More Related Content Similar to Kevin McFarthing IACCM 11 May 2011 (20) Kevin McFarthing IACCM 11 May 20112. Contents
1. What
is
Open
Innova(on?
2. Why
and
how?
3. Role
of
suppliers
4. Role
of
procurement
5. Contracts
6. Rela(onships
and
communi(es
©
Innova(on
Fixer
Ltd
2011
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4. The
Open
Innova(on
Paradigm
Other
Firm’s
Licensing
Market
Technology
Spin‐offs
New
Internal
Market
Technology
Base
Current
Market
External
Technology
Base
Technology
Insourcing
R
D
©
Innova(on
Fixer
Ltd
2011
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5. Outside
In
OI
• Defini(on:
• "Outside
In"
OI
is
when
you
access
other
people's
assets
to
add
value
to
the
products
and
services
that
you
deliver
to
the
market.
©
Innova(on
Fixer
Ltd
2011
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6. OI
–
basic
principles
• Your
customers
really
don’t
care
where
the
solu(ons
come
from
–
why
should
you?
• There
are
more
smart
people
outside
your
organisa(on
than
inside
• OI
increases
the
number
and
range
of
solu(ons
to
your
technical
and
product
problems
• OI
can
be
faster
depending
on
your
ability
to
integrate
and
the
partner’s
ability
to
cooperate
• AND
• Your
compe(tors
are
doing
it
–
you
are
now
figh(ng
on
another
ba_lefield
©
Innova(on
Fixer
Ltd
2011
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7. OI
–
basic
principles
• A
greater
propor(on
of
IP
is
being
registered
by
SMEs
– e.g.
Kra`
quote
that
≈98%
of
food
IP
is
generated
outside
Kra`
• An
increasing
propor(on
of
IP
is
being
generated
in
countries
like
China
• OI
leverages
exis(ng
internal
resource
• OI
doesn’t
have
to
be
riskier
©
Innova(on
Fixer
Ltd
2011
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9. Where
do
you
look?
• Exis(ng
contacts
– Suppliers
– Customers
– Universi(es
88% of companies use
suppliers for innovation
– Friends
(HEC, Paris)
– Referrals
• Research
tools
– Google!!
– Patents,
publica(ons,
news
• Intermediaries
– Consultants
– Brokers
– Technical
experts
©
Innova(on
Fixer
Ltd
2011
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10. Suppliers
• You
have
a
lot
already
in
place
– Rela(onship
– Systems
– Enterprise
integra(on
– People
– Responsibili(es
and
governance
• They
have
competencies
you
don’t
have
©
Innova(on
Fixer
Ltd
2011
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11. Suppliers
• You
may
also
have
– Power
– Mul(ple
sourcing
– Leverage
– Lack
of
trust
– A
thick
contract
– More
lawyers
©
Innova(on
Fixer
Ltd
2011
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14. Nestlé
• “Sharing
is
winning”
philosophy
• Partners
include
– Barry
Callebaut,
BASF,
Cargill,
Cognis,
DSM,
DuPont,
Firmenich,
Fonterra,
Givaudan,
IFF,
Kerry,
Mane,
Symrise,
Tetra
Pak
• Nestlé
shares
its
future
needs
for
all
its
business
units
with
innova(on
partners
• Have
a
Master
JDA,
with
project
addenda
• IP
ownership
principle
– Every
physical
solu(on
is
owned
by
the
competency‐providing
partner
– The
smart
applica(ons
are
owned
by
the
receiving
party
(Nestle)
• SiW
has
added
$200M
in
revenue
Source: Nestlé ©
Innova(on
Fixer
Ltd
2011
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16. Kra`
‐
Open
Innova(on
Driving
Value
Crea(on
Scouting for New Solutions
Searching Alliances /
inside your Partnerships
VALUE CREATION
network
Licensing In
- Technology
Product
In-bounding
Licensing In
- Trademark
Supplier &
Coman
Challenges
Supplier Co -
development
DIFFICULTY & TIME
Source: Kraft ©
