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The power of open innovationThe power of open innovation
Leo WildemanAmsterdam, 20 November 2008
Atos, Atos and fish symbol, Atos Origin and fish symbol, Atos Consulting, and the fish itself are registered trademarks of Atos Origin SA. July 2008© 2008 Atos Origin. Confidential information owned by Atos Origin, to be used by the recipient only. This document or any part of it, may not be reproduced, copied, circulatedand/or distributed nor quoted without prior written approval from Atos Origin.
Agenda
» Open Innovation
» Innovation in networks
C l i» Conclusion
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Innovation – traditional approach
For years companies innovated using a Closed Innovation perspective
Research Development
MarketsResearchprojects
Firmboundaries
Source: Chesbrough (2003)
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Closed Innovation refers to a situation in which all innovation is developed internally and kept inside thecompany. No knowledge flows into or out of the company
Open Innovation – new approach
Companies revise their innovation strategy by moving towards an Open Innovationmodel
Research Development
New marketNew market
MarketsResearchprojects
Firmboundaries
“O I ti i th f i i fl d tfl f k l d t l t i t l i ti
Source: Chesbrough (2003, 2006)
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“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”
Research method – research process
The translation from theory to our Open Innovation questionnaire
» A literature study revealed five elements to look at:
Research process
» The maturity of the innovation strategy» Mechanisms to acquire knowledge from outside the organization (outside in)» Mechanisms to commercialize unused knowledge from inside the organization
(inside out)(inside out)» The extent to which employees and companies are externally oriented
(mindset)» The success rate of innovation
» Developing a validated 64 question survey
» Gathering data from innovation and R&D managers» Online survey» Online survey» Personal interviews
» Analysis of the data from more than 100 responses (70% Dutch, 11% USA and19 % mainly Western Europe)
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19 % mainly Western Europe)
Management processesSpider web of overall resultsSpider web of overall results
1 I ti1. InnovationStrategy
4. Mindset4.8 Alliance management
4.7 CVC management4.6 Problem solving4.5 Rewards
4 4 Sh i id t ll
1.1 Innovation strategy
1.4 Innovation management1.3 Value chain strategy
1 6 Product portfolio development1.5 Knowledge management
1.2 Lead or lag
4.2 Top management support
4.4 Sharing ideas externally
4.3 Legal department
4.1 Company support of open innovation
1.8 Problem solving
1.9 External knowledge
1.7 Evaluation
1.6 Product portfolio development
1.11 Business model vs time to market
1.10 Business models
3.10 Collaboration in region
3.9 Information intermediaries
3.11 Alliances
2.1 Customers
3.8 Time to license IP
3.7 IP protection
3.6 Licensing partners
3 5 O t li i f IP
2.4 Enter in funnel
2.3 Universities
2.2 Suppliers
2. Outside in3. Inside out
3.5 Out-licensing of IP
3.3 CVC to create new companies3.2 External sales channels
3.1 Exit from funnel
3.4 External VC for spin-offs 2.6 Crowdsourcing2.5 CVC in start-ups
2 13 Li i t 2 10 Innovation climate in region2.9 Brainstorms
2.8 Alliances2.7 Information intermediaries
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2.13 Licensing partners 2.10 Innovation climate in region2.11 Collaboration in region2.12 In-license IP
Results – Financial sectorFinancials
4.8 Alliance management4.7 CVC management
4.6 Problem solving4.5 Rewards
4 4 Sh i id t ll
1.1 Innovation strategy
1.4 Innovation management1.3 Value chain strategy
1 6 Product portfolio development1.5 Knowledge management
1.2 Lead or lag
1. Organizationstrategy
