Future of open innovation slideshare

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The Future of Open Innova1on

February, 2011

Philippe Vandenbroeck, Partner, shi4N


Understanding the future of open innova;on


A diverse landscape


Apple's iPod

> 300 million sold 70% market share in the US iTunes 1 billion USD Q4 2010

only 6 months development time !


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


Open Innova1on is not new


Open Innova1on is not new


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


A diverse landscape

•  Sourcing in external exper;se •  Collabora;ve innova;on •  Valorizing endogenous (dormant) IP •  User‐led innova;on •  Corporate venturing


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


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


Sourcing in exper1se


Collabora1ve Innova1on ? Tata Nano: only 34 patents Open Hardware Model


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


Valorizing endogenous IP


Corporate Venturing

Investment focus: consumer products and services, health care, weight management and !tness, media, water, clean tech, environmental services, ...


Wide scan: P&G Connect & Develop


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!


Drivers behind open innova1on


Fragmentation of IP

Eroding innovation model of majors

Job mobility

Prosumership

The spread

of Open

Innovation

FOR


the microprocessor paradigm

asset liquidity and option density

from value chain to value constellations: innovative co-productive relationships


"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


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


? 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


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


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


The Future of Open Innova1on



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



Cri1cal Uncertain1es

Strategic agility of innovators

Intensity of exogenous pressures

Low High


A back‐of‐the‐envelope scenario framework

high strategic agility

low strategic agility

moderate pressures

high pressures


Scenario framework



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.


4 thumbnail scenarios



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





moderate pressures

high pressures


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





moderate pressures

high pressures


Big = beau1ful Ac1vist OI

Business as usual: insourcing logic Incumbents dictate terms of semi-OI Patent-anchored hard IP





moderate pressures

high pressures


Big = beau1ful Ac1vist OI

Blue Ocean

Strong focus on user experience 'Blue Ocean' service/business model innovation Fluid value constellations Brands trump IP


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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