Evaluation of Open Innovation with R&D Alliances for Breakthrough Technologies in the Energy Sector

Abstract

In the energy industry, a time of dynamic innovation and uncertainties drives R&D incumbents to extend their technology screening process to the early technology lifecycle. Many early breakthrough technology innovations stem from academia and are developed by academic spin-offs. In these situations an incumbent's future technology organization (FTO), focused on open innovation, needs to expand its evaluation and development capabilities towards R&D alliances with academic technology spin-offs.In the light of the open innovation and real option frameworks this study analyzes R&D projects using the real options analysis (ROA) and discusses the critical decision of whether to develop technology internally or externally. It explores R&D alliances between academic spin-offs and a large power industry player and investigates the concept and role of a FTO in the open innovation process. A model will be introduced to operationalize the FTO concept and practically evaluate the risk of open innovation with R&D alliances for breakthrough technologies. Contrary to the common view that risks increase when open innovation is applied along with external development of a breakthrough technology in R&D alliances, the present study shows that the risks and uncertainties can be mitigated and controlled when applying ROA and the FTO model.

Open innovation in the power & energy sector: Bringing together government policies, companies’ interests, and academic essence

“…OI is also seen as a way out from the undesirable effect of excessive outsourcing of core activities, which can weaken the internal R&D capabilities and absorptive capacity (Pellegrini, Lazzarotti, & Pizzurno, 2012). A recent multiple case study (Hess & Siegwart, 2014) analyses R&D alliances between academic spin-offs and a large power industry firm. The authors propose the joint application of real options analysis and a novel technology organizational model to mitigate the risks of OI for breakthrough…”

“…When firms need to address significant challenges in the deployment of novel technologies academic institutions support them, improving their success chances (González et al, 2012;Pellegrini et al, 2012;Sahir et al, 2012;Srikanth, 2011). Often firms cooperate with academic spin-offs that were incorporated to develop and bring to the market breakthrough technologies ideated earlier in the academia (Hess & Siegwart, 2014).…”