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Open Innovation Overview

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Overview of Open Innovation in High Technology

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Open Innovation Overview

  1. 1. Innovation in High TechnologyBoston Guy Laliberté, March 2011 This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
  2. 2. Open Innovation Overview What is “Innovation” ? ■ Invention or Innovation ? An invention is useful only to its inventor unless it is offered and used in a market. If the invention improves some product, process or service in a market, then that invention transforms into an innovation. An innovation is the extension of an invention. Innovation is not only new technologies but also improvements in processes, design or services. ■ Innovation in the High Technology Business  The future of most businesses depends upon their ability to innovate  Innovation is to sustain competitive advantage, maintain market share or generate growth  Innovation is rarely part of a business strategies and often confused with R&D  Companies culture and leadership are the two prominent barriers to innovation  Tools & methods exists to “make innovation happens” This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
  3. 3. Open Innovation Overview What is “Innovation” ? ■ Types of innovations (High Level) Incremental (the need is known) Market : Extension of an existing product for the same market Product : Its characteristics are well-defined Initiator : Often developed in response to a specific market need R&D / Marketing : Marketing Leads  “Customer Pull” Incremental Interaction Radical Breakthrough (the technical solution precedes the customer need) Market : New technology creates new market Product : Superior functional performance over “old” technology Initiator : Developed for a specific market opportunity or to cover a secondary concern R&D / Marketing : R&D Leads  “Technology push” Interaction Radical Breakthrough This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
  4. 4. Open Innovation Overview Technology Adoption■ In the 20th century, the time between standards was long enough that almost all members of the population would have adopted the new technology before the new standard appeared.  A new audio media standard used to emerge every 10 years (with a 5 year overlap)  The time between the VHS and DVD was even longer  18 years■ Today, the time between generations of new technology is short enough and the overlap is now long enough that it is possible to skip one or more iterations.  In 2006, movies were still being released on VHS and DVD as well as HD-DVD and Blu Ray. Three years later, new releases were no longer available on VHS or HD-DVD but they were available for digital download through DVRs, IPTVs and, of course, the internet.  With several standards to choose from, there is no pressing need to adopt a new standard. Instead, it becomes a choice of what to adopt and when to adopt. This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
  5. 5. Open Innovation Overview Technology Adoption ■ “The CHASM” is changing  highly industry dependent... The CHASM The CHASM Early Early Early LateLead Users Adopters Early Majority Late Majority Laggards Lead Users Adopters Majority Majority Laggards 2.5% 13.5% 34% 34% 16% 2% 48 % 29% 16% 5% Early Main Stream Lead Main Possible Market (?) Market Market Users Market Classical The New Reality Early market VS Mainstream Market The CHASM may have moved depending on your industry !!!! This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
  6. 6. Open Innovation Overview Technology Adoption ■ Evolution of “The CHASM” (1/3) The CHASM  In the last 10 years, people have become more and more tech-savvy  People are more comfortable with technology  Adoption of technology is faster today thanks to Lead Users Early Adopters Early Majority Late Majority Laggards Internet, Twitter, Facebook and other social medias. Lead Main Possible  The Early Adopters area of the curve is today Users Market Market (?) much larger  50% of the total market is now before the CHASM. 50% of Market 50% of Market This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
  7. 7. Open Innovation Overview Technology Adoption ■ Evolution of “The CHASM” (2/3) The CHASM  Since new technologies is launched more often and people adoption is faster, it is also replaced faster.  A new technology rarely has the time to become Lead Users Early Adopters Early Majority Late Majority Laggards the «standard» so the leap from Early Adopters to Early Majority is more difficult. Lead Main Possible  Competition appears when you are still working Users Market Market (?) the Lead Users or early for the Early Adopters  the market is shared faster between the 50% of Market 50% of Market competition.  To take the market, you must prepare your penetration strategy considering a small window of opportunity. The Lead Users must be “internal” to prevent getting the word out  Requires large budget… This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
  8. 8. Open Innovation Overview Technology Adoption ■ Evolution of “The CHASM” (3/3) The CHASM  To win the market, you must prepare your penetration strategy considering a small window of opportunity to achieve it.  The classical strategy to target a niche and grab Early Early Late Lead Users Adopters Majority Majority Laggards other niches after that may no longer be possible since adoption is so fast  You may have to penetrate “the market” and not only a niche. Lead Main Possible Users Market Market (?)  The Lead Users must be “internal” to prevent getting the word out  Requires large budget… 50% of Market 50% of Market  Competitors will jump-in soon after you are “visible on the market”  Crossing the CHASM now represents huge investments and is riskier for a smaller portion Is it worth it for start-ups ??? of the market still available to be won. A bigger partner is often required Competitors will fight for it and new technology will appear before the Late Majority can catch up. This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
  9. 9. Open Innovation OverviewWhat is “Open Innovation” ? ■ Open innovation is a way to accelerate product development and launch on markets. ■ Open Innovation is when the complete product development is done not only internally but also using external “partners”. ■ Areas of Open Innovations are:  Problem Solving  Beta-Testers  Open Data / API (use others to “grow” your product)  Development Partnership (or Joint Venture)  Sub-System Licensing (or buy-out)  Patent Buy-out  Directed Investment Funds (to target and stimulate external innovation in specific areas) This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009
  10. 10. Open Innovation OverviewConclusions and a Few Key Remarks1. Aligning R&D & Business Development / Marketing Efforts ■ The product development cycles must be accelerated because there is less time before the complete product cycle is completed. Often, it is a good strategy to use 3rd parties technology to fasten the process as much as possible and reduce risks. ■ Synchronize your product development efforts with your market development efforts. When you develop the technology for your product, you must also develop your market in order to prepare your penetration. Actions on the market must be done before you actually have the product completed and ready to sell it. ■ “Innovation” must be represented at the executive level of a company. Innovation is more then technology developed by engineers and a CTO is a clear message for investors. This allows coordination between engineering, manufacturing, business development and marketing  A key position but difficult if the “culture of innovation does not exist in the company”. ■ Open Innovation is a way to accelerate the launch of products in markets. Do you have the time and resources to do everything yourself ? This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009

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