A Strategic Approach to

Open Innovation

With Jeffrey Phillips

About the

Conference 6 Education-packed sessions

About Jeffrey Phillips

Jeffery Phillips

Jeffrey is a senior consultant and leads our consulting practice. He is responsible

for thought leadership, project engagements and business development.

Jeffrey has led innovation projects in the US, Western Europe, South Africa, Latin

American, Malaysia, Dubai and Turkey. He has expertise in the entire “Front End

of Innovation”, with specific focus on trend spotting and scenario planning,

obtaining customer insights, defining an innovation process and open

innovation. He is the author of three books about innovation, Relentless

Innovation, 20 Mistakes Innovators Make and Make us more Innovative. He also

writes the Innovate on Purpose blog, which ranks as one of the top blogs about

innovation.

Open Innovation

• Brief OVO Introduction

• Closed and Open Innovation

• Types and Methods

• The future of (open) innovation

About OVO

• OVO is a consulting firm helping our clients build sustainable innovation capabilities.

• We work primarily with large, distributed organizations that seek to make innovation an internal, consistent, repeatable capability

• We believe innovation can become a core capability, backed by a definitive process or approach and trained, engaged advocates

Our PublicationsOur Blog

Our whitepapersOur books

Innovation best practices

• Get lots of ideas

• Use diverse teams, built of people with different experiences, different perspectives

• Combine ideas and technologies; build on existing ideas

• Explore/Discover/Experiment

Build, Add, Copy, Combine

FilamentBamboo, Cotton, Cardboard,Wood, Platinum

Power SourceAC current or DC current

MountScrew, Flat ring, Grooves,Bayonet

Menlo Park was Open Innovation

Large Hadron Collider at CERN

The best innovation comes from….

Lots of ideas

Diverse Perspectives

IP and Technology

Question: can my company do internal innovation effectively withouttapping into the ideas, intellectual property and technology availablein the global marketplace?

Arthur Lafley, CEO of P&G

Closed Innovation

“Closed” Innovation

For the purposes of this discussion we’ll define “closed” innovation as innovation activities that rely exclusively on the ideas, insights and technologies of the company. No external participation or insights will be involved.

Internal Idea Generation

Advantages / Disadvantages

Advantages

• Rely only on internal team

• Faster to conduct

• No need to educate the team

• Far fewer intellectual property concerns

• Full ownership of ideas

Disadvantages

• Idea scope may be constrained

• May lack critical knowledge or insights

• May be unaware of emerging trends, ideas or technologies

Open Innovation

“Open” Innovation

Open innovation is an umbrella term that describes a range of techniques to search for, find, acquire and implement newideas, intellectual property,technologies or products, ORto spin out the same to othercompanies.

The book that defined it

In 2005 Henry Chesbroughpublished Open Innovation, which was one of the first books to name and define the activities surrounding what we now call open innovation.

Open Innovation TypesTechnique Definition Partners

TechnologyScouting

Internal resources or external teams seeking emerging research or technologies that can address product challengesPreScouterLux Research

Contests

Broadcast challenges to a selected population that seek solutions to a specific problem. For example, BP created a contest after the Gulf Oil spill seeking ideas to remove crude oil from the Gulf waters. Anyone was welcome to submit ideas or technologies. This was an Open, public contest, but the way the contest is framed and publicized, and who is allowed to respond, can be moderated.

HyveHypeSpigit

Blind RFPs

Firms provide a means to connect a firm seeking a new solution or technology with “solvers” through a blind matching process. The firm seeking a new technology develops an “RFP” with specific technical specifications. NineSigma, Innocentive and other firms solutions like them publish these RFPs and seek responses. These firms provide some initial validation of the proposed solutions and can make introductions as appropriate.

NineSigmaInnocentive

Crowd-Sourcing

Crowdsourcing is similar to a contest in that a firm seeking ideas implements a “suggestion box” or other means of capturing ideas for products or solutions from its customers. Dell’s IdeaStorm site is probably the most well-known. In just over seven years of operation, the site has received almost 22,000 ideas and over 500 of those ideas have been implemented.

