

attempts to increase organized community efforts to impact positively the

economy. Nevertheless, the development of these practices are at an early stage

awaiting to benefit the gross-industry sectors as many implicated parties are still

learning how to manage open innovation and build up a sustainable network

without compromising core knowledge assets.

In this sense, the reviewed literature presents communities as the backbone of new

innovations, stressing the need of external collaboration, knowledge exchange-

integration pro-retrieval, as well as discretional knowledge management practices.

A community calls for integration, knowledge sharing education, and trust

construction practices. Companies can obtain great benefits by processing and

integrating communities’ contributions into their knowledge infrastructure to get

access to actionable insight. Well managed communities can become the places

where companies can repeatedly ask the hard question about where to invest their

assets or how to improve their current operations in accordance to the needs of

their final customers. Communities can help to keep up a flux of ideas, facilitate

the creation of collaborative teams, provide the basis for further development and

research, and support commercialization and marketing activities.

iii

PREFACE

Innovation through communities encloses many of the issues that companies are

facing today to sustain their competitive aiming given the constantly changing

external environment. Through communities companies can find customers to

listen and ask what they want, but they can also conduct research and obtain

information about all the different phases of a product development process.

The inspiration for researching Communities and Open Innovation came from my

supervisor with who I had several fruitful discussions about the concepts and broad

ideas presented in this paper. Thus my special gratitude goes to Dr. Jouni Lyly-

Yrjänäinen for all those interesting debates we had.

Tampere, 10.10.2010

Manuel Velazquez Vega

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TABLE OF CONTENTS

ABSTRACT ______________________________________________________ ii

PREFACE _______________________________________________________ iii

1 INTRODUCTION ____________________________________________ 1

1.1 Background __________________________________________________ 1

1.2 Objective _____________________________________________________ 1

2 INNOVATION _______________________________________________ 3

2.1 What Is Innovation? ___________________________________________ 3

2.2 Acquiring Innovation __________________________________________ 4

2.3 Enhancing Innovation __________________________________________ 5

3 USER COMMUNITIES _______________________________________ 7

3.1 Why Communities? ____________________________________________ 7

3.2 Types of Communities __________________________________________ 7

3.3 Improving Quality and Attractiveness_____________________________ 9

4 INNOVATION & COMMUNITIES ____________________________ 11

4.1 Open Innovation _____________________________________________ 11

4.2 Communities for Open Innovation _______________________________ 12

4.3 Networking for Open Innovation ________________________________ 13

5 CONCLUSION & RECOMMENDATIONS ______________________ 14

REFERENCES __________________________________________________ 16

Velazquez M.

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1 INTRODUCTION

1.1 BACKGROUND

Traditionally companies lead their Research and Development (R&D) efforts in

great extent internally. Examples of this are the stage gate process, the product

development tunnel (Figure 1), and the chain link model (Schonberger et al. 1994,

p. 59-61). An open mode of collaboration has attracted attention especially in the

Information Technology (IT) sector for the development of software. This practice

has shown how the simple exchange of information within different parties can

enable the buildup of a final product out of the information flow itself (Chesbrough

2003, p.187-195).

MarketG

1

S

4G

5

S

5

Initial

Screen

A first

quick

investigation

Interim

Approval

Build a

business

case

Approve

project

Development

Review of

development

result

Test and

Validation

Product

Release

Production

and full

launch

S

1G

2S

2G

3

S

3G

4

Figure 1. Stage Gate Process and Product Development Tunnel.

In addition to software development, this collaboration approach is also becoming a

common practice within other industries. An open community project is described

by Watson et al. (2005, p. 125-142) with the Oxford English Dictionary. The

project took about 70 years to complete and was compiled primarily from

definitions submitted by thousands of volunteers fluent in English language.

Interestingly, Winchester (1998) reported that an insane American prisoner became

the most prolific contributor to the original compilation of the dictionary. This

example illustrates two things. Firstly, everyone is able to contribute regardless of

their personal circumstances in an open innovation scheme. Secondly, collaborative

efforts can create great value.

