Creating a Community of Collaboration and Innovation Through

Copyright © 2013 ITECS

Susan Ward, PhD President

ITECS Innovative 404 934-9161

[email protected]

Creating a Community of

Collaboration and Innovation

Through Open Innovation


What is Open Innovation Crowd Sourcing

“Traditional” Open Innovation

Results from Interviews

Consultant Companies that Work in the Space

IP at the Government

Potential Fits with ITECS

Agenda


Product Development Funnel

Open Innovation

“Open Innovation is a paradigm that assumes that firms can and

should use external ideas as well as internal ideas, and

internal and external paths to market, as the firms look to

advance their technology. Open Innovation combines internal

and external ideas into architectures and systems whose requirements are

defined by a business model.”

Henry Chesbrough, Open Innovation: The New Imperative

(2003)

“Open innovation is the use of purposive inflows and outflows

of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. [This paradigm] assumes that firms can and should use external

ideas as well as internal ideas, and internal and external paths

to market, as they look to advance their technology.”

Henry Chesbrough, Open Innovation: Researching a New

Paradigm (2006)


Segmentation

• B2C

• B2B

• Computer Programming

• Pharmaceutical Industry


Government Embracing Open Innovation

• Open innovation challenge – government posts challenge, gives awards for technology developed in responds to a challenge. It is different than a RFP in that you do not know whether you won until you already developed the technology. There are 93 challenges with $50M going to the private sector. The government has pilots with Innocentive, Yet2.com, Kaggle and TopCoder.

• Criteria for challenge versus RFP: 1. Covering new territory, 2. Broad Set of Solvers, 3. Risk of going after the award is not horrible.

• To find information go to Challenge.gov.


Jennifer Duggan, Open Innovation Manager, Nestle

Manuel Martinez Alonso,

Open Innovation Manager, Ferrovial

Keith Chisholm, R&D Process

Development and Open Innovation Manager, Mars

Snackfood US

Jeff Bellairs, Sr. Director, Open Innovation, General

Mills

Srinivasan Krishnan, Open Innovation Manager,

Unilever HPC

Steve Goers, VP, Open Innovation & Investments,

Kraft Foods

Linda Beltz, Director,

Technology Partnerships/Open

Innovation, Weyerhaeuser

Shama Vaman, Open Innovation Manager,

Cadbury

Jeff Murphy, Executive Director, Johnson &

Johnson

Chris Thoen, Managing Director, Global Open

Innovation Office, Procter & Gamble

Jason Husk, Group Manager, Open Innovation Networks,

Clorox

Manabu Tsuyama, General Manager, Open Innovation

Division, Sony

Shourya Roy, Open Innovation Manager, Xerox

India Innovation Hub

John Tao, VP, Open Innovation, Weyerhaeuser

Kenneth Lee, Director,

Competitive Intelligence & Technology Prospecting,

Open Innovation Coordinator at L’Oreal

Sandra Van Den Berg, Open Innovation Director, Mars

Sarah Pearson, Open

Innovation Champion, Cadbury

Jose Miguel Alonso, Open

Innovation Manager, Ericsson


Thought Leaders – LinkedIn


Thought-Leaders - Published

H W Chesbrough: has several books on the subject; seems to be the one everyone else references; dissects OI and gives case studies in his books

Alpheus Bingham and Dwayne Spradlin: The two have written articles and books on the subject in addition to being co-founders of InnoCentive. Bingham also helped in the founding of YourEncore and several other such organizations after leaving Eli Lilly. Spradlin cam from PriceWaterHouseCooper

Jay Paap: MIT


Companies that Speak About Open Innovation

P&G Cisco Nokia

Genentech Pfizer

Qualcomm Intuit PARC Clorox

Whirlpool Cummins

Dow Corning IBM

Xerox Alcan

Air Products

General Mills Kraft

Colgate Unilever PepsiCo Siemens

Mead Johnson Hallmark


Agenda

What is Open Innovation

Crowd Sourcing “Traditional” Open Innovation






Talks At IRI

• Tim Bernstein, of Yet2 gave a talk about crowd sourcing. He described the difference between open innovation and crowd sourcing as cutting a deal to license technology (open innovation) versus coming up with a good concept (crowd sourcing). He sees Innocentive in the crowd sourcing space and Yet2 and Nine Sigma in the open innovation space. Some examples of companies that are totally run by crowd sourcing are: Threadless, ETSY, Local Motors, 99designs.com. He also talked about what a high contact sport it is and how much client management is involved in open innovation and how much building the morale of the crowd is in crowd sourcing


• Doug Comstock from NASA gave a talk about their new business venture. This venture is based on crowd sourcing. It offers awards for programmers to develop algorithms to solve problems for NASA or to solve problems that private companies ask them to solve. The concept is to develop models that can better predict results (i.e. the chance of someone defaulting on their credit card).

