Proceedings of 7th Annual American Business Research Conference
23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5
Applying the Outside-In Process Open Innovation Model in the
Mature Furniture Sector; the GSF Research Project
Karagouni Glykeria1, Trigkas Marios2 and Papadopoulos Ioannis1
The present paper refers to the investigation of implementing an open innovation model in the
Greek furniture sector, exploring the interactions between Higher Educational Institute, firm and
consumers, for the development and successful launching of an innovative Green and Smart
Furniture (GSF) product. The model is based on the outside-in process; it aims in the
enrichment of the company's own knowledge base through the integration of suppliers,
customers, and external knowledge sourcing and regarding the development and successful
commercialization of a green and smart furniture product. We argue that this process can
increase a company's innovativeness; hence we propose that the specific open innovation
framework can be promoted by relevant initiatives for Greek furniture enterprises at least. The
results apply mainly to the integration of inter-sectoral knowledge bases, the formulation of the
respective business strategy, innovation and NPD development. The open innovation concept,
placed at the core of a business strategy, can allow all parts to develop shared knowledge
which can accelerate access to market and commercialization; customers and related industries
can play a key role in the development of R&D activities and innovation in general.
Field of Research: Management
1. Introduction
In the beginning of the 20th century, industries presented a tendency towards the introduction
of scientific achievements into markets in the form of products and services. The majority
belonged to high-tech sectors such as biotechnology and pharmaceutics while the care
industry and machinery could claim a significant share of this trend. However, most of these
achievements were based on knowledge produced inside the firms’ boundaries. “Beside the
fact that science was entering into a flourishing era, its commercial use was still far away from
been obvious” (Chesbrough, 2003). This was translated in the existence of strong R&D
departments and the number of patents produced per year.
The significant changes in macro and micro economic level, the accelerating international
competition and internationalization opportunities, the focus on the importance of the cocreation of new knowledge and its recognition as a business’ strategic resource have led
towards different approaches of the development of innovation. Enterprises are now seeking
knowledge in customers, suppliers, Universities, public and private organizations and
institutes, even in start – ups (Chesbrough, 2003), signaling a transition from the traditional
closed, to an open innovation model. During the last years a growing number of sectors are
moving gradually towards this open model. Furthermore, this model appears to suit perfectly to
mature low-tech sectors such as furniture and textiles industry.
Low-tech firms do not have a tradition on R&D activities, since, according to literature, they are
supplier dominated, adopting innovation developed mainly by machine manufacturers.
1
Mrs Glykeria Karagouni MSc and Dr Ioannis Papadopoulos, Technological Educational Institute of Thessaly,
Department of Wood & Furniture Design and Technology, V. Griva 11, Karditsa, Greece, 43100 papad@teilar.gr
karagg@teilar.gr
2
Dr Marios Trigkas, Aristotle University of Thessaloniki – Department of Forestry & Natural Environment, Lab. of
Forest Economics, Finikas Thessaloniki, building B, 55134 mtrigkas@for.auth.
Proceedings of 7th Annual American Business Research Conference
23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5
However, an emergent stream of literature indicates that low-tech industries are becoming
more intensive as creators and users of knowledge than usually acknowledged, with
cognitively deep and complex knowledge bases. Therefore, besides such as machine
manufacturers and suppliers, external knowledge sources such as firm of other sectors,
organizations, Universities and research institutes can play a decisive role in their innovation
and overall business strategies (Heidenreich, 2009; Santamaria et al., 2009). Furthermore,
empirical literature confirms the complementarity with high-tech industries, as initially pointed
by Heidenreich (2009); in many cases low-tech firms open new market opportunities for hightech industries. Yet, besides the arising interest in low-tech innovativeness, theoretically driven
and empirically-based research exploring factors, processes, mechanisms, constraints or
factors affecting university-low tech industry innovation projects remains relatively scarce.
