Collaboration business models - rapport

Collaboration and Business Models
in the Creative Industry
Exploring heterogeneous collaborations

Commissioner: IIPCreate
Authors:   Remco Kossen
Peter van de Poel
Isabelle Reymen
Date: March 2010

Collaboration and Business Models in the Creative Industry Page 2 of 47

PREFACE
This report is the result of the IIP Create project "Collaboration and business models in the creative
industry". Collaboration and business models are one of the key themes of the Strategic Research
Agenda of IIP Create. IIPCreate is one of the Innovation platforms of ICT Regie, stressing the importance
of the creative sector. The report describes a) important and relevant literature, b) important
stakeholders, and c) best practices and problems on collaboration and business models in the creative
industry. The aim of this report is to inform and convince policy makers, knowledge institutes and
practice of the importance of the topic and indicate areas for further research in the near future. It
should provide the basis information for a proposal and consortium on the topic.

Based on a request from IIP Create, Isabelle Reymen from Eindhoven University of Technology (TU/e)
and Catholijn Jonker from TUDelft wrote a project proposal in Spring 2009, which was accorded by
IIPCreate in August 2009. It was one of the Ways of Working (WoW) Projects, coordinated by Anne
Nigten. The project was performed from September 2009 till March 2010 by two master students of
TU/e, Remco Kossen and Peter van de Poel, under supervision of Isabelle Reymen.

dr.ir.arch. Isabelle is Assistant Professor Design Processes at the Eindhoven University of
Technology (TU/e) and working in the Innovation, Technology Entrepreneurship, and Marketing
Group (ITEM) of the Department of Industrial Engineering and Innovation Sciences. The
research conducted in the ITEM group relates to the areas of New Product Development, and
Entrepreneurship and Commercialization of New Technology. Education is mainly provided in
the programs "Innovation Management" (Master) and "Technische Bedrijfskunde" (Bachelor).
Entrepreneurship related education activities take place in the Brabant Center of
Entrepreneurship, a collaboration between the University of Tilburg and the TU/e.

B.Sc. Peter van de Poel finished his Bachelor Industrial Engineering and is enrolled in the
Operations Management and Logistic master at TU/e. He plans to graduate this summer.

B.Eng. Remco Kossen finished his bachelor Mechanical Engineering and is enrolled in the
Innovation Management master. He plans to graduate this summer.

We especially like to thank people who made this study possible. First of all, we like to thank Catholijn
Jonker for her support in writing the proposal. Also very important was Anne Nigten for representing the
WoW projects on a higher level in IIPcreate. We like to thank Geleijn Meijer (director of IIP Create) and
Patricia Heukensfeldt Jansen and Frits Grotenhuis working for IIPCreate for their support of our project,
also financially, and for arranging all contract‐related aspects. Content related expertise in the field of
collaboration and business models was obtained from the TU/e Department of Industrial Engineering
and Innovation Sciences, group of Innovation, Technology entrepreneurship and Marketing (www.item‐
eindhoven.nl). Especially Hans Berends and Ksenia Podoynitsyna provided constructive feedback during
the project.


TABLE OF CONTENTS
Preface..................................................................................................................................................... 3
Summary.................................................................................................................................................. 5
1 Introduction ..................................................................................................................................... 7
2 Research Approach .......................................................................................................................... 8
2.1 Overall Approach .................................................................................................................... 8
2.2 Identification of Important Stakeholders ................................................................................ 8
2.3 Identification of Best practices and Problems ......................................................................... 8
2.3.1 Data Collection ................................................................................................................... 8
2.3.2 Case Selection..................................................................................................................... 8
2.3.3 Data Analysis ...................................................................................................................... 9
2.4 Literature Review.................................................................................................................... 9
3 Literature Review ........................................................................................................................... 10
3.1 Introduction.......................................................................................................................... 10
3.2 The Creative Industry............................................................................................................ 10
3.3 Collaboration ........................................................................................................................ 12
3.4 Business Models ................................................................................................................... 13
3.4.1 What is a business Model? ............................................................................................... 13
3.4.2 Frameworks of Business Models....................................................................................... 13
3.4.3 Type of Business Models .................................................................................................. 16
3.5 Collaboration and Business Models ...................................................................................... 17
3.5.1 Open Business Models: ‘Inside‐out’ and ‘Outside‐in’........................................................ 17
3.5.2 Co‐development partnerships .......................................................................................... 19
3.6 Conclusion ............................................................................................................................ 19
4 Important Stakeholders.................................................................................................................. 20
4.1 Stakeholders Interviewed ..................................................................................................... 20
4.2 Other Stakeholders in the Creative Industry ......................................................................... 22
4.3 Conclusion ............................................................................................................................ 23
5 Best Practices and Problems .......................................................................................................... 24
5.1 Collaboration in the Creative Industry .................................................................................. 24
5.1.1 The importance of having a network ................................................................................ 24
5.1.2 Formalization and contracts & IP ...................................................................................... 24
5.1.3 Communication & trust .................................................................................................... 26
5.1.4 Heterogeneity in Size and Discipline ................................................................................. 26
5.2 Business models in the Creative Industry.............................................................................. 28
5.3 Collaborative Business Models.............................................................................................. 30
5.4 Conclusion ............................................................................................................................ 32
6 Conclusions .................................................................................................................................... 33
7 References ..................................................................................................................................... 35
8 Interview notes .............................................................................................................................. 36
9 Appendices..................................................................................................................................... 37
9.1 Interview Protocol entrepreneur .......................................................................................... 37
9.2 Interview Protocol – information brokers ............................................................................. 39
9.3 Business Models ................................................................................................................... 41


SUMMARY
This report is the result of the IIP Create project "Collaboration and business models in the creative
industry". Collaboration and business models are one of the key themes of the Strategic Research
Agenda of IIP Create. The report describes a) important and relevant literature, b) important
stakeholders, and c) best practices and problems on collaboration and business models in the creative
industry. The aim of this report is to inform and convince policy makers, knowledge institutes and
practice of the importance of the topic and indicate areas for further research in the near future. It
should provide the basis information for a proposal and consortium on the topic.

Collaboration in the creative industry is indeed very important. There are several reasons for
collaborations between partners in the creative industry. For example, creative businesses (ZZP, start‐
ups, SME,) often lack resources to leverage their creativity into successful products whereas other
(larger) companies often lack creativity and speed to exploit their IP. Based on our study, we see
heterogeneous collaborations in the creative industry as collaborations a) between different type of
partners: e.g. ZZP, SME, start‐ups versus e.g. large corporations, knowledge institutes, cultural institutes,
b) between partners from different disciplines (different Beta disciplines like mechanical engineering,
electrical engineering etc., but also alfa and gamma disciplines), and c) with different positions in the
value chain/on different topics, e.g. concept development, marketing and customer involvement, supply
chain, etc..