1.2 OBJECTIVE

Due to the integration of information and communication technology (ICT)

networks, the ability of combine people’s ideas has nowadays no limits. Still it

seems pretty challenging to lead projects for the commercialization of useful ideas,

enforce collaboration of people in groups within these networks, integrate their

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workflows, and create trust between external and internal units from different

entities.

The objective of this paper is to present how communities could help in

the realization of an innovation.

Chapter 2 presents the findings about innovation; definition, acquisition, and

enhancement. Chapter 3 introduces communities; usability, the different types,

and how they can be improved. Chapter 4 gives a short introduction to open

innovation, presents how communities can be narrowed and integrated for

open innovation, and sketches community networking influenced by open

innovation practices. In chapter 5 conclusions are drawn and the current picture of

open innovation management is given.

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2 INNOVATION

2.1 WHAT IS INNOVATION?

The concepts of invention and innovation are mistakenly often used

interchangeably. Since invention implies coming up with something new while it is

the bringing an invention to life what makes an invention to an innovation

(Gattorna 1977, p. 2; Davila 2006). Rubenstein (1989) defines innovation as the

process whereby new or improved products, processes, materials, and services are

developed and transferred to places where they are appropriate. These two

definitions together imply a process of finding, developing, and realizing a certain

invention in accordance to someone else’s needs for explicit trading purposes.

Thus, innovation is a successfully commercialized invention.

Innovations can take place in two forms. One way is the radical innovation, also

called disruptive innovation, in which an insight is able to substitute existent

products, processes, practices, and even concepts. The other way is the incremental

innovation, or continuous innovation, in which an innovation is gradually enhanced

with small improvements (White et al. 2007). Figure 2 illustrates both cases,

incremental innovation on the left and the disruptive case of innovation on the

right. Both cases lean on a time frame and imply a successful commercialization

phase to be able to advance in their performance.

Disruptive

Innovation

Technology Limit 2

Technology Limit 1

Time

Pe

rfo

rma

nce

Time

Pe

rfo

rma

nce

Launching

1

Launching

2

Maturity 1Incremental

Innovation

Maturity 2

Launching

MaturityPerformance Limit

TIME FRAME

Figure 2. Technology Life Cycle (Foster 1986).

Radical innovations are more commonly related with field-experts, researchers and

entrepreneurs whereas gradual innovations are rather linked with traders, well

established companies, and end-users (Maidique 1980, p. 59-76; Dodgson et al.

2008). However, field-experts can be highly conceptualized to innovate radically

out of their fields of expertise and trouble shooters not necessarily need to be

experts in a specific field to overcome difficulties and find ways to get the things

done. Therefore, an expert’s or end-user’s conditions are not exclusive for

innovation in any case (Root-Bernstein 1989, p. 43-55), but rather complements.

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Consequently, an unspecialized perspective can provide as much value as a

specialized one. Nevertheless a pre understanding with respect to the subject under

discussion is required for a shared mindset setup (Newell 2002; Alvesson 2004).

2.2 ACQUIRING INNOVATION

Drucker (1985) affirms that diverse needs on demand for better results in certain

periods of time may boost or even give rise to innovation and, especially if these

needs are worthy business opportunities, people will try to realize them. The seven

driving sources of innovation defined by Drucker (1985) are:

1. Unexpected: What is, and what is not working in the actual business? Why

is this? How to change/reinforce it?

2. Incongruity: Is what we consider valuable also valuable for our

stakeholders? Can we give them what they want, and remain profitable?

3. Process Needs: What is needed to reach a better performance? Can we

realize it with what we have? If not, how can we obtain what we need?

4. Structural Changes: What is on demand? Integration or specialization?

5. Demographics: What will be the major changes of our target group? What

will these changes demand?

6. Changes in perception, mood, and meaning: What is appreciated today? Can

we respond in time?

7. New Knowledge/The idea: What is new? How to apply it to our current

operations? What are the risks, and the ROI?