The GSF research project explored the potential of applying such a model in the mature
furniture industry within the rather introversive and strongly conservative Greek furniture
sector. The project attempted the practical application of open-innovation and R&D-based
theory by developing collaborative innovation from A to Z providing a complete “best practice”
of the Outside-In Process Open innovation Model. The target was to challenge at least the
open-minded furniture entrepreneurs to reconsider their strategy and engage new approaches
to NPD, product life-cycle and potential markets. This appears to be an imperative for the
Greek furniture industry’s enterprises particularly after the recent economic crisis which
plagues the Greek entrepreneurial world in general and the furniture manufacturers more
specifically.
The core of the projected was based in the intersection of ecology, ICT and the tacit and
existing needs of Greek micro, small and medium furniture manufacturers to develop
capabilities for new competitive advantages. Selecting the elderly as the main target group,
research focused on the development and market introduction of technologically supported
furniture eco-solution to foster the targeted consumers’ self-determined living in their homes.
The research was undertaken by the Laboratory of Applied Marketing, Management and
Economic of the Wood and Furniture Design and Technology Department of TEI of Thessaly
Greece (WFDT from now on). The research team included an ICT company, a furniture small
company, two other Universities and a number of external collaborators. The research project
has been co-financed by the European Union (European Social Fund - ESF) and Greek
national funds through the Operational Program "Education and Lifelong Learning" of the
National Strategic Reference Framework (NSRF) - Research Funding Program
“ARCHIMEDES III Investing in knowledge society through the European Social Fund”.
2. LITERATURE REVIEW
2.1 Open innovation within the context of innovation systems
Scientific research approaches the meaning of innovation in a systematic way instead of the
classical linear model. Enterprises do not innovate by their own, but there is a continuous
interaction with the individual members of the system; these interactions shape the firm’s
innovative activity (Feinson, 2002; Adam, 2014). Four major types of innovation systems’
approach can be found in the literature: 1) National Innovation Systems (NIS), 2) Regional
Innovation Systems (RIS), 3) Sectoral Innovation Systems (SIS) and 4) Technological Systems
(TS) (Rodríguez and Crescenzi,2008; Leydesdorff, 2013; Tödtling and Trippl, 2013; Lundquist
and Trippl, 2013). The key to success of such a system is the way its members interact under
Proceedings of 7th Annual American Business Research Conference
23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5
the context of a network (Castellacci and Natera, 2013).The demand for innovation from the
side of consumers and final recipients and users in general plays a central role in the approach
of innovation systems leading to the paradigm of an open innovation model (Chiaroni et al.,
2011).
The term open innovation was introduced by Chesbrough (2003) and implies, that external
partners perform part of the innovation processes. According to Chesbrough et. al, (2006: p.1),
open innovation is: “… the use of purposive inflows and outflows of knowledge to accelerate
internal innovation, and expand the markets for external use of innovation, respectively.” By
using a firm's process perspective, research discusses the new developments in open
innovation and illustrate their relevance in practice through illustrative figures. Three core
processes can be differentiated in open innovation (Gassman and Enkel, 2004; Grönlund, et
al., 2010):
1) The outside-in process: enriching the company's own knowledge base through the
integration of suppliers, customers, and external knowledge sourcing. This process can
increase a company's innovativeness (Laursen and Salter, 2006). The outside-in process
reflects companies' experience that the locus of knowledge creation does not necessarily
equal the locus of innovation. Within this process, we can see an increasing awareness of the
importance of innovation networks (Dittrich and Duysters, 2007; Enkel, 2010; Chesbrough,
2013), new forms of customer integration, such as crowdsourcing (Howe, 2008), mass
customization, and customer community integration (Piller and Fredberg, 2009), as well as the
use of innovation intermediaries (Lakhani, 2008; Piller, 2009).
2) The inside-out process: The external exploitation of ideas in different markets, by
promoting ideas to the external environment. The process involves the innovation movement
from the company to the outer world, but not though traditional innovation channels and new
product development procedures (NPD), but through alternative channels, often not connected
with a company’s core competences.
