The power of open innovation


                                                                                           ...
Agenda


» Open Innovation
» Innovation in networks
» C
  Conclusion
      l i




ms08_116LW - 2
Innovation – traditional approach

For years companies innovated using a Closed Innovation perspective

                  ...
Open Innovation – new approach

Companies revise their innovation strategy by moving towards an Open Innovation
model
    ...
Research method – research process

The translation from theory to our Open Innovation questionnaire

                    ...
Management processes
Spider web of overall results



4. Mindset                                                          ...
Results – Financial sector
                                                                                               ...
Results - Financial sector vs Best in Class
                                                                              ...
Results – Financial sector vs
total population
                                                                           ...
Management processes
The most and least used in Financial services



                  Most used management          Leas...
Benefits of Open Innovation
Does it pay to implement Open Innovation principles?




                   Companies that hav...
Agenda


» Open Innovation
» Innovation in networks
» C
  Conclusion
      l i




ms08_116LW - 12
Alliance Network in Flat Screens
2006 2007
2006-2007




        In only 2 years 75% of the firms in the industry are dire...
Decentralized network:
Horticulture sector 2007




                           Region
       Cooperative



ms08_116LW - 14
Becoming a network orchestrator


                                     Network orchestrators perform
                     ...
The Olympic Network




ms08_116LW - 16
The Olympic Network (2)




ms08_116LW - 17
Knowledge and innovation management
in networks: the key challenges

                                                     ...
METRO Group and the
Future Store Initiative


» Third largest retail chain worldwide
» Based in Germany
» Ai C t th retail...
About 50 partners came together to build
the Future Store

                   Other Services (10)                   RFID (...
Examples of new technologies and
services


» Self check out (IBM, NCR, AlgoTec)
» Electronic advertising displays (Cisco,...
Olympics Challenges

    Highly visible and critical
      g y
    » No second chance

    Complex project management
    ...
Olympic innovations
Impacting the organizers…


» Transport: GPS, EAM, NFC, Smartcards
» Security :Smart CCTV, smartcards,...
Olympic innovations
Impacting the spectators…


» Mobile displays of Real-time games       » Mobile Payments for merchandi...
Olympic innovations
Impacting home viewers…


» Interactive TV – be your own director
» Mobile TV
» W b
  Webcast
        ...
Managing innovation and knowledge
flows

                  » Goal alignment
                  » Value distribution
       ...
Agenda


» Open Innovation
» Innovation in networks
» C
  Conclusion
      l i




ms08_116LW - 27
Managerial implications:
How to keep your network innovative?


» Strategize: connect narrowly defined goals of partners
»...
Key lessons for innovative networks


» Some of the most innovative networks combine strong financial incentives with a
  ...
For more information:




