Rick Wielens CEO– NineSigma Europe

Open Innovation 2.0 Stockholm March 2012

2011 © NineSigma, Inc.

Pop quiz

Biggest  patent  applicant  in  the  world  in  2010?  

A.  Philips    B.  Panasonic  C.  Huawei    D.  ZTE  Corpora@on  E.  Apple  

Pop quiz

Where  does  innova@on  happen  most?  (R&D  spending,  Patents)    a.  Companies  with  more  then  25,000  employees  b.  Companies  with  less  then  25,000  employees    

         

But:  Would  your  company  have  hired  him?  

Innovation is shifting

outside the large entreprise

Company size in # employees

Source: Henry Chesbrough

Page Page

Trends in Patent Registrations Top 7 global consumer-packaged-goods (CPG) companies

In challenging companies on how they innovate and grow

We believe

R&D Ownership Avoid Risk Idea driven Assets

S&D /Collaborate & Integrate Access

Fail often Need driven Ecosystem

Enable and engage organizations to use open innovation and develop the right capabilities

It is not about ownership it is about Access

The future is new business models e.g. Car share (not rental!) ZipCar: a fleet of 1,000 cars in 2 years for rental WhipCar: no fleet but within 6 months over 1,000 cars available to rent

Organizations are not designed for innovation

….but for ongoing operations… •  Resistance to innovation •  Frustrating the money press

machine! •  Predictable vs Uncertainty

Open Innovation Toolbox

RAPID  PRODUCT    PROTOTYPING  

TECHNOLOGY  MONITORING  

LINKED  INNOVATION  /  CROWDSOURCING  

OI  SKILLS  ASSESSMENT    &  DEVELOPMENT  

QUICK  -­‐  SCAN  OPPORTUNITIES  

TARGETED    PARTNER  SEARCH  

TARGETED    TECHNOLOGY  SEARCH  

SOLUTION  SEARCH  Solu=o

ns  

Skills  

Exper=se  

Knowledge  

OPEN  INTELLIGENCE  /  LANDSCAPING  

·∙  ·∙  

Professor  Frank  Piller  (MIT  smart  customiza=on  &  RWTH  Aachen):  

Open  Innova@on  is  the  formal  discipline  and  prac1ce  of  leveraging  the  discoveries  of  unobvious  others  as  input  for  the  innova1on  process  through  formal  and  informal  rela1onships  

What  is  Open  Innova@on?  

Examples  of  Collabora=ve  Innova=on  Outcomes  

Where  do  these  ideas  and  technologies  come  from?  

Trusted  networks  

Suppliers  

Consultants  

Universi=es  

Re=rees  

Others  

Other  BU’s  

Research  center  

Business  Development  

Other    

Universi=es  

Large  companies  

Small  entrepreneurial  companies  

Private  Laboratories  

University  Technology  Transfer  Offices  

Individuals  

NineSigma  Affiliates  

Na=onal  Labs  

Global  Innova=on  Community  

Business  Unit  

Company  

New solutions and ideas come from internal and external networks

...working backwards from customers needs often demands that we acquire new competencies and exercise new muscles, never mind how uncomfortable and awkward-feeling those first steps might be.... Jeffrey P. Bezos Founder and CEO Amazon April 2009, Letter to Shareholders

Need driven innovation

If I had an hour to solve a problem I'd spend 55 minutes thinking about the problem and 5 minutes thinking about solutions Albert Einstein

Need driven innovation

Ideas or Needs

Idea  Driven    Edisons  way:  700  experiments    Serial  /  itera@ve    Pay  for  failures  and  success    All  costs  for  experiments  internal    Serial  failures  &  experiments    Pay  for  @me  invested          

Need  Driven    Einsteins  way:  1  challenge    Parallel:  Expert  Crowds      Pay  for  success  only    Only  costs  for  integra@on    Parallel  failures  &  experiments    Pay  for  value  received  

The  Innova@on  and  R&D  Paradigm:    You  have  to  Fail  oWen  internally  to  Learn    

THIS  WILL  NEVER  WORK    IN  OUR  INDUSTRY    

VDMA  FVA  study  (federa@on)    

RFP:  ID  and  topic*  

Ins=tu=on   Solu=on  Technology  

new   known   new   known  more  info  required  

66198:  Durable,  non-­‐lubricated  gear  materials  

23   3   16   6   4  

66204:  Extraordinary  fine  par@cle  removal    from  lubricated  mechanisms  

10   0   3   7   0  

66207:  Transla@onal  research  in  bio-­‐similar    par@cle  capture  

7   0   6   0   1  

66201:  Low-­‐fric@on  hard  surfaces   33   2   n.A.   n.A.   n.A.  