• Erika Wagner from X Prize Foundation talked about prizes for technology challenges. These can range anywhere from $10,000,000 for x prizes to $1,400,000 for X challenges. One of the challenges was for the first commercial space craft Branson bought this for Virgin airline. Use prizes to bring solvers to you; when there is value in attracting multiple solutions; define the problem and not the solution; set and maintain clear criteria for playing and winning; you are what you incentivize (be careful)

Talks At IRI


From Interviews

• Intuit – puts challenges on the website and offers prizes

• Whirlpool – does crowd sourcing and co-development

• Kraft – does some crowd sourcing


Conclusion on Crowd Sourcing

• Different definition of what crowd sourcing is

– Concept development

– Work completed prior to knowing when got prize

• ITECS will define crowd sourcing as – work completed prior to knowing when got prize


Agenda


Crowd Sourcing







Individual Collaboration

• Business World

– Licensing – in licensing and out licensing

– Co-Develop – jointly develop, jointly own IP

– Outsource – buy resources, control IP

– Leverage Suppliers – free work, don’t control IP

– Consortium – Semi-conductor

• Government Space

– Licensing – out licensing and in licensing(part of RFP system)

– Co-Develop – CRADA

– Outsource – RFP

– Leverage Suppliers – defense contractors

– Consortium - Centers


Examples – Co-Develop

• We don’t buy patents because we have trouble evaluating them. All our technology comes about because we are already working with the company through establish partnerships and co development. An example we found this Japanese company that was making ink jet pigment. We thought this could solve our problem of pigment innovation as it is cost prohibitive to use a new chemical because of regulations. They had technology to mix inorganic with organic. We worked on a proof of concept with them and they are now a manufacturing of our pigments.

• We mostly collaborate innovation with university that is co-creative.


Examples – Out Sourcing

• We write RFP using 9-Sigma. For example they found adjacent technology in the marine industry for dishwashing liquid

• We are creating disruptive technology. Cost of product development and launch has gone up double and triple. The revenue is going the other direction. They are therefore partnering with companies. Work with companies that have developed with skills that don’t have product knowledge and market knowledge. He fights against calling sourcing open innovation.


Examples - Licensing

• They do all sort of license partners. He is looking for the white space. For example music lights. Need to partner to do the audio. They co-developed it. Market approach was also a new area. They do it with scouts and also with on-line initiative.

• They start with the strategy. Understand emerging space and identify potential in that area. Work is both with deals and co-development.

• They split there efforts between several stages of development.

Discovery – looking at strategic partners and see what trends they see, other markets; Opportunity Development – Crowd Sourcing, co-development; Commercialization – Licensing


Example - Consortiums

• Open Innovation does occur in the B2B segment, but the forms are different. He found that collaboration in pre-competitive research was of value, particularly in highly fragmented industries, or in industries facing significant foreign competition. In fact, Intel and the semi-conductor industry is very active in collaborating in pre-competitive research. Siemens gave a very good overview of their Open Innovation programs in the CoDev conference this year. This link summarizes their initiatives on page 6:http://blog.tim.rwth-aachen.de/wp-content/uploads/2010/05/Pictures-of-the-Future-Siemens-ENGLISH-May-2010-Open-Innovation.pdf. The initial focus of B2B companies is to find solution providers for longstanding issues that internal research has not solved. GP’s Tech Scouting for the No-Added Formaldehyde project is another good example.

http://blog.tim.rwth-aachen.de/wp-content/uploads/2010/05/Pictures-of-the-Future-Siemens-ENGLISH-May-2010-Open-Innovation.pdf
























How A Major Business Machine Manufacturer Practices OI

– Broker Mediated Open Innovation

– Supplier Partnerships

– Sponsored Research at Universities

– Industry/Academia/Government Partnerships

– Unrestricted Grants

– Contract Services

– Pre-Competitive Consortia

– Technology License Out

– Technology License in

– Open Innovation Out-Bound

– Knowledge network


Value Proposition

• Relationship Building: – Hiring new talent, visiting scientists, leverage infrastructure, access to latest

analytical tools and additional disciples, enables networking with other industrial

partners

• Internal Competency Building: – Provides new competency for growth in targeted areas, enhances existing

competencies via knowledge (scientific, business models, trends)

• Schedule Acceleration: – Has potential for significant impact on schedule

• Business Opportunity: – Addresses missing piece of value chain (BGs) enabling technology; Creates new

business opportunity (print shop, fleet, services) via customer/business visibility

• New Idea Generation: – External idea sourcing (Tactical vs. radical) providing new insight or experience

resulting into growth. Critical problem solving is part of tactical.


