Fiat: Open Innovation in a Downturn (1993–2003)

Abstract

One of the key elements of Fiat9s recent resurgence is the superiority of its clean, fuel-efficient engine technologies that were mostly developed during the 1990s by Centro Ricerche Fiat (CRF), the Fiat Group company in charge of R&D and technology development. In the early 1990s, when the Italian carmaker was going through troubling times (along with many other players in the automotive industry), CEO Gian Carlo Michellone radically turned around CRF9s organization and innovation strategy, adopting and mastering a strategic approach to innovation that resembles what would become known as the open innovation paradigm. This revolution allowed the Fiat Group to keep its “innovation engine” running, despite the heavy downturn of the industry. The CRF case demonstrates how open innovation can protect the firm9s innovation capability from the risk of severe resource rationalizations during periods of crisis while proffering a starting point to replicate innovation capability once the downturn is over. The efforts to streamline the adoption of open innovation need to be targeted at several aspects of a firm9s organization, i.e. the structures, organizational roles, the planning and control and performance management systems, corporate values, and individual competencies and attitudes. The role played by the senior executive leadership in promoting the successful implementation of open innovation is critical, especially during tough economic times.