Important problems recognized in collaborations in the creative industry are a) economic valuation of
creative/cultural value is difficult since this value is to a great extent intangible, which often rises
problems with the protection of IP or in the attraction of money; b) differences in culture and approach
between partners (e.g. formality, hierarchy, scale). Since the creative industry employs approximately
30% of the Dutch employees, the collaboration problems are not incidental but structural; most of the
interviewees state that it is difficult.

Important enablers for collaborations in the creative industry seem to be subsidies (like Point One),
development environments (like Fablab), networks (like social networks), and communication and trust
(versus formalization, contracts and IP). Practitioners invented numerous ways (best practices) to
overcome typical problems with heterogeneous collaboration. Many entrepreneurs are involved in
(large) networks and use strong‐ and weak ties relationships. These relationships enable them to attract
money and raise funds, get (free) juridical advice, and/or start new cooperation’s. Many of them state
that communication and trust are essential in maintaining these networks. Furthermore, entrepreneurs
show a great amount of creativity in creating business models. Some offer a diversified product/service
portfolio to extent the number of possible income channels. Others are involved in numerous subsidy
programs. Some even create unique distribution channels.

Two dominant type of business models could be identified in the creative industry, namely creators, in
which products are created and sold to buyers (physical as well as intangible assets are being sold) and
brokers, facilitating sales by matching potential buyers and sellers, of mainly intangible assets (based on
the framework of Malone, 2006). Some other business model related aspects we found are: every
model is unique; alignment of the partners' business models is essential in fruitful collaboration; and
open innovation (inside‐out and outside‐in) stimulates collaborations and enables new ways of doing
business. Despite the large amount of professional attention to business models, academic literature on
business models is scarce. We could identify several frameworks of business models and types of
business models. But insight on the design and development of business models for (heterogeneous)
collaboration is limited, let alone specific to the creative industry. Empirical research based on some
good (and bad) practices may help to create insight in the development of effective business models


and create guidelines to design business models useful in the creative industry. So although some best
practice exist, more research towards effective business models for collaboration in the creative
industry is needed. It should enhance both scientists and practitioners to fully exploit the opportunities
in the creative industry.

Also guidelines and support is needed to face the many challenges when setting up heterogeneous
collaborations. This has not been covered widely in the literature, and also in practice, little is known.
Many of the interviewees acknowledged that most collaborations are designed by their gut feelings.
Insight in the development and guidelines for the design of business models for different type of
(heterogeneous) collaborations is definitely missing. In order to create useful guidelines, many different
streams in the literature need to be synthesized, like literature on partnerships, inter‐organizational
collaboration and open innovation, and applied to the creative industry. For research purposes,
selecting a specific area in the creative industry is thereby needed, e.g. the music industry.

Some specific questions for further research on business models for heterogeneous collaborations are
How to create and appropriate value
‐ with business models that combine different types of value, not only economic value, but also
immaterial value (like cultural value, social value, knowledge value, idealistic (e.g.
sustainability) value)?
‐ with a business model that is both innovative and still accepted in the industry? (What
determines a business model success, to be accepted?)
‐ with (not‐used) IP of larger organizations (Philips Research, TNO,etc.), based on collaboration
between larger organizations and SME/creative ZZP in a win‐win situation? (idea of big player,
make business with small player) (valorisation)
‐ based on collaboration between creative ZZP/SME and larger organizations in a win‐win
situation? (idea of small player, scale up with large player)
‐ in interface between big players and users/ZZP/SME? (e.g. platform development between
professional content providers and users)?

How to support value creation and appropriation
‐ in inter‐organizational business models? (Business models that do not belong to one
organization, but to the value chain; next to the business models of partner organizations.)

Eindhoven University of Technology is interested in studying these questions in the creative industry and
welcomes collaborations with enthusiastic partners. We would like to combine knowledge creation
according to academic standards, with developing guidelines that can be used for improving value
creation and appropriation in the creative industry.


1 INTRODUCTION
The creative industry is an important (Dutch) industry. Approximately 30% of the Dutch workforce is
employed in this area (SRA, 2009). The rise of this new sector over the last years has led to a significant
amount of opportunities for the economy and its entrepreneurs. However, the different nature and
innovativeness of this industry gave rise to a number of new and difficult challenges (SRA, 2009). As a
result of these challenges, there is a demand for support in creating (new) business models and for
guidelines for collaboration between the involved parties.

Specific for the creative industry are heterogeneous collaborations. The creative industry is
characterized by many Small & Medium sized enterprises (SME’s) and Freelancers or "Zelfstandige
Zonder Personeel" (ZZP)1. They lack resources to leverage their creativity to bring successful products to
the (global) market. Bigger companies and multinationals do have the possibilities to bring creative
products to the market, however often lack creativity and entrepreneurial spirit. Collaboration between
these heterogeneous parties could therefore create interesting opportunities for both parties. Other
heterogeneous collaborations can be established with cultural institutions, knowledge institutes etc.
Supporting the organization of these processes of collaboration between heterogeneous partners and
the creation and appropriation of value for all stakeholders in these collaborations is of crucial
importance for the sector. Up till now it is however unclear how to do so effectively and efficiently.

The aim of this study is to identify relevant stakeholders, literature, and best practices and problems on
collaboration and business models in the creative sector. The scope of the study is defined as:
“Collaboration and business models between heterogeneous partners within the creative industry”2.
The creative industry is well‐delineated to ICT related creative industry. Only the Dutch situation is
looked at. The study should be seen as a first step in creating insight and support for business models
and collaborations in the creative industry.

First, academic literature regarding business models and collaboration is reviewed and analyzed, and
described in Chapter 3 of this report. Secondly, important stakeholders regarding business models and
collaboration in the Dutch creative industry have been listed in Chapter 4; their background range from
entrepreneur of a new venture, to consultant on business models and subsidy coordinator within a
multi‐national. Finally, best practices and problems regarding (heterogeneous) collaborations and
business models in the creative industry have been analyzed and are reported in Chapter 5, based on
interviews with creative SME’s and Freelancers, cultural institutions, multinationals, consultancy, and
researchers. The report starts in the next chapter with a discussion of the research approach and ends
with a conclusion summarizing the main findings and discussion of the directions for future research.


1
ZZP is a typical Dutch term for an entrepreneur without having personnel. It is often one person who
offers products or services and therefore sends a bill to his customers. (www.wikipedia.nl)
2
Samenwerking en business modellen tussen heterogene partners in de creatieve industrie


2 RESEARCH APPROACH
2.1 OVERALL APPROACH
The main goal of this study is to identify relevant stakeholders, literature, and best practices and
problems on collaboration and business models in the creative sector. For each sub goal, the
methodology to obtain it is described. In general, the research follows a design science approach
(Romme and Endenburg, 2006), aiming to link research with practice and being focused on contributing
simultaneously to both scientific knowledge as knowledge useful in practice.