Agenda


Crowd Sourcing







Open Innovation - Interviews

• 24 Interviews; 21 Companies (2 interviews for Praxair, Conoco and Osram Sylvania)

• Intuit, Xerox, Colgate, Osram Sylvania, Weyerhaeuser, Whirlpool, Hershey, Kennametal, Praxair, Conoco, Milliken, Energizer, Kraton, Regal, Novelis, BASF, MWV, L’Oreal, General Mills, Cadberry, International Flavours


Overall

• Everyone interviewed partnered with someone in a co-development

• Most used the stage-gate process to incorporate open innovation into the development process

• Some were adamant about doing a technology roadmap first


Resources Companies Use

• Technical Road Mapping

• Mapping for Adjacent Technologies

• Incorporate in Stage-gate Process

• Networking; Scouts

• Websites Solicitations

• Consultants : 9 Sigma, Yet2.com, InnoCentive, Alliance Management

• Databases: Inno360


Drivers

• Drivers

– Cost – 14%

– Broader Expertise/Adjacent Spaces – 58%

– Quick to Market – 28%

• There were a variety of metrics. Most people were happy with the ones in the business units. Few were happy with measuring at a corporate level (i.e. – number of RFP’s)


Organizational Structure

• Organizational Structure: 25% all corporate, 63% small corporate group, 12% all business unit

• Small Corporate Group (1-10 people): Facilitates process, maintains database/website, hires consultants, maintains best practices, manages scouting

• Most companies the advocate was either the CTO or the CEO


Consultants

• Consulting Firms Used:

– None - 2

– InnoCentive - 6

– 9-Sigma - 11

– Yet2.com - 5

• Other Thought Leaders: Jay Paap, Inno-360, NASA TecFusion, Gene Slowinski, Stephen Lindgaard, Cheryl Perkins, Brandon Kelly


Agenda


Crowd Sourcing







9-Sigma

• 9-Sigma has a database with 2 million people mostly from industry. Clients come to them to find the right solution for a problem. 9-Sigma does not send a mass mailing but target the ecospace that most fits the client. The deal is negotiated with

the client. 9-Sigma at that point is not involved.

• 9-Sigma has 60 people. They have 37 in Cleveland, 7 in Europe and 7 in Japan. The way 9-Sigma gets paid is they have a base project fee and then has a success fee. They have all sorts of criteria for success. Their average take per client is around $100,000. They are partnered with a design house that offers value.


9 –Sigma What Other Say

• Good Reviews

• They approach to help set up consortium in Europe and go after the government

• They have metrics around open innovation

• Best Scouts

• Yet2.com - They feel they are different than 9-Sigma in that they most are working in later stage technologies and broking a deal. 9-Sigma deals are also smaller

• Some feel that the search engine will be less important. He feels there direction to working an Ecosystem might provide value


Yet2.com

• 60% of their business is monetizing Global 1000 IP and 40% is broking a deal. They charge an upfront fee 70% and a success fee 30%. They insist on making the deal and most of them are around $1MM. Last year they did 25 deals. They have 20 people in Boston, London and Tokyo.

• The types of programs they work on are 15% broad problems in core business, 57% narrow problems in core business, 18% broad problems in new businesses, and 10% as narrow problems in core businesses. Most of their clients are BtoC

• 3M, Allied Signal, Boeing, Dow, DuPont, Ford, Honeywell, Polaroid, P&G and Rockwell provided IP


Yet2.com – What Other Says

• Yet2.com clients generally want to find a home for their technology. They have 12 people and they monetize IP.

• Great to get in the C sweet

• Best Brokering


InnoCentive

• Investment by Eli Lily

• Interviews: Happy with service. Small investment. Best for conceptual work. Software for internal use Crowd Sourcing

• 9-Sigma: InnoCentive only has 160,000 enrolled and they are mostly from academia. A lot is focused in Russia and China. The work is always owned by the client and confidentiality is assumed.

• Yet2.com: difference between open innovation and crowd sourcing as cutting a deal to license technology (open innovation) versus coming up with a good concept (crowd sourcing). He sees InnoCentive in the crowd sourcing space and Yet2 and 9-Sigma in the open innovation space.


