Open Innovation in Public Service Reform

Dato’ Sri Dr. Noorul AinurDato’ Sri Dr. Noorul Ainur Mohd. Nur currently spearheads the Ministry of Science, Technology and Innovation as the Ministry’s Secretary-General. Dato’ Sri Dr. Noorul Ainur has more than 25 years’ experience in the public sector spanning key ministries including, the Ministry of Women, Family and Community Development, Ministry of Finance, Ministry of Education, Ministry of Information, and the National Institute of Public Administration Malaysia (INTAN). In the international arena, being an expert who specializes in the fields of development, administration and economics, she served as the Senior Advisor in the Southeast Asia Group, for the World Bank in Washington D.C. during the period of 2006-2008. Her significant contribution to social transformation  has  led to her appointment  as Vice  President of the Intergovernmental  Council of  the Management of Social Transformations Programme (MOST IGC Bureau) of UNESCO for the Asia and the Pacific region. Dato’ Sri Dr. Noorul Ainur obtained her PhD in Political Science at the Graduate Center, CUNY. She was also a recipient of Goldman Sachs Visiting Research Fellow at the University of Oxford.

INTRODUCTION

Definition
Recently, growing attention has been devoted to the concept of “Open Innovation”, both in academia as well as in practice. In his book Open Innovation: The New Imperative for Creating and Profiting from Technology (2003), Chesbrough, who coined the term “Open Innovation”, defined it as follows: “Open Innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology. Open Innovation combines internal and external ideas into architectures and systems whose requirements are defined by a business model.” He described how companies have shifted from the so-called closed innovation processes towards a more open way of innovating. The original book focused primarily on new models of research and development (R&D), and the shifting roles of internal central R&D labs, external relationships with entities like university research centres, and, generally, within the context of the current business models of the organisations.
 
Based on this definition, Open Innovation is essentially about expanding or enlarging the innovation potential of organisations or entities through the introduction of or opening up of new ways of working with external partners. Whether this  is manifested as new co-working agreements, acquisition of start- ups with exciting technologies, or spinning out new developments into external companies, the final outcomes are the same: increasing innovation and achieving increased value, as a consequence.

Practice of Open Innovation
In practice, however, the term is relatively loose and means different things to different people. Professor Ammon Salter from the Imperial College, London, observed that, based on the current definition, everything from industry-university collaborations and expert sourcing to ideation challenges have been called examples of open innovation. He argued that this ambiguity contributed to the difficulty of figuring out whether the benefits of open innovation outweigh the costs. Nevertheless, open innovation has today been explicitly adopted by a broader range of organisations, and many have attributed part of their current successes to their open innovation strategies and activities. Open innovation involves a structured approach to looking for solutions outside one’s own organisation. With open innovation, one can reach out to the larger STI communities to find solutions to the common challenges. In this regard, Malaysian organisations, mainly in the private sector, and of late in the public sector too, are beginning to embrace and embed innovation principles as well as engaging themselves in Open Innovation initiatives.
 
The Sixth National Survey of Innovation (NSI-6), based on a survey carried out from 2009 until 2011, in Table 1 showed that more new products were produced and developed based on a closed innovation system with 82% for new product and 78% for significantly improved product in the manufacturing sector. In the service sector, a closed innovation system produced more results showing 80% and 83% respectively for new services or significantly improved. On the other hand, open innovation was not actively pursued within that period with less than 5% results in both manufacturing and services sectors.

Table 1: Developers of New Product or Significantly Improved Products across Sectors

OPEN INNOVATION THROUGH QUADRUPLE HELIX MODEL (QHM)
 
Quadruple Helix Innovation Theory (QHIT)
A country’s economic structure lies on four pillars/helices: Academia, Firms, Government and Civil Society, and economic growth is generated by the clustering and concentration of talented and productive people. This is the premise of the Quadruple Helix Innovation Theory (QHIT). A brief paper written by Ernest J. Wilson III, Dean of the Annenberg School for Communication and Journalism at the University of Southern California called How to Make a Region Innovative (2012) put forth the same argument. He contended that in order to foster economic growth of innovation, clusters need to draw on the power of an interrelated “quad” of sectors: public, private, civil, and academic.
 
Generally speaking, the QHM is an innovation cooperation model or innovation environment involving these four quads or parties that cooperate in order to produce innovations (products and/or services). While the Triple Helix innovation model focuses on university-industry-government relations, the Quadruple Helix, which embeds the Triple Helix by adding a fourth helix, makes it even broader and more comprehensive. It also encourages the perspective of the knowledge society, and of knowledge democracy for knowledge production and innovation.
 