2.2 IDENTIFICATION OF IMPORTANT STAKEHOLDERS
At the start of the project, several names and links were provided by IIP Create and Anne Nigten,
coordinator of the Ways of Working projects, as a starting point to look for important stakeholders.
These were extended by desk research and the "snowball principle", by asking interviewees for other
interesting or important stakeholders. It was looked at stakeholders in knowledge institutes,
consultancy, larger companies, SME and cultural institutions. There are two important limitations to this
method: (1) actors who are not connected by any of our sample will not be located; and (2) it highly
depends on the pre‐defined list to catch all major players, without isolating sub‐set of actors within the
creative ICT industry. In total 30 have been identified. This list is far from complete, but is at least
representative of the diversity in the sector. The list should be extended in a dynamic way in the future,
to capture recent developments.

2.3 IDENTIFICATION OF BEST PRACTICES AND PROBLEMS
2.3.1 DATA COLLECTION
To identify best practices and problems on collaboration and business models in the creative industry,
an explorative qualitative research approach was followed, best suiting the limited knowledge available
yet. Interviews were the main source of data. Furthermore, publicly available information on internet
was used.

For the interviews, a focused (i.e. semi‐structured) interview protocol was used to collect data regarding
the difficulties and best‐practices of collaboration between heterogeneous partners and their business
models. A different set of questions was used for interviewing entrepreneurs (interview protocol in
Section 8.1, in Dutch) and for knowledge brokers (in Section 8.2). The former focuses on the practice
and problems the entrepreneurs (start‐ups, SME's, larger corporations) experience; and asks for other
examples and important stakeholders in the sector. The latter focuses on the problems, challenges and
trends seen by knowledge institutes regarding collaboration and business models in the creative
industry, their knowledge of good and bad practices and also on links to other stakeholders and
important knowledge. In some interviews with entrepreneurs, some questions about their business
model were added. As a frame of reference, the Business Model Canvas from Osterwalder & Pigneur
(2009) was used; it is discussed in more detail in the literature chapter.

2.3.2 CASE SELECTION
Based on the identification of important stakeholders (see Section 2.2), a subset. was made for
interviewing. In total 16 interviews were held. Each interview still brought new insights; saturation was
thus not yet reached, but resource limitations forced to stop here. Table 1 classifies the interviewees
into the following categories: size of organization (in number of employees or Small/ Medium / Large /
Extra Large), Function of interviewee, expertise of interviewee, artifacts produced by the organization
and the extent to which a company is subsidized. The expertise of the interviewee has three categories:


Entrepreneurial expertise (expertise of the interviewee in starting and running new businesses), Creative
expertise (involvement and knowledge of the interviewee in the creative industry) and Business
Model/Collaboration expertise (expertise of the interviewee when it comes to the creation of business
models in a collaborative setting). The artifacts produced by the organization are knowledge, services, or
physical products.

Name Size Function Expertise of Artifacts produced by Subsidized
Interviewee Interviewee organization
E. C BM / Knowledge Services Products
Col
The Experience S Co‐founder / 0 + + 60% 40% 0% 0
Economy Director

Yvonne Kirkels, L Ph. D. ‐ ‐ + 100% 0% 0% +
researcher
Serious Toys 3 Co‐founder / 0 0 + 0% 0% 100% ‐
Director

Waleli 4 Founder / + + + 0% 60% 40% ‐
Director

CCF 1 Director ‐ + + 0% 50% 50% +

Verkeersgame 2 Co‐founder 0 ‐ 0 0% 0% 100% 0

NYOYN 6 Founder + 0 + 0% 0% 100% ‐

De Waag Society 57 Manager ‐ + + % % % +
Mediagilde 2+ Director 0 + + 0% 100% 0% +
Cap Gemini L Consultant ‐ ‐ + 0% 100% 0% ‐
Point One M Manager ‐ ‐ + 0% 100% 0% +
Prof. Grefen, L Professor ‐ ‐ + 100% 0% 0% +
researcher
Alice in Eindhoven 1 Director ‐ + 0 0% 100% 0% +
TNO XXL Consultant ‐ + + 33% 33% 33% 0
Patchingzone M Founder / + + 0 30% 70% 0% +
Director
TABLE 1: OVERVIEW AND CLASSIFICATION OF INTERVIEWEES

2.3.3 DATA ANALYSIS
The data of the interviews was combined and structured and inductively coded into main themes (e.g.
use of network, importance of IP, communication, trust, business model). Afterwards the results were
compared to the literature.

2.4 LITERATURE REVIEW
Scientific literature was searched for the topics (heterogeneous) collaboration and business models.
Most important and most relevant papers were cited. This overview is in no sense complete, but is,
according to us, a relevant representation of important literature. Mostly, general literature was found,
not specific for the creative industry. For information on the creative industry, mainly (SRA, 2009) was
used.


3 LITERATURE REVIEW

3.1 INTRODUCTION
This chapter shows the results of a literature review which aims to describe the specific factors and
elements that relate to (heterogeneous) collaborations and business models in the creative industry.
Although this review does not pretend to be exhaustive, it aims to cover as many relevant aspects as
possible. Note that the goal has been to include as many relevant aspects as possible, not to describe all
characteristics in the utmost detail.

The reviews start with the definition and characterization of the creative industry (Section 3.1). The
subsequent section provides a brief overview of specific elements that relate to collaboration (section
3.2). Section 3.3 is solely devoted to the definition and use of business models; special attention is given
to the business model of Osterwalder and Pigneur (Osterwalder and Pigneur, 2009). Section 3.4 focuses
on the interrelation between collaboration and business models. The final section (Section 3.5) provides
a conclusion.

3.2 THE CREATIVE INDUSTRY
The creative industry is an important (Dutch) rising industry. This rise is mainly caused by the increased
production flexibility (largely due to the increased IT technologies) and the growing reflexivity in
consumption (SRA, 2009). This reflexivity in consumption implies that customers buy products that
engage their personal identity. Apple users, G‐Star wearers, or 2nd hand shop customers all identify
themselves with the image and status of the brand. Or, to put it differently: “(the) creative life‐styles (of
customers) will affect private and community life, work styles and citizenship” (SRA, 2009, p. 10). As a
result, creativity is an important input into all sectors where “design and content form the basis of
competitive advantage in global economics markets” (Flew, 2002).

The Creative Industries Task Force Mapping Document was one of the first documents that
distinguished and defined the creative industry (Smith, 2001). It defined creative industries as “activities
which have their origin in individual creativity, skill and talent and which have the potential for wealth
and job creation through generation and exploitation of intellectual property”. Besides this often cited
definition (see e.g. (Cunningham, 2002, Flew, 2002) the creative industry is also defined as follows “(the
creative industry) contains all who are creating in relative autonomy, operate in a social network, live a
local ecosystem and deliver their goods where they can on the world” (IIPCreate, 2010). This ‘all’ in the
preceding definition is often referred to as the ‘creating’ class. This class is characterized by members
that behave similar and who can be seen as autonomous. “They optimize experience and expectation,
and strive towards total acceptance of invisible technology in ambient intelligent environments”
(IIPCreate, 2010; SRA, 2009, p.10).

