A Quick Intro to Open Innovation

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A Quick Intro to Open Innovation

• Kevin Blackwell
• Research Analyst in Innovation Strategy
• Vice President of Sales Marketing

Nerac,Inc. kblackwell_at_nerac.com [phone]
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What is Open Innovation Anyway?

• Open Innovation is a term promoted by Henry
  Chesbrough, a professor and executive director at
  the Center for Open Innovation at Berkeley.
• The central idea behind open innovation is that
  in a world of widely distributed knowledge,
  companies cannot afford to rely entirely on their
  own research, but should instead buy or license
  processes or inventions (i.e. patents) from other
  companies. In addition, internal inventions not
  being used in a firm's business should be taken
  outside the company (e.g., through licensing,
  joint ventures, spin-offs). In contrast, closed
  innovation refers to processes that limit the use
  of internal knowledge within a company and make
  little or no use of external knowledge. Some
  companies promoting open innovation include
  Procter Gamble, Innovation Exchange, NineSigma,
  InnoCentive, yet2.com, and IBM.
• Prior to World War II, closed innovation was the
  paradigm in which most firms operated. Most
  innovating companies kept their discoveries
  highly secret and made no attempt to assimilate
  information from outside their own RD labs.
  However, in recent years the world has seen major
  advances in technology and society which have
  facilitated the diffusion of information. Not the
  least of these advances are electronic
  communication systems, including the internet.
  Today information can be transferred so easily
  that it seems impossible to prevent. Thus, the
  open innovation model states that since firms
  cannot stop this phenomenon, they must learn to
  take advantage of it.
• It is the business model of the firm that
  determines what external information to bring
  inside, and what internal information to take
  outside.

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What is Open Innovation Anyway Really?

• The exact opposite of NIH Not Invented Here
  Syndrome

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Who is practicing it?

• The Worlds Most Innovative Companies - 2007
• http//bwnt.businessweek.com/
• interactive_reports/
• most_innovative/index.asp
• Particularly strong in Consumer Package Goods,
  Electronics

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The Importance to Nerac

• Nerac is a Research and Advisory firm for
  companies developing innovative products and
  technologies.
• 3,000 clients worldwide
• Historical roots in the NASA Apollo mission.
• Integral part of many Open Innovation Strategies
• Vendor sourcing
• Intellectual property research
• Technology scouting
• Key Opinion Leader mapping
• Nerac Solutions Network

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2 OI Adoption Models

• By the Book Adoption PG
• Established innovation networks
• Formally convey innovation missions to the
  network
• By their Nature Adoption Sun Microsystems
• So good at it that the process may seem
  ill-defined.

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Open Innovation Implementation Status
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Trends in Innovation Networks
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An Example Boeing 787

• Innovation Partner Innovia Technologywww.innovi
  atech.com
• Mission Build a new passenger jet with
  dramatically increased flight range.
• Innovation Need Increasedpassenger comfort on
  long flights
• Result advanced LED lighting that makes the
  cabin seem more spacious and emotionally
  comforting.

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Key Recommendations

• Look for companies that have a stated focus on
  Open Innovations
• Expect that the logistics for participating are
  ill-defined
• focus on their mission, not the process
• focus on disruptive technology companies will
  reinvent the process in real time for that.
• Expect plurality in how to participate in a
  companies innovation networks.
• Stage your OI relationship disclose your
  understanding of the mission aggressively, but
  details of your innovation more slowly.