Making Open Innovation a Reality

Some Practical Approaches and Experiences

Mike Hield Chief Executive IXC UK Ltd

Connecting Innovation For Business Growth

Some Challenges of OI

The IXC approach

Use of Intermediaries

Some practical examples

Improving Serendipity

Decimate Collaboration times.

Connect internal programs to external networks, whilst preserving anonymity.

Accelerate innovation and product development.

Securely access external IP and find better ways to exploit their own.

Helping companies to

Knowledge Dating AgencyEffective Serendipity

Barriers to Innovation

Make Time for Serendipity

Innovation ?Considered imperative for competitive advantage

38% of UK enterprises engaged in it

A contact sport in which collaboration is essential

We don’t know what we don’t know

“We will fight our battles not on the low road to

commoditization, but on the high road of innovation.” Howard Stringer, Chairman and CEO, Sony

“You can only win the ‘war’ with ideas, not with spending

cuts.” Klaus Kleinfeld, President and CEO, Siemens AG4

Essential Serendipity

Connecting ideas with the right technologies and capabilities.

Invention + Enterprise = Innovation

Innovation?

Connecting ideas with the right technologies and capabilities.

Invention + Collaboration = Innovation

Innovation?The game has changed

Thinking in Other People’s Boxes

Closed Innovation Principles

Open Innovation Principles

Hire the best people so that the smartest people in the industry work for us

Not all the smart people work for us – we need to engage with the best inside and OUTSIDE our company

To bring new products to the market we must discover and develop them ourselves

External R&D can create significant value; internal R&D is needed to claim some portion of that value

We need to discover it ourselves to profit from it We don’t need to originate the research to profit from it

The company that gets an innovation to market first will usually win

Building a better business model is better that getting to market first

Industry leaders in R&D investments will discover the best and most ideas, and will come to lead the market as well

Companies that make the best use of internal and external ideas will win

Control intellectual property to ensure that competitors do not profit from our ideas

Source: Henry Chesbrough (2003)

Company can profit from others’ use of our IP and we should buy others’ IP whenever it advances our own business model.

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• Concerns about the protection of IP

• Is it:

– protected and at what cost?

– worthwhile protecting? When do you know this?

– adequately protectable?

• Fear of IP Contamination

• Difficulty in identifying suitable partners/networks

• Lack of trust between external parties

• Problems in managing relationships between potentially disparate

cultures/scale of operation/clock-speed

• Need to find appropriate doors and help in Interpretation .

Open InnovationConstraints

The trusted Go-Between

The InnovationXchange IXC UK

Providing confidential links to extensive external networks around the globe

Connecting the brightest and best

Embedded Serendipity

The Prize

Something special happens when intermediaries are embedded:

• Creativity - the spark of innovation - and a sharper edge to internal processes

• Smart observation by, and a technical sounding board with, a commercially astute highly motivated go-between

Better Collaboration Faster

Business information

Important Features

• International Network – Local Access • Embedded Go-Between• Confidentiality & Ethics• Commercial Neutrality• Proven Process• Potential for Client Anonymity

Practical Serendipity

OI In Practice

• £60m per annum new collaboration for £6k advice – accelerating product launch by 18 months – nutraceutical development

• New product sector created from “unattainable” packaging technology solution – food-pharma link

• Rail/Aerospace technology transferred into medical devices creating new products and re-engineering existing

• “Mining industry” solution adapted to food manufacturing applications

• Clever corrosion resistance ideas harnessed by oil/gas industry

• Pharma Manufacturing technologies re-applied in food processing

• Archaeology department linked to automotive manufacturer

• “Old” Aerospace technology solves Railway problems

• Healthcare trust finds new ways to reduce costs and “learn”.

4x impact of other innovation initiatives

OI Key Lessons

OI is an innovation itself

Role of effective and Trusted intermediaries

Appropriate form of IP protection

Realism in expectations of fortune generation

Importance of SME sector – how to be open

Speed to Market

OI Key Lessons

OI is an innovation itself

Role of effective and Trusted intermediaries

Appropriate form of IP protection

Realism in expectations of fortune generation

Importance of SME sector – how to be open

Speed to MoneyCreate appropriate OI culture, skills,

procedures and motivation

• Specialist Innovation consultants/brokers/networks• Virtual networks and data-bases/exchanges• Technical research associations and providers• University commercial exploitation managers• General management consultants• Incubator and science park managers• Business service providers – accountants, lawyers, etc.• Marketing services providers• Business Links - MAS• Old friends and friends-of-friends.

Intermediary Sources

Innovation is a contact sportVirtual networks – generally in ‘public domain’Play in the right leagues – comfort/trustWho generates the creativity?How far can they really be trusted?Blend of technology understanding and

business connections – how current is expertise?

Problems with Intermediary Services

Keys to Success

What are your real expectations?

Ensure Focus, Fit and Experience

How do you measure success/failure?

Use a proven process/network

What happens when trust/confidentiality is challenged?

Intermediation is only part of the solution

Talk to me !

“Those that live by the sword …. will be shot by those that don’t!”

Gary Hamel

Harness Serendipity

A Final Caution

Why Innovate?