Innova(on
Fixer
Ltd
2011
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17. Kra`
• From
transac(on
to
collabora(on
• Being
less
prescrip(ve
opens
up
more
opportuni(es
• Supplier
challenge
process
– Brief
– Develop
solu(ons
– 30
day
go/no
go
Source: Kraft ©
Innova(on
Fixer
Ltd
2011
17
18. Kra`
Evaluate/ Advance
per
Iden(fy
business
Engage
Develop/
Decide/ agreed
need
supplier
Work/Product
Communicate
process
Challenge
Kick
Check
Check
Decision
brief
off
in
in
deadline
SHOWCASE
•
Best
ideas
presented
•
Key
stakeholders
in
a_endance
•
Supplier
and
marke(ng
interac(on
Source: Kraft ©
Innova(on
Fixer
Ltd
2011
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19. A
different
approach…
• $6bn
household
product
company
• Usually
#2
or
#3
in
their
categories
• WIN
BALANCING
• If
an
Open
Innova(on
project
comes
off,
everybody
wins
• If
it
doesn’t,
Clorox
compensate
the
supplier
• There
is
always
money
on
the
table
for
the
supplier
–
so
they
come
back
to
Clorox
Source: Clorox ©
Innova(on
Fixer
Ltd
2011
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20. Help
them
• Do
your
suppliers
know
– Your
strategy?
– Your
priori(es?
– Your
consumer/customer
insights
and
needs?
– Your
technical
needs?
– Product
priori(es?
• The
more
they
know,
the
more
they
can
help
©
Innova(on
Fixer
Ltd
2011
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21. How
much
to
tell
them?
• Don’t
surprise
a
compe(tor
• Be
as
specific
as
possible
about
the
problem
• Don’t
be
too
prescrip(ve
about
the
solu(on
• Ask
yourself
–
what’s
the
worst
that
can
happen?
• Be
open
to
exploi(ng
the
surprising,
unan(cipated
proposal
©
Innova(on
Fixer
Ltd
2011
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23. Role
of
procurement
• Be
fair
to
procurement
–
don’t
measure
them
on
one
thing
and
demand
another
• Measure
on
innova(on
and
classic
commercial
goals
• Innova(on
can
deliver
new
products
and
cost
savings
– Kellogg
split
opportuni(es
into
these
two
groups,
with
different
processes
• Train
and
support
appropriately
• Understand
if
policy
changes
are
required
• Understand
if
more
training
is
appropriate
©
Innova(on
Fixer
Ltd
2011
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24. Contracts
• Common
fields
• Project
specific
– Exclusivity
or
not
addenda
– Services
(both
ways)
– Field
– Payments
– Project
brief
• Direct
– Timing
and
milestones
• Supply
contract
• Royalty
– IP
– Confiden(ality
– Dura(on/termina(on
• Boilerplate
©
Innova(on
Fixer
Ltd
2011
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25. To
consider….
• Do
you
really need
• Do
you
really
want
to
send
exclusivity?
innova(ve
proposals
out
to
– Total
tender?
– In
your
field
– Reac(on
of
supplier
– Will
non‐exclusive
give
what
– You’re
unlikely
to
get
the
best
you
want?
they
have
to
offer
– How
long
do
you
need
it?
– Limits
the
rela(onship
• Dura(on/termina(on
– Strong
disincen(ve
– One
off?
– Ongoing
rela(onship?
©
Innova(on
Fixer
Ltd
2011
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26. To
consider
‐
Intellectual
Property
• Do
you
really
need
to
own
the
IP?
– Totally
– In
your
field
– In
your
geography
• What
is
the
commercial
benefit?
– What
does
the
IP
protect?
– What
is
the
expected
product
life(me?
• How
easy
can
compe(tors
develop
around
the
IP?
• Are
you
be_er
off
keeping
it
a
trade
secret?
• Owner
needs
to
maintain
IP
– Reversion
clause
is
essen(al
©
Innova(on
Fixer
Ltd
2011
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28. To
consider….
