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Keynote presentation for 17th Savory Flavor Conference,, March 2011, Geneva
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Shiftn, ©2010 www.shiftn.com 1
17th Savory Flavor Conference
The Future of Open Innova1on
Geneva, February 17-18, 2011
Philippe Vandenbroeck, Partner, shi4N
Shiftn, ©2010 www.shiftn.com 2
A diverse landscape
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Understanding the future of open innova;on
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Apple's iPod
> 300 million sold 70% market share in the US iTunes 1 billion USD Q4 2010
only 6 months development time !
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Apple's iPod
> 300 million sold 70% market share in the US iTunes 1 billion USD Q4 2010
only 6 months development time !
because
Apple sourced in the idea from an outside consultant and assembled a team of 8 component technology partners to bring it to market
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Open Innova1on is not new
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Open Innova1on is not new
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Cri1cal uncertain1es
"Open Innova1on is the use of purposive inflows and ou?lows of knowledge to accelerate internal innova;on, and expand the markets for external use of innova;on, respec;vely."
Henry Chesbrough
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A diverse landscape
• Sourcing in external exper;se • Collabora;ve innova;on • Valorizing endogenous (dormant) IP • User‐led innova;on • Corporate venturing
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A diverse landscape
• Sourcing in external exper;se • Collabora;ve innova;on • Valorizing endogenous IP • User‐led innova;on • Corporate venturing
Different approaches Different goals Different implica1ons for strategy and capabili1es
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OI Mode Goal Locus Capabilities
Sourcing in Reduce costs, Speed to Market
End of stage-gated innovation process
Frame issues, Find expertise
Collaborative Innovation
Radical innovation, New business models
Fuzzy front end Ecosystem mgt, IP regime design System integration
Valorizing endogenous IP
Increase revenues from existing assets
Modularization, identify application space
User-led innovation Empower customers, Create brand loyalty
Ideation, customisation
Crowdsourcing, Marketing
Corporate Venturing Secure access to component technologies
Anywhere Scouting
A diverse landscape
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Sourcing in exper1se
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Collabora1ve Innova1on ? Tata Nano: only 34 patents Open Hardware Model
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SOCIAL PRODUCT DEVELOPMENT
"Together, we develop two new products every week. One could be anything; the other is based on a brief we provide you ... "
User‐led Innova1on
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Valorizing endogenous IP
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Corporate Venturing
Investment focus: consumer products and services, health care, weight management and !tness, media, water, clean tech, environmental services, ...
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Wide scan: P&G Connect & Develop
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Concluding
• Open Innova;on is designing the flow of knowledge assets across company boundaries.
• Open Innova;on is not a monolithic prac;ce. • Building an OI por?olio has to be anchored in a clear strategic vision.
• Deploying full spectrum OI entails a strategic 'upframing', away from product and technology layer to include service and business model innova;on. Enormous degrees of freedom!
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Drivers behind open innova1on
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Fragmentation of IP
Eroding innovation model of majors
Job mobility
Prosumership
The spread
of Open
Innovation
FOR
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the microprocessor paradigm
asset liquidity and option density
from value chain to value constellations: innovative co-productive relationships
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"It is the views in the minds of business people that are the greatest constraint, and the source of greatest opportuni;es today. There are no 'mature' businesses. There are only 'mature' frames of reference."
Normann and Ramirez, 1994
the microprocessor paradigm
asset liquidity and option density
from value chain to value constellations: innovative co-productive relationships
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Fragmentation of IP
Failing innovation model of majors
Job mobility
Prosumership
Culture (NIHS)
The IP conundrum
Transaction costs
Elusive business case
The spread
of Open
Innovation
FOR AGAINST
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? The IP conundrum
Secrecy or Transparency? Speed or Security?
Generic or Flexibility? Cost or Opportunity Cost?
interna1onaliza1on
economic vola1lity
evolving partner‐
ships
heterogeneous partnerships
Importance of intangibles
Increasing speed of innova1on
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Secrecy or Transparency? Speed or Security?
