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  • 1. FEI 2010: Feb. 8, 2010 Sam Saguy Helmut Traitler – Nestlé and Sam Saguy – Hebrew University of Jerusalem [email_address] and Brigit Coleman – swissnex San Francisco www.swissnex.org Sharing-is-Winning Paradigm for Reinventing R&D in Open Innovation Culture
  • 2. 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 Saguy
  • 3. 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 Saguy
  • 4. 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 Saguy
  • 5. 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 Saguy
  • 6. 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 Saguy
  • 7. Nestlé R&D (R&D: 3,700; Application:1,300)
    • 1-Central research center.
    • 27-Global R&D and P roduct T echnology C enters ( PTC s).
    • 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 Saguy
  • 8. R&D Spending (millions; CHF 1~ $0.97) FEI 2010: Feb. 8, 2010 Sam Saguy 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.
  • 9. 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 Saguy
  • 10. Nestlé: Sharing-is-Winning ( SiW ) Model
    • A strategic decision and a paradigm shift was required.
    • In novation P artnerships ( INP ) created (2006).
    • Integration ( bigger, bolder, faster execution and implementation ).
    FEI 2010: Feb. 8, 2010 Sam Saguy
  • 11. Nestlé Innovation Partnerships ( Traitler and Saguy, 2009) FEI 2010: Feb. 8, 2010 Sam Saguy Development stage Early Mature Focus Benefit Areas Business Needs Mid INP with Universities, Medical Centers & Start-Ups Monetary contributions Products Venture capital INP with SMEs & Inventors In-kind contributions (expert ressources) INP with Key Suppliers
  • 12. Nestlé SiW Model: 5-Pillars
    • Innovation Partnerships (INP ): partner selection.
    • 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.
    • Joint creative problems-solving : bringing together many scientific disciplines and people with different skills and large knowledge base.
    FEI 2010: Feb. 8, 2010 Sam Saguy
  • 13. Nestlé SiW model: 5-Pillars (cont..)
    • Implementation :
      • best practices
      • nourishing the innovation process flow
    • Continuous evolving process :
    • management, strategy, consumers-center, insights, partnerships, champions, internal experts, education, mindset, metrics, culture….
    FEI 2010: Feb. 8, 2010 Sam Saguy
  • 14. Nestlé SiW model FEI 2010: Feb. 8, 2010 Sam Saguy
    • Alignment of all the value chain to consumer-centric innovations.
    • Linking profit function (tangible/perceived) is key for catalyzing innovation.
    CREATE VALUE BUILD GOODWILL INDISPENSABLE DIALOG ESTABLISH TRUST Value creation: ultimate goal of the partnership
  • 15. 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 Saguy
  • 16. Selected Key Nestlé INP Collaborations
    • Barry Callebaut
    • BASF
    • Cargill
    • Cognis
    • DSM
    • DuPont
    • Firmenich
    FEI 2010: Feb. 8, 2010 Sam Saguy
    • 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.
  • 17. Typical example: Nestlé- DuPont FEI 2010: Feb. 8, 2010 Sam Saguy Solllys® soy-based products a co-development with an innovation partnership
  • 18. Nestlé USA – DSM & Cognis: Glowelle Beauty Drink FEI 2010: Feb. 8, 2010 Sam Saguy 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
  • 19. 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.”
  • 22. FEI 2010: Feb. 8, 2010 Sam Saguy
  • 23. FEI 2010: Feb. 8, 2010 Sam Saguy Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention Continuous evolving process
  • 24. Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention FEI 2010: Feb. 8, 2010 Sam Saguy 1. Leadership & Management Continuous evolving process
  • 25. 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 Saguy
  • 26. Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention FEI 2010: Feb. 8, 2010 Sam Saguy 2. Strategy Continuous evolving process
  • 27. 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 Saguy
  • 28. Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention FEI 2010: Feb. 8, 2010 Sam Saguy 3. Metrics Continuous evolving process
  • 29. 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 Saguy
  • 30. Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention FEI 2010: Feb. 8, 2010 Sam Saguy 4. The consumers and customers Continuous evolving process
  • 31. The consumers
    • Consumer-centric business model and innovation process.
    • Personalization.
    • The utmost importance of sharing, social network, crowdsourcing.
    FEI 2010: Feb. 8, 2010 Sam Saguy
  • 32. Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention FEI 2010: Feb. 8, 2010 Sam Saguy 5. Internal experts and champions Continuous evolving process
  • 33. 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 Saguy
  • 34. Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention FEI 2010: Feb. 8, 2010 Sam Saguy 6. Partnerships Continuous evolving process
  • 35. 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 Saguy
  • 36. Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention FEI 2010: Feb. 8, 2010 Sam Saguy 7. Passion Continuous evolving process
  • 37. 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 Saguy