The creative industry is defined by the ICTInnovatie Platform as including gaming, social software,
Artificial intelligence, disclosure cultural and personal heritage, new media, wearables and ambient
technology. This study uses an adapted version of this definition.

In this study, the creative industry is defined as including gaming, disclosure cultural and personal
heritage, new media, wearables and ambient technology. In this study, specific attention is paid to ICT
related companies.


Important Challenges in the Creative Sector

FIGURE 1: IMPORTANT CHALLENGES IN THE CREATIVE SECTOR

The creative industry differs from the so called cultural industry. Cunningham mention that it differs at
least on two factors (Cunningham, 2002, p. 7). First, “content creation will become more important than
it is in the current content industries. Distribution, not production, is where most profit‐making
currently occurs”. Second, “the creative industries will be characterized increasingly by their being
inputs into other (service, but also manufacturing and even primary) industries”. As a result of these
(and more) differences, the industry faces several challenges of which some are introduced below.

Gap between idea generation and production. The first challenges the creative industry is facing, is
related to the existence of a gap between idea generation and production. Despite the numerous ideas
generated, the economic exploitation is often limited (SRA, 2009, p. 6). This is mainly caused by the fact
that engineers and designers ‘cannot find each other’ and due the existence of broken links in the
knowledge chain (SRA, 2009, p. 22).

Lack of creativity versus lack of resources. Small companies often lack resources to leverage their
creativity into successful products. Larger companies on the order hand often lack the creativity and
speed to exploit their IP.  As a result, smaller and larger businesses need cooperate together to create
and develop products. This co‐creation however is often hindered due to the large differences between
the cooperating companies.

Valuing creativity? A third challenge can be found in the changing nature of the value system. Instead of
tangible assets, intangible assets (R&D, creativity, and people) increasingly represent company’s value.
But how do, for example, “investors value such things as research and development; intellectual capital;
organizational capital (e.g., business strategies and networks); reputational capital (brand recognition);
and information technology?” (Tepper, 2002, p. 165). Buiguis et al. (2000, p. 42) state that “(although)
we want to quantify this capital (...) on a generally understood format this ambition is, however, (often)
frustrated by the multidimensionality of intangible knowledge capital (…)”.

Protection of creativity. Another problem is related to the protection of creativity. Buiguis et al. (2000, p.
48) distinguishes  4 stages of control of property. They argue that intangibles are the most abstract of
the 4 stages implying that they are the most hard to control and hence to protect. As a result,
cooperating companies starting exchanging intangibles are quite prudent and often use large, detailed
contracts to protect their own intangibles (often IP). Furthermore, they depend heavily on the legal
system.


Attracting money. Most businesses in the creative industry face difficulties in attracting traditional
money via bank loans. As a result, they need to attract venture capital not only to grow their business
but even to start them (Bilton, 2007, p. 120).

As a result of all these challenges, it is not surprisingly that Tepper mentions “unquestionably, many of
the old governing assumptions about economic life are changing” (2002, p. 166). As a result, traditional
(IP) cooperation‐ and business models can no longer be applied and become out‐dated. Not surprisingly,
Tepper states on the same page that “perhaps (the) most crucial is the need to link our research and our
strategies for “measuring” the creative industries to realistic, tangible, and practical policy goals”. The
remainder of this literature review is therefore devoted to the search for these new researches and
strategies either in the creative industry or in collaborations.

3.3 COLLABORATION
Collaboration is well defined by Anderson (1995, p. 58) as ‘a strategic mode of integration in which two
or more organizations co‐operate on parts or all stages of production, from the initial phase of research
to marketing and distribution. Collaborative agreements can be short‐term or long‐term and encompass
a spectrum of co‐operation that lies between outright merger/ acquisition and arms‐length market
transaction’.

The rationale behind collaborations can vary. Among others, De Man (2004) mentions getting access to
market, increasing efficiency, getting access to new competencies, and the sharing of R&D risks as
potential drivers for collaboration. Arku (2002) identified the reasons for collaborations while
accounting for the size of the company. He showed that one of the largest reasons for smaller
companies to collaborate is to get access to technological know‐how or to specialized skills. Main
reasons for larger companies seems to be to penetrate new geographical markets or to product
markets.

FIGURE 2: MOTIVATION FOR COLLABORATION

If people start to cooperate, whether it is intra‐ or inter organizational, they need to adapt to the new
situation and get training to understand the cooperating partner. Cross‐functional training can help
them to become aware of their own standards and culture and that of the others. Not surprisingly, an
extant body of literature is devoted to the topic of team composition, cross functional training, cultural
diversity.

In this study, collaboration between heterogeneous partners is defined as collaboration between
organizations of different sizes; e.g. multinationals (Philips) versus ZZP or Medium‐ and Small Businesses
(NYOYN, Serious Toys) and of different kind, e.g. start‐ups with knowledge or cultural institutes. The
focus is on heterogeneous partners in the creative industry.


3.4 BUSINESS MODELS
3.4.1 WHAT IS A BUSINESS MODEL?
‘Business model’ is a frequent used and misused term in literature and today’s business. There are
however, many different definitions in literature. Here are some examples of what different authors
think is a business model;

• A business model describes the rationale of how an organization creates, delivers and captures
value.(Osterwalder, 2009)
• A concise representation of how an interrelated set of decision variables in the areas of venture
strategy, architecture, and economics are addressed to create sustainable competitive
advantage in defined markets.(Morris et al., 2005)
• A business model is an abstract representation of some aspect of a firm’s strategy; it outlines
the essential details one needs to know to understand how a firm can successfully deliver value
to its customers. (Magretta, 2002)
• The business model provides a coherent framework that takes technological characteristics and
potentials as inputs, and converts them through customers and markets into economic
outputs. (Chesbrough and Rosenbloom, 2002)
• We define a business model as a representation of a firm’s underlying core logic and strategic
choices for creating and capturing value within a value network. (Shafer et al., 2005)
What we can learn from these different definitions is that business models perform two important
functions; (1) they create value; (2) they deliver value to a customer; and (3) they capture the value and
turn it into economic output.

In this study, a business model is defined as a set of assumptions about how a firm creates and
appropriates value for all its stakeholders (Dorf and Byers, 2005).