According to Hippel (1988), from the company perspective there are basically two

main ways to realize an innovation. The first one is the traditional way that comes

from the internal efforts, more commonly from the R&D departments of a

company. The second way of innovations takes into account external people such

as customers, suppliers or independent entrepreneurs. Throughout this paper, the

internal people of a particular company will be represented with black dots and

external people with white dots as shown in Figure 3.

External

Internal

Figure 3. People for Innovation – Company Perspective.

Not surprisingly, bigger needs require greater collaborative efforts to innovate and,

given the competitive landscape and the constantly increasing market demands,

internal and external people tend to have closer collaborations when working on

innovations together. This kind of collaboration requires knowledge integration

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throughout networks and domains (Mitchell 2005, p. 518-522). This integration

attempts to make guided collaborative efforts to innovate with parties that are

different in nature including for example government and universities (White et al.

2007, p. 116-118; Dixon 2009). However, this integration does not narrow

participation in a business network. Someone participating in a business network

can be (1) an independent party, (2) an expert in certain field, (3) an active

customer and provider of many products, and also (4) a member of other networks.

Heterogeneity in a network might help to acknowledge more easily the drivers of

certain markets and react faster to them because the knowledge scope includes

different perspectives of a shared issue (Drucker 1985, p. 27-122; European

Commission 2004, p. 23; White et al. 2007, p. 21-29).

2.3 ENHANCING INNOVATION

The process towards innovation is very dynamic and knowledge intensive.

Managers with understanding of knowledge management practices and awareness

of the intangible nature of knowledge assets have better competences to innovate

collaboratively (Newell et al. 2002, p. 105/152-155; Alvesson 2004, p. 180). Some

of the best practices include:

Obtaining knowledge on people related with the company activities

Increasing availability, sharing and mediating company’s knowledge

Identifying best practices and new ideas to add value to current operations

Avoiding redundancies

The reviewed literature provides among others an internal-oriented style that

suggests a hierarchical management to innovate where managers have special skills

and perform determined tasks in order to achieve an innovation (Roberts 1969, p.

259; Kanter 1982, p. 87-93; Drucker 1985, p. 27-122; Rogers 1995, p. 519). In

such cases organizations focus their efforts on the selection, development, and

congruence of the top management as the success depends on their decisions on

how to use available internal resources (Twiss 1980). Innovation flourishes when

internal teams have overlapping areas of knowledge, members can contact each

other independent of their functions and ranks, managers are in open ended

positions, and rewards systems look to the future (Kanter 1982, p. 87-93). Even so,

an innovation requires external awareness; including the awareness of the channel

that needs to be used to increase the chances of external support, acceptance, and

adoption (Rogers 1995, p. 519).

Clearly companies have shifted their innovation practices towards a more external-

oriented style where a moderate and discretional innovation management is needed.

In the external case, the tasks and outflows cannot be managed but rather cultivated

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and refined according to the interactions of a group supporting the realization of a

new idea (Edosomwan 1989, p. 20-30; Newell et al. 2002, p. 141-164; Alvesson

2004, p.182/184-186). This style takes into account the issue that innovation can be

encouraged or discouraged by the actions of external people that cannot be

formally managed (Christensen 1997, p. 207-210). Internal people in charge of the

process of certain innovation should be as close as possible to end users in order to

create value based on real needs (Ruggles 1998, p. 80-88; Chesbrough 2003, p.

76/184). Consequently, innovations call for team work among internal and external

people in order to create a greater value. The mentioned drivers, practices, people

and parties can be easily grouped and differentiated in a community repository

(Figure 4).

Figure 4. Grouping Internal and External People – Entities.

In this sense, companies could actively nurture their innovations by including local

or worldwide perspectives from different external communities (Lesser et al. 2001,

p. 831-841). In this direction, communities seem to provide a guided pattern of

communication enabling the understanding and integration of organized

contributions into a knowledge domain for supporting an innovation (Pemberton et

al. 2007, p. 13/74-85).