3) The coupled process: Linking outside-in and inside-out processes by working in alliances
with complementary companies during which interactive and feedback relationships are crucial
for success. (Gassmann and Enkel, 2004; Dodgson, Gann & Salter, 2006). This type of
process didn’t gain popularity during further research of open innovation.
2.2 Open innovation and business sectors
Research in open innovation was conducted from different industries’ perspectives ranging
from ICT industry (West & Gallagher, 2006; Bigliardi, Dormio & Galati, 2012), consumer
electronics (Christensen et al., 2005; Park, Amano & Moon, 2012), food (Sarkar and Costa,
2008) and financial services (Fasnacht, 2009), to automotive (Ili et al., 2010) and
biotechnology (Fetterhoff and Voelkel, 2006; Bianchi et al., 2011). According to relevant
literature, open innovation is more common in industries with shorter product life cycles; i.e.
high-tech industries. However, open innovation can be found in low-tech industries as well
(Spithoven, Knockaert and Clarysse, 2008). Other studies confirmed that there are minor
differences in the adoption rate between industries (e.g., Chesbrough and Crowther, 2006;
Lichtenthaler, 2008; Keupp and Gassmann, 2010; Lichtenthaler and Ernst, 2009; Van de
Vrande et al., 2009). Practice shows the existence of open innovation in traditionally closed
industries (Ticher, 2007), although some authors insist that certain industries are not suitable
for open innovation, due to a high level of secrecy and security reasons (Gassmann, 2006).
Proceedings of 7th Annual American Business Research Conference
23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5
In general, low-tech firms are quite reluctant to co-operations especially with universities and
public research organizations (e.g. Seggara-Blasco, 2010). However, low-tech firms of an
innovative culture seem to be more willing to join common innovative efforts with scientific
organizations, technology liaison offices, political institutions, associations, chambers of
commerce and industry or also regionally focused support programmes. Focusing in the
Greek furniture sector, previous research of Trigkas et al. (2012) and Karagouni et al. (2010)
revealed the need for more attention in the area of new products’ development and methods of
products’ distribution. The greater percentage of sales comes from products which are
technologically improved and embody new methods of production and distribution. However,
the sector’s enterprises are not capable of proceeding by themselves alone towards radical
innovations yet. Furthermore, it seems that furniture manufacturers have not managed to
develop trust or they are not well informed regarding several organizations, governmental or
private for acquisition and transfer of innovation, technology and know-how. There are
significant improvement margins regarding the development and application of R&D mainly
through the acquisition of external R&D. This means that specific efforts should be made
regarding the enhancement of an open innovation model to be adopted by the sector’s
enterprises. The use of IT could also play a fundamental role towards this direction (Trigkas et
al., 2014).
3. Methodology applied
Research is based on the GSF new product development process. This paper approaches
the way the participating Greek furniture firm collaborated with the Department of Wood &
Furniture Design and Technology (Technological Educational Institute (TEI) of ThessalyGreece). It is still an ongoing project; however at this point of progress, most results have
already come up. The model for the firm is this of the outside-in process; knowledge comes
from several sources with the TEI Department to play the core role, high-tech companies to
develop technical solutions and potential customers to provide knowledge in order to fulfill
existing and tacit needs and desires.
•
•
•
•
•
•
The steps followed during this open innovation process are:
New product development planning prepared by the TEI team after discussions with the firm’s
CEO and his design department.
A thorough study of all relevant provisions that are in effect internationally, in order that the
final result is compatible with the current legislation and specification regarding ergonomics,
ecological and safety issues.
Market research including identification and demographics of target market, international
trends and tendencies and face to face questionnaires consumers.
Collection, selection and elaboration of information and knowledge on materials, functions and
outputs; all parties had to present their strong and weak points in order to be find out solutions
to emerging problems. The designers of the Department and of the firm collaborated in order
to produce a series of drawings, ideas and concepts with their distinctive design signature.
Core limitations were the ecological and smart criteria and their successful combination. The
firm could afterwards use all inserted knowledge for further NPD.