                    Leo Wildeman
                    Executive partner

                    Pape...
The power of open innovation


                                                                                           ...
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Atos Consulting

  1. 1. The power of open innovation Leo Wildeman Amsterdam, 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, circulated and/or distributed nor quoted without prior written approval from Atos Origin.
  2. 2. Agenda » Open Innovation » Innovation in networks » C Conclusion l i ms08_116LW - 2
  3. 3. Innovation – traditional approach For years companies innovated using a Closed Innovation perspective Research Development Markets Research projects Firm boundaries Source: Chesbrough (2003) Closed Innovation refers to a situation in which all innovation is developed internally and kept inside the company. No knowledge flows into or out of the company ms08_116LW - 3
  4. 4. Open Innovation – new approach Companies revise their innovation strategy by moving towards an Open Innovation model Research Development New market Markets Research projects Firm boundaries Source: Chesbrough (2003, 2006) “Open I “O Innovation i th use of purposive i fl ti is the f d tfl i inflows and outflows of knowledge t accelerate i t fk l d to l t internal i l innovation, ti and expand the markets for external use of innovation, respectively” ms08_116LW - 4
  5. 5. Research method – research process The translation from theory to our Open Innovation questionnaire Research process » A literature study revealed five elements to look at: » 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) » 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 » Personal interviews » Analysis of the data from more than 100 responses (70% Dutch, 11% USA and 19 % mainly Western Europe) ms08_116LW - 5
  6. 6. Management processes Spider web of overall results 4. Mindset 1.1 Innovation strategy 1. Innovation 1 I ti 4.8 Alliance management 1.2 Lead or lag Strategy 4.7 CVC management 1.3 Value chain strategy 4.6 Problem solving 1.4 Innovation management 4.5 Rewards 1.5 Knowledge management 4.4 Sharing ideas externally 4 4 Sh i id t ll 1.6 1 6 Product portfolio development 4.3 Legal department 1.7 Evaluation 4.2 Top management support 1.8 Problem solving 4.1 Company support of open innovation 1.9 External knowledge 3.11 Alliances 1.10 Business models 3.10 Collaboration in region 1.11 Business model vs time to market 3.9 Information intermediaries 2.1 Customers 3.8 Time to license IP 2.2 Suppliers 3.7 IP protection 2.3 Universities 3.6 Licensing partners 2.4 Enter in funnel 3.5 Out-licensing of IP 3 5 O t li i f 2.5 CVC in start-ups 3.4 External VC for spin-offs 2.6 Crowdsourcing 3. Inside out 2. Outside in 3.3 CVC to create new companies 2.7 Information intermediaries 3.2 External sales channels 2.8 Alliances 3.1 Exit from funnel 2.9 Brainstorms 2.13 Licensing partners 2 13 Li i t 2.10 2 10 Innovation climate in region 2.12 In-license IP 2.11 Collaboration in region ms08_116LW - 6
  7. 7. Results – Financial sector Financials 1.1 Innovation strategy 4.8 Alliance management 1.2 Lead or lag 4.7 CVC management 5 1.3 Value chain strategy 4. Mindset 4.6 Problem solving 1.4 Innovation management 1. Organization 4.5 Rewards 1.5 Knowledge management strategy 4 4.4 Sharing ideas externally 4 4 Sh i id t ll 1.6 1 6 Product portfolio development 4.3 Legal department 1.7 Evaluation 3 4.2 Top management support 1.8 Problem solving 4.1 Company support of open innovation 2 1.9 External knowledge 3.11 Alliances 1.10 Business models 1 3.10 Collaboration in region 1.11 Business model vs time to market 0 3.9 Information intermediaries 2.1 Customers 3.8 Time to license IP 2.2 Suppliers 3.7 IP protection 2.3 Universities 3.6 Licensing partners 2.4 Enter in funnel 3.5 Out-licensing of IP 3 5 O t li i f 2.5 CVC in start-ups 3. Inside out 3.4 External VC for spin-offs 2.6 Crowdsourcing 2. Outside in 3.3 CVC to create new companies 2.7 Information intermediaries 3.2 External sales channels 2.8 Alliances 3.1 Exit from funnel 2.9 Brainstorms 2.13 Licensing partners 2 13 Li i t 2.10 2 10 Innovation climate in region 2.12 In-license IP 2.11 Collaboration in region ms08_116LW - 7