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3 USER COMMUNITIES

3.1 WHY COMMUNITIES?

In most cases communities are seen as means for improvement (Appendix 1).

Community is a source of collective knowledge with the contribution of its

participants, also called collective intelligence (Wang et al. 2006, p. 524-526).

Community knowledge building is the knowledge derived from members’

interactions in a community (Lambropoulos 2006, p. 414-416). In order to facilitate

these interactions, networking is needed to support the efforts of any community

(Khine 2003, p. 22/335-397). To help network management, communities require

to be enclosed under oriented guidelines for distributive actions (Figure 5).

Figure 5. Community Enclosed under a Specific Function.

Oriented communities can help in the design, stability, implementation,

documentation and scalability of a product (Dixon 2009). In this sense,

communities shape the generation of knowledge flows with respect to specific

goals and issues, while having the freedom to achieve these goals and solve these

issues in the best possible way. This knowledge flow intends to streamline benefits

from previous understanding and different perspectives; as well as realize under

what perspective certain understanding is valid to either augment success’ chances

or lower risks of spilling out resources in a product development.

3.2 TYPES OF COMMUNITIES

Before dot-com, user communities had a very limited scope through magazines,

post letters, and social gatherings (Turban 2007, p. 393-397). Such communities

were built around the shared interest of improving products and acquiring insight

into how the best performance is obtained (Jin et al. 2007). Communities were seen

as informal, almost volunteer structures for solving problems within the web by

exchanging experiences (McDermott 2004, p. 2). The creation of a community can

be conceived in a spontaneous manner, but lately companies have realized the

importance of creating their own strategic communities (Rochlin 1997, p. 15-

34/45-46; McDermott 2001; McDermott 2004, p.10; Tzu 2004, p. 7). Spontaneous

communities do not include direct participation of the companies’ staff;

nevertheless spontaneous communities can still be closely monitored around

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specific companies’ purposes. Both cases (Figure 6) can provide insight into

companies in order to channel their efforts towards an innovation in a smarter way.

Strategic

Community

Spontaneous

Community

Figure 6. Creation of Communities.

Chesbrough (2003, p. 12-13/32-33/ 183) identifies three core activities to innovate

within a time frame: (1) time to research, (2) time to test, and (3) time to market.

These activities can be contained in communities, change or even become cyclical

over time, as for instance, outflows from a testing community may disclose further

research needs (Stoll 2007, p. 15/18/28/34; Owyang 2008a, p. 10). Under these

general functions (Figure 7), communities can help an innovation in (1) researching

improvements, economical solutions or new applications of/for a new or an

existing product, (2) testing a product under development that requires the previous

understanding or access to other products or technologies, (3) marketing

assessment, promotion, introduction and conceptualization of the product itself, and

(4) a partial combination of the three previous points.

RESEARCH TESTING MARKETING

Figure 7. Community – General Functions & Cycles.

First, research communities include gurus and users with the highest level of

expertise in a certain field. Research communities tend to link efforts of academics,

researchers or R&D units of entities deeply involved in a specific technology. In

this kind of community people should be able to easily access pre-selected

resources and peers in order to complement and share their findings. The role of the

company members is to deliver marketing and testing knowledge to the

community. One example is the collaboration between BP, the University of

California Berkeley, the University of Illinois and the Lawrence Berkeley National

Lab (2007) for the development of capabilities to put biofuels down the road.

Second, testing communities include users with a high level of expertise. These

people are either regular users or potential customers with a fair understanding of

the issue under development. The role of the company is to identify improvements

and further developments to enhance performance, as well as to assure contact with

the product under development. For example, at the moment at Tampere University

of Technology (TUT 2010) Nokia is realizing a project in which 250 mobiles were

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lent to engineering students for a two months trial period in order to identify

architectural defects and to find new applications.

Third, marketing communities include users or potential customers with no deep

understanding of the technology. Usually people in these communities are either

current customers who want to know more about the general use of certain product

or potential customers making explorations before the final purchasing decision.

