Open Source Innovation
Modifying your business model to
accommodate it
EXPERIMENT WITH BUSINESS
INNOVATIONS

Successful
Au...
Outline
What is ‘Open Source Innovation’

Why it is it increasingly popular

Case Studies, Models & Potential

Implication...
Open Source Innovation
.......is a paradigm shift for most of us
“Open innovation assumes that firms can and should use ex...
Assumptions behind Open Source
Innovation
.......the paradigm shift
Innovation is everywhere,

“there is more elsewhere th...
So why is it so popular now in BMI?
“Companies using the web intensively, gain greater
market share and higher margins”
Mc...
Why is this happening……..Global connectedness is
changing worldwide society
 Internet is 18 years old (6,000 days); Socia...
OSI is one of the tools of
Business Model Innovation
It is not a silver bullet!!

LET’S LOOK AT TWO REVEALING
CASE STUDIES...
From humble beginnings to giving the
sport of biking a new life

California, 1970s, going up and down the Marin county sou...
From this....

Mountain bike builders were
innovative, inspired and
reckless AND they sourced
ideas from their customers –...
Mountain Bike brought new markets......
• Ski resort
• National parks
• Indoor facilities

Moab Slickrock trail, Utha
Cadbury – OSI Implementation Team
 Small team mandated to source R&D
solutions and new product ideas from broad
areas out...
OSI @ Cadbury - Delivering value
Over ~ two year period:
 Integrated with the global innovation strategy
 35 collaborati...
Cadbury Open Source
Cadbury’s Innovation Strategy
Develop innovation roadmapping with flexible portfolio approach in
multi-functional teams
Di...
HOW ARE COMPANIES
CHANGING THEIR BUSINESS
MODEL TO USE OSI

LET’S LOOK AT SOME EXAMPLES
Partnerships with Customers
Invited customers to work with you to improve the
product overall, and to improve the offering...
Lego
Having experienced an historic
loss of 188 million Euros in 2003;
the turnover of the Danish group
increased by 38% i...
“Do it yourself programmable robot “
In 2 weeks of the product hitting the market, adult hackers
reverse-engineered the fi...
Value for Money – Research Findings
Insights from 4,500 firms from 13 European countries
 Low-technology firms investing ...
Competitions: Peugeot Design
4 million page
views
5 demonstration
models exhibited
at auto
marketing events

Designers fro...
• 5 Million projects
• 7 million designers
• 1 Trillion AUD $
CROWDSOURCING: logo and website design

NOW Launched just th...
Intermediary Model
P&G’s Collaborative Approach

The "P&G Advisors” program
allows consumers to try new
products and offer suggestions and
fe...
Collaborations : “Those with Challenges
meet those with Solutions”

GHD Aust – Innovation Exchange

Released in 2011
to bu...
GHD: Innovation Interchange - Water
Water First– What’s next?
InnoCentive: Partnering Intermediaries
NineSigma works with Clients

NineSigma works with Clients

. . .. . toto discover innovative ideas, technologies,
. disco...
Worldwide Society is Changing

In four years to 2010, newspaper
ad revenue dropped by 44.24%

Revolution is
Everywhere

Ma...
What’s next? .....Web 3

Internet will be
everywhere
There are very few silver
bullets out there
This is one of the tools of
Business Model Innovation!!
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Open innovation presentation austech 2013

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Open innovation presentation austech 2013