Generic or Flexibility? Cost or Opportunity Cost?
interna1onaliza1on
evolving partner‐
ships
Clear strategic vision
Differen1ated suite of agreements and exit/divorce plans Clear but modular typology of knowledge assets
Clear phasing of R&D process
heterogeneous partnerships
economic vola1lity
Importance of intangibles
Increasing speed of innova1on
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Elusive Business Case
• "Contrary to our expecta;ons, it is collabora1on in explora1ve technological ac1vi1es, rather than collabora;on in exploita;ve technological ac;vi;es, that leads to a reduc1on in firm value."
• "These findings ques;on the relevance of open business models for technological ac;vi;es. In par;cular, they suggest that the poten1al advantages of collabora1on for (explora;ve) technological ac;vi;es (i.e. access to complementary knowledge from other partners, sharing of technological costs and risks) might not compensate for the poten1al disadvantages, such as the incurred increase in coordina;on costs and the need to share innova;on rewards across innova;on partners."
Research Orienta-on EXPLORATIVE EXPLOITATIVE
SOLITARY
COLLABORATIVE Collabora;ve Innova;on, Insourcing
Valorizing dormant IP
Belderbos et al. 2009 Data reflect technological ac;vi;es of 168 sample firms, 1996‐2003 R&D‐intensive European, US and Japanese firms in five industries
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The Future of Open Innova1on
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Cri1cal uncertain1es
Driving forces
Poli1cal Geopoli;cal security Extent of mul;‐polarity
Economic Intensity of global compe;;on Access to capital Economic surplus Emergence of new business models
Environmental Impact of climate change Scarcity of energy/raw materials
Social Demographics Availability of human capital Acceptability of closed IP
Technological: Informa;on security
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Cri1cal uncertain1es
Cri1cal Uncertain1es
Strategic agility of innovators
Intensity of exogenous pressures
Low High
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A back‐of‐the‐envelope scenario framework
high strategic agility
low strategic agility
moderate pressures
high pressures
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Scenario framework
high strategic agility
low strategic agility
moderate pressures
high pressures
Pressing societal needs (health, climate), Expensive inputs, Tough global compe11on Low societal acceptance of closed IP
Willingness/ability to embrace new business models, partnerships.
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4 thumbnail scenarios
high strategic agility
low strategic agility
moderate pressures
high pressures
Techno‐ hybridiza1on
Focus on time-to-market and !exibility Strong focus on 'user-embedded' technology Soft IP (licence of right) Highly differentiated innovation landscape Convergence on interoperability standards OI-oriented public procurement
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4 thumbnail scenarios
high strategic agility
low strategic agility
moderate pressures
high pressures
Techno‐ hybridiza1on
Ac1vist OI
Open source/commons-oriented innovation Limits on patentability and copyright Erosion of IP base through hacking and theft State control of IP rights in strategic areas
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4 thumbnail scenarios
high strategic agility
low strategic agility
moderate pressures
high pressures
Techno‐ hybridiza1on
Big = beau1ful Ac1vist OI
Business as usual: insourcing logic Incumbents dictate terms of semi-OI Patent-anchored hard IP
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4 thumbnail scenarios
high strategic agility
low strategic agility
moderate pressures
high pressures
Techno‐ hybridiza1on
Big = beau1ful Ac1vist OI
Blue Ocean
Strong focus on user experience 'Blue Ocean' service/business model innovation Fluid value constellations Brands trump IP
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Concluding
• The future of Open Innova;on is an open future. • The ques;on is not whether we can prove these scenarios true. The ques;on is: if they materialize, what does it mean for our innova;on model?
• Under the assump;ons studied, the dominant IP regime is very likely to undergo significant changes.
• Very likely all of these forms of Open Innova;on will manifest themselves. In that sense the scenario framework cons;tutes a typology of forms of OI.
• The full poten;al of Open Innova;on can only be leveraged by those companies that are willing to innovate their business model.
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With best wishes for an insigh?ul 17th Savory Flavor Conference
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Five func1ons of a business model
• Ar;culate the value proposi1on • Iden;fy a market segment • Define the structure of the value chain/network and posi;on of company therein
• Iden;fy revenue genera1on mechanisms • Formulate a bto hold advantage over rivals
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Business models and IP
Business model Innovation process IP management Undifferentiated None NA
Differentiated Ad hoc Reactive
Segmented Planned Defensive
Externally aware Externally supportive Enabling asset
Integrated Connected to business model Financial asset
Adaptive Identi!es new business models Strategic asset
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