Creation of functional prototypes and pilot production in the firm’s plant. This was the main
challenge for the firm; to manage the production of the GSF product in co-operation mainly
with the ICT Company.
Registration of the final drawings.
Proceedings of 7th Annual American Business Research Conference
23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5
•
•
The TEI team in co-operation with another Business School Department and the Marketing
team of the firm is now preparing an effective marketing plan for the promotion of the GSF
product in the Greek and international market and the relevant marketing strategy.
Branding by design would be developed by the firm in order to be in line with its overall image.
However the Universities’ teams would support it further.
The core target of the GSF regarding the interaction with the furniture industry is the
enhancement of the current in-house NPD and innovation activities and operation. It therefore
encourages the use of modern technologies not only in the manufacturing and material
aspects but further in NPD through the collaboration with high-tech industries and the support
of University parts. So far, Greek furniture firms are rather reluctant to engage the open
innovation model being unaware of its potential and afraid of extending to unknown areas such
as the engagement of ICT.
Figure 1: The GSF open innovation process
•Technology
•Strategy
•Accelaretion of
internal
innovation
•Knowledge
•Technologies
•Solutions
•Values
•Commercialazation
•Use of innovation
FIRMS
CONSUMERS
OTHER
INDUSTRIES
UNIVERSITIES
•Knowledge
•Resources
4. RESULTS
The results of the GSF project regarding open innovation and more precisely the outside-in
process can be integrated into the following key processes in the furniture sector:
Integration of the knowledge base in the sector: Findings highlight several implications for
creating effective shared knowledge creation environments in the mature furniture sector. The
GSF project is trying to create such spaces of shared knowledge, as precursors to process
innovation implementation. This is achieved through the acquisition of know-how on the
ecological furniture by all the involved researchers, institutes and professionals, the
dissemination of know-how in the furniture enterprises as well as among the consumers. This
includes further the recording and elaboration of the opinion of the industry and consumers on
the ecological furniture, the improvement of the designing skills and capabilities of the
designers and technicians, development of guidelines for the production of GSF products and
finally the dissemination of results in various activities of the furniture firm. The creation of a
Proceedings of 7th Annual American Business Research Conference
23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5
database of all relative legislation on ecological furniture along with the establishment of
criteria that will condition the ecological furniture, constitute some extra ways of knowledge
creation around green and smart furniture products.
Formulation of business strategy: it supports the creation of a Product Mission Statement as
well as the determination and quantification of the required inflows for the production of ecological furniture. Innovation-based strategy is fundamental for the development of “green”
business plans for the production of eco-logical furniture incorporating the ICT technology, the
configuration of the relevant operational strategy, the determination of a relevant brand
strategy enhancing the advantages of the eco-logical furniture and at a final stage the support
of the competitiveness and the investments of the furniture enterprise.
Technology-based innovation culture in an extremely conservative and mature industry: The
project materializes the phrase of Theodor Von Karman, (1881-1963) “…science investigates
something that exists, technology creates this that does not exist yet.”. The acceleration of
firms’ innovative activities and the establishment of an innovation culture are core elements of
the project. These act as a catalyst for the deployment of specific innovation activities such as,
the creation of patented or registered drawings, which is rather unusual for furniture
manufacturers in Greece. The physical output of the GSF project regards the first European
ecological and at the same time intelligent piece of furniture together with a fully integrated
innovative process; i.e. functional prototypes, manufacturing feasibility study, the reformation
of their productive process, a marketing plan and a promotion plan for the Greek and
international market. Besides the involvement of high technology and know-how in the furniture
sector, the GSF project highlights further the protection of the environment and the forestall
wealth as well as the health and safety of both consumers and the firm’s employees. At this
phase the firm is introduced in a second-order level of co-operation which appears to be more
intangible than in the NPD phase; the preparation of the marketing plans for the international
market regarding an innovative product. This is a new area under discussion within the
framework of the open innovation model; co-operation cannot rest only in R&D but extends in
several other areas, since furniture firms in Greece are lagging behind even in issues
regarding management and marketing. The successful commercialization of the GSF products
constitutes an important aim at this stage of the specific open innovation process’ i.e. the
development of alternative promotion channels for the commercialization of the GSF product.