Inno-360

• Started by the Fortune 1000 Firms

• Database that they can use so they don’t have to hire a 9-Sigma

• Database is costly - $250K

• They have not started to make money yet.

• Yet2.com and Innocentive is working with them

• 9-Sigma see’s them as a threat


Alliance Management – Gene Slowinski

• The Alliance Framework is trademarked

• Companies brand is structuring deals

• They have 12 people that can be subcontracted

• The average consultant role is $80-100K. He gets $4000 a day plus travel.

• In the beginning his business was pharma and electronics. They learned how to do it themselves. Now is if food and consumer. B2B isn’t ready yet.


Jay Papp

• Jay big push is about road mapping and involving the outside world in developing the business strategy.

• He makes 40-50% of his money showing clients how to do this and the rest of his money by giving talks. Generally he makes $25,000 a week for a roadmap and $10K-11K for giving a talk

• The original model of want, find, get, and managed was developed by MIT and NASA


Techcom

• Techcom was set up with a partnership of the Arlington Chamber of Congress and the University system in Texas. It business model is to be self funded by charging corporate, economic development, venture capitalist, and universities funds to belong. Their mission is to establish partnerships and leverage government IP for economic development. They are a non-profit. An example of some work they did is with biomass jet fuel. They put together a team to commercialize this. They are hoping that the affiliates will be very actively involved and set the mission for the center.


NASA TecFusion

• The Tec fusion program was created by NASA in 2004 as a means to bring together SBIR/Small Business Technology Transfer (STTR) technologies and large companies looking to obtain advanced technologies funded through federal research and development budgets. It operates on the government side, from 10 Centers, not including their headquarters. The Centers in turn work with various universities in addition to small and large businesses

• Companies prominently display their involvement with this program. RTI, a $750 M research organization in Raleigh, links itself with the program at Langley. The Aspen Group, a consulting company is linked with Langley through a commercialization center in Virginia.


RTI TechVentures website

• NASA TecFusionTM Program—Prefer a more intimate setting or want the technologies to come to you? NASA Langley Research Center developed a program that Included in the program is a customized search for technologies that match the specific needs of the company, followed by a forum at the company's site where pre-screened small businesses present their technologies and core competencies. Tim Avampato of PPG Industries said that the TecFusion Program was "one of the most effective approaches for surfacing innovative technologies from small businesses we have ever undertaken." For additional program information, contact Robert Yang at 757-864-8020 or [email protected].

mailto:[email protected]


Agenda


Crowd Sourcing







History • There were several ACTS passed by Congress to allow the

national labs and universities to license their technologies. They were passed with the intent for taxpayer funds to be commercialized. Each laboratory associated with taxpayer funds has to have a tech transfer office. There are two organizations that over see these activities AUTM for the Universities and FLC for the national labs.

• There are partnership intermediates that were funded by congressional asks that were set up to help with the technical transfer, CTC being one of them and now Techcom being another. These organizations need to be non-profit and have a mission for economic development. With congressional ask going away some of these organizations are folding up their tents.


Amount of Activity

• There is between 4000-5000 invention disclosures, 2000 patent applications and 1500 patents per year for all the laboratories. Right now there is about 11,000 active licenses with about $154,000 income. He also told me there is between 6000-7000 active CRADA’s a year.


How to Do Business With Agency

• DOD has 100 defense labs which all act as independent agents. The ease of doing business depends on the tech transfer office.

• USDA has a very good system. The scientist can only get promoted if their technologies are commercialized. Therefore they are very interested in doing business.

• NIH has a great website but a marginal tech office

• DOE has a major challenge in that a lot of the technology gets taken by the contractors (i.e. Lockheed Martin). Therefore there is less technology available in the open market. The labs are getting their hands slapped for this but time will tell whether something changes.

• New initiative by Secretary Chu


Agenda


Crowd Sourcing







Potential Fits for ITECS

Full Service Provider

– Leverage Trust Established Between the Client and Program Manager to fill any gaps the company has in leveraging the outside world using ITECS expanded network

– Leverage Knowledge and Contacts within the Government Space to help the clients – • Understand Ecosystem

• Find IP

• Establish Partnerships

• Capture Funds

• Pilot New Technology for the Government

• Sell Products

Questions???


Susan Ward, PhD President

ITECS Innovative 404 934-9161

[email protected]

Documents

Creating a Community of Collaboration and Innovation Through