4. Mindset4
5
4.2 Top management support
4.4 Sharing ideas externally
4.3 Legal department
4.1 Company support of open innovation
1.8 Problem solving
1.9 External knowledge
1.7 Evaluation
1.6 Product portfolio development
2
3
1.11 Business model vs time to market
1.10 Business models
3.10 Collaboration in region
3.9 Information intermediaries
3.11 Alliances
2.1 Customers0
1
3.8 Time to license IP
3.7 IP protection
3.6 Licensing partners
3 5 O t li i f IP
2.4 Enter in funnel
2.3 Universities
2.2 Suppliers
3.5 Out-licensing of IP
3.3 CVC to create new companies3.2 External sales channels
3.1 Exit from funnel
3.4 External VC for spin-offs 2.6 Crowdsourcing2.5 CVC in start-ups
2 13 Li i t 2 10 Innovation climate in region2.9 Brainstorms
2.8 Alliances2.7 Information intermediaries
2. Outside in3. Inside out
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2.13 Licensing partners 2.10 Innovation climate in region2.11 Collaboration in region2.12 In-license IP
Results - Financial sector vs Best in Class
Financials
Best in class
4.8 Alliance management4.7 CVC management
4.6 Problem solving4.5 Rewards
4 4 Sh i id t ll
1.1 Innovation strategy
1.4 Innovation management1.3 Value chain strategy
1 6 Product portfolio development1.5 Knowledge management
1.2 Lead or lag
1. Organizationstrategy
4. Mindset4
5
4.2 Top management support
4.4 Sharing ideas externally
4.3 Legal department
4.1 Company support of open innovation
1.8 Problem solving
1.9 External knowledge
1.7 Evaluation
1.6 Product portfolio development
2
3
1.11 Business model vs time to market
1.10 Business models
3.10 Collaboration in region
3.9 Information intermediaries
3.11 Alliances
2.1 Customers0
1
3.8 Time to license IP
3.7 IP protection
3.6 Licensing partners
3 5 O t li i f IP
2.4 Enter in funnel
2.3 Universities
2.2 Suppliers
3.5 Out-licensing of IP
3.3 CVC to create new companies3.2 External sales channels
3.1 Exit from funnel
3.4 External VC for spin-offs 2.6 Crowdsourcing2.5 CVC in start-ups
2 13 Li i t 2 10 Innovation climate in region2.9 Brainstorms
2.8 Alliances2.7 Information intermediaries
2. Outside in3. Inside out
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2.13 Licensing partners 2.10 Innovation climate in region2.11 Collaboration in region2.12 In-license IP
Results – Financial sector vstotal populationtotal population
Financials
Best in class
Average total sample4.8 Alliance management
4.7 CVC management4.6 Problem solving4.5 Rewards
4 4 Sh i id t ll
1.1 Innovation strategy
1.4 Innovation management1.3 Value chain strategy
1 6 Product portfolio development1.5 Knowledge management
1.2 Lead or lag
Average total sample
1. Organizationstrategy
4. Mindset4
5
4.2 Top management support
4.4 Sharing ideas externally
4.3 Legal department
4.1 Company support of open innovation
1.8 Problem solving
1.9 External knowledge
1.7 Evaluation
1.6 Product portfolio development
2
3
1.11 Business model vs time to market
1.10 Business models
3.10 Collaboration in region
3.9 Information intermediaries
3.11 Alliances
2.1 Customers0
1
3.8 Time to license IP
3.7 IP protection
3.6 Licensing partners
3 5 O t li i f IP
2.4 Enter in funnel
2.3 Universities
2.2 Suppliers
3.5 Out-licensing of IP
3.3 CVC to create new companies3.2 External sales channels
3.1 Exit from funnel
3.4 External VC for spin-offs 2.6 Crowdsourcing2.5 CVC in start-ups
2 13 Li i t 2 10 Innovation climate in region2.9 Brainstorms
2.8 Alliances2.7 Information intermediaries
2. Outside in3. Inside out
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2.13 Licensing partners 2.10 Innovation climate in region2.11 Collaboration in region2.12 In-license IP
Management processesThe most and least used in Financial servicesThe most and least used in Financial services
» Innovation management
Least used managementprocesses
» Use of information
Most used managementprocesses
» Innovation management
» Evaluation of innovationprojects (!)
