Open innovation in value networks

Chapter 13: Open Innovation in Value Networks
13.1 Introduction.
The complexity of new technologies often goes beyond the capabilities of individual companies and forces innovating companies to cooperate with other firms and organizations to reduce the inherent uncertainties associated with novel product markets. In this chapter we will focused on the role of interorganizational networks in thecommercialization of new product offerings based on the technological breakthroughs in the agbiotech.
This chapter shows that innovating companies also have to set up and mange interorganizational networks to commercialize their innovation successfully. These networks are different from the networks that firms establish to tap into external technology sources in the early stages of the funnel(figure 1.2). These networks are directly responsible for the market success and profitability of new technologies.
In agbiotech value constellations are interorganizational networks linking firms with different assets and competencies together in response to or in anticipation of new market opportunities. Value constellations create value for a target customer group by means of a business modeltranslating technological developments into new commercially viable products. The value constellation is set through acquisitions, licensing agreements, non equity alliances, joint ventures, contracting, and other types of relations that go beyond arm’s-length relation.
New business models that are radically different from those underlying existing product offerings force the innovating firm to setup a value constellation with different partners to successfully launch a new product. Value constellations are a particular type of interorganizational networks, where value creation and distribution, external resource or knowledge sourcing, interorganizational ties, and network governance call for an integration of various frameworks.
13.2 Agricultural Biotechnology and New BusinessOpportunities
Before de advent of agbiotech, agriculture was a mature and slowly growing business and competition was based on price and economies of scale were crucial,
The first generation of GM crops was a designed to reduce farm production cost or improve crop yields. The most popular examples are pest-resistant and herbicide tolerant corps. These two crops lower use of insecticides or herbicide. Theadvantages for farmers are time and cost savings and are beneficial for the environment.
These enhancements however only affected a small part of the existing value creating system, and business model stayed strictly focused on commodity-like agricultural products. For farmers, competition is still based on price and efficiency gains remained the most important competitive driver.
Contrary tothe first generation of biotechnology products, many of the innovations under development in the agbiotech focus on value-enhanced or output traits. The GM crops are designed for specific need of end-users in different industries. For example some GM crops under development focus on deliver better or healthier ford and feed. Some GM tomatoes remain firm longer and retain pectin during processinginto tomato paste, which generates advantages through the entire value chain, the farmer get a better tomato, the processor can reduce waste, and the consumer is offered quality and cost savings.
Biotech also transforms the agricultural industry into an important upstream industry for many industrial sectors that were previously not related to agriculture, for example better fiber quality of thecotton, edible vaccines, cheap drug development, biodegradable polymers, or new energy sources. Agbiotech enables companies to set up new value creating systems in different industries also enables agriculture to shift from production of commodity-like food and feed to high priced, specialized plant-derived products that can be applied in a wide range of industries.
13.3 Value constellations:...