• Indemni(es
– Protec(ng
your
business
could
put
the
other
company’s
business
at
risk
– Are
they
too
one‐sided?
• Project
failure
and
liability
– Innova(on
projects
fail,
it’s
a
fact
of
life
– Don’t
punish
the
supplier
for
genuine,
competent
project
failure
©
Innova(on
Fixer
Ltd
2011
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32. Suppliers
need
to
play
ball
• It’s
not
just
about
increasing
volumes
• It’s
not
just
avoiding
price
decreases
• It’s
not
about
increasing
your
slice
of
the
pie;
it’s
about
increasing
the
size
of
the
pie
• It’s
about
building
a
long
term
rela(onship
with
your
customer
for
the
benefit
of
your
customer’s
customer
©
Innova(on
Fixer
Ltd
2011
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33. From
bilateral
to
community
• O`en
suppliers
are
managed
at
arm’s
length
• Why?
• Build
an
ecosystem,
a
community
• Use
the
richness
of
interac(on
for
your
benefit
• Encourage
community
collabora(on
• Supplier
days
• Mul(ple
points
of
contact
©
Innova(on
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2011
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34. • Network
of
exis(ng
suppliers
• Invita(ons
for
new
ones
to
join
• Clear
indica(on
of
benefits
• Direct
contact
with
R&D
and
packaging
teams
©
Innova(on
Fixer
Ltd
2011
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36. P&G
• OI
projects
(external
input
>50%)
reportedly
achieve
70%
higher
NPV
than
internal
projects
• New
goals
for
Connect
&
Develop
(October
2010)
– C&D
to
triple
its
contribu(on
to
P&G’s
innova(on
development
by
delivering
$3
billion
toward
the
Company’s
annual
sales
growth
– P&G
to
become
the
Partner
of
Choice
for
innova(on
collabora(on
by
consistently
delivering
win=win
rela(onships
©
Innova(on
Fixer
Ltd
2011
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37. From
briefs
to
the
genuinely
new
Long
term
Joint
supply
and
opportunity
innova(on
and
IP
alliance,
as
Sharing
genera(on
part
of
a
Informa(on
supply
and
needs
community
Innova(on
briefs
©
Innova(on
Fixer
Ltd
2011
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38. Ul(mately…
FROM TO
Threats
Mutual
help
Suspicion
Trust
Avoiding
risk
Seizing
opportunity
Indemni(es
Sharing
risk
What
can
go
wrong
How
we
can
get
it
right
Our
slice
of
the
pie
Making
the
pie
bigger
This
project
Long
term
rela(onship
We
must
own
all
of
it
We
have
access
to
what
we
need
©
Innova(on
Fixer
Ltd
2011
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39. This
is
the
job!
• You
drive
the
crea.on
of
new
supply
chains
for
new
proposi.ons
that
bring
sustainable
sales
• Open Innova*on •
growth.
You
collaborate
closely
with
the
Innova.on
purchasing/value Theme
Leads
and
the
Innova(on
Leads
on
defining
the
search
direc(ons.
sourcing manager • You
collaborate
closely
with
the
purchasing
and
supply
intelligence
teams
globally.
• You
create
and
maintain
the
global
network
of
knowledge,
technology
and
supply
partners,
• As
Open
Innova(on
Purchaser
extending
way
beyond
the
current
supply
base.
• You
connect
with
upstarts,
ventures,
technology
you
are
responsible
for
finding,
brokers,
etc
to
in‐source
technologies
and
rela(onship
building,
selec(ng,
products.
contrac(ng
and
monitoring
high‐ • You
deliver
new
supply
chains
for
new‐to‐Philips
proposi(ons.
tech
knowledge,
technology
and
supply
partners
globally.
• You
manage
the
rela(ons
with
key
development,
marke(ng
and
supply
partners.
• You
are
part
of
the
project
teams
and
inform
all
stakeholders
pro‐ac(vely.
• Your
scope
is
interna(onal
so
extensive
travelling
is
part
of
this
job
©
Innova(on
Fixer
Ltd
2011
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