The role of the company is to find out what is considered valuable in the market to

retain and expand its share. Polar (2010) has a practice where its customers can get

users’ tips and free of charge software updates for their products; while the

company can better understand customers’ needs and use that pool to launch new

products.

Communities may be enclosed inside other communities or overlapped with each

other (Appendix 2). Other general characteristics like language, geographical

proximity or market target can influence the interactions within a community. For

further considerations are the degree of certain qualities each participant requires in

accordance to the community function, and the fact that communities can go from

up-down involvement, or from researching to marketing approaches among groups

with pre-established interests (Appendix 3).

3.3 IMPROVING QUALITY AND ATTRACTIVENESS

Straight managerial practices for communities that depend on bottom-up

involvement are rather difficult to be applied as their success depends on

individuals’ commitment (Newell et al. 2002, p.120; Alvesson 2004, p.175). As

such, communities are not manageable but rather cultivable, meaning that

communities require a moderator instead of a manager (Rein et al. 2007, p. 50-61).

Still down-up communities, in the same manner as up-down communities, require

direction and administration to link their outflows with the company’s assets in

order to obtain an efficient development (Hippel 2002). In both cases, community

administration only supports, integrates, and communicates everybody’s opinions

(Tzu 2004, p.13-19). McDermott (2004, p. 10) and Renninger (2002, p. 253-261)

coincide that communities evolve to provide leverage by influencing organizational

decisions with their opinion. McDermott (2004, p.13) says that spontaneous

communities go from a practice of mere group discussions and idea exchange to a

direct and formal communication with the R&D units of a company. In the case of

strategic communities, the success can be seen when questions are answered by

people outside the company (Jin et al. 2007, Chapter 4.7; Renninger 2002, p. 151-

152). Here the role of the company should be upgraded to identify the people

responding to the community’s concerns.

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The constant growth of communities in some areas has shown the need of

designing tools to manage them as current staff levels cannot meet users’ demands

(Panel on Neutron Research 2007, p. 5-6). This growth has created positions like

“data managers” who incorporate feedback from users into data packages and

provide authoritative data sets to tackle more directly the development, re-analysis,

and research of a community (National Research Council 1995, p. 80; Committee

on Climate Data Records 2004, p. 63-80). Other technical issues encompass the

running of communities, like the use of Extensible Markup Language (CCIDGDC

2003, p. 16), the use of virtual private networks, or artificial intelligence for data

identification and processing (Vedral 1998, p. 28). Table 1 includes some

characteristics of successful communities.

Table 1. Characteristics of Successful Communities (Molm et al. 2000, p. 1396-

1426; McDermott 2002, 2004, p.11-12; Hess 2005, p.146/285/335; Sawhney 2000,

p. 24-54).

The lack of trust is a latent problem as potential participants might be unwilling to

collaborate truthfully with the perception that not everyone will contribute in the

same manner (Kramer 1999, p. 569-598; Andrews et al. 2000, p. 797-810; Empson

2001, p. 839-862; Dirks et al. 2001; Cabrera 2002, p. 687-710). Trust can be

increased if participants in a community can perceive reciprocity from other

participants (Molm et al. 2000, p. 1396 - 1426). Schulz (2001, p. 661-681) provides

evidence of the relation between sharing knowledge and reciprocity, indicating that

sharing knowledge stimulates a reciprocal flow of knowledge. At this point,

successful communities could be seen as the core of new innovations when

discussing open development (Onetti et al. 2005, p. 224-227) or, in other words,

user communities are “an innovative way to innovate”.

Hess McDermott Molm Sawhney

Clear function x

Active participation of moderator(s) x

Critical mass of engaged members x x

Accomplishment and Learning x x

High expectations x

Real time x

Trust x x x x

Reciprocity x x

Altruism x

Passion and Motivation x x

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4 INNOVATION & COMMUNITIES

4.1 OPEN INNOVATION

Today companies have realized the value of functioning as semipermeable

membranes able to embrace external contributions and combine them with their

internal assets and competences to develop business opportunities (Chesbrough

2008). This practice aims at avoiding technological and market uncertainties

(Chesbrough 2003, p. 11-13/130-133; 2008). Figure 8 illustrates the open

innovation scheme where R&D and commercialization of an idea can be carried

out in collaboration with external entities while the company internalizes,

incorporates, and shares outflows based on environmental needs and internal

competences.

