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Presentation on ‘Open Innovation – a Critical Component of Innovation Ecosystem’, Dr. Makarand Phadke, Chairman, FICCI National Committee on S&T and Innovation & Sr. VP – Innovations, Reliance Industries Ltd.
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Makarand Phadke
November 2013
“Open Innovation – a Critical Component of
Innovation Ecosystem”
2
What is Innovation?
Ideas
New questions
New customer
needs
Obstacles
Values
Action
Technology
Integration
‘Out-of-the-box’
thinking
New products &
service
Credit: Pravin Rajpal
3
Outline
Why Innovate?
“Word on the Street” - Innovation
Performance of Organizations
Challenges
“Innovation Ecosystem”
Open Innovation – Current Status
4
Why Should Organizations Innovate?
To stay ahead of competition
In ever-more connected world, velocity of change is ever increasing.
Product Life Cycles are shrinking
Avoid commoditization risk
“We will fight our battle not on the low road to commoditization, but on the high road of innovation”
- Howard Stringer, Chairman and CEO, Sony
5
Innovative Companies Deliver Higher Sales Growth and Margins
5 Yr Sales Growth (%)
138%
346%
Less InnovativeCompanies
MostInnovativeCompanies
5 Yr Sales Growth (%)
Source: Business Week 2006
10 Yr Median Growth in Net Margin (%)
0.40%
3.40%
Standard &Poor's 500
InnovativeCompanies
Source: Pricewaterhouse Coopers 2005
6
Innovative Companies Deliver Higher Sales Growth and Margins
Less Inno-vative
Companies
Most Inno-vative
Companies
1.38
3.46
5 Yr Sales Growth (%)
5 Yr Sales Growth (%)
Standard & Poor's 500
Innovative Companies
0.004
0.034
10 Yr Median Growth in Net Margin (%)
Source: BusinessWeek 2006
Source: PricewaterhouseCoopers 2005
7
Innovation as a Strategic Priority
8
Key Elements of Innovation Ecosystem
The term ‘Open Innovation’ was coined by Chesbrough (2003); this model claims that
“the company commercializes both its internal ideas & external ones from
other companies, and search for ways to put
their ideas on the market through the
developments of different products that are not part of its usual
business”
Ideation System
Alligned HR Policies Open In-
novation Network
R&D Infrastruc-ture
Dedicated Re-sources
Venture Fund
Reward & Recognition
9
ResearchResearch
Open Innovation Networks ConceptOpen Innovation Networks Concept
Know what you Know
Know what you don’t Know
Know what others know
TechnologiesTechnologies
Intellectual propertyIntellectual property
Business Models
Prototypes
10
Open Innovation Network at Work
11
Open Innovation Concept - Benefits
12
Notable Examples of Innovations that Came from Outside a Company
Dialysis
Ultra Sound
Bluetooth
13
P&G’s Connect + Develop
$5 Billion/y
New Sales
9,000 P&G R&D
People
2 Millio
n
14
Some users of Open Innovation Framework
15
Reliance Innovation Council (RIC) : Stimulating Innovation led Growth
Implement RIL innovation agenda
Acts as a catalyst in providing leadership and support to the business of RIL by harnessing cutting-edge, futuristic but practical, science, technology and innovation initiatives from both within and outside the organization
RIC members have provided new ideas and give direction to young researchers & shape the technology organization
Nerve Centre with the sole quest of propelling RIL to the forefront of global business leadership
Bringing Together World Thought Leaders to initiate Innovative Technology Developments
16
Closing Remarks
Innovations as a Strategic Imperative
Innovative Companies take Ecosystem Approach
Open Innovation – Strategic Component of Overall Ecosystem
India Needs to Build Strong Ecosystem – including enabling Environment for Open Innovation
THANK YOUTHANK YOU