3.4.2 FRAMEWORKS OF BUSINESS MODELS
In literature many authors have defined a business model framework wherein they argue to capture all
the aspects of a business model. There are many different frameworks which vary slightly in structure
and attributes. A framework very often used is the one of Morris et al. (2005) and Osterwalder and
Pigneur (2009). This section will discuss both frameworks

3.4.2.1 F RAMEWORK OF M ORRIS
To develop a useful framework, it must be reasonable simple, logical, measurable, comprehensive and
operationally meaningful. Therefore the authors proposed a framework which consists of three specific
levels of decision making; (1) the foundation level; (2) proprietary level; and (3) Rules level. These levels
represent the different managerial purposes of the model. The foundation level addresses basic
decisions that all entrepreneurs must make (e.g. how to create value? For whom to create value?). The
proprietary level purpose is to enable development of unique combinations among decision variables
that should result in marketplace advantage. This level makes it possible to customize the framework
and focus on how value is being created within the 6 decision variables, which will be discussed
hereafter. The rule level, enables the framework to be useful, and delineates guiding principles
governing execution of decisions made at level one and to. (Morris et al., 2005)

Morris (2005) specified 6 different factors, which can be applied on the 3 levels discussed above. They
differentiate between;

1. Factors related to offering (how do you create value?)
2. Market factors (whom you create value for?)


3. Internal capability factors (what is your source of competence?)
4. Competitive strategy factors (how do you competitively position yourself?)
5. Economic factors (how do you make money?)
6. Growth/exit factors (what is your time, scope and size ambitions)

The business model, thus results in a matrix with 18 different sections, wherein a unique business
concept can be developed or described. The latter is done for Southwest Airlines, as illustrated in Figure
3. This hopefully gives some insights in how this method works.

FIGURE 3: CHARACTERIZING THE BUSINESS MODEL OF SOUTHWEST AIRLINES (MORRIS ET AL., 2005)

3.4.2.2 B USINESS C ANVAS BY O STERWALDER
Another recent developed framework by Osterwalder and Pigneur (2009) is applied very often in
practice because it is plain and simple. Their so called ‘business model canvas’ (Figure 4) allows to easily
describe and manipulate business models. It consists out of nine basic building blocks that show the
logic of how a company intends to make money. The Business canvas and the nine building blocks are
illustrated and discussed below.


FIGURE 4 BUSINESS MODEL CANVAS (OSTERWALDER & PIGNEUR, 2009)

1. Customer Segments (CS): An organization serves one or several customer segments. It can serve a
mass market which is often the case in the consumer electronic market. It can however also serve niche
markets which are most likely to be found in an intensive supplier‐buyer relationship as is the case in the
car industry. More types of customer segmentation can be distinguished like Segmented, Diversified and
Multi‐sided platforms customer segments.

2. Value Propositions (VP): A business seeks to solve customer problems and satisfy customer needs
with value propositions. Value proposition can for example focus on the newness of the product, its
performances, the associated risk reduction, or its customization. Furthermore, they can either be
quantitative or qualitative.

3. Channels (CH): Value propositions are delivered to customers through communications, distribution,
and sales channels. They involve different phases like the creation of product awareness or the
convincement of customers to actually buy the product. Channels can either be direct or indirect and
either be an owned channel or a partner channel.

4. Revenue Streams (RS): Revenue streams result from value propositions successfully offered to
customers. These can come from direct asset sale, usage fees, licensing, brokerage fees or advertising.
Furthermost, pricing can be different depending on the type of revenue stream. Pricing can be dynamic
(i.e. prices change based on market conditions) such as auctions real‐time market, yield management
and negotiation. Prices can also be fixed (i.e. predefined prices are based on static variables) such as list
price, product feature dependent, customer segment dependent and volume dependent pricing.

5. Key Resources (KR): Key resources are the assets required to offer and deliver the previously
described elements. These can be physical, intellectual, human, and financial.


6. Key Activitities (KA): describes the most important things a company must do to make its business
model work. Mostly key activities are categorized as follows: production, problem solving (i.e. new
solutions for individual customers) and platform/network (e.g. Ebay, Microsoft and Visa credit card)

7. Key partnership (KP): This aspect describes the network of suppliers and partners that make the
buisness model work. Companies forge partnerships for many reasons and partnerships are becoming a
cornerstone of many business models. Overall there are three motivations for creating partnerships: (1)
optimization and economy of scale, which is the most basic form of a partnership and is designed to
optimize the allocation of resources and activities; (2) Reduction of risk and uncertainty is another
motivation to partner with other companies; and (3) few companies own all the resources to perform
the activities, so they partner to get acquisition of particular resources and activities.

Osterwalder (2009) furthermore distinguishes four types of partnerships: Strategic alliciances (between
non competitors), Coopetition (strategic partnership between competitors), Joint Ventures and Buyer‐
supplier relationship.

8. Cost structure (C$): this describes all costs incurred to operate a business model. Low costs structures
are more important to some business models than to others. Therefore, you can distinguish between
two broad costs structures: Cost driven and value driven. Many companies, however fall somewhere in
between.

9: Customer relationship (CR): Customer relationships are established and maintained for each specific
segment. These relationships may differ widely; it can be a relationship that can be defined as personal
assistance, co‐creation or self‐service for example.

3.4.3 TYPE OF BUSINESS MODELS
Some literature tried to investigate the types of business models there are. One example is the research
of Malone et al. (2006). They differentiate two dimensions of what a business does. The first dimension
is about – what types of rights are being sold? – which give rise to 4 basic business models;

(1) ‘the creator’ – buys raw material or components from suppliers and transforms or
assembles them to create a product sold to buyers;
(2) ‘The distributer’ – Buys a product and resells essentially the same product to someone
else;
(3) ‘The landlord’ – Sells the right to use, but not own, an asset for a specified period of
time;
(4) ‘The Broker’ – Facilitates sales by matching potential buyers and sellers. (Malone et al.,
2006)
The Second dimensions is about ‐ what kind of asset is involved? – Which also gives rise to 4 other
dimensions: (1) Financial Assets; (2) Physical Assets; (3) Intangible Assets; and (4) Human Assets. This
results in a total of Sixteen Business models Archetypes as illustrated in Table 2.


Financial Physical Intangible Human
3
Creator Entrepreneur Manufacturer Inventor Human Creator

(Kleiner Perkins) (GM) (Lucent Bell Labs

Distributor Financial Trader Wholesaler/Retailer IP Trader Human Distributor4

(Merril Lynch) (wall Mart) (NTL Inc.)

Landlord Financial Landlord Physical Landlord Intellectual Contractor
Landlord
(Citygroup) (Hertz) (Accenture)
(Microsoft)

Broker Financial Broker Physical Broker IP Broker HR Broker

(Charles Schwab) (eBay) (Valassis) (EDS)

TABLE 2: BASIC BUSINESS MODEL ARCHETYPES (MALONE ET AL. 2006)

3.5 COLLABORATION AND BUSINESS MODELS
More information on business models for (heterogeneous) collaborations can be found in the literature
of open innovation and open business models, and co‐development partnerships. Co‐development
partnerships are used more and more to improve innovation effectiveness (Chesbrough and Schwartz,
2007). For this way of working, innovative business models are in need, which embody mutual working
relationships between two or more parties, and which can promote innovation effectiveness. Note that
this literature is mainly focused on the viewpoint of large corporations, and not from the viewpoint of
the SME or ZZP.