Company 1

Other Firm’s

Markets

New

Markets

Current

Market

Internal

technology

base

External

technology base External technology sourcing

Internal/external

venture handling

Licence, spin

Out, divest

Figure 8. Open Innovation (Chesbrough 2008; SCA).

Consistently with the definition of innovation, open innovation endorses

collaboration towards specific goals and mission oriented activities to demonstrate

project commercialization (Chesbrough 2008; Curtis et al. 2006, p. 368) either for

current or new markets. Additionally, open innovation takes into account the

capabilities of external potential network partners to realize an innovation. The

development of an innovation under participation of external parties with free

knowledge exchange requires risk management practices (Dixon 2009). It is

important to realize the implications of disclosing information, as it is difficult to

enforce custody over it (Braman 1989, p. 233-234; Newell et al. 2002, p 100-113).

It is also important to consider the fact that information needs to be processed and

validated (Alvesson 2004, p.122-124). Communities can be created under certain

conditions where some information flows are not disclosed until all interactions

have occurred (Chesbrough 2008). Communities can be founded under certain

restrictions, hold/share rights, description of responsibilities, and documents

outlining the sharing of benefits and risks. Agreements that include the particular

interests of each participant can help to create trusty environments for knowledge

sharing (National Research Council Staff 1999, p. 80-110, Chesbrough 2008;

Seppänen et al. 2007, p. 578-589; Jong 2008).

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4.2 COMMUNITIES FOR OPEN INNOVATIONS

Despite the risks, increased visibility inside the company could also improve

collaboration. Figure 9 switches the company structure into another community

where the funnel no longer represents the company but a sort of magnetic field

including the outflows from internal-external interactions, and the decisions

supported by internal members of the company.

Figure 9. Company as a Community.

Figure 10 integrates the new company structure with external communities. The

figure also presents the cyclical logic of the knowledge flows and how resources

can be allocated in accordance to each function within a time frame.

Figure 10. Communities for Innovations.

In today’s world, companies are focusing their efforts on identifying the most

relevant communities for achieving innovations. Some tasks of the company are (1)

to stimulate collaboration, (2) to grasp the outcome produced from communities’

interactions, (3) to follow further developments, and (4) to support

commercialization. From the open innovation perspective, communities can be

considered as cells of external knowledge resources, laboratories for

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experimentation, or a gate for straight contact with the different market places. The

“function”, the “monitoring methods”, and, in the case of a strategic community,

the “desired participants’ profiles” are elements that need to be delineated by the

company members.

4.3 NETWORKING FOR OPEN INNOVATION

When innovating openly, the company’s role is to pull and integrate market

oriented collaboration, enhance competitiveness, procure with solution providers,

and create value to its customers throughout the development of networking

(Timmers 2003, p. 121-140; Kuivalainen 2009, p. 2-4; Burris 2008, p. 2-8). The

management of network relationships has an important role in open development

businesses for integrating outflows and accomplishing the job on time (Dahlander

et al. 2005, p. 481-493). The main aim of networking is having access to external

key parties to keep sustainability even though, as at the user level, network partners

sometimes have contradictory intentions and expectations (Seppänen et al. 2007, p.

578-589; Chesbrough 2008; Dixon 2009; Welch 2009). Network communities for

innovations also include the participation of intermediaries, indirect partners, and

potential customers. Figure 11 is a snapshot of a network community with its

interactions for resources distribution.

Figure 11. Community Network for Innovations.

