Buff.eugene

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Buff.eugene

  1. 1. Effective Use of Open Innovation in Project DefinitionUsed with permission
  2. 2. Open Innovation DefinedOld 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. 3. Open Innovation Defined (continued) CUSTOMERS’ UNMET NEEDSMissing 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”
  4. 4. Intermediaries & Open Innovation licensing - yet2.com Other Firm’s Market NVPLLC: spinoffs NewInternal MarketTechnologyBase Current MarketExternalTechnology Sequoia/ InvestmentBase InnoCentive Cisco Banks NineSigma yet2.com Technology Insourcing R Page 5 D© 2007 Henry Chesbrough
  5. 5. 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
  6. 6. The Why - Best Practices goal settingFrom 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
  7. 7. 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 peopleJ&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 initiativesSara 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 routinelySources: Weedman pres’n to yet2.com 2009 Executive Briefing Conference; Stefan Lindegaard Innovation Metrics blog 15inno.com
  8. 8. 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)
  9. 9. 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”
  10. 10. 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”
  11. 11. Deals - Factors For Success1. Well described &.accurate Technology Needs and Technologies - upfront advance preparation of content, understanding of strategy and expectations2. Access to diverse, cross industry global community – not just the size of the network but the diversity and relationships3. Entrepreneurial technology and technology need owners – deal orientated, flexible about what a deal looks like4. Personal contact and relationship building is key to closing deals – a marketplace makes you the connection quicker but be ready to engage5. Use experienced facilitators to help create partnerships - understand the nuances between large companies and smaller technology innovators, ensure successful partnerships for both sides.
  12. 12. Key value add of intermediariesConnectivity Deep reach into corporate technical staffs Access to key gatekeepers (tech transfer & tech acquisition) Relationships with venture capital and SMEsConfidentiality Opportunity screening and initial discussions Protect client name and applicationExpertise Evaluation and communication methods Market and buy-side knowledge Business formation and commercialization skillsExternal perspective Unbiased evaluation and critical thinking
  13. 13. 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 brokersBoth networks important, but will yield different responses
  14. 14. Connect - Our Marketing Approachyet2.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
  15. 15. yet2.com Technology Acquisition Process – Needs IdentificationNeeds 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
  16. 16. 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
  17. 17. Need Qualification Learning broad narrowSearch scope:Background knowledge High (already searched, have candidates) No knowledgeabout the problem/specs:Project Trigger (IP situation, competitors, Has to find a solution Would like to have a solutionregulatory change…)/motivation: 6 months 10 years or moreDeadlines/product launch in:Maturity level of Fully developed Early stagepreferred solution:Internal project to Ongoing, funded nonesolve the Need:Willingness to complete Unwilling, unable High capability, availability, budgeteddevelopment:
  18. 18. TechNeed TitleSearch ScopeBackground KnowledgeUrgency- Project Trigger- DeadlinesProject Status- Existing / new- Need OwnershipSolution evaluation- Technical competence- AvailabilityDevelopment status - Desired technology readiness- Willingness to complete developmentASSESSMENT: Conducive to Search Business Impact / Readiness to Acquire Urgency(H/M/L) H/M/L H/M/L H/M/L
  19. 19. 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”
  20. 20. Eugene Buff, MD, PhDCertified Licensing Professional (CLPTM)Vice President, Consulting – yet2.com Tel: +1 (781) 972-0604 Fax: +1 (781) 972-0601 ebuff@yet2.com

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