The document discusses open innovation models and case studies of companies that successfully use open innovation. It describes two models of open innovation - one that starts by identifying a specific need and uses a competitive process to solve it, and one that starts by finding partners to explore broad opportunities cooperatively. Several companies are examined as case studies, including Novartis, P&G, McLaren, Lego, Orange, and ARM Holdings. Common themes across the successful models include superior information flow, trust between partners influencing each other, and developing new flexible business capabilities. The document advocates for open innovation through engaged networks and giving more than getting from partnerships.

1. 100%Open 2013
INSEAD Presentation
Roland Harwood, 100%Open
29 September 2013 1

2. 100%Open 2013
Open Up
29 September 2013 2
“No matter who you are,
most of the smartest
people work for
someone else.”
Bill Joy, Sun Microsystems

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Two Models of Open Innovation
• Starts with ‘what’ question: an innovation
brief detailing a specific unmet need
• Is a competitive marketplace amongst
customers, suppliers or users
• The innovation process is mediated by a
Trusted Agent
• Innovations are extracted through a
linear process
• Tend to be internal routes to market (e.g.
license deals)
Discover
• Starts with a ‘who’ question: finding
partners to explore a broad opportunity
• Is a cooperative community & process ,
with customers, suppliers or users
• The innovation process is facilitated
through a Catalyst
• Innovations are built using an iterative
process
• Tend to be external routes to market (e.g.
joint ventures)
Jam

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Open Innovation
29 September 2013 4
Innovating with partners
by sharing the risks
and the rewards.

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100%Open Process
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Explore Extract Exploit
Identify
Interesting Questions
A shortlist of partners
and solutions
Taking investable
propositions to market

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Explore > Extract > Exploit
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“Open innovation is a
U-Shaped Process.”
Paul Vanags

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Open Business Models
Co-Creative
Collaborative
Cooperative
Closed
Crowd-
Sourcing
Joint
Ventures
Open
Source
Open
Ecosystem
Co-
Branding
IP
Acquisition
Peer
to Peer
Revenue
Share
Strategic
Alliances
Strategic
In-sourcing

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Case Study – Novartis
29 September 2013 8
Novartis gains skill in orchestrating many different business models by open calls to
„opportunities‟ rather than pre-designating what roles partners must occupy

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Novartis Value/Model
29 September 2013
Superior Information Flow
• Extends reach into consumer-facing and service-
based businesses (wholly alien to the historical
business model), plus geographical reach
• Relies on „the outside‟ to suggest what might be
possible
Trust = Power to Influence
• Demonstrating „citizenship‟ behaviour in the early-
stage markets, letting others spot the win-wins,
builds confidence about „perils‟ of dealing with a big
beast
Fitness
• Business model diversity/experimentation– positive
negotiation towards “the art of the possible”,
alliance building and „business model innovation‟
become core capabilities
• Learning how to learn, through working closely with
others with different core competitive advantages–
places firm well to act quickly as industry
changes/develops
Novartis
ProductsIdeas Propositions
Partners
Revenues Data
Deals

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Case Study 2 – P&G
29 September 2013
P&G have a target to source 50% of their new products and services from outside and
to systematically gather needs and push out through networks and partners.

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P&G C&D Value/Model
29 September 2013
Superior Information Flow
• Helps avoid the „limits to inter-organisational
knowledge acquisition‟
(Dushnitsky & Shaver 2009)
• In-house and existing designer relationships are
based on past product successes– more diversity
should result in more „appropriate‟ fit and
knowledge from other cutting edge projects
Trust = Power to Influence
• Product designers who know that their P&G
relationship is ongoing will make choices about
other projects to pursue partly based on
prospective partnership opportunity. More
transparency from P&G = better chance of
designers making accurate investment choices
Fitness
• Avoiding path dependence, building more flexible
„docking points‟ for outside techs
• Speeding „search‟ and creating a beacon
Connect
&
Develop
Unmet
Needs
Brokers
IP
Product
Acquisition
Internal
R&D
P&G
JV
Unis
Brands
Customers
Insights
Business
Units
SMEs

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Case Study - McLaren
29 September 2013 12
McLaren‟s predictive F1 software allows air traffic controllers to predict how aircraft
are likely to act at airports, overcoming costly and dangerous uncertainty.