This process will be further developed under the co-operation of the University with the
relevant department of the firm.
The role of consumers: The GSF project applied the relevant theory of involving consumers
mainly in the early stages of NPD (Gruner and Homburg 2000; Grewal, Lilien, and
Mallapragada, 2006). Consumers were involved at the ideation (i.e., idea generation) stage at
a high degree. Their opinions, suggestions and desires were exploited in the product concept
development stage. Once the core idea prepared, selected consumers were involved in the
concept development stage by sharing the concept with them and actively seeking their input.
This was quite novel for the furniture manufacturer; executives admitted the value of this sort
of inexpensive input and the reduction of their anxiety on the acceptance of such "strange"
furniture products by the elderly who are highly conservative. In accordance with relevant
literature, major benefits were the achievement of high differentiation, the increased
effectiveness of the products and its services which applied to specific requests and the
higher perceived quality and novelty. Actually, it appeared that customers’ involvement
supported the creation of a pool with a significant number of fresh ideas, expectations and
Proceedings of 7th Annual American Business Research Conference
23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5
challenges. Furthermore, there were certain issues that were early located due to the
consumers' observations and comments, saving time and money from unnecessary work.
A second but not of less importance series of benefits regarded the commercialization and
post launch at least at regional level. Due to the involvement of a significant number of
consumers and the publicity of the research project there was great consumer enthusiasm and
world-of-mouth effects. Moreover, the customers involved declare ready to use the furniture
piece besides the need to "be educated" in the functions of the smart product.
5. CONCLUSIONS
The present paper discussed the implementation of an open innovation model in the Greek
furniture sector, exploring the interactions between Higher Educational Institute, firm and
consumers, for the development and successful launching of an innovative Green and Smart
Furniture (GSF) product. The model was based on the outside-in process; it aimed in the
enrichment of the company's own knowledge base through the integration of suppliers,
customers, and external knowledge sourcing and regarding the development and successful
commercialization of a green and smart furniture product.



The firm's own knowledge and technology served as a basis to enhance the innovative
potential of it which was further supported by the company's strategy. However, the firm's team
needed to admit its internal weaknesses regarding innovation and knowledge and be prepared
to co-create it; this was not that easy at it appears. It implied the full commitment to openness,
trust and sharing, the development of relevant mechanisms and the ability for technology and
knowledge transfer. However, according to the executives, the GSF project besides the
physical output enacted such mechanisms which they intend to turn to routines.
More precisely:
universities can add mainly to novel knowledge but they further provide other resources such
as a more organized process to develop R&D based innovation; in parallel they may benefit
from the industrial experience and apply their findings in multiple ways advancing knowledge.
other industries can use mature firms as vehicles for their technologies and innovations
consumers can be co-creators regarding ideas, values and expectations and at the same time
facilitation commercialization.
Traditional firms such as the ones of the furniture sector may use the outside – in process of
an open innovation model to create paths to innovative niche markets, particularly attractive for
modern consumers. Eco-innovation in combination to high -technology and knowledge inflows
can be one way of the challenge.
This process can increase at least a furniture company's innovativeness; hence we could
further propose that the specific open innovation framework can be promoted by relevant
initiatives for Greek furniture enterprises at least. The open innovation concept, placed at the
core of a business strategy, can allow all parts to develop shared knowledge which can
accelerate access to market and commercialization.
Acknowledgments
This research has been co-financed by the European Union (European Social Fund - ESF)
and Greek national funds through the Operational Program "Education and Lifelong Learning"
Proceedings of 7th Annual American Business Research Conference
23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5
of the National Strategic Reference Framework (NSRF) - Research Funding Program:
ARCHIMEDES III. Investing in knowledge society through the European Social Fund
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