Despite all that, the concept of Quadruple Helix remains to be not very well established and widely used in innovation research. An improvement to the “Triple Helix Model”, it represented a shift towards systemic, open and user-centric innovation policy. As a result, the early Schumpeterian model of an entrepreneur working alone to bring his product to the market has been superseded by many actors working together, bringing more value to the initial idea (Laursen & Salter, 2005).
 
QHM as Malaysia’s New Growth Strategy
In this regard, Malaysia has embraced and adopted the open innovation concept through a Quadruple Helix Model. Launched in 2012 by our Prime Minister Datuk Seri Najib Tun Razak, Malaysia is the first country to introduce and adopt such a strategy in its innovation ecosystem. In Malaysia, we have a strong believe that a long-established partnership comprising the Government, business sector and the academia in Malaysia’s innovation policy should be extended to include the general public or the civil society, of which the future of the country hinges upon.

OPEN INNOVATION IN ACTION: SOME EXAMPLES
 
Many government agencies have worked together in furthering the concept of Open Innovation. Such agencies include the Innovation Foundation of Malaysia (YIM) under MOSTI that upholds the noble vision to promote, educate, and inculcate a culture of creativity and innovation within all levels of the Malaysian society from the grass root up to the businesses and industries and eventually innovates the nation. The government has also set up the Malaysian Innovation Agency (AIM) to drive and sustain progress for Malaysia by accelerating a culture of innovation. AIM facilitates collaborations between government, academia and industry in advancing the consolidation and execution of new ideas in innovation.
 
Innovation Walk or Jejak Inovasi is another successful programme in scouting innovations produced by individuals in rural areas. The high potentiality of innovations at the community level are captured in the National Innovation Data Bank to preserve and share the knowledge with communities from other areas. Many innovative products have been produced such as kompang x-ray, saxophone from bamboo, environmentally friendly compound bricks, multi user truck, Desa Cart, Hybrid Pool, Smart Water Trap and many others. About 300 innovations involving more than 66,000 people have been successfully catalogued.

In another effort to help improve the quality of life of the community, Technology Application Programme (TAP) or known as TAPMOSTI@ COMMUNITY) was devised to translate knowledge and ideas of the community into new products, processes and services. This has in fact increased collaboration between communities in various districts and government agencies. Such outputs include liquid smoke from coconut shell as organic insecticide, chitosan from crab and shrimp shells, the production of biodiesel from Palm Oil Mill Effluent, harvest drying technology, natural vinegar and many others.
 
In addition, the Malaysian Global Innovation and Creative Centre (MaGIC) has been launched by the present Malaysian Prime Minister as a “one-stop shop” for entrepreneurs in getting financing from banks or venture capitalists and also to serve as incubators for developing start-ups. According to the Prime Minister, “Ideas and opportunities cannot travel through a vacuum - they must be born in an open, market-driven environment that welcomes them, nurtures them, (and) allows them to flourish and spread.” He has also noted that Governments should play an active role in supporting research, irrespective of whether it had an immediate commercial application or not, and not hesitate to work closely with industry to promote innovation. He also quoted Germany’s Fraunhofer Institute’s joint applied research ventures between business and the state as a successful model for co-operation across the traditional sector divide (Chen & Sibon, 2013).
 
The spectrum of involvement in innovation has also included women in the setting up of Women Innovation Academy (myWIN) which targets engagement, research and training of entrepreneurship and leadership of women, thereby inspiring students, youth and women to make innovation as a culture.
 
It can be concluded that the Malaysian public sector has shifted the way the sector is looked at, and its environment by involving other parties, (i.e. a mixture of innovation sourced from external and internal knowledge and processes) thus creating value. This has aptly satisfied the open innovation principles suggested by Chesbrough (2003) that are as follows:
  • If we create the most and the best ideas in the industry, we will win;
  • External R&D can create significant value: internal R&D is needed to claim some portion of that value;
  • We do not have to originate the research to profit from it;
  • Building a better business model is better than getting to the market first;
  • If we make the best use of internal and external ideas, we will win; and
  • We should profit from others’ use of our Intellectual Property (IP), and we should buy others’ IP whenever it advances our business model.

ISSUES AND CHALLENGES 

Culture
Transformation to an open innovation culture is a challenge for any organisation. Where traditionally, ideas and knowledge are firmly locked behind closed doors, open innovation encourages sharing and exploration of opportunities with external partners. Researchers, scientists and engineers (RSEs), the core delivery agents of R&D, now need to adopt much broader and new skill sets not only on their technical skills but also having business acumen in understanding growth opportunities and profits to their organisations as well as to their partners. They also need to have personal attributes that help in building relationships and stimulating trusting environments with external collaborators.
 
