Because R&D takes place in a social context, the challenge is to implement a climate of active participation and minimal conflict. Too much discipline could thereby endanger the employees’ creativity, whereas too much freedom could on the other hand waste resources. The following figure (Enkel/Perez-Freije study 2007) shows this dilemma situation of Innovation Controlling.

In the early innovation phase, there has to be sufficient freedom for creativity, while in the development phase, leadership and discipline have to be guaranteed. Or in the words of the study of University St. Gallen:

“Successful companies have an appropriately focused innovation control system; the right degree of freedom has been established and the right decisions have been made.”

Unlike R&D performance measurements, innovation controlling deals with an integrated management of cross-departmental innovation activities and thereby serves as management support and communication medium for R&D. As illustrated below, innovation controlling contains besides operational elements also a strategic dimension in the early phase of the innovation process, including strategic technological reconnaissance, market analysis and project decisions.

Innovation Process (Enkel/Perez-Freije 2007; own translation)

As a recently published benchmarking study of University St. Gallen shows, a new product strategy reflected in spending decisions is clearly linked to positive performance. The role of innovation in achieving the overall business goals especially can be strengthened by a clear definition of strategic innovation goals and a roadmap for new products.

Target of innovation controlling is the problem-adequate planning and control of complex and long lasting innovation processes. The relevant innovation controlling instruments are designed to purposefully manage innovation processes. Continual project evaluation shall provide information in any innovation phase to decide whether the project will be continued or cancelled.  Thereby, improving effectiveness and efficiency of R&D is an important goal towards the valuation of costs, risks, resource allocation and future development.

“R&D currently needs to simultaneously excel in efficiency, quality, flexibility and innovativeness.” (Enkel/Perez-Freije)

Formerly, R&D controlling was limited to the ex-post examination of budget and time assignments. Nowadays, the provision of decisive information stands in the centre of innovation controlling, effectively supporting management in the development of successful innovations.

Weber/Vinkemeier (2007) thereby identify potential contribution of controlling to the future orientation of an organization by:

• “choice and monitoring of early warning indicators
• coordination and reporting of corporate intelligence providing the interface to other departments, for example cooperation with innovation management (data preparation and concentration)
• strategic controlling through planning, control of premises and processes.”

In many industries, innovations are the most important driver for economic success. Because of globalization and increasing competition, companies are forced to accelerate their innovation rates. Currently however, most innovations fail in the market as Berth/Kienbaum have shown within a study on innovation efficiency monitoring the output of 1919 ideas. Out of all ideas, 369 concrete projects arose, 176 became finished products and 52 of them were brought to market entry. 24 of these were total losses, 17 developed on average and only 11 provided real success.

It is highly paradox that innovations often seem to arise contrary to any rules and that higher expenditures for Research & Development do not always guarantee success. R&D-management therefore has to face the challenge to decide in which innovation projects to invest. Available resources have to be allocated efficiently throughout this process. Innovation controlling therefore gains importance and has a significant influence on the R&D-performance of a company.  An increasing part of innovations, how-ever, is descended from external sources, because in a world of widespread knowledge, companies cannot entirely rely on their own research in order to be innovative, but need to integrate external competencies where necessary. The concept of “Open Innovation”  therefore even constitutes a new challenge for the innovation controlling of cooperative networks or virtual organizations.

The main question is therefore whether you should be rather cooperative than controlling in regard to innovation, especially in virtual organizations. On the other hand, resources could be wasted if no one looks at their efficient assignment.

One may consider our concept of Open Entrepreneurship even as an approach towards the future of work building a democratized economy where everyone will become an entrepreneur and can be recruited (or rather recruits himself) for temporal projects in permanently changing constellations and forms of organization. Despite all promises of the so called digital revolution, one may not forget that a democracy like this will probably ever be a representative democracy not making it possible for everyone to participate to the same degree. The model therefore is helpful to improve the understanding of currently happening developments, but does not meet the requirements of solving any problems of society as the concept is not intended to achieve.

So the question remains open whether this approach is part of another organizational fashion or whether it really holds revolutionary potential. Probably the answer to that lies, like most answers to difficult questions, somewhere in between. Like in every oscillation there will stay something behind, possibly even deflecting the movement of the pendulum of organization slightly to another direction. The importance of this approach as of any other, even if they may contain characteristics of fashions, lies in providing permanent challenge to the dynamics of organization. In so far the democratizing creation of wealth in networks can be a contribution to the core of entrepreneurship: the destruction of existing, the creation of new – and thereby the permanent reinvention of organization.

The current developments of entrepreneurship in networks can be described by the metaphor of a jam session in regard to the organizational models currently observable. The interpreters of this jam session, the networked individuals and organizations, seem to have thrown the conductor’s score away improvising on the challenges and opportunities they are confronted with. The result of that may be growing disorder and instability of increasingly diversifying society, but just like in jam sessions this seems to be nevertheless working astoundingly well. The order emerging out of disorder and the stability of highly dynamic systems are two paradox figures that seem to be observable in many situations where sociality meets individualism.

On the basis of the mentioned approaches towards Open Innovation and Open Entrepreneurship, we would like to venture on the attempt of a synthesis. From our point of view both approaches are interacting and built on each other. Only in combination a deeper understanding for the existing potentials of both concepts is possible. While the perspective embodied in Open Innovation by the integration of the user into the organization mostly has a top-down view, Open Entrepreneurship exactly works the other way round from bottom-up. Regarding inter-organizational cooperation, Open Innovation provides an inside-to-outside view on external resources and competencies whereas Open Entrepreneurship comes from the outside, from the widespread knowledge probably emerging in something that could possibly build a future inside in networks or on the switch to markets and hierarchies.