  8. 8. Results - Financial sector vs Best in Class Financials Best in class 1.1 Innovation strategy 4.8 Alliance management 1.2 Lead or lag 4.7 CVC management 5 1.3 Value chain strategy 4. Mindset 4.6 Problem solving 1.4 Innovation management 1. Organization 4.5 Rewards 1.5 Knowledge management strategy 4 4.4 Sharing ideas externally 4 4 Sh i id t ll 1.6 1 6 Product portfolio development 4.3 Legal department 1.7 Evaluation 3 4.2 Top management support 1.8 Problem solving 4.1 Company support of open innovation 2 1.9 External knowledge 3.11 Alliances 1.10 Business models 1 3.10 Collaboration in region 1.11 Business model vs time to market 0 3.9 Information intermediaries 2.1 Customers 3.8 Time to license IP 2.2 Suppliers 3.7 IP protection 2.3 Universities 3.6 Licensing partners 2.4 Enter in funnel 3.5 Out-licensing of IP 3 5 O t li i f 2.5 CVC in start-ups 3. Inside out 3.4 External VC for spin-offs 2.6 Crowdsourcing 2. Outside in 3.3 CVC to create new companies 2.7 Information intermediaries 3.2 External sales channels 2.8 Alliances 3.1 Exit from funnel 2.9 Brainstorms 2.13 Licensing partners 2 13 Li i t 2.10 2 10 Innovation climate in region 2.12 In-license IP 2.11 Collaboration in region ms08_116LW - 8
  9. 9. Results – Financial sector vs total population Financials Best in class 1.1 Innovation strategy Average total sample 4.8 Alliance management 1.2 Lead or lag 4.7 CVC management 5 1.3 Value chain strategy 4. Mindset 4.6 Problem solving 1.4 Innovation management 1. Organization 4.5 Rewards 1.5 Knowledge management strategy 4 4.4 Sharing ideas externally 4 4 Sh i id t ll 1.6 1 6 Product portfolio development 4.3 Legal department 1.7 Evaluation 3 4.2 Top management support 1.8 Problem solving 4.1 Company support of open innovation 2 1.9 External knowledge 3.11 Alliances 1.10 Business models 1 3.10 Collaboration in region 1.11 Business model vs time to market 0 3.9 Information intermediaries 2.1 Customers 3.8 Time to license IP 2.2 Suppliers 3.7 IP protection 2.3 Universities 3.6 Licensing partners 2.4 Enter in funnel 3.5 Out-licensing of IP 3 5 O t li i f 2.5 CVC in start-ups 3. Inside out 3.4 External VC for spin-offs 2.6 Crowdsourcing 2. Outside in 3.3 CVC to create new companies 2.7 Information intermediaries 3.2 External sales channels 2.8 Alliances 3.1 Exit from funnel 2.9 Brainstorms 2.13 Licensing partners 2 13 Li i t 2.10 2 10 Innovation climate in region 2.12 In-license IP 2.11 Collaboration in region ms08_116LW - 9
  10. 10. Management processes The most and least used in Financial services Most used management Least used management processes processes » Use of information » Innovation management intermediaries » Evaluation of innovation » Brainstorms projects (!) » Use of crowdsourcing » Use of CVC » Licensing ms08_116LW - 10
  11. 11. Benefits of Open Innovation Does it pay to implement Open Innovation principles? Companies that have implemented Open Innovation… » … successfully combine internal and external knowledge » … have a statistically significant higher success rate of new product introductions » … generate statistically significant more revenue from recently introduced products » … are more satisfied with their innovation performance ms08_116LW - 11
  12. 12. Agenda » Open Innovation » Innovation in networks » C Conclusion l i ms08_116LW - 12
  13. 13. Alliance Network in Flat Screens 2006 2007 2006-2007 In only 2 years 75% of the firms in the industry are directly or indirectly connected ms08_116LW - 13
  14. 14. Decentralized network: Horticulture sector 2007 Region Cooperative ms08_116LW - 14
  15. 15. Becoming a network orchestrator Network orchestrators perform N t k h t t f the next tasks » Recruit the right partners » Ensure all partners have the right incentives » Define standards » Develop business process focused at meeting customer needs » Be responsible for end product » Encourage learning in the network » Ensure correct governance g structure (consensus, coordination, conflict resolution, planning, progress) ms08_116LW - 15
  16. 16. The Olympic Network ms08_116LW - 16
  17. 17. The Olympic Network (2) ms08_116LW - 17
  18. 18. Knowledge and innovation management in networks: the key challenges How to motivate partners to share knowledge? Motivation How t prevent H to t companies learning How to ensure the but not sharing? right knowledge ends up with the right ith th i ht partner quickly? Free-riding Efficiency Boundary- How to overcome Source: adapted from Dyer and Nobeoka, 2000 crossing cultural, time, knowledge gaps? ms08_116LW - 18
  19. 19. METRO Group and the Future Store Initiative » Third largest retail chain worldwide » Based in Germany » Ai C t th retail store of the f t Aim: Create the t il t f th future, to test technology and to enable METRO t t tt h l dt bl to 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
