As the process consists of launching new products and services out into the market, innovation is one of the engines of economic growth. It is behind the rise of increasing returns to scale, of the expansion of the size of markets and of the deepening of labor division. It conditions the productivity gains locally registered at the scale of firms and industries, and globally registered at the scale of regions and countries. Finally, it constitutes a privileged strategy for economic actors in order to develop and create value, and to obtain favorable competitive positions. Even if the way of managing innovation activities differs from firm to firm, from region to region or from country to country, innovation always suggests the creative mobilization of tangible and intangible assets in view of inventing and commercializing new ideas (Box I.1). It is a question of combining human resources and financial means, production and communication technologies, regulations and norms as well as cultural and professional values, and aligning them with a political and/or strategic value-creating vision. This is true for the scale of a firm, a territory, a region or a nation.

Even if, today, the definition of innovation in terms of process elicits a broad consensus on behalf of researchers and practitioners, many questions are still open:

1. – How do economic actors, firms and territories organize themselves in order to innovate?
2. – Which capabilities do they need to mobilize in order to invent and commercialize new products, services or technologies?
3. – How do they acquire these capabilities?
4. – Which are the processes capable of nourishing the acquisition and development of an innovation capability?

In the introduction of his work Open Innovation published in 2003, Henry Chesbrough suggested a comparative analysis of the innovation processes used by Lucent and Cisco companies. While the first massively invested in the development of its internal research and development (R&D) capabilities, the second focused its technological expertise on identifying the most promising external sources of innovation. While the first strategy aims to develop an internal innovation capability and a knowledge capital from which to elaborate innovative technological trajectories, the second offers the firm the means of accessing dispersed knowledge and competencies that will enable it to invent and commercialize new products, services or technologies thanks to the use of a collaborative agreement and an intelligent investment policy.

From this comparison, Chesbrough shows that firms no longer manage their innovation activities by relying exclusively on their internal capabilities for R&D. Rather, they build on the combination of internal and external sources of knowledge, leaving a large space for interaction and collaboration between partners, customers, suppliers, research laboratories, universities, financial institutions and governmental agencies [VON 02, FIL 09].

The decompartmentalization of firms’ innovation capabilities is a feature of what Miller and Morris [MIL 99] named the fourth generation of R&D. According to this approach, innovation depends on the capability of firms to combine diverse internal and external sources of knowledge, tacit and explicit, with business processes that depend on equilibrium between market forces and technological dynamics. This transformation of innovation management models is accompanied by the emergence of new forms innovation process organization that depend on the collaboration and sharing of knowledge between the participating actors in the innovation process [BAR 14a].

In this context, researchers have studied the characteristics of these novel approaches to innovation, exploring the modalities of innovation management in knowledge-intensive industries, but also in more traditional industries. The resulting models include the paradigm of open innovation made popular by Henry Chesbrough, the theory of innovation through users introduced by Eric von Hippel, the multiple perspectives on innovation communities defended particularly by Patrick Cohendet or the theory of business ecosystems and business models developed by James Moore. All of these approaches consider innovation to be the result of interaction, collaboration and opening of firms’ R&D departments, implying the combination of tangible and intangible resources incorporated in a variety of distributed organizational and technological contexts. The case of Airbus BizLab is illustrative in this respect (see Box I.2).

Enterprises like Xerox, IBM, Procter & Gamble or Phillips [CHE 03, DOD 08] have chosen to put into practice an open business model based on the principles of interaction and collaboration. These initiatives demonstrate the extent to which innovation management practices are witnessing a radical change. These examples equally reveal that the adoption of an open business model entails an upheaval in the enterprise’s activities which are not directly tied to R&D, particularly marketing, distribution, appropriation of return or the management of information. In the words of Chesbrough [CHE 03, pp. 51–52]:

“The new logic turns the old assumptions on their head. Instead of making money by hoarding technology for your own use, you make money by leveraging multiple paths to market for your technology. Instead of restricting the research function exclusively to inventing new knowledge, good research practice also includes accessing and integrating external knowledge. Instead of managing intellectual property (IP) as a way to exclude anyone else from using your technology, you manage IP to advance your own business model and to profit from rivals’ use”.

In the face of such changes, the solution of vertically integrating the “sources of innovation” (to paraphrase the title of the publication by Eric Von Hippel) in view of controlling them appears expensive, even dangerous. On the contrary, the idea of combining internal and external resources in order to develop and market new goods and services appears pertinent and rational. Chesbrough [CHE 03, pp. 53–54] uses the example of the pharmaceutical firm Merck which, in the nineties, chose to redefine the perimeter of laboratory competencies of R&D in order to integrate knowledge developed outside of its boundaries. Capitalizing on a corporate culture that privileges scientific excellence, the laboratory heads were provided with a route map that not only calls for internal research activities in the preferred knowledge domains of the firm (i.e. biotechnology, genetic research) but also equally encourages the contact of Merck laboratories with all external resources considered useful and pertinent for the development of its commercial offer (i.e. university or private laboratories, users communities, rival enterprises). For this, the firm must count on internal capabilities, allowing it to identify and connect, to absorb and to combine [COH 90] this diversity of resources.

