Executing an Open Innovation Model

Jose A. Briones, Ph.D.Twitter: @Brioneja

R&D Innovation Strategies & Process Excellence SummitBerlin, Germany

November 11, 2016

www.Brioneja.com Twitter: @Brioneja

Agenda Background Open Innovation Services and Software Case Studies:

FVA Group of German engineering companies in the automotive industry – Dr. Frank Piller

Smarty Ears Use of Open Innovation for Development of iPad Apps

P&G Yesterday vs. Today


Acknowledgments


Frank T. Piller RWTH Technology & Innovation Management Group, RWTH Aachen,

Germany

Barbara L. Fernandes CEO – Smarty Ears LLC

Objective Weigh the pros and cons of turning to a

technology provider to help solve your OI needs

Understand the landscape of open innovation intermediaries and platforms

Make the most of your investment in an OI platform


Objective But which is the right method for open innovation? Which are the criteria to plan an open innovation

project?

Which intermediary or service provider has specific knowledge and expertise in, e.g., crowdsourcing, the lead user method, Netnography, idea contests, technology scouting, or broadcast search?


•“There’s a better way for management teams to grow their companies. But they will need the courage to challenge some of the paradigms of financial analysis and the willingness to develop alternative methodologies”

Clayton M. Christensen



The Open Innovation Paradigm


Open Innovation Management What are the options to implement an

Open Innovation program?Go at it alone:

○ Website and social mediaEngage an Open Innovation platform

○ Open innovation software○ Open innovation services


Open Innovation Services vs. Software Open Innovation Services offer a

communities of experts in a variety of fields.Problems are posted for a fee to get

feedback from the community

Open Innovation Software/Platforms relies in the company’s customer base and a broader reach


Open Innovation Services

Source: Frank T. Pillerwww.Brioneja.com Twitter: @Brioneja


Case Study: Piloting open innovation (co-creation with technical experts) in the German industry

Group of German engineering companies in the automotive industry: Suppliers and users of driving systems (gear boxes, power train , etc.), organized in industry association (called "FVA")

Many of them are world market leaders in their sector

Very engineering driven, successful, very "German" engineers. Typical example of "local search" !

Problem: For some technical problems, they did not find sufficient solution

Project with our group: Pilot co-creation for technical problem solving ==>

“We took some problems they could not solve before and

"crowd-sourced" these problems to external

problem solvers via an intermediary (broker)”

Frank T. PillerRWTH Technology & Innovation Management Group, RWTH Aachen, Germany


13

Source: David Feitler 2010

In the project, we selected five problems from companies and the FVA research consortium to be "broadcasted" by NineSigma.


www.Brioneja.com Twitter: @Brioneja 14


The solutions in general were both from sources new to the companies and did contain a new technological solution

Evaluation of solution proposals by project steering committees

15

RFPInstitution Solution Technology

new known new known ?

66198 23 3 16 6 4

66204 10 0 3 7 0

66207 7 0 6 0 1

66201 33 2 22 8 5



16

Return on open innovation

Data from VDMA project in textile machinery industry

Direct cost of OI project€ 18 000 ,- + approx. 2 person months

Estimated value of realized solution€ 375 000,-

ROI : approx. 2000%

Quality of solution:

Fit to requirement: 89% in average of suited solutions


Open Innovation Software

SpigitSpigitEngage for Facebook,

organizations can engage their customers in social co-creation by tapping customer insights through idea generation, free thought, campaigns, contests, and game dynamics.

RymaIdeascope integrates customer

feedback with other systems like Help Desk, Customer Relationship Management (CRM), Demand Management


Open Innovation Software

ImaginatikInnovation Central

collaboration platform allows organizations to include or exclude whichever groups or individuals are most appropriate for the topic

Nosco Idea management softwarePublish, rate and collaborate

on ideas



Smarty Ears’ Open Innovation Program

Smarty Ears is the largest app publishing company in the segment of speech and language development.

Over 40 total Apps Most for iPhone and iPad but

some for Android.

Promotion is via Social Media and Website



How The Program Works Just like in traditional publishing,

there are authors to books/therapy materials and there are publishers.

Smarty Ears is the App publisher and the submitter is the author

Submitters continue to own the idea and materials they provide, and therefore they get paid royalties for it.

The final application, coding, and any art work developed belongs to Smarty Ears.

Typical contract is 5 to 10 years www.Brioneja.com Twitter: @Brioneja

Royalties

Authors receive a royalty of 5% to 15% on all sales for their app.

The amount of royalty is decided based on Level of expertise Amount of material

provided by you to us on the creation of the app

Complexity of the application.