3.5.1 OPEN BUSINESS MODELS: ‘INSIDE‐OUT’ AND ‘OUTSIDE‐IN’
Open Business Models are derived from an article written by Chesbrough (2003) who introduced Open
Innovation. Traditional business models center around the idea of developing products around internal
technologies. However, by using external parties, R&D expenses can be reduced, innovation output can
be increased, and partnering can open up new markets that may otherwise have been in accessible.
“Open Business Models can be used by companies to create and capture values by systematically
collaboration with outside partners. This may happen from the ‘outside‐in’ by exploiting external ideas
within the firm, or from the “inside‐out” by providing external parties with ideas or assets lying idle
within the firm” (Osterwalder and Pigneur, 2009).

An Open Innovation environment, companies commercializes its own innovation and ideas, as well as
innovation and ideas from other firms. Boundaries between a company and its environment are porous,
enabling innovations to move easily ‘inside‐out’ (i.e. from the firm to its environment) or the other way
around from ‘outside in’. ‘Outside‐in’ innovation occurs when firms bring, external ideas, innovations,
technology, or IP inside the boundaries of the firm, and with the help of these externalities, apply this in
new products or services. Since companies focus on their core‐competence, these ‘outside‐in’ processes
are increasingly happening in industry. ‘Inside‐out’ innovation occurs when firms license or sell their
ideas, innovation, technology, or IP. Licensing models, joint ventures, and spin‐offs are most used within
these Open Business Models.


3
These models are illegal in the US and most places today because they involve selling human beings. They are
included here for logical completeness.


FIGURE 5 ‐ OPEN INNOVATION (CHESBROUGH, 2003)
For our study, heterogeneous collaborations between small and big firms are very interesting, how do
their business models look, or should like? There are two generic patterns; the previous discussed
‘outside‐in’ and ‘inside‐out’ Business Models with typical characteristics (Osterwalder and Pigneur,
2009) (Table 3)

TABLE 3 ‐ DIFFERENCE BETWEEN OUTSIDE‐IN AND INSIDE‐OUT BUSINESS MODELS (OSTERWALDER & PIGNEUR, 2009)
Outside‐In Pattern Inside‐Out pattern

Key Partners: External Organizations, sometimes from Value Propositions: Some R&D outputs that are
completely different industries, may be able to offer unusable internally – for strategic or operational
valuable insights, knowledge, patents, or ready‐made reasons – may be of high value to organizations in other
products to internal R&D groups industries

Key Assets: Building on external knowledge requires Key assets: Organizations with substantial internal R&D
dedicated activities that connect external entities with possess much unutilized knowledge, technology, and IP.
internal business processes and R&D groups Due to sharp focus on core businesses, some of these
otherwise valuable intellectual assets sit idle. Such
businesses are good candidates for an ‘inside‐out’ open
business model.

Key Resources: Taking advantage of outside innovation Revenue Streams: By enabling others to exploit unused
requires specific resources to build gateways to external internal ideas, a company adds ‘easy’ additional revenue
networks streams.

Costs: It costs money to acquire innovation from outside
sources, But by building on externally‐created
knowledge and advanced research programs, a
company can shorten time‐to‐market and increase its
internal R&D productivity

Channels: Established companies with strong brands,
strong Distribution Channels, and strong Customer
Relationships are well suited to an Outside‐in open
business model. They can leverage existing Customer
Relationships by building on outside sources of
innovation


3.5.2 CO‐DEVELOPMENT PARTNERSHIPS
Collaborations can have serious positive effects but can also bring serious hazards. Chesbrough (2007)
identified four essentials aspects which affect the successfulness of a co‐development partnership;

1. Objectives of the partnership
2. Asses the capabilities you require
3. Business model alignment
4. Future collaborations

The most used objectives which drives partnerships are: increase profitability, shorten time to market,
enhance innovation capability, create greater flexibility in R&D and expansion of market access. Each
objective involves different implication for co‐development (co‐creation) and partner selection. And
therefore, it is difficult to generalize business models, because each partnership is different.

Another aspect is the type of capability a company’s needs. Needs can be classified by their importance
for a company. Chesbrough and Schwartz (2007) classified them into three categories: Core, critical and
contextual. Core capabilities are vital to a company’s running business. Partnerships in this category are
the most important, and it is important to manage these (mostly none to very few) partners as best as
possible. Partnerships which affect critical capabilities are important, but not core to the overall
business, however it may be core to the other partner. Contextual capabilities are necessary but not of
value adding for a business. Partnerships involving creativity are as discussed before often hard to value,
and for that reason also hard to put them into a certain category.

A source of many problems within collaborations can be the misalignment of the partner’s business
model. “Aligned Business Models are complementary; if you execute your model well, your partner will
benefit, and vice versa” (Chesbrough and Schwartz, 2007). By assessing a partner’s business model and
comparing it to yours, one can create alignment and develop more valuable partnerships (Chesbrough
and Schwartz, 2007).

Last, by thinking of future opportunities and not only the current needs you enhance the successfulness
and efficiency of collaborations. As Jeff Weedman, Vice President of P&G, once said: “The second deal
takes 1/2 the time of the first deal. The third deal takes 1/3 the time, and so on. And subsequent deals
are not only faster, they tend to be more profitable” (Chesbrough et al., 2006)

3.6 CONCLUSION
This chapter identified a number of challenges and characteristics of the creative industry. Among
others, this industry is characterized by valuation difficulties and a lack of resources. These
characteristics give rise to specific challenges for small creative companies, for example when it comes
to IP protection and the attraction of money. One method to overcome these challenges is to create
(structural) collaboration ties with other companies since it can lead to new market‐ and competencies
access. For these heterogeneous collaborations, specific business models might be needed.

Despite the large amount of professional attention to business models, academic literature on business
models is scarce. We could identify several frameworks of business models and types of business
models. But insight on the design and development of business models for (heterogeneous)
collaboration is limited, let alone specific to the creative industry. Empirical research may help to
identify specific structures and patterns in the business models with heterogeneous collaboration. So
although some best practice exist, more research towards effective business models for collaboration in
the creative industry is needed. It should enhance both scientist and practitioners to fully exploit the
opportunities in this challenging area.


4 IMPORTANT STAKEHOLDERS
One goal of this study was to identify important stakeholders in the field of business models and
collaboration in the creative industry. This chapter describes the stakeholders and briefly discusses
them. They range, from small‐ to larger businesses and from commercial (profit) focused towards
research focused organizations, as also depicted in Table 1. A selection of the important stakeholders
has been interviewed.