As it changes the way in which firms manage the phases of invention and commercialization of new products and services, this transformation of innovation models is accompanied equally by a modification in the knowledge management processes which are mobilized to innovate. To trust a third party (i.e. research laboratories) with a part or the whole of the work load consisting of developing new knowledge or new concepts during the ideation phase (invention phase; Arthur [ART 07]), new challenges arise for the innovating firm. In particular, this requires the development of new capabilities in the matters of creation, codification, integration, sharing, transfer, protection and valorization of knowledge. Besides, the available knowledge outside the firm’s boundaries must be able to be used in complement with the internal knowledge of the firm, requiring integration mechanisms that involve specific capabilities, particularly the capability to absorb knowledge [COH 90]. It also requires deploying methods of interaction management between the partners that differ from traditional management modes. The structures of governance, leadership forms, sharing mechanisms and knowledge control involve particular organizational capacities [AMI 04]. Consequences of the transformation of innovation models also concern the phase of commercialization. This calls for appropriation regimes adapted to the stakes of interaction, collaboration and opening. The innovative firm must be capable of displaying the modalities of protection and sharing of knowledge, adapting these to the features of new business models [TEE 10].

Aims of the publication

If we suppose that knowledge and innovation are two faces of the same coin, then it is pertinent to consider that knowledge management is inseparable from the way in which firms organize themselves in order to innovate. However, in spite of significant advances in research, we have no more than a fragmentary knowledge of the specificity of processes and practices of knowledge management that underlie innovation, particularly when it depends on open organizational forms and interactive, collaborative, community-based or participative business models.

The relationship that exists between these new innovation management models with the processes and practices of management knowledge deserves to be studied in a systematic manner. There are two reasons for this: on the one hand, research papers on management knowledge and the innovation capabilities of the firms are not sufficiently articulated (i.e. open, collaborative, communitarian, participatory innovation ways); on the other hand, the processes of knowledge management on which these depend have not been the object of systematic analysis.

Thus, the aim of this book is to offer students, researchers and managers the keys to understanding, assisted by concrete illustrations, that will enable them to articulate the processes and practices of knowledge management put into practice by firms in order to innovate in an interactive way.

Outline of the plan

This book is structured in three chapters. The first chapter addresses the following question: what connections can we establish between the processes of knowledge management, the development of firms’ innovation capabilities, and their performance? To answer this question, we proceed in two steps. We start by investigating what researchers say about the relationship between knowledge management and firms performance. One of the essential lessons to be learned from research is that the performance of teams, firms and networks of firms in the matter of innovation depends on the quality of their knowledge processes on the one hand, and on their knowledge management practices on the other hand. In the second instance, we explore the concept of innovation capability by asking about the way in which knowledge management processes nurture the firm’s innovation capabilities. This exploration leads us to define innovation capability as a dynamic capability, which can be divided into knowledge management processes and organizational competencies mobilized during the different phases of the innovation process. Economists have long suggested that to invent new products (goods or services, technologies, procedures or organizations) and to commercialize them does not require the same organizational capacities or the same learning processes [SCH 34, PEN 59, NEL 82]. This result, regularly confirmed by research, is important since it presents innovation as a process anchored in the management of knowledge and one that links together the phases of invention and commercialization in a particular context. In this framework, certain knowledge processes are associated with the accomplishment of certain tasks specifically attached to one of the phases, and others are mobilized to accomplish tasks whose performance engages different phases in the innovation process.

The second chapter of the book deals with the variety of processes and knowledge management practices mobilized in order to innovate. Which processes are associated with the different phases of the innovation process? What are the features of knowledge management practices used by firms during these different phases? In this chapter, we invite the reader to consider innovation as the result of three fundamental knowledge management processes: the generation of knowledge (by absorption, rearrangement and integration of knowledge), the application of this knowledge (according to the mechanisms of conception, sharing, transfer and coordination of knowledge) and the valorization of knowledge (protection of knowledge and appropriation of returns from innovation). These processes constitute the core activities of knowledge management of innovating firms. Together, they define the components of their innovation capability considered as a dynamic knowledge capability (see Chapter 1).

Finally, the interactive approaches to innovation are presented in the third chapter of the book. After introducing the federating process of open innovation, we distinguish three more specific approaches: the user-centric innovation, the community-based innovation and crowdsourcing. All of these share the consideration that knowledge mobilized by actors in order to innovate is distributed inside and outside the organization’s boundaries.

In this context, the innovative firm must be capable of identifying, combining and coordinating a variety of innovation sources suggested by very different individuals and organizations (i.e. suppliers, clients, R&D enterprises, consultants, users’ communities, etc.). How does the innovative enterprise proceed? Which are the knowledge processes sustaining these interactive approaches of innovation? The third chapter provides answers to these questions.