Case #5 – Exploring the Future through Open Innovation at Intel

As promised in a recent posting, I will be continuing my exploration of cases that show how firms organize their open innovation activities. Last time, I looked at Cisco and how it used acquisitions to bolster its innovation performance (mainly) in the present and near future; this time, my focus is on how you can use smart open innovation activities to strengthen your competitive position in an uncertain, longer-term future. One of my favorite cases on this topic is “Intel Research: Exploring the Future” by Alan MacCormack and Kerry Herman (HBS Case 5-606-119), which is a brilliant description of Intel’s efforts in this space.

The problem that every company in an uncertain technology space is facing is that of “what is next?” – a question with which in particular incumbents are struggling very often, we know for example from Clayton Christensen’s work. However, in interconnected (i.e., vertically disintegrated) business environments or “ecosystems” in which many players have interlinking commercial offerings that consumers can choose from, this problem becomes even more complicated, because the innovations of other firms who might not even be direct competitors might have an impact on the focal firm, because they can change the competitive dynamics of the ecosystem.

Intel is in exactly this situation – its microprocessors are essential components of many products, which is good (note ‘essential’) and bad (note ‘component’) at the same time: whereas Intel’s position in the microprocessor business is probably unrivaled, it also needs to fend of the threat of the larger ‘products’ (or: ecosystems) shift in a way that renders microprocessors obsolete, or creates different demand profiles for microprocessors which are better met by competitors’ offerings. This is exactly where Intel Research comes in – it is Intel’s sensor for the future, which, opposite to the R&D conducted by the core departments (note: Intel’s microprocessing business has its own R&D, and the integration of production and R&D was one of the core organizational design choices of Intel’s founders) follows principles of open innovation in doing exploratory research that does not necessarily focus on silicone. The case goes on to describe how Intel Research was set and the choices that led Intel Research to evolve into what it had become at the time of the case.

Unsurprisingly, this case has become one of the cornerstones of my case portfolio on open innovation – not many cases capture the benefits of open innovation on the company’s future performance as well as this one does. While its strong technology focus may lead to some students grappling with the specific subject matter, the issue of organizational design and design choices that pervade the case will appeal to any student of management – the case itself has some introduction on Intel and its technological focus areas, however, this might not be enough for students with little or no background in technology. Consequently, I usually place this case toward the middle or the end of a lecture series, trying to establish a baseline understanding of the industry using earlier cases (for example, the aforementioned Cisco case, or potentially even another case on Intel, preferably from Robert Burgelman), which has proven to work with pretty much any audience.

For educators, the teaching note to the case (HBS Case 5-606-119) is extremely helpful. I have sometimes decided to drop the performance question brought up there in order to focus more strongly on the organizational design questions, but I can see how the former may also be a nice addition to any discussion on open innovation – but, in my view, one that would rather warrant an entire case for itself!

References
Alan MacCormack, Kerry Herman “Intel Research: Exploring the Future” HBS Case 9-605-051, October 27, 2005, http://cb.hbsp.harvard.edu/cb/web/product_detail.seam?R=605051-PDF-ENG, last accessed July 21, 2011