  20. 20. About 50 partners came together to build the Future Store Other Services (10) RFID (15) » Boston Consulting Group » Ch k i t Checkpoint » DHL » Avery Dennison » Visa Europe » Philips Software (5) Retail Technology » SAP and Services (9) » Oracle » Algotec » Microsoft » Mettler Toledo » Wincor Nixdorf IT Technology and Services (9) dS i » IBM Brands (10) » Intel » Coca Cola » Fujitsu Siemens » Gillette » Henkel ms08_116LW - 20
  21. 21. Examples of new technologies and services » Self check out (IBM, NCR, AlgoTec) » Electronic advertising displays (Cisco, Cittadino) » P l h i Personal shopping assistant (Wi i t t (Wincor Nixdorf, Al T Ni d f AlgoTec, IBM IBM, Fujitsu Siemens, Loyalty Partners) » Intelligent scales ( g (Mettler Toledo, IBM, Cisco) ) » Information terminals (IBM, Cittadino, Cisco, Wincor Nixdorf, Sonopress; content provided 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 y , ms08_116LW - 21
  22. 22. Olympics Challenges Highly visible and critical g y » No second chance Complex project management » Fixed Deadline » Leading a Consortium of partners and suppliers without hierarchical control » Integration of cultures, ways of working Co p e systems Complex syste s » Massive Testing Program Information Security » Heterogeneous environment » Real Time Risk Management Knowledge management & transfer A complex mix Operations Readiness of technology, » Quick staffing ramp-up close to the Games processes and people » Training » Huge deployment in short period of time ms08_116LW - 22
  23. 23. Olympic innovations Impacting the organizers… » Transport: GPS, EAM, NFC, Smartcards » Security :Smart CCTV, smartcards, biometrics, digital identity, g g y, granular security monitoring y g » Green IT: Video conferencing; Telepresence; Virtualization, less paper, energy savings » Construction-GIS; EAM, Flow simulation » Ticketing / Accreditation /Visas: RFID, NFC, Smartcards, Smartcards biometrics » Multimedia: storage, search engines » Volunteers and staff: LBS e-learning YouJob LBS, e learning, (video CV) » Sport: 3D/telemetry judging systems/visualization ms08_116LW - 23
  24. 24. Olympic innovations Impacting the spectators… » Mobile displays of Real-time games » Mobile Payments for merchandising actions and F&B » “All-in-one” electronic ticket (one ticket » Location Aware/Based Services (child- ( ( for all events, embedded ID, “Olympic” locate-via mobile, nearest restaurants, digital cash, transportation pass, push technology to alert about services RFID,...)) when you are nearby) y y) » Multi-language services ms08_116LW - 24
  25. 25. Olympic innovations Impacting home viewers… » Interactive TV – be your own director » Mobile TV » W b Webcast t » 3D viewing » Interactive gaming » Web 2.0/3.0 » Wikis » Blogs » Virtual Games (Second Life) » YouTube ms08_116LW - 25
  26. 26. Managing innovation and knowledge flows » Goal alignment » Value distribution » Interpersonal Motivation » Co-location relationships » Printed and electronic media » Modularization » Pressure cooker Free-riding Efficiency » Network identity » Interpersonal relationships » Sanctions » Absorptive capacity p p y Boundary- Boundary » Direct communication crossing Both hard and soft elements play an important role ms08_116LW - 26
  27. 27. Agenda » Open Innovation » Innovation in networks » C Conclusion l i ms08_116LW - 27
  28. 28. Managerial implications: How to keep your network innovative? » Strategize: connect narrowly defined goals of partners » Pressurize: create a sense of urgency » L li d boundaries i ti Localize: reduce b d i in time and l d location ti » Customize: each network requires different solutions » Overshoot: the more the better more, » Specialize: modularization diminishes the need for coordination ms08_116LW - 28
  29. 29. Key lessons for innovative networks » Some of the most innovative networks combine strong financial incentives with a very informal way of working g y, y » Long-term view is necessary, but by building on existing relations fast g g g gains can be had » 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 on networks » Networks have deep effects inside companies ms08_116LW - 29
  30. 30. For more information: Leo Wildeman Executive partner Papendorpseweg 93 3528 BJ Utrecht, The Netherlands P d 93, Ut ht Th N th l d Phone +31 (0)88 265 8635 Mobile +31 (0)6 51 343 800 leo.wildeman@atosorigin.com www.atosconsulting.nl ms08_116LW - 30
  31. 31. The power of open innovation Leo Wildeman Amsterdam, 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, circulated and/or distributed nor quoted without prior written approval from Atos Origin.
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