  1. 1. Open Source Innovation Modifying your business model to accommodate it EXPERIMENT WITH BUSINESS INNOVATIONS Successful Australian Manufacturers Frank Wyatt, Enterprising Partnerships Pty Ltd frank@enterprisingpartnerships.com.au 0414 39 2323
  2. 2. Outline What is ‘Open Source Innovation’ Why it is it increasingly popular Case Studies, Models & Potential Implications for your business model innovation
  3. 3. Open Source Innovation .......is a paradigm shift for most of us “Open innovation assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as firms look to advance their technology”. In addition, internal inventions not being used in a firm's business should be taken outside the company and offered to others. Companies can no longer afford to rely entirely on their own research, but should share with other companies. Henry Chesbrough 2003 Open Innovation: The new imperative for creating and profiting from technology
  4. 4. Assumptions behind Open Source Innovation .......the paradigm shift Innovation is everywhere, “there is more elsewhere than here” Other Industry domains provide solutions New paradigm is about managing IP – not necessarily owning IP New markets for innovation are being created faster through OSI Requires strong collaborative relationships working in alliances Only recently has it become more accepted and so accessible
  5. 5. So why is it so popular now in BMI? “Companies using the web intensively, gain greater market share and higher margins” McKinsey released reports in 2010/2011 1. The Rise of the networked enterprise: Web2.0 finds its payday” – McKinsey Quarterly Dec. 2010; 2. MGI Report, “Internet Matters: The Net’s sweeping impact on growth, jobs and prosperity” May 2011 The reports found that companies using OSI see on average… 20% decrease in travel costs 15 - 20% improvement in marketing effectiveness & costs 10% reduction in operational costs 18% increase in customer satisfaction 41% increase in employee satisfaction SME’s using Web technologies grow and export 2x as much as others
  6. 6. Why is this happening……..Global connectedness is changing worldwide society  Internet is 18 years old (6,000 days); Social Networking  Web 2 is ~ 8 years old – still an infant!!  E.g. Facebook • • • • 10% of all internet on line time, doubling every 12 months, est. to grow to 50% in 5 years (Scott Gallway, NYU Stern) 1Billion users: approx 1m+/yr 50% of users make $50k+/yr; 50%+ degree + credit card 1/3 smartphone to buy on-line & this is growing rapidly The future global market may not be China but Facebook!!
  7. 7. OSI is one of the tools of Business Model Innovation It is not a silver bullet!! LET’S LOOK AT TWO REVEALING CASE STUDIES.............
  8. 8. From humble beginnings to giving the sport of biking a new life California, 1970s, going up and down the Marin county south bay hills on their “Klunkers” Gary Fisher, Tom Ritchey, Mike Sinyard Joe Breeze and Charlie Cunningham are just a few names from those “thrill seekers” that gave birth to a new sport…..and a new bike!!
  9. 9. From this.... Mountain bike builders were innovative, inspired and reckless AND they sourced ideas from their customers – and increased their revenues INNOVATION • Fat tires • Wheel size and shape • Front suspension • Rear suspension • Lever breaks to disc brakes • high performance derailleur 27 speeds • seat post (quick release) • Handlebars • Frame geometry • Pedals • Crack arms • Equipment • Clothing To this...... faster, lighter, reliable, and way more expensive.
  10. 10. Mountain Bike brought new markets...... • Ski resort • National parks • Indoor facilities Moab Slickrock trail, Utha
  11. 11. Cadbury – OSI Implementation Team  Small team mandated to source R&D solutions and new product ideas from broad areas outside confectionery  Grew to become a globally linked team The early goals:  Develop ‘needs list’ (Want)  Build networks (Find)  Deliver value (Existing teams)  Grow capability (Value Dr Sarah Pearson, Director ANU Edge &Visiting Fellow, College of Business & Economics Dr Sarah Pearson
  12. 12. OSI @ Cadbury - Delivering value Over ~ two year period:  Integrated with the global innovation strategy  35 collaborations set up internationally  External partners for 50% of long term research projects with public research organisations  New product platforms  Recognised as innovation leaders, ideas coming to them  CEO quote – “open innovation is the key to Cadbury success” Dr Sarah Pearson, Director ANU Edge &Visiting Fellow, College of Business & Economics
  13. 13. Cadbury Open Source
  14. 14. Cadbury’s Innovation Strategy Develop innovation roadmapping with flexible portfolio approach in multi-functional teams Divisions within Cadbury own the ‘want list’ Clear value when deliver Discoveries had a home: value to company; value to external network; greater chance of success Demonstrate relevance and seen to help deliver success for others Knowing longer term strategies or consumer foresight means knowing when radical innovation is appropriate – integrated into global strategy Dr Sarah Pearson, Director ANU Edge &Visiting Fellow, College of Business & Economics