People in a community network can punctually replicate to value creation

opportunities, either by taking actions or bringing up insight in collaboration. Here

it is important to highlight the most relevant aspects from the company’s view

point, the less relevant research, or the most appropriate idea to be commercialized

under current market needs and company’s competences. On the other hand, if an

idea is not suitable for a company, the openness of the innovation process

facilitates another network partner to develop it using a different approach.

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5 CONCLUSION & RECOMMENDATIONS

In the past, companies have usually led their innovations internally in order to

protect their competitive advantage. Today companies have closer collaboration

with other parties sometimes including even competitors. The objective of this

paper was to present how communities can help in the realization of an innovation.

A great evolution towards a participative innovation process has taken place in the

last decade, mainly because of the integration of information and communication

technologies. Nevertheless, physical proximity with partners is still important to

carry out successful development processes.

The open sharing of findings with trusty parties could enhance and increase the

probabilities of achieving innovations. Networking is an essential part of open

innovation where companies require proactive search of potential partners and

solution providers for the creation of innovations. Innovation requires a close

monitoring of communities to anticipate changes in demand or technology. Figure

12 summarizes the different stages of an innovation based on its market coverage.

Acceptance

Adequate Business Model

Commercial Success

12Invention

Other Users

More Apllications

Other Markets

Improved Process

Integration with

other Technologies

Combination

Component

Substitute

Disruptive

Innovation

Commoditization

Part of other innovation

A B C D

(Number): Invention (number). Research, testing and marketing.

A: Successful product commercialization in the targeted market. The invention becomes an innovation.

B: Market diversification and changes according to users’ needs. Phase of incremental innovation.

C: The innovation helps in the realization of other innovations. Integral part of other innovations.

D: Commoditization of the technology until a substitute arises.

Market

Coverage

3

TIME FRAME

Product

Launch

A B C D

A B

Figure 12. Innovation Development.

Knowledge assets are an important concern that companies should evaluate in

terms of their innovation processes, both internally and externally, in order to

perform low risk practices. Risk can be diminished with middleman communities.

A middleman community can orchestrate research, testing or marketing

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communities in order to achieve a balance between the different parties involved in

a development. Furthermore a middleman community can also create value

linkages between network partners for successful innovations. Successful

innovations help to create other innovations with the transmission of

knowledge within the network. The case of a disruptive innovation is still an issue

hard to foreseen. Nevertheless a network including the right partners might be able

to survive and evolve over the disruption. Figure 13 is a snapshot that shows the

dynamics of innovations where new ideas either create discontinuity or expand the

scope of an innovation.

Disruptive

Innovation

Disruptive

Innovation

Integrative

Innovation

Integrative

Innovation

Integrative

Innovation

1

2

3

4

5

TIME FRAME Figure 13. Innovations’ Dynamics.

Finding partners for greater overall value and trust building practices to exchange

knowledge freely are important elements for innovations. The internationalization

of trade and the regulatory environment are issues that can also affect the

development of an innovation and call for reducing external boundaries. Further

research is needed for the specific case of developing technological innovations in

global markets.

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REFERENCES

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Appendix 1: Definitions of Communities

Virtual

Community

Social aggregations that emerge from the Net when enough

people carry on those public discussions long enough, with

sufficient human feeling, to form webs of personal

relationships in cyberspace.

Rheinglod

(1993, p.5)

Virtual

Community

Group of people with common interests and practices that

communicate regularly and for some duration in an organized

way over the Internet through a common location or

mechanism.

Ridings et al.

(2002, p. 273)

Online

Community

Interactive group of people joined together by a common

interest, where the most important feature is the interaction

among members.

Owyang

(2008a, p. 2)

Online

Community

Voluntary collaboration among members across time and

space independent of geographical barriers, with different

rules from physical communities. They often exist around a

single idea or topic.

Lucas (2008,

p. 48-60)

Knowledge

Community

Groups or organizations whose primary purpose is the

development and promulgation of collective knowledge.

Kramer (1999,

p. 50)

Knowledge

Community

A group of people providing information related to the same

subject, and the information is interpreted in a different way

in accordance to the previous experiences of people receiving

the information

Huff (2002, p.