4.1 STAKEHOLDERS INTERVIEWED
The stakeholders which have been interviewed are mapped to the extent they are subsidized and to the
artifacts they produce (i.e. physical products, services or knowledge), see Figure 6.

Independent

Serious Verkeersgame
Toys Cap Gemini
NYOYN CCF

Experience economy
Waleli

Mediagilde
Waag Society

Sander Limonard (TNO)

Patchingzone
Subsidized

Alice Paul Grefen
Point one Eindhoven Yvonne
Kirkels

Physical products Services Knowledge

FIGURE 6 ‐ MAP OF STAKEHOLDERS INTERVIEWED

For all the stakeholders who have been interviewed, a brief description is given below (listed in
alphabetical order);

Alice in Eindhoven ‐ Han le Blanc is director of the Alice in Eindhoven, a platform which aims to stimulate,
represent and promote the creative industry in the region.

Cap Gemini ‐ Bas van Oosterhout works at CapGemini and offers consultancy services to listed company
when it comes to new business models.

Creative Conversoin Factory – Hans Robertus is director of the CCF. The CCF aims to valorize unused IP
from Philips to (starting) entrepreneurs, offering all kinds of support to the entrepreneurs. Its director is
Hans Robertus., also in search these entrepreneurs who can receive all kind of coaching. At the moment
CCF has 2 projects in the pipeline.

De Waag Society – Frank Kresin. This nonprofit company coragnization aims to develop creative
technology for the creative industry. They develop concepts, pilots and prototypes for the market, half
under own label, half as a subcontractor.


Fontys / TU/e Yvonne Kirkels Ph.D. researcher. Her study focuses on the role and importance of
knowledge brokers in a network, in the creative indusrtry.

Mediagilde – Auke Ferweda. Mediagilde situated in Amsterdam is a new media incubator that coaches
and facilitate starting entrepreneurs.

NYOYN – Bart van Gogh. Like Serious Toys, NYOYN develops interactive learning material for children.
Their main product ‘Sound Steps’ has been sold several times and it is expected larger sales volumes are
sold in the near future. Bart is an experienced business man. The IP in their products is licensed from
Philips.

Patchingzone – Anne Nigten. Patchingzone is a transdisciplinary laboratory for innovation where Master,
doctor, post‐doc students, and professionals from different backgrounds create meaningful contents.
Anne Nigten applies the process patching approach as a main methodology for creative research and
development.

Point One – Ronald Begeer. Point one is an innovation program originated by the Dutvh higtech induestry,
knowledge institutions and the Ministry of Economic Affairs. It translates the worldwide developments
from nano‐electronics, embedded systems and mechatronics into social relevant problems.

TNO ‐ Sander Limonard works at the research institute TNO at the Information and Communication
Technology Department. His main research focuses on new business models in new media ventures.

TU/e ‐ Paul Grefen In his book ‘Mastering E‐business, IT enabled business models’ Prof. Paul Grefen of
TU/e explains the domain of e‐business in a well structured way, covering the complete spectrum from
business aspects to technology aspects, including attention for business models.

Serious Toys ‐  Willem Fontijn is cofounder of Serious Toys and former employee of Philips Research. They
operate in the e‐learning market focusing on interactive products for kids. They bought IP from Philips
which is the core of their main product ‘TagTile’.

The Experience Economy – Albert Boswijk. The goals of the Experience Economy are to become the
leading body of expertise in Europe in the field and to close the gap between theoretical concepts and an
integrative body of knowledge. They aims to study, develop, and improve methodology for
implementation of experience strategies and concepts.

Verkeersgame ‐  Together with his companion, Olivier Verstappen aims to become a competitive player in
the online training market of travel licenses by offering real life car simulation tools (and theory
questions).

Waleli ‐ Situated in Amsterdam, Waleli’s founder Syte Hamminga aims to develop a commercial hit using
wireless technology. In able to found his multiple projects he offers unique brainstorm services directed at
creating multiple applications for their IP.


4.2 OTHER STAKEHOLDERS IN THE CREATIVE INDUSTRY
Besides companies and persons who have been interviewed, there are other interesting stakeholders as
well. Other stakeholders can be separated into two parts; (1) stakeholders who are interesting because
of their knowledge about business models and/or knowledge about heterogeneous collaborations; (2)
stakeholders who have experience on heterogeneous collaboration in practice. This list is far from
complete, but should be seen as a first inventory, which can be used in future to set up collaboration.

Name Knowledge Practice Description
Andrew Bullen X IIPCreate EU coordinator (for EU projects)
ASMI X AMSI ‐ the Amsterdam Centre for Service Innovation ‐
is focusing on research and education in
"management of innovation in service firms and
service organizations"
Jeroen van Mastrigt   X HKU – reserach on design models for interdisciplinary
teams.
Kai Pattipilohy X Diversion aims to create useful and creative products
for the society thereby focusing on social innovative
products.
EXER X EXER is a company specializing in leisure and cultural
event organization
Liesbeth Jansen X Director of the westergas fabriek ‐ livinglabs
Redesign me X Redesign is a co‐creation platform enabling business
to join forces in creating products.
Shapeways X 3D printing company which allows consumers to print
their own creative physic products. Because they
created a community, they are able to develop cheap
3D printing solutions. This company is a spin‐off by
Philips.
Volle kracht X Small design firm, with an interesting business model
ICT Kring Delft X X ICT Krings Delft aims to connect ICT knowledge and
experiences in the regio.
Martijn Kriens X X The idea of iCrowds is that by letting many people
collaborate through social software it is possible to
create exceptional results. Much more than the results
of just a bunch of individuals working together.

Novay (Telematica Instituut X X Novay connects businesses, knowledge institutes‐ and
Twente) partners, and governmental instititutions to foster ICT
innovations.
Syntens X X Syntens is a network of advisors that assists
businesses in their innovation processes. Remco
Bakker of Syntens focuses on the ICT industry and on
the creation of business models.
TABLE 4: OVERVIEW OF STAKEHOLDERS


4.3 CONCLUSION
The list of stakeholders shows a large variety of persons and organizations relevant in one way or the
other to the topic of this study. Further research should definitely focus on some specific sub‐sector or
type of collaboration in order to deliver useful guidelines to improve practice and create academic
insight.


5 BEST PRACTICES AND PROBLEMS
From the interviews, best practices and common pitfalls have been identified and from some
interviewees, insight in their business model was obtained. The first section discusses most important
issues on collaboration which are; (1) the importance of having a network; (2) problems related to
formalization, contracts, & IP; (3) communication and trust; and (4) heterogeneity in size and discipline.
The next section discusses business models used within the creative industry and will give case
descriptions when appropriate. Subsequently, business models for (heterogeneous) collaboration are
discussed. The chapter ends with some conclusions.