» Use of informationintermediaries
» Brainstorms
» Use of crowdsourcing
» Use of CVC
» Licensing
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Benefits of Open InnovationDoes it pay to implement Open Innovation principles?Does it pay to implement Open Innovation principles?
» successfully combine internal and external knowledge
Companies that have implemented Open Innovation…
» … successfully combine internal and external knowledge
» … have a statistically significant higher success rate of newproduct introductionsproduct introductions
» … generate statistically significant more revenue fromrecently introduced products
» … are more satisfied with their innovation performance
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Agenda
» Open Innovation
» Innovation in networks
C l i» Conclusion
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Alliance Network in Flat Screens2006-20072006 2007
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In only 2 years 75% of the firms in the industry are directly or indirectly connected
Decentralized network:Horticulture sector 2007Horticulture sector 2007
RegionCooperative
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Becoming a network orchestrator
N t k h t t f
» Recruit the right partners
Network orchestrators performthe next tasks
» Ensure all partners have the rightincentives
» Define standards
» Develop business process focusedat meeting customer needs
Be responsible for end product» Be responsible for end product
» Encourage learning in the network
» Ensure correct governancegstructure (consensus, coordination,conflict resolution, planning,progress)
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The Olympic Network
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The Olympic Network (2)
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Knowledge and innovation managementin networks: the key challengesin networks: the key challenges
How to motivatepartners to shareknowledge?
H t tMotivation
How to ensure theright knowledge ends
ith th i ht
How to preventcompanies learningbut not sharing?
up with the rightpartner quickly?Free-riding Efficiency
How to overcomecultural, time,knowledge gaps?
Boundary-crossingSource: adapted from Dyer and Nobeoka, 2000
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knowledge gaps?
METRO Group and theFuture Store InitiativeFuture Store Initiative
» Third largest retail chain worldwide
» Based in Germany
Ai C t th t il t f th f t t t t t h l d t bl METRO» Aim: Create the retail store of the future, to test technology and to enable METROto distinguish itself
» 3 months contract for Intel to create a common solutions framework
» Project initiated: September 2002
» Store open: 2003 (existing store with most loyal clients and near the head office)
» Continuous innovation and roll out of new concepts to other METRO stores
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About 50 partners came together to buildthe Future Store
Other Services (10)» Boston Consulting Group
RFID (15)Ch k i t
the Future Store
» Boston Consulting Group» DHL» Visa Europe
» Checkpoint» Avery Dennison» Philips
Retail TechnologySoftware (5)» SAP and Services (9)
» Algotec» Mettler Toledo» Wincor Nixdorf
» SAP» Oracle» Microsoft
» Wincor Nixdorf
IT Technologyd S i (9)
Brands (10)» Coca Cola» Gillette
and Services (9)» IBM» Intel» Fujitsu Siemens
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» HenkelFujitsu Siemens
Examples of new technologies andservicesservices
» Self check out (IBM, NCR, AlgoTec)
» Electronic advertising displays (Cisco, Cittadino)
P l h i i t t (Wi Ni d f Al T IBM» Personal shopping assistant (Wincor Nixdorf, AlgoTec, IBM,Fujitsu Siemens, Loyalty Partners)
» Intelligent scales (Mettler Toledo, IBM, Cisco)g ( )
» Information terminals (IBM, Cittadino, Cisco, Wincor Nixdorf, Sonopress; contentprovided by a.o. Henkel Schwarzkopf, Procter & Gamble, Kraft Foods)
» Electronic shelf labels (NCR)
» PDA for the staff (Hewlett Packard, Microsoft, Cisco)
» Wireless LAN by Cisco and Symbol Technologies
» Core RFID technology by SAP, IBM, Intermec Technologies, Intel, DHL, Philips,Avery Dennison, CHEP
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y ,
Olympics ChallengesOlympics Challenges
Highly visible and criticalg y» No second chance
Complex project management» Fixed Deadline» Fixed Deadline» Leading a Consortium of partners and suppliers without hierarchical control» Integration of cultures, ways of working