A new type of entrepreneur therefore has to combine elements of both approaches and make innovation on the whole more likely to happen by acting in networking structures together with other users or companies: the Open Entrepreneur or in short terms “Openeur”. According to that, Openeurs are companies or single individuals who take advantage of the opportunities of Open Innovation through collaborative work in networking structures and who generate added values in networks out of their knowledge and faculties.

Morten Hansen and Henry Chesbrough describe networked incubators as companies offering space, coaching, funding, and various basic services for start-ups, and being a new organizational model to create value and wealth.

“The promise of networked incubators lies in their potential to surpass existing organizational structures in creating and growing new businesses. They combine the benefits of large corporations with those of VC-backed start-ups […]. Networked incubators are designed to launch a greater number of ventures more quickly than an established company can, and their ability to connect those start-ups surpasses that of an independent VC.”

In that sense, networked incubators do not play a role much different from intermediary platforms networking Open Entrepreneurs unless they are unvirtually real. The main difference lies in the local aggregation of start-ups produced by networked incubators, having contributed in the density of high-tech companies for example in Silicon Valley as well as for the corporate birth surplus of the New Economy. The interesting part of it lies in the competition between the different networks, virtual regarding intermediary platforms as well as in real terms of networked incubators.

While real start-ups are bound to networked incubators by funding or long-lasting rent-contracts, virtual collaborations do not stick necessarily to a specific network and might change sides to another one if conditions alter. Therefore the competition between virtual networks must usually be higher although networking externalities could maybe suggest staying on the largest platform where the most customers or contacts can be expected. However, for an Open Entrepreneur in virtual networks nothing speaks against partnering with different networks at the same time. Therefore pressure on virtual intermediary platforms could be very high if competitors are around that could benefit from this latent polygamy.

The concept of Open Entrepreneurship contains several paradoxes which can become relevant through this special form of organization. First, people collaborating in networks are consumers and producers at the same time. Alvin Toffler’s approach of prosumerism leads in a functional view in the same direction for the non-monetary economy. Especially for the interactive creation of wealth understood as the informational exchange between manufacturer and user the problem emerges that you may have to start talking to yourself.

Second, Open Entrepreneurs in networks can be seen as competitors and cooperators at the same time. Cooperation and competition are reciprocal, being two sides of the same medal reflecting each other. For instance, if you consider entrepreneurs trading with the same goods over an intermediary platform, they have the same interest in regard to a well working cooperation towards the platform, but stay in competition to each another.

Third, there exists something like an informational dilemma. Large-scale collaboration in the mentioned form seems to have become only possible by the technological development of the internet and the reduction of transaction costs for this collaboration. At the same time the internet reduces asymmetry of information and therefore the customer knows better about the market price of a certain good or service that is tradable worldwide over the internet. Therefore when switching a potential innovation generated in networks onto the worldwide market of the internet, the margins for profits could stay very low. Through this, innovation could be destroyed by the same medium that supported its creation.

A challenging question that remains still open towards the approach of Open Entrepreneurship is the definition of who actually are the individuals that have the necessary attributes to venture entrepreneurship in networks. Eric von Hippel’s concept of Democratizing Innovation (2005) makes thereby the importance of lead users clear as already mentioned. The mostly intrinsic motivation of lead users to cooperation results in networks of lead users not being a mass phenomenon. It is likely that particularly the most creative users take part in such a form of collaboration.

The question that arises is, in how far the mentioned lead user approach might be equivalent to Richard Florida’s concept of the Creative Class (2002) based on the role of creativity by the according to Florida key factors of economic development, technology, talent and tolerance. May it be possible to network the creative class even if they live in different cities all around the world? It seems likely that people belonging to that socio creative group would willingly join to forms of networked collaboration, but as the different concepts focus on different attributes and mental models congruence cannot be proven.

A further look still has to be provided on the creativeness of individuals inside a networked cooperation. If anybody will be in the position to become an entrepreneur in networking structures, what is still the core that qualifies for entrepreneurship? According to Joseph A. Schumpeter the creative destructive element characterizes an entrepreneur.

“They will create something new and destroy the old thing, conceive and carry out bold plans, which, whatever their nature, seem to ridicule any attempt of being grasped.” 

Permanent reinvention and continuous renewal is the consequence of that. The creation of a new organization therefore always embodies already the core of its own destruction. For the creation of wealth in networks this estimation might be true after all considering that the network as well underlies continuous change. The stability of the network therefore is shown by the ability to cope with change inside the network or its parts.

Eric von Hippel (2005) delivered an example for inter-personal collaboration developing goods mainly on the own resources of the group involved in the absence of a platform or manufacturer.  These “User Innovation Networks” as von Hippel calls them can cope with complex, knowledge-based goods like software as well as with physical goods if they can integrate the necessary infrastructure for production into their networks.

For instance, the kite-surfing industry has been mainly developed by customers changing the rules of industrial creation of value and forming a 100-million-dollar industry today. Because of the high specificity and specialists’ knowledge needed to produce kite-sails, not many people possessed the capabilities to develop good sails. These customer developers built only because of their personal needs a community sharing their latest blueprints with each other and continued on developing the kite-sails designed by others. By acting that way, value in networks could have been generated when the blueprints are subsequently manufactured by external sail makers who usually all are able to work with open interfaces and standards like CAD.