5.1 COLLABORATION IN THE CREATIVE INDUSTRY
5.1.1 THE IMPORTANCE OF HAVING A NETWORK
Many of the interviewees mentioned the importance of having a network. A network allows you to tap
into new knowledge, and it can create brokerage opportunity by linking people, firms, or technologies to
create new products.

Tap into different knowledge / competences

TU/e researcher Yvonne Kirkels mentioned the importance of tapping into knowledge beyond
your network. A network can generate interesting opportunities via strong and weak ties. She
defined strong ties as direct friends whereas weak ties are defined as connections via a ‘friend
of a friend’.

An example of a weak tie relation that enabled a business to grow can be found at NYOYN. A
good friend of the director Bart was well connected to a private investment network that
provided NYOYN the necessary money to start its business. Waleli had the opportunity to use a
strong tie relation to fund its business. The person that funded his business believed in the
entrepreneurial experiences of Siete Hamminga and bought business shares.

Create brokerage opportunities

Mediagilde recognizes that linking people to other people enables business opportunities. They
create brokerage opportunities by connecting people within their network and strive to arrange
for financial support for 60% of their clients. A group that businesses find hard to approach is
talented students with potential entrepreneurial skills. Mediagilde aims to close this gap by
proactively search for talented students via the launch of business cases and campus activities.
Yvonne Kirkels also mentions this gap by explaining the role of brokers in closing structural
holes. A structural hole exists when businesses are in need for collaboration but unable to find
each other. A broker can bring these businesses together and close the hole. Han Le Blanc of
Alice Eindhoven indicated that development environments like Fablab are also very much
stimulating collaborations and supporting innovation.

5.1.2 FORMALIZATION AND CONTRACTS & IP
Almost all interviewees mention the Intellectual Property challenges in the creative industry.   This is not
surprising since IP is one of the most valuable assets of an organization and companies. However,
protecting IP leads to various problems that seem to be strengthened by the type of industry and the
extent to which creative companies collaborate with larger organizations.


Type of industry

Most creative companies manufacture services or products of which the technique is hard to
protect. This is according to Auke Ferwerda (Mediagilde) mainly because most creative
companies are to a large extend software based or use techniques that can be used by anyone
(like GPS or RFID). The main added value of creative companies can be found in the
combination of techniques or in the uniqueness of their applications. As a result, companies try
to protect these combinations or applications but this is often difficult. Furthermore, it takes
considerable time before a patent is granted. As a consequence, creative software companies
often put more emphasis into being first to the market, than to secure their IP.

A good example of this IP securing versus time dilemma can be found in the area of Iphone
application development. Almost all software companies are able to manufacture all existing
Iphone programs. However, the value is not situated in the program itself. Instead, the main
value is created by the company that brings the products earliest to the market.

Note that for creative companies of which the IP is mainly positioned in the hardware, like
NYOYN or Serious Toys, IP protection is a much bigger issue than for software companies
(Gogh, 2009; Hietbrink, 2009). These, and more characteristics of this industry will be discussed
in more detail in one of the next sections.

Extra IP problems due to heterogeneous collaborations

Due to the complexity of protecting (creative) IP, larger companies depend heavily on
specialized lawyers. Philips, for example, has an internal Intellectual Property and Standards
department employing more than 300 professionals worldwide. To put this into contrast, De
Waag Society has one fulltime internal lawyer assisting in IP issues and contract formulation.
Juridical advice can however also be attracted externally. Mediagilde paid about 50.000 euros
to have a set of highly detailed contracts covering all relevant IP issues.

Typically these companies expect smaller companies to act at the same juridical level and
specialism as they start to cooperate. However, smaller companies and starting entrepreneurs
often lack people, time and money to face these complicated IP issues as noted by Bart van
Gogh (NYOYN). And although in some cases larger partner companies are willing to share their
resources most small companies  fail to respond adequately to the juridical demand of larger
companies.

A typical example of this problem is illustrated by NYOYN. NYOYN was one of the first
companies starting to work with IP of Philips. Philips however approached NYOYN multiple
times as if they were a big, established multinational company by sending them multiple
contracts (30+ pages). NYOYN in turn failed to respond adequately to these contracts since they
did not have the time and knowledge to read and understand them in detail. As a result,
NYOYN almost decided to quit their cooperation with Philips and to not use its IP.

Although both Philips and NYOYN acknowledge this problem and state that they both learned
their lessons, other companies also address this issue. Serious Toys owner Wilbert Hietbrink
stated that IP negotiations are often very time consuming, and force them to shift their focus
which slow down their product market introduction.


5.1.3 COMMUNICATION & TRUST
There are many operational variables which affect a successful collaboration. However only a couple of
these have been mentioned frequently in our interviews of which Good communication and Trust the
most.  Many of our interviewees acknowledged these aspects and gave examples of its importance in
successful collaborations.

Good communication

According to Waleli and Mediagilda, communication is one of the most important ingredients in
successful collaboration. Especially in the first stage of the collaboration with external parties, it
is of significant importance to identify the mutual needs and expectations.

Siete Hamminga also emphasized the importance of clarity, honesty, realistic and openness in
communication. Therefore, Waleli communicates in the first stages of a partnership about what
to expect, and for which price. This way of doing business leads to clarity further downstream
the supply chain.

Trust

Trust is a second and essential ingredient in any true collaboration. Trust between partners is
most important, you can gain trust by being realistic, honest and clear all the time. Hamminga
gained confidence by its investors by winning an important entrepreneurial competition in the
Netherlands, and due to his realistic view of its own business.

Trust can also be gained by proof of ability, which can be either be shaped by previous
successful experiences or by acknowledgements of third parties. Van Gogh has been asked to
be one of the leaders of NYOYN since he showed 15 year experiences in an international
construction company.

Another way to gain trust is the acknowledgment of your work by a third party as mentioned by
Auke Ferwarde. When, for example, ideas or products have been promoted on sites like
Engadget or Gizmodo, they have been acknowledged by important gadget gurus and already
received marketing attention.

From this section it can be concluded that communication shapes the collaboration process. Good
communication in pre‐stages of a co‐development will pay‐off in the end. Furthermore, trust between
companies is another essential ingredient in true collaboration, and can be gained by proof of ability,
and by being realistic, honest, and clear all times.

5.1.4 HETEROGENEITY IN SIZE AND DISCIPLINE
Heterogeneity between firms is another important determinant in successful collaborations.
Heterogeneity can either be specified by size (e.g. small companies vs big companies) or by discipline
(e.g. artistic vs Commercial). This paragraph will address both forms of heterogeneity and supports them
with examples out of our 16 interviews.

Small vs. Big (trust vs. Legal)

Many interviewees stress the problems which occur while collaborating with external parties.
One example has already been given which described how NYON got overloaded with contracts
by the legal department of Philips. Because of the difference in size, Philips is able to have a
specialized department which can arrange all legal issues. A company like NYON, which consists


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