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FEI 2010: Feb. 8, 2010 Sam Saguy1
Helmut Traitler – Nestlé
and
Sam Saguy – Hebrew University of Jerusalem
and
Brigit Coleman – swissnexSan Francisco
www.swissnex.org
Sharing-is-Winning Paradigm for Reinventing R&D in Open Innovation Culture
Outline
Open innovation (OI)
Nestlé’s Sharing-is-Winning (SiW) model
Few examples
Reinventing R&D in OI Ecosystem: SiW
roadmap to co-invention.
FEI 2010: Feb. 8, 2010 Sam Saguy2
P&G OI model ("Connect + Develop")
Target (2000): “50% of the innovation to be acquired outside of the company”.
Very successful outcome
– 1,500 external ideas, 5-7% were acted upon.
– A dramatic increase in OI: From ~15 (2000) ~47% (2008).
Diversifying risks, sharing market and technological uncertainty.
FEI 2010: Feb. 8, 2010 Sam Saguy3
OI – A Buzzword?
Overexploited: frequently utilized with no real base, or understanding, too many definitions (excuses?) for (not?) OI.
Consumer driven: defined as "open,” although practiced for decades.
SMEs: are struggling with implementation. P&G’s OI model: prohibitively complex &
expensive a “perceived” impediment.
FEI 2010: Feb. 8, 2010 Sam Saguy4
OI – A Buzzword (cont..)?
Cost: substantial upfront investment (sieving, assessing, selecting, and negotiating).
Organizational changes: required for embracing and implementing OI, are only partially implemented.
Nestlé’s: Sharing-is-Winning (SiW) model
FEI 2010: Feb. 8, 2010 Sam Saguy5
Nestlé Economic Data in the Nut Shell
Established in 1866 by Henri Nestlé. Very successful, strong R&D, vertical integration
innovation. The largest global food company (2008):
– Revenues CHF 109.9 Bn– EBIT of 14.3%– 2.8% Real Internal Growth (RIG)– Presence in 84 countries– 283,000 employees– More than 1 Bn units of products sold daily.
FEI 2010: Feb. 8, 2010 Sam Saguy6
Nestlé R&D (R&D: 3,700; Application:1,300)
1-Central research center. 27-Global R&D and Product Technology Centers
(PTCs). Application Groups: 280, located in 456 Nestlé
factories ensuring compliance with high quality and local requirements, and taste preferences.
FEI 2010: Feb. 8, 2010 Sam Saguy7
R&D Spending (millions; CHF 1~ $0.97)
FEI 2010: Feb. 8, 2010 Sam Saguy8
1.2%
1.8%
Nestlé: #2 in R&D spending within the consumer companies, following P&G (Jaruzelski, 2009)
Nestlé Venture Capital (CHF 1.5 Bn, 10 years): focusing on start-up growth-phase food, NH&W companies.
Booz Allen Hamilton Global Innovation 1000 Research (Jaruzelski et al., 2005)
Excess resources may be counterproductive
impeding innovation.
Successful R&D requires much more!
FEI 2010: Feb. 8, 2010 Sam Saguy9
Nestlé: Sharing-is-Winning (SiW) Model
A strategic decision and a paradigm shift was
required.
Innovation Partnerships (INP) created (2006).
Integration (bigger, bolder, faster execution and
implementation).
FEI 2010: Feb. 8, 2010 Sam Saguy10
Nestlé Innovation Partnerships (Traitler and Saguy, 2009)
FEI 2010: Feb. 8, 2010 Sam Saguy11
Development stageEarly Mature
Focus
BenefitAreas
BusinessNeeds
INP withUniversities, Medical Centers & Start-Ups
Monetary contributions
Products
Mid
Venture capitalINP with
SMEs & Inventors
In-kind contributions(expert ressources)
INP with Key Suppliers
Nestlé SiW Model: 5-Pillars
1. Innovation Partnerships (INP): partner selection.
2. IP: early stages joint co-creation. The guiding rule of thumb: - physical solution is owned by the competency-
providing partner, - smart application solutions is owned by the
receiving partner.
3. Joint creative problems-solving: bringing together many scientific disciplines and people with different skills and large knowledge base.
FEI 2010: Feb. 8, 2010 Sam Saguy12
Nestlé SiW model: 5-Pillars (cont..)
4. Implementation: – best practices – nourishing the innovation process flow
5. Continuous evolving process:
management, strategy, consumers-center, insights, partnerships, champions, internal experts, education, mindset, metrics, culture….
FEI 2010: Feb. 8, 2010 Sam Saguy13
Nestlé SiW model
FEI 2010: Feb. 8, 2010 Sam Saguy14
CREATEVALUE
BUILD GOODWILL
INDISPENSABLE DIALOG
ESTABLISHTRUST
Value creation: ultimate goal of the partnership
Alignment of all the value chain to consumer-centric innovations.
Linking profit function (tangible/perceived) is key for catalyzing innovation.
SiW Main Benefits
Accelerate innovation: reducing the burden of upfront-resources and time to market.
Sharing of resources: postponing out of pocket investments to the point where the project is ready to be launched.
Gaining critical mass: motivated, talented and highly skilled human resources...