Weak Measures on Performance of Open Innovation
According to a survey report issued by Chesbrough and Brunswicker in 2013, there does not appear to be a silver bullet in which open innovation directly and immediately leads to substantially better business performance. Similar observation has also been made within the Malaysian public sector by Siddiquee in 2007 that more robust measures are called for to improve the governance as a continuous process that require more drives, learning and relearning in public service reforms.
 
Realising Value from the Ecosystem
A key issue that was commonly brought up in open innovation activities was the interactions between large organisations, and the networks of smaller businesses due to their differences in terms of relative sizes, perspectives and expertise of collaborating organisations. This was seen as a sheer challenge which jeopardised the ‘balance’ of realised value among partners. The big leading organisations were seen to be increasingly “orchestrating” diverse different partners in their ecosystem in new risk-sharing projects, ventures and activities.
 
MOVING FORWARD 

Based on a relatively new experience of Malaysia on open innovation, the following areas need to be given serious consideration:
  • a review on existing building blocks of open innovation in an organisation;
  • the traits of different market sectors in influencing the impact of open innovation; and
  • addressing common barriers and on-going challenges in migrating from a closed model of innovation to a more open approach.
CONCLUSION 

Open innovation has provided plenty opportunities for the public to work together with the government, private sector and academicians, thus recognising all parties as actors in fostering and reforming the public sector so as not to work in silos. In this regard, public sector is no more seen as self-serving but as an institution that plays a major role in interfacing with other parties as an integrator. The knowledge and experiences of all stakeholders are systematically integrated into the innovation and value creation process; thereby enhancing public value creation and even the political decision-making process.
 
Even though there is no one size of open innovation that fits all, the experience of undertaking the whole process can be shared by interested parties. At the core of developmental aspect, ideas and knowledge are important components in innovation with citizen-driven programmes particularly when expectations of the citizens are fulfilled.
REFERENCES 

Cheng, L., & Sibon, P. (2013, October 26). Government to Establish Women Innovation Academy Next Year. Borneo Post. Malaysia.

Chesbrough, H. (2006). Open Innovation: The New Imperative for Creating and Profiting from Technology. Boston: Harvard Business School Press.

Chesbrough, H., & Brunswicker, S. (2013). Managing Open Innovation in Large Firms. Fraunhofer Verlag.

Hall, B.H. (2009). Open Innovation and Intellectual Property Rights – The Two-edged Sword, Available at http://eml.berkeley.edu/~bhhall/papers/BHH09_IPR_openinnovation.pdf (Accessed on 7 October 2014)

Hilgers, D., & C., I. (2010). Citizensourcing: Applying the Concept of Open Innovation to the Public Sector. The International Journal of Public Participation, 67-88.

Industry, D. o.-b. (2012). Statistics on Idle Lands. Kuala Lumpur: Department of Agriculture & Agro-based Industry.

Kuhndt, M. Burcu Tunçer, & Christa Liedtke (2013). A Triple Bottom Line Innovation Audit Tool For ICT Product-Service Mix Applications. Proceedings of the 2nd International Workshop on Sustainable Consumption, Tokyo. Available at https://www.aist-riss.jp/old/lca/ci/activity/project/sc/report/031212_document/paper/s5-1kuhndt_tuncer.pdf (Accessed on 7 October 2014)

Laursen, K., & Salter, A. (2005). The Paradox of Openness: Appropriability and the Use of External Sources of Knowledge for Innovation. All-Academy Symposium “Open Innovation”: Empirical Research on Locating and Incorporating External Innovations”. Honolulu, Hawaii.

Meeting, T. 1. (n.d.). Promoting Openness and Transparency in Science, Technology and Innovation Policy.

Mohd Nur, N. A. (2013, September 29). Speech: Driving World Class Citizen Services and Leading the IT-fication in Innovating Government 2.0 Summit. Putrajaya.

MOSTI. (2012). National Survey of Innovation 2012. Putrajaya: Malaysian Science and Technology Information (MASTIC).

MOSTI. (2013). The National Policy on Science, Technology and Innovation (NPSTI) 2013 - 2020. Putrajaya, Malaysia.

Nadzrin, W. H., & Ahmad, N. (2009). Tax Incentives for BioNexus Status Companies - Process and Procedures. Malaysian Biotechnology Corporation Sdn. Bhd.

Siddiquee, N. (2007). Public Service Innovations, Policy Transfer and Governance in the Asia-Pacific Region: The Malaysian Experience. Journal of Administration and Governance, 2(1), 81-91.

Tan, B. (2004). The Consequences of Innovation. The Innovation Journal: The Public Sector Innovation Journal, 9(3), 1-42.

Wilson, J. E. (2012). How to Make a Region Innovative. New York: PwC Strategy& Inc.