Apps have name, bio, photo of author


Program Growth

In the past Smarty Ears’ open innovation program was limited Apps that Smarty Ears could

not do on its own because of lack of expertise.

Today the program has expanded to include apps that Smarty Ears could do Looking for submitters that

can devote the time to Co-development and not just submit ideas.

Higher probability of success


Benefits of Co-Development

Submitters are passionate about their ideaThey want it to

be perfectTest with their

heartBecome the

most effective salespersons


App Creation Flow Create mockup Create content

Questions Select images Create flow of product Coding Bug testing iTunes description



Open Innovation Program Results

~10 ideas for new apps/month

1 out of 10 becomes an app.

10 new apps are a result of this processMore apps to market - faster

Recent app release from Open Innovation program “Fun and Functional” is currently on top 50 educational app list on iTuneswww.Brioneja.com

Twitter: @Brioneja

Program Lessons Win-Win Scenario

Not a one-time paymentBoth the company and the

submitter benefit from the success of the product

% Revenue sharing goes down if author does not participate in updates with content.

Does not include bug fixing



P&G Connect and Develop – Model for Open

Innovation Launched in 2000

P&G needs are posted on website in classified categories, and then anyone can propose their ideas and get assessed by a specialized team.

By 2006, 35% of all P&G products had an external component vs. 15% in 2000

R&D productivity increased 60%


P&G Update – P&G CEO Lafley decentralized R&D, making

business-unit heads responsible for developing new items.

R&D chief Brown says that inadvertently slowed innovation by more closely tying research spending to immediate profit concerns.

Between 2003 and 2008, the sales of new product

rollouts shrank by half.


Keys to Success

OI is a way to speed up time to market and increase probability of success

OI includes sourcing for products, technology, intellectual property and ideas.

OI is NOT outsourcing. OI requires constant interactions between companies and inventors. It requires huge partnering capabilities on both sides.

OI will not decrease a company’s costs – it will only move it among line items. R&D budget may be less over time, but Legal and Business Development budgets will increase immediately.

Source: Open Innovation – Paradigm Shift or Program? September 21, 2009 by Suzanne Harrison


Lessons Learned

Using the right approach to open innovation is critical for successDepends on the type of

problem/industry Open Innovation is NOT a

substitute for R&D and a long-term innovation programMust use a non-linear management

approach designed for radical or disruptive innovation, e.g. Spiral Approach


Resources

Resources

TimeTime

Level

1

2

3

VOC

Idea Generation

Technology Assessment

PrototypeDevelopment

Customer Testing

BusinessCaseValue in Use

Analysis RegulatoryIP Strategy

Supply ChainAnalysis

Roadmap/Timeline

Risk Analysis

The SpyroTek™ Method for Innovation Management

LaunchQuadrant I

Quadrant IIQuadrant III

Quadrant IV

Twitter: @Brioneja www.Brioneja.com

Questions for the Panel/Audience Q1. What is the "customer job" (Clay Christensen sense) that

needs to be filled by innovation management software?

Q2. Which employees are "right" for participating in the innovation process?

Q3. How do you find high potential ideas from a high volumes of them?

Q4. What are some models for engaging employees in a process that falls outside their "day jobs"?

Q5. Isn't this a popularity contest for ideas, and what company would operate that way?


Questions for the Panel/Audience

Q6. What does it mean to "evaluate" an idea?

Q7. How to say 'no' to an idea, and not discourage future participation?

Q8. What are some best practices for running an employee innovation program?

Q9. What about expanding beyond employees, and bringing customers directly into the innovation process?

Q10. Where does a crowdsourced innovation management platform fitwithin the enterprise software ecosystem?


Resources Making Open Innovation Work. Author: Stefan Lindegaard Open Services Innovation. Henry Chesbrough A Guide to Open Innovation and Crowdsourcing. Paul Sloane The Open Innovation Marketplace. A. Bingham and D.

Spradlin Open Innovation – Paradigm Shift or Program? September 21,

2009 by Suzanne Harrison Innovation Killers, 2008 - HBR http://hbr.org/product/innovation-killers-how-financial-

tools-destroy-you/an/R0801F-PDF-ENG?Ntt=innoation%2520killers

The Market for Open Innovation – Frank T. Piller, K. Diener The Spiral Approach to Disruptive Innovation Management.

Jose A. Briones.


Acknowledgements Thanks to Smarty Ears, LLC for allowing

me to be part of this exciting new field of product development

www.smartyearsapps.com


Contact Information

Jose A. Briones, Ph.D. [email protected] Twitter: @Brioneja www.Brioneja.com