Embracing culture openness: networks, social impact…
FEI 2010: Feb. 8, 2010 Sam Saguy15
Selected Key Nestlé INP Collaborations
Barry Callebaut BASF Cargill Cognis DSM DuPont Firmenich
FEI 2010: Feb. 8, 2010 Sam Saguy16
Fonterra Givaudan IFF Kerry Mane Symrise Tetra Pak
Results from collaborations with these innovation partners contributed more than $200 million in new businesses by the end of 2008.
Typical example: Nestlé-DuPont
FEI 2010: Feb. 8, 2010 Sam Saguy17
Solllys® soy-based products a co-development with an innovation partnership
Nestlé USA – DSM & Cognis: Glowelle Nestlé USA – DSM & Cognis: Glowelle Beauty DrinkBeauty Drink
FEI 2010: Feb. 8, 2010 Sam Saguy18
Glowelle - The ultimate beauty drink dietary supplement sold at high end US retail (Bergdorf Goodman, Neiman Marcus). Contains: antioxidants, vitamins, botanical & fruit extracts (cocoa, apple, grape seed, maritime pine bark, goji berry and white tea). Beauty from within – a new category
swissnex San Francisco
Sharing is Winning:Innovation Partnerships with external networks.
Birgit Coleman
Initiative of the State Secretariat for Education and Research SER Annex of the Consulate General.
Swiss Knowledge Network with outposts in Boston, San Francisco, Shanghai and Singapore
20
Novel collaborations for a fast moving consumer goods industry:
Global swissnex network, www.swissnex.org as a match-maker to players across industries and disciplines
Doing business as ‘unusual’ - Partnerships with:
unusual technology partners
e- and retailers
media
21
Examples for the ‘Sharing is Winning’ Paradigm
Nestlé moves among Top 50 ranks of “Top global 50 most innovative companies” thanks to its dynamic interactions with its global partners.
Nestlé shares with media trickle-up innovation stories.
Nestlé shares best practices and challenges among peers at public & private roundtable discussions such as:
What is the Future of Doing Business? – How to innovate Business with a Strategy for Sustainability”
Does Design Matter? Roles and Interactions between Design, Technical Innovation and Business Relevance.”
FEI 2010: Feb. 8, 2010 Sam Saguy22
FEI 2010: Feb. 8, 2010 Sam Saguy23
Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention
Continuous evolving process
Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention
FEI 2010: Feb. 8, 2010 Sam Saguy24
1. Leadership & Management
Continuous evolving process
Leadership & Management
SiW doesn’t come easy paradigm shift. Vision/culture/tools embracing, promoting and
sustaining innovation.
Quantifiable/crystal clear goals.
Reward mechanism(s).
FEI 2010: Feb. 8, 2010 Sam Saguy25
Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention
FEI 2010: Feb. 8, 2010 Sam Saguy26
2. Strategy
Continuous evolving process
Strategy
Strategize a roadmap for SiW utilization, emphasizing the importance of external co-development and partnerships.
Create a sustainable platform for all the value chain participants to benefit from the innovation outcome.
Promote top-down, bottom-up, outside-in, and buys in.
Support structured/disruptive entrepreneurships.
FEI 2010: Feb. 8, 2010 Sam Saguy27
Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention
FEI 2010: Feb. 8, 2010 Sam Saguy28
3. Metrics
Continuous evolving process
Metrics
Develop appropriate metrics for quantifying ‘innovativeness’ to overcome impediments.
Link innovation metrics (qualitative, quantitative, base line) with KPI (Kew Performance Indicators) and reward.
Benchmarking – wide scope metrics.
FEI 2010: Feb. 8, 2010 Sam Saguy29
Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention
FEI 2010: Feb. 8, 2010 Sam Saguy30
4. The consumers and customers
Continuous evolving process
The consumers
Consumer-centric business model and
innovation process.
Personalization.
The utmost importance of sharing, social
network, crowdsourcing.
FEI 2010: Feb. 8, 2010 Sam Saguy31
Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention
FEI 2010: Feb. 8, 2010 Sam Saguy32
5. Internal experts and champions
Continuous evolving process
Internal Experts and Championships
Market successes are due mainly to the people that drove them, and more so for a successful SiW.
Finding the “yellow brick road” to attract, support, nourish, sustain, educate and reward.
Internal experts - networks (inside/outside).
FEI 2010: Feb. 8, 2010 Sam Saguy33
Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention
FEI 2010: Feb. 8, 2010 Sam Saguy34
6. Partnerships
Continuous evolving process
Partnerships – A way of life
‘Partner or perish’ is the new mantra.
Random collisions/interactions not an option.
To survive/thrive, seek alliances/partnerships (downstream and upstream) based on compatible differences that are paramount for cross fertilization and synergism.
FEI 2010: Feb. 8, 2010 Sam Saguy35
Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention
FEI 2010: Feb. 8, 2010 Sam Saguy36
7. Passion
Continuous evolving process
Passion
Innovation requires passionate and committed leaders, people and organizations.
“Passion-based organizations stop at nothing to accomplish their goals and are able to attract people and resources to their causes. A passion economy can arise that unleashes both a new era of prosperity and solutions for the big issues of our time” (Saul Kaplan, 2009).
Join us in Sharing-is-Winning to co-innovate the future.
FEI 2010: Feb. 8, 2010 Sam Saguy37