1. Effective Use of Open Innovation in
Project Definition
Used with permission
2. Open Innovation Defined
Old model (closed innovation):
• Companies must generate their own ideas, then develop,
manufacture, market, distribute and service those ideas themselves.
• Spectacular successes of central R&D such as Bell Labs.
Open Innovation:
• Useful knowledge is widely disseminated, and ideas must be used with
alacrity. If not, they will be lost. Role of R&D extends far beyond the
boundaries of the enterprise.
• Companies must now harness outside ideas to advance their own
businesses while leveraging their internal ideas outside their current
operations.
Open Innovation: The New Imperative for Creating and Profiting from Technology, Henry Chesbrough
3. Open Innovation Defined
(continued)
CUSTOMERS’ UNMET NEEDS
Missing feature / performance Improve an existing product
issue / legislation change
Improve price Reduce cost / identify
manufacturing efficiencies
Step function change in Monitor next generation
performance technology curves
Wholly unmet need Expand into new “white space”
6. Technology Scouting – the Why (key
motivations)
• Market Intelligence
• Speed to Market
• Non-Core Technology Opportunities
– One-off Needs
– Technology Platform partners – a consistent
innovation pipeline
• Move into ‘White spaces’
Consistent organic growth is rarely achieved yet hugely valued
7. The Why - Best Practices goal setting
From DSM’s Rob Kirschbaum:
• Commit to Innovation!
– DSM set a goal of €1b new revenue in 5 yrs
• Plus’s /Minus’s of Open Innovation
+ Shorter time to market - Info overflow
+ Higher chance of success - Culture change is slow
+ More funnel output - Many legal contracts
+ Lower innovation costs - IP leakage (China)
+ Mitigated risk (options) - Balance of power
+ Reputation ; recruitment - Upfront Investment
+ Knowledge based economy - Less job rotation
8. The Why – Best Practices goal
setting (continued)
P&G (Jeff Weedman, head GlobalBusDev) –
– “We will acquire 50% of our innovations from outside P&G.” A.G. Lafley,
2000
– External sourced has grown from 10% to 50% in 10 years; R&D productivity
has increased by nearly 60 percent
– 9000 internal R&D people; 2m relevant external people
J&J (Jeff Murphy, Exec Dir) –
– Initial metrics (engagement, participation), pipeline growth (growth in active
projects by stage), early wins, end-goals (successes – counts, revenues, ROI)
– Getting ahead of yourself can lead to unrealistic expectations; falling behind
can lead to killed initiatives
Sara Lee (Paul Chaudury, VP Innovn) -
– Steady-state goals: Net sales from [sourced] products; pipeline projected
value (yr2 sales, risk adjusted); comparative times to mkt
– As important – reporting is institutionalized, and reported to sr mgt
routinely
Sources: Weedman pres’n to yet2.com 2009 Executive Briefing Conference; Stefan Lindegaard Innovation
Metrics blog 15inno.com
9. Technology Scouting – the How
• How to build the organizational
groundwork to enable success
• How to identify ‘worthy’ Needs
• What are best practices for evaluating and
actually acquiring
• How to get started
– pilots (and buy-in and metrics)
10. What is Important for Success –
Organizational Groundwork
• Choice of Project
– Conduciveness to search
• Likelihood that solution may emerge from beyond your core network
– Business Impact / Urgency
• Existing product line(s) vs. new business opportunity
• Trigger for need (e.g., regulatory requirement, incremental improvement)
– Readiness to acquire
• Project funding & staffing
• Technical competence to evaluate, and/or budget to employ external
evaluators
• Willingness to complete development
• Client Role
– Ownership – direct involvement of business leader who can “green light”
– Involvement – team bi-weekly calls (with preparation) to screen
candidates
– Engagement w/ external cos. – legal hurdles minimized; sample evaluation
– Momentum – maintaining drive throughout process; willing to “close”
11. Organizing for Success
• Build dedicated team, but…
– Ensure project teams include those who would have developed the solution
internally
• Create incentives for entrepreneurial behavior
• Staff & skills require a careful mix…
– Cooperative competencies
– Ability to work with smaller companies
• Use external resources to extend ‘reach’
– Go beyond conversations with suppliers, technical conferences, serendipity
• Funding
– Set aside funding in budget both for “searching” and for “acquisition”
12. Deals - Factors For Success
1. Well described &.accurate Technology Needs and Technologies - upfront
advance preparation of content, understanding of strategy and
expectations
2. Access to diverse, cross industry global community – not just the size of
the network but the diversity and relationships
3. Entrepreneurial technology and technology need owners – deal
orientated, flexible about what a deal looks like
4. Personal contact and relationship building is key to closing deals – a
marketplace makes you the connection quicker but be ready to engage
5. Use experienced facilitators to help create partnerships - understand the
nuances between large companies and smaller technology innovators,
ensure successful partnerships for both sides.
