Atos Consulting

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

ms08_116LW - 2

Innovation – traditional approach

For years companies innovated using a Closed Innovation perspective

Research Development

MarketsResearchprojects

Firmboundaries

Source: Chesbrough (2003)

ms08_116LW - 3

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)

ms08_116LW - 4

“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)

ms08_116LW - 5

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

ms08_116LW - 6

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




1.2 Lead or lag

1. Organizationstrategy

4. Mindset4

5





1.8 Problem solving


1.7 Evaluation


2

3





3.11 Alliances

2.1 Customers0

1


3.7 IP protection


3 5 O t li i f IP

2.4 Enter in funnel

2.3 Universities

2.2 Suppliers








ms08_116LW - 7


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




1.2 Lead or lag


4. Mindset4

5





1.8 Problem solving


1.7 Evaluation


2

3





3.11 Alliances

2.1 Customers0

1


3.7 IP protection


3 5 O t li i f IP

2.4 Enter in funnel

2.3 Universities

2.2 Suppliers








ms08_116LW - 8


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




1.2 Lead or lag

Average total sample


4. Mindset4

5





1.8 Problem solving


1.7 Evaluation


2

3





3.11 Alliances

2.1 Customers0

1


3.7 IP protection


3 5 O t li i f IP

2.4 Enter in funnel

2.3 Universities

2.2 Suppliers








ms08_116LW - 9


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

ms08_116LW - 10

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

ms08_116LW - 11

Agenda

» Open Innovation


C l i» Conclusion

ms08_116LW - 12

Alliance Network in Flat Screens2006-20072006 2007

ms08_116LW - 13

In only 2 years 75% of the firms in the industry are directly or indirectly connected

Decentralized network:Horticulture sector 2007Horticulture sector 2007

RegionCooperative

ms08_116LW - 14

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)

ms08_116LW - 15

The Olympic Network

ms08_116LW - 16

The Olympic Network (2)

ms08_116LW - 17

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

ms08_116LW - 18

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

ms08_116LW - 19

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

ms08_116LW - 20

» 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

ms08_116LW - 21

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

ms08_116LW - 22

» 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

ms08_116LW - 23

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)

ms08_116LW - 24

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

ms08_116LW - 25

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

ms08_116LW - 26

Both hard and soft elements play an important role

Agenda

» Open Innovation


C l i» Conclusion

ms08_116LW - 27

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

ms08_116LW - 28

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

ms08_116LW - 29

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 [email protected]

ms08_116LW - 30

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.

Economy & Finance

Atos Consulting