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Accessing Supplier Innovation
Road warrior or road kill its your choice
Gene Slowinski Rutgers University Alliance
Management Group, Inc. a PRTM affiliate gene_at_stra
tegicalliance.com 908 234-2344
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What is Open Innovation?
Open innovation is any external collaboration
whose purpose is to obtain or co-develop a
technology, material, product, process, brand or
other opportunity on either an exclusive or
preferred basis. Some products enabled by Open
Innovation
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Why engage in Open Innovation?
Individuals, companies, and organizations with
resources relevant to our business
Our Firms RD capability
We must connect to compete and re-invent our
innovation process
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Transformational Growth Industry is accessing
the world for innovation
The WFGM Model
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Network Structure of Industry
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Network Structure of Industry
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Transformational Growth Industry is accessing
the world for innovation
The WFGM Model
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The Want equation is simple but powerful
A B C
Internal resources external resource meet
customer needs
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Palomar Medical Signs Agreement With Johnson
Johnson Consumer Companies to Develop Home-Use,
Light-Based Devices for Skin Rejuvenation, Acne
and Cellulite BURLINGTON, Mass., Sept. 7
/PRNewswire-FirstCall/ -- Palomar Medical
Technologies Inc (Nasdaq PMTI) said today that
they signed an agreement with Johnson Johnson
Consumer Companies, Inc ("JJCC"), a Johnson
Johnson company, to develop, clinically test and
potentially commercialize home-use, light-based
devices for (i) reducing or reshaping body fat
including cellulite (ii) reducing appearance of
skin aging and (iii) reducing or preventing acne.
Palomar Medical and Gillette in Next Phase of
Development Agreement Jun 30, 2004 Palomar
Medical Technologies Inc. and The Gillette
Company announced that they have completed the
initial phase of their agreement to develop and
commercialize a home-use, light-based hair
removal device for women, and both parties will
move into the next phase.Palomar will now
disclose additional proprietary information to
assist the parties in completing the development
and commercialization of the device. In
conjunction with entering this next phase, the
parties have amended the agreement to provide for
additional development funding to further
technical innovations.
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Working with Suppliers
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Which Company will a Supplier Chose?

• Company A
• Slow, cumbersome decision making
• We must own ALL IP
• One financial model for commodities and
  innovation
• Cannot sell to competitors

• Company B
• Fast, efficient, repeatable process
• Rights-to-use IP allocated to partners based on
  business needs
• Multiple financial models based on innovation
  content
• First into the marketplace, royalty on competitor
  sales

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The Food Industry
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William R. JohnsonChairman,President andChief
Executive Officer
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Portfolio of Alliances
Research - sponsored research at various
Universities
-Senomyx
Distribution - exclusive retail distribution
agreements for
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The Chemical Industry
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Imperial College
Protexeon
APTech Database
John P. Jones III
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Dow Corning Corporation has launched the
External Equipment Provider Alliance with nine
leading companies from the electronics assembly
and packaging industry.
2004.10.19Dow Corning Partners In A New
Photonics And Electronics Research Consortium
Dow Corning Corp. announced today a strategic
partnership of a new photonics and electronics
scientific consortium based at one of the
worlds premiere research universities.
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The Consumer Products Industry
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Competition in Home Personal Care is fierce
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Transformational Growth Industry is accessing
the world for innovation
The WFGM Model
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The Alliance Framework

• A rigorous process for planning and negotiating
  an alliance.
• Developed in the electronics industry to create
  high quality deals quickly or, to understand that
  a deal is not possible , quickly.
• Requires input from all key stakeholders

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Adopted by many Fortune 500 companies.
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Why alliances fail !
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Alliance Framework Elements

• Typical Elements
• Objectives (ours, theirs)
• Roles (ours, theirs)
• Overall resources
• Boundaries
• Market model
• Strategic exclusivity
• Intersections with the potential alliance
• Business plan summary
• Detailed objectives and detailed resources
• Financial pie-split
• Intellectual property
• Working process and governance
• Term and termination
• Alliance structure

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Becoming the Partner of Choice
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What Partners DO NOT Want !

• Why companies lose deals
• Low offers, claim to have no money
• Slow, cumbersome decision making processes i.e.,
  committee after committee that only meet once a
  month
• Ad hoc process for creating alliances
• Ad hoc processes for managing alliances
• Favor internal products at the expense of the
  partners product
• Unwilling to take the partners strategic needs
  into account both inside and outside of the
  boundaries of the alliance
• History of lost or lousy deals
• Continual turnover of key alliance personnel
• Do not learn from prior alliances
• Unwilling to listen to the partners view and
  take advantage of their expertise
• No alliance training, processes or diagnostic
  capabilities

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A complete system Integrated into the
established organizational structure
A widely applicable system From simple deals to
multi-party global alliances

• A flexible system
• Applicable at any step
• Adaptable to variations in management style and
  organizational structure
• Incorporates feedback loops

A fast system Requires a streamlined
decision-making structure
A stakeholder-created system People support a
system they help create

• A learnable system
• Must be understood by people of varied
  background and experience levels
• Includes training and support

An improvable system Adjustable to reflect new
learnings and organizational changes

• A top management-supported system
• Adequate resource commitments
• Decision-making processes tied to the system

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Transformational Growth Industry is accessing
the world for innovation
The WFGM Paradigm
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The Alliance Implementation Program

• Twelve tools born from the ashes of thirty
  failed alliances.
• Designed with the help of very thoughtful people
• Widely adopted in the pharmaceutical industry
  but adaptable to any industry

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Tool 7 - Protecting Know-how and Trade Secrets

• What Intellectual Assets
• Must we share
• May we share
• Must never share

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Thank You
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Accessing Supplier Innovation
Road warrior or road kill its your choice
Gene Slowinski Rutgers University Alliance
Management Group, Inc. a PRTM affiliate gene_at_stra
tegicalliance.com 908 234-2344