Evolving a Value Chain to an Open Innovation Ecosystem: The Cognitive Influence of Stakeholders in Customizing Medical Implants

Abstract

While open innovation ecosystems allow firms to harness new external sources of value creation, these external ties can also constrain its ability to adapt its innovation strategy to pursue new opportunities. Here we look at how firms conceive new open innovation models of value creation, and how those efforts are affected by the need to both learn from and educate its external partners. We do so in the context of a potential 3D printing-enabled shift from mass production to mass customization of orthopedic medical implants. Using interviews, observations and archival data from three continents, we document how an incumbent firm approached the economic, regulatory and cognitive constraints on both its existing and future value creation strategy, so as to transform its linear value chain into a more interactive and collaborative ecosystem. We show how the firm used both open innovation and open business models to develop a new value creation logic, and how a delay in freezing this logic allowed it to identify a second, more radical business model shift that it is now pursuing. These results demonstrate how firms and managers can address the cognitive shift needed to develop trans-formative open innovation strategies that require a complex restructuring of a firm’s internal and external stakeholder relationships. In addition to developing a process framework for such changes, we also extend the limited prior research on cognitive strategy in open innovation.