   

VDMA  Study  /  FVA  (drivetrain  /  machine  building  federa@on  Germany)  

Need or challenge driven Innovation request:Tacit knowledge Expert crowd sourced: 10,000+ people whom we suspect that might have a solution Non Confidential: enables IP transfer and partnership 60% Industry: Business AND Academics 40% Surprise proposals people we did not contact

Open  Innova@on  Readiness:  Absorp@ve  capacity    

Strategy      

Culture      

Organiza@onal  structure    

Systems  /  Methods    

•  Agenda  segng:  Innova@on  and  external  knowledge    

•  Management  commitment  /  support      •  Collabora@on  and  communica@on  orienta@on  •  Innova@on  orienta@on  

•  Structures  and  processes  facilita@ng  collabora@on  and  knowledge  transfer  

•  Formaliza@on  of  Open  Innova@on  ini@a@ves  (Open  Innova@on  process)  

 •  Incen@ves-­‐  and  reward  systems  •  Collabora@on  and  communica@on  methods    

Source:  Prof.Frank  Piller  MIT/  RWTH  Aachen  

Open  Innova@on  Readiness:  Absorp@ve  capacity    

What  are  the  obstacles  in  your  organiza@on  that  may  prevent  you  from  benefi@ng  from  an  open  innova@on  ini@a@ve?  Which  micro  mo@ves  are  driving  this  resistance?    Which  measures  do  you  have  in  place  to  prevent  intra-­‐organiza@onal  NIH?  Can  you  transfer  some  of  these  measures  to  open  innova@on?    How  do  your  present  incen@ve  structures  support  NIH,  how  could  you  promote  PFI  (Proudly  Found  Elsewhere)?  

Engage  th

e  Inno

va=o

n  Ecosystem  

Enable  Internal  Teams  to  be  Successful  

New  Technology,  Partners,  innova@on  

People,  Process  Technology  

Fully  Leveraged  Innova@on  Ecosystem  

Round  up  the  usual  Suspects  

Enabling  Open  Innova@on  focused  across  two  primary  dimensions  

Open Innovation Road Map Prepare before you jump

Session  A  

Tools  Workshop  

Program  Development  

Execute  OI  projects    

Innova@on  Audit  

Learnings  and  Roll  out    

Session  B  

Interviews  and  data  collec@on  

First  Projects    

Define  scope  and  objec@ves  

Training  workshop,  OI  tool  box  

On-­‐going  program  review  &  support  

OI  GOALS:  •   Solu@ons  •   Opportuni@es  •   Improvements  •   Breakthroughs  •   Value  

Quirky in Numbers $200,000: Minimum upfront cost of building a conventional startup around a single product >200/ week ideators submit concept ideas online. Ideas must retail for less then $150 and should not require integrated software. Community of 65,000 members (growing 20%/month) influencers votes on ideas and develop them further

What is a good idea? The ultimate experimentation platform

30% payoff for ideators 2011 revenue: $6-10 million.Quirky has raised 12.6 million in funding. Staff: Today 40 planned 80

What  makes  Quirky  best  in  open  innova@on?  5.  Demonstra@ng  speed  of  innova@on  -­‐  despite  the  involvement  of  so  many  par@cipants  and  par@es.  4.  LiWing  the  crowdsourcing  model  to  another  level  -­‐-­‐  and  developing  the  idea  further  than  "just"  ideas:  plalorm  for  experimen@ng....  3.  Providing  a  plalorm  for  products  origina@ng  from  deep  user  insights  and  offering  anyone  the  plalorm  of  turning  their  necessity  into  real  products.  2.  Excellent  example  of  agility  and  ACCESS  over  OWNERSHIP  and  value  crea@on  between  openness  and  closeness.  1.  Being  one  of  the  first  companies  that  really(!)  takes  external  contributors  serious.   Source: Frank Piller