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McLaren Value/Model
29 September 2013
Superior Information Flow
• Finding partners outside the normal course of
business with unusual information
Trust = Power to Influence
• “Distance” of technology from partners‟ core
business and status as a non-competitor allows
trustful relationship/alliances
Fitness
• ROI on projects high due to sunk cost in original
development of technology
• Future McLaren tech development considered with
modularity, „re-purposing‟ in mind
• Unbranded experiments with lead users from other
industries
McLaren
Applied
Technologies
IP
F1 McLaren
JV
Brands
Insights
Lead
Users
Revenues
Insights
Co-Branded
Prototyping
Un-Branded
Prototyping

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Case Study – The LEGO Group
29 September 2013
The LEGO Cuusoo community (280,000+) is a design competition where qualifying
ideas that attract 10,000 votes get produced, and 1% revenue shared with originators

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LEGO Cuusoo Value/Model
29 September 2013
Superior Information Flow
• Rather than relying on only obvious and famous
sources of IP, the question
„will anyone want this‟ is answered in advance of
development investment
• Takes Lego into previously unknown niches in a
low-risk manner, helps
prevent the „gravitational pull‟ of past hits
dominating the future.
• Additional barrier to entry to competitors– flow
of “best” ideas coming to Lego
Trust = Power to Influence
• Pre-formed community, grateful to Lego for
producing set (potentially even
accepting of design compromises) and
evangelising for it
Fitness
• Superior cycle time
LEGO
1% Revenue
Share
New
Product
Promotion &
Marketing
Cuusoo
Community
Platform
Customers/
FansDesign
Ideas
10,000 Votes

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Case Study - Orange
29 September 2013
Orange run innovation challenges with entrepreneurs for big near-market-ready
propositions and avoid IP contamination through an Innovation Airlock.

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Orange
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Orange Airlock Value/Model
29 September 2013
Superior Information Flow
• gaining access to ideas earlier in their lifecycle
than the previous norm
• including access to ideas that probably would
have failed for lack of distribution before growing
to scale and the „notice‟ of the team
• access to ideas that are really just ideas not fully
developed commercial propositions = cheaper to
acquire, though perhaps higher risk
Trust = Power to Influence
• Orange already „owned‟ the cutting edge of MNO
customer relationships with Orange Wednesdays-
- creating a community of content provision
SMEs reduces the risk that the next brilliant
version of this will go to the competition
• In Game Theory, costly signals are credible
signals. Self-denying ordinance sends the right
message to the whole community of designers.
Fitness
• Outside orientation by managers decreases pull of
legacy France Telecom culture on innovation
People
License
Deal
Reject, Archive, Feedback
IP Reverts Back
ProtectionProposition
Fast-tracked
Airlock
Acquisition
Ideas & IP
Submission
Challenge
Pitch
Decision
90 days
Expert
Review
Panel
Build Network
Competition
Launch

18. © 100%Open 2012
Case Study – ARM Holdings
ARM Holdings' model for driving ecosystem co-operation gives a near monopolistic
position by creating value up and down the value chain.
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ARM Holdings Value/Model
29 September 2013
Superior Information Flow
• Creating flows of information up and down the
supply chain, including end user information and
client technology trajectories
• Being more aware of information than anyone else
in the market and even more than divisions of their
clients aware of each other
Trust = Power to Influence
• ARM philosophy– „we would never disadvantage a
client‟
• Focus on the non-core, „foundation‟ level of their
customers‟ technology offerings allows trustful
relationship/alliances, with clients giving up some
autonomy
Fitness
• Synthesising multiple clients‟ requirements
provides the best possible defence against
competition-- appropriate product for market, with
low cycle time
• Relationship management is superior to all others–
“engineers with client-facing skills”
ARM
Unmet Needs
Ideas
Revenues
DataPR
Product
Partner BPartner A
Fast cycle speed with Suppliers = Smoother transitions
Design Collaboration with Customers

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Open Business Models
Co-Creative
Collaborative
Cooperative
Closed
Crowd-
Sourcing
Joint
Ventures
Open
Source
Open
Ecosystem
Co-
Branding
IP
Acquisition
Peer
to Peer
Revenue
Share
Strategic
Alliances
Strategic
In-sourcing

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Lesson’s Learned
1. Give > Get
2. Aggregate Needs
3. Create Safe Space for Collaboration
4. Host Cross Cutting Networks
5. Open Up
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22. © 100%Open 2012
And finally
2229/09/2013
“Innovation is a by-product
of engaged networks.”
Verna Allee

23. 100%Open 2013
Thank You
29 September 2013 23
Roland Harwood
Co-Founder & Partner
100%Open | Somerset House | South Building | London | WC2R 1LA
Phone: +44 (0)20 78133 1006 | +44 (0)7811 761 435
Email: roland@100Open.com
Web: www.100Open.com
Twitter: @100Open