IdeaScaleWazokuChaordix

VettedPartnerships

P&G’s Connect+Develop partnerships represent co-development or joint development “Open Innovation” relationships. P&G identifies key suppliers, partners and even competitors to work with, reducing barriers and sharing more information. These vetted partnerships are similar to work Hollister has done with its trusted suppliers.

DSM

SponsoredResearch

Working with universities or research institutions to indicate specific areas of vital research or actually sponsor research is another way to develop Open Innovation and acquire new technologies or products.

VariousInstitutions

Brokers/KOLs/Conferences

Many industry conferences and VC conferences are also Open Innovation venues, seeking to connect entrepreneurs and small businesses that have interesting new technologies with larger businesses who may wish to acquire or license those technologies. Key Opinion Leaders (KOLs) can introduce or act as brokers

EpiCenterIPTynax

Advantages / Disadvantages

Advantages

• Broader array of ideas, IP and technologies to choose from

• Broader array of expertise

• No need to reinvent the wheel

• May combine ideas, channels and business models

Disadvantages

• May expose some of your strategic thinking to 3rd parties

• Ideas/technologies may come at a cost

• Legal/IP issues; ownership issues

Evolution of Corporate Innovation

Types and Methods

Open Innovation Framework

Instructions

None

Directed

Invitations

Relatively Few “Everyone”

Directed, Invitational Directed, Participative

Suggestive, Invitational Suggestive, Participative

©OVO Innovation 2006-2017.

Open Innovation Techniques• Different Open Innovation techniques introduce varying amounts of risk and

provide different kinds of ideas or technologies.

• While all techniques are viable, innovation teams must choose carefully according to their needs and expectations

• The techniques are plotted according to the instructions offered and number of companies to invite – using an OVO matrix

354/24/2017

These techniquesrequire close relationshipsand deeper discussionsto provide results

These techniquesexpose strategic goals toa broader audience

These techniques oftenlead to ideas or further research rather than solutions

Categorized another way

Source: Bagherzadeh & Brunswicker (2015)

Open Innovation Methodology

Gene Slowinski

An Innovation Bazaar

Innovation Marketplace Participants

Channels or Interactions

Lessons learnedExposing your strategy

• “No other company would be seeking this technology”

Lessons learnedBuilding partnerships before you need them

Lessons learnedBeing able to accurately determine the value of internal and external IP

(Open) Innovation Future

• No distinctions

• Broaden the definition

• Speed and agility

• Organize platforms and ecosystems

• Achieving experiences

Beyond technologies and products

Platforms and Ecosystems

To what end?

• Products

• Linked to platforms

• Supported/Surrounded by ecosystem partners

• Seamlessly linked to provide a total customer experience

Product

Platform

Ecosystem

Experience

Implication

• Start with the customer’s experience goals in mind

• Determine which solution partners we need

• Define the appropriate open innovation methods or tools to invite them in

From Sinek’s book Start with Why

Two ecosystem approaches

Same ecosystem partners (Carriers, software developers, musicians, etc)

Different methods (Dictate the platform and ecosystem versus encouragedevelopers for the platform)

Watch this play out in real time

Old closed/open innovation

• Examine ideas and technologies

• Identify interesting capabilities

• Develop a product

• Promote to customers

New innovation

• Define “experiences to be had” that customers want

• Identify relevant platforms and ecosystem partners

• Build relationships and prototype experiences

Understand the drivers of change

Product Lifecycles are Shrinking

Cultural Change

• Where the idea is from doesn’t matter, what matters is that it drives value for customers

• Need to eliminate the “Not Invented Here (NIH)” mentality

• Must view third parties as partners rather than competitors. Find a way to get to “yes”

More about how and what

Open or Closed Innovation?

How to contact me

jphillips@ovoinnovation.com

@ovoinnovation

www.ovoinnovation.com

703-714-7345 x789

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