144-145)

Learning

Communities

A learning community is a cohesive community that

embodies a culture of learning. Members are involved in a

collective effort of understanding. It attends issues of climate,

needs, resources, planning, action, and evaluation.

McConnell

(2006, p. 19)

Communities

of Practice

A group of people who come together around common

interests and expertise. They create, share, and apply

knowledge within and across boundaries of teams, business

units, and even entire organizations - providing a concrete

path toward creating a true knowledge organization.

Vat (2005, p.

827-830)

Communities

of Practice

A group of people in an organization who are (somehow) held

together by common interest in their work topic, purpose, and

activities.

Disterer

(2005, p.

1391-1396.)

Communities

of Practice

A group of individuals that may be co-located or distributed,

are motivated by a common set of interests, and are willing to

develop and share tacit and explicit knowledge.

Coakes &

Clarke (2006,

p. 30-33)

Customer

Communities

Organized system of customer contact, that allows regular

interactions with customers, both in person and electronically.

These interactions are for information sharing, feedback, and

exchange of ideas.

O'Leary &

Sheehan

(2008, p.2)

Community

of Creation

A community of practice where members mainly focus on the

sharing and generation of new knowledge for the purpose of

creating new ideas, practices, and artifacts (or products). They

can be legitimized through involvement in a company-

sponsored product development effort, or they may be

informal through various practitioners, with similar

experience and knowledge meeting where new innovations

arise from this interaction

Paquette

(2006, p. 68-

73)

Velazquez M.

22

Appendix 2: Communities over communities.

Use

r C

om

mu

nityIC

T

Ma

rke

tin

g

Re

se

arc

h

Fa

ce

to

Fa

ce

Co

mm

un

ity

of P

ractice

Le

arn

ing

Co

mm

un

ity

Kn

ow

led

ge

Co

mm

un

ity

Virtu

al

Co

mm

un

ity

On

line

Co

mm

un

ity

Cu

sto

me

r

Co

mm

un

ity

Co

mm

un

ity o

f

Cre

atio

n

Ve

ntu

re

Ca

pita

l

Co

mm

un

ity

Te

stin

g

Velazquez M.

23

Appendix 3: Some User Communities considerations in accordance with their

function.

RESEARCH

TESTING

MARKETING

F

U

N

C

T

I

O

N

innocentive.com,

bootb.com, yet2.com,

yourencore.com,

ninesigma.com

ebay.com, amazon.com

nokia.com

polar.com

ONLINE EXAMPLES

Do

wn

-up

Bu

ild

up

Up

-do

wn

Bu

ild

up

Down – Up Build up

Size The amount of people in the community; at the top tends to be “1 to 1”

organizational level, while at the bottom the interaction tends to be “n to N”.

Product How easy it is to obtain physical contact with the actual product; at the top are

located highly technological tangible products, in the middle non durable goods,

services and processed information, and at the bottom commodities.

Platform The importance of having a user friendly interface; analytical tools, easy

language, features, etc.

Social The openness of the community. The bottom tends to be public and spontaneous;

the top is strategic and private.

Homogeneous At the bottom participants are expected to have very similar profiles, while at the

top the group tends to be multidisciplinary.

Geography The level of geographic concentration of the participants. At the top participants

may come from many different countries, while at the bottom specific areas are

targeted.

Analysis The investment needed to process information.

Up – Down Build up

Expertise The level of previous experience the participants have in relation with the subject.

Incentives The investment (effort/time) that participants are willing to engage in the

collaboration.

Effectiveness The return in knowledge over the amount of participants.

Time The time that a participant is willing to invest in communication.

Control The degree of managerial control that can be exerted in the community. At the

top well determined schedules, profiling, selection, and goals; at the bottom the

community is uncontrolled and can be just cultivated as everyone is free to play.

Trust More levels of trust and reliability can be built around a well-managed

community rather that a public community.

Insight The level of involvement, understanding, and shared information per participant.