13. Key value add of intermediaries
Connectivity
Deep reach into corporate technical staffs
Access to key gatekeepers (tech transfer & tech acquisition)
Relationships with venture capital and SMEs
Confidentiality
Opportunity screening and initial discussions
Protect client name and application
Expertise
Evaluation and communication methods
Market and buy-side knowledge
Business formation and commercialization skills
External perspective
Unbiased evaluation and critical thinking
14. For example: yet2.com – Global
network
yet2.com NETWORK:
YOUR NETWORK: -Rolodex / competencies database
borne of 8000+ introductions
-Suppliers between buyers and sellers
-Select university -100,000+ online global, cross-
relationships industry connections
-Conferences/trade -Direct access to 10,000+ SMEs
shows -Broad reach to
-Industry universities/research orgs/VCs
journals/colleagues -Global network of affiliated
brokers
Both networks important, but will yield different responses
15. Connect - Our Marketing Approach
yet2.com employs multiple channels to make connections:
Direct ‘Rolodex’ channels
yet2.com competencies database
SME Network
Relationships borne of over 5000 introductions between
buyers and sellers (including University, Research, VC)
External expert network
Broadcast channels
yet2.com Marketplace, email communications
Syndication partners and Broker relationships
16. yet2.com Technology Acquisition
Process – Needs Identification
Needs Identification High Value Cases: Target
High Value Cases:
• Gather priority needs - Identification
Marketing
• yet2.com draws on our
from R&D, Marketing, etc • yet2.com website
network and proprietary
• Prioritize • Proactive channels
competencies database
• Build or buy
Deals
• Anonymity / IP shield, Lead Qualification, Call
facilitation, Due diligence, Contract and
negotiation support
17. What is Important for Success –
Organizational Groundwork
• Choice of Project
– Conduciveness to search
• Narrow vs. broad criteria
• Searching already done within same industry?
• Likelihood that solution may emerge from beyond your core network
– Business Impact / Urgency
• Existing product line(s) vs. new business opportunity
• Trigger for need (e.g., regulatory requirement, incremental
improvement)
• Timeline to market / Technology Readiness (TRL)
– Readiness to acquire
• Project funding & staffing
• Technical competence to evaluate, and/or budget to employ external
evaluators
• Willingness to complete development
18. Need Qualification Learning
broad narrow
Search scope:
Background knowledge High (already searched,
have candidates) No knowledge
about the problem/specs:
Project Trigger (IP situation, competitors, Has to find
a solution
Would like to
have a solution
regulatory change…)/motivation:
6 months 10 years or more
Deadlines/product launch in:
Maturity level of Fully developed
Early stage
preferred solution:
Internal project to Ongoing, funded none
solve the Need:
Willingness to complete Unwilling, unable
High capability,
availability, budgeted
development:
19. TechNeed Title
Search Scope
Background Knowledge
Urgency
- Project Trigger
- Deadlines
Project Status
- Existing / new
- Need Ownership
Solution evaluation
- Technical competence
- Availability
Development status
- Desired technology
readiness
- Willingness to complete
development
ASSESSMENT: Conducive to Search Business Impact / Readiness to Acquire
Urgency
(H/M/L) H/M/L H/M/L H/M/L
20. What is Important for Success –
Organizational Groundwork
– Ownership – direct involvement of business leader
who can “green light”
– Involvement – team bi-weekly calls (with
preparation) to screen candidates
– Engagement w/ external cos. – legal hurdles
minimized; sample evaluation
– Momentum – maintaining drive throughout process;
willing to “close”