Complex systemsCo p e syste s» Massive Testing Program
Information Security» Heterogeneous environment» Heterogeneous environment» Real Time Risk Management
Knowledge management & transferA complex mix
Operations Readiness» Quick staffing ramp-up close to the Games» Training
A complex mixof technology,
processes and people
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» Huge deployment in short period of time
Olympic innovationsImpacting the organizers…Impacting the organizers…
» Transport: GPS, EAM, NFC, Smartcards
» Security :Smart CCTV, smartcards, biometrics,digital identity, granular security monitoringg y, g y g
» Green IT: Video conferencing; Telepresence;Virtualization, less paper, energy savings
» Construction-GIS; EAM, Flow simulation
» Ticketing / Accreditation /Visas: RFID, NFC,Smartcards biometricsSmartcards, biometrics
» Multimedia: storage, search engines
» Volunteers and staff: LBS e-learning YouJob» Volunteers and staff: LBS, e learning, YouJob(video CV)
» Sport: 3D/telemetry judging systems/visualization
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Olympic innovationsImpacting the spectators…Impacting the spectators…
» Mobile displays of Real-time gamesactions
» “All-in-one” electronic ticket (one ticket
» Mobile Payments for merchandisingand F&B
» Location Aware/Based Services (child-(for all events, embedded ID, “Olympic”digital cash, transportation pass,RFID,...)
(locate-via mobile, nearest restaurants,push technology to alert about serviceswhen you are nearby))
» Multi-language services
y y)
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Olympic innovationsImpacting home viewers…Impacting home viewers…
» Interactive TV – be your own director
» Mobile TV
W b t» Webcast
» 3D viewing
» Interactive gaming» Interactive gaming
» Web 2.0/3.0
» Wikis» Wikis
» Blogs
» Virtual Games (Second Life)» Virtual Games (Second Life)
» YouTube
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Managing innovation and knowledgeflowsflows
» Goal alignment» Value distribution» Value distribution» Interpersonalrelationships
» Co-location» Printed and electronic media» Modularization
Motivation
» Modularization» Pressure cooker
Free-riding Efficiency
» Absorptive capacity
» Network identity» Interpersonal relationships» Sanctions
Boundary p p y» Direct communicationBoundary-
crossing
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Both hard and soft elements play an important role
Agenda
» Open Innovation
» Innovation in networks
C l i» Conclusion
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Managerial implications:How to keep your network innovative?How to keep your network innovative?
» Strategize: connect narrowly defined goals of partners
» Pressurize: create a sense of urgency
L li d b d i i ti d l ti» Localize: reduce boundaries in time and location
» Customize: each network requires different solutions
» Overshoot: the more the better» Overshoot: the more, the better
» Specialize: modularization diminishes the need for coordination
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Key lessons for innovative networks
» Some of the most innovative networks combine strong financial incentives with avery informal way of working
» Long-term view is necessary, but by building on existing relations fast gains can beg y, y g g ghad
» Networks raise new questions and problems (where to position, how to manage)…
» … but we have tools and frameworks available that help us getting a grip onnetworks
» Networks have deep effects inside companies» Networks have deep effects inside companies
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For more information:
Leo WildemanExecutive partner
P d 93 3528 BJ Ut ht Th N th l dPapendorpseweg 93, 3528 BJ Utrecht, The NetherlandsPhone +31 (0)88 265 8635 Mobile +31 (0)6 51 343 800leo.wildeman@atosorigin.comwww.atosconsulting.nl
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The power of open innovationThe power of open innovation
Leo WildemanAmsterdam, 20 November 2008
Atos, Atos and fish symbol, Atos Origin and fish symbol, Atos Consulting, and the fish itself are registered trademarks of Atos Origin SA. July 2008© 2008 Atos Origin. Confidential information owned by Atos Origin, to be used by the recipient only. This document or any part of it, may not be reproduced, copied, circulatedand/or distributed nor quoted without prior written approval from Atos Origin.