  15. 15. HOW ARE COMPANIES CHANGING THEIR BUSINESS MODEL TO USE OSI LET’S LOOK AT SOME EXAMPLES
  16. 16. Partnerships with Customers Invited customers to work with you to improve the product overall, and to improve the offering made to all customers. This works for three reasons: 1. customers want to help and work with brands they know are listening to them 2. customers want to solve problems 3. all too often the solution or idea you need will be really simple to somebody else
  17. 17. Lego Having experienced an historic loss of 188 million Euros in 2003; the turnover of the Danish group increased by 38% in 2008 to reach 182 million Euros They appointed a new CEO who adopted Open Source Innovation!! Case Study: http://www.managing-innovation.com/case_studies/Lego.pdf
  18. 18. “Do it yourself programmable robot “ In 2 weeks of the product hitting the market, adult hackers reverse-engineered the firmware and developed additional gaming software for the robots – Lego engaged with these customers and changed their business model! Business Model Changed When Lego produced its next generation product, MINDSTORMS NXT, the company turned to its lead customers again; recruiting a small group of lead customers from the hacker community to consult with them on the design of the next generation product http://mindstorms.lego.com/en-us/Default.aspx
  19. 19. Value for Money – Research Findings Insights from 4,500 firms from 13 European countries  Low-technology firms investing in R&D can achieve the highest returns if they direct their search behaviour towards customers.  Advanced technology firms invariably source inventions from public research is the major leverage point for a firm’s search pattern. Carbon fibre wheels Parallel-shaft speed reducer gear Nano soft tissue design Kelly Slater, world champion Surfer, wearing a Deakin University & Quicksilver high performance wetsuit Source: Christoph Grimpe and Wolfgang Sofka, 2007, Search Patterns and Absorptive Capacity: A Comparison of Low- and High-Technology Firms from Thirteen European Countries, Centre for European Economic Research, Discussion Paper No. 07-062
  20. 20. Competitions: Peugeot Design 4 million page views 5 demonstration models exhibited at auto marketing events Designers from 100 nationalities contributed 10.000 prizes 5th year of the contest
  21. 21. • 5 Million projects • 7 million designers • 1 Trillion AUD $ CROWDSOURCING: logo and website design NOW Launched just this week: CROWDSOURCING in all job categories, employers can source software, slogans, video production, design work and architecture They are also now crowdsourcing for their next generation of ideas – “tell us what you want us to crowd source for you”!!
  22. 22. Intermediary Model
  23. 23. P&G’s Collaborative Approach The "P&G Advisors” program allows consumers to try new products and offer suggestions and feedback to P&G for refining their products and shaping national marketing plans. Before, P&G would spend $25,000 to field a new product concept test that took two months to complete. Now, by engaging the customers, the company spends $2,500 and gets results in about two weeks.
  24. 24. Collaborations : “Those with Challenges meet those with Solutions” GHD Aust – Innovation Exchange Released in 2011 to build collaborations between owners of “Challenges” & “Solutions”
  25. 25. GHD: Innovation Interchange - Water
  26. 26. Water First– What’s next?
  27. 27. InnoCentive: Partnering Intermediaries
  28. 28. NineSigma works with Clients NineSigma works with Clients . . .. . toto discover innovative ideas, technologies, . discover innovative ideas, technologies, products and services from outside their organizations products and services from outside their . . organizations the very best innovators and . to connect with solution providers . . . to connect withfrom very best innovators and the around the world . . solution providers from around the world . to quickly and cost-effectively solve their business needs . . . to quickly and cost-effectively solve their . . business needs their innovation processes . and to transform . . . and to transform their innovation processes NineSigma profile:  Offices in USA, Europe and Japan  Over 1,200 Open Innovation projects completed  >2 million solution providers contacted  14,000+ proposals received from 73 countries  South Africa regional partnership with RIIS N I N E S I G M A I S A L E A D E R I N O P E N I N N O VAT I O N S E R V I C E S Our clients tell us we help  Accelerate the innovation cycle  Provide greater access to new ideas, innovation, knowledge  Help hedge risk  Provide an expandable, low-cost network of innovation partners  Expand access to different skill sets and competencies Some of their many global clients
  29. 29. Worldwide Society is Changing In four years to 2010, newspaper ad revenue dropped by 44.24% Revolution is Everywhere Manufacturing to China, Services to India, Philippines, Eastern Europe, etc
  30. 30. What’s next? .....Web 3 Internet will be everywhere
  31. 31. There are very few silver bullets out there This is one of the tools of Business Model Innovation!!

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