Issue 2 | theinnovationenterprise.com
INNOVATION 17
Measuring your return on Innovation We examine the methods that can be used to measure innovation 15 IE Interviews We hear from prominent innovators and get their insights on some of the field’s most important topics
google’s robotics brigade
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letter from the editor Welcome to the second edition of Chief Innovation Officer. The first issue was a great success, with the magazine getting a lot of excellent feedback, something we’re grateful for. We’re looking to build upon this success in this instalment, with a number of exciting trends discussed. As one of the world’s most consistent innovators, Google are a company we always keep a firm eye on. In our featured article we examine why Google acquired eight robotics companies in 2014 and whether this latest ‘moonshot’ will be a success. In addition to this, we will look at how companies can hinder their innovation efforts by inadvertently encouraging a culture of fear. We will discover how important it is for companies to create open environments where employees aren’t scared to go to senior management when they have reservations about a project.
In addition to this edition’s articles, we have also included a section of interviews from prominent open innovators. This will bring you first-hand experiences from some of the world’s top professionals in this area and demonstrate how they are using Open Innovation to accelerate change. We hope you enjoy the magazine, it has been created to help spread new ideas within innovation and Chief Innovation Officers, so if you have any feedback please get in touch with me at ghill@theiegroup.com. Also, if you like the magazine, please share it. George Hill Managing Editor Are you are looking to put your products in front of key decision makers? For Advertising contact Giles at ggb@theiegroup.com
Managing Editor George Hill
Editor Simon Barton
Art Director Chelsea Carpenter
Contributors Ryan Marshall Abigail Fletcher Richard Angus Carlos Almasque Denise Powell Frank Hatzack
General Enquiries ghill@theiegroup.com
2015
contents
12 FASTER TO PROTECTION, FASTER TO PROFITS Ryan Marshall takes us through the Patent Examination Process and how it can affect a company’s innovation initiatives in 2015
HOW THE SHARING
EC N MY IS CHANGING OUR
4 GOOGLE’S ROBOT BRIGADE What are the implications of Google’s investment in robotics? Simon Barton looks at Google’s latest ‘moonshot’
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W RLD
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HOW THE SHARING ECONOMY IS CHANGING OUR WORLD With interconnectivity increasing all the time, we take a look at how the Sharing Economy is affecting us all
26 interviews
MEASURING YOUR RETURN ON INNOVATION We examine the methods that can be used to measure innovation
IE INTERVIEWS We hear from prominent innovators and get their insights on some of the field’s most important topics
17 HOW DO YOU TACKLE FEAR We’re all scared of trying something new and the same can often be said for companies. In this article we see how this fear can be overcome
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GOOGLE’S ROBOT BRIGADE
GOOGLE’S ROBOT BRIGADE by simon barton editor cino magazine
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GOOGLE’S ROBOT BRIGADE
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thing that they all “one have in common however is that they are becoming increasingly data driven, something that’s central to google’s business
”
In 2014, Google bought a number of advanced robotic and artificial intelligence companies to drive its innovation efforts. According to Fast Company, Google’s autonomous cars have travelled over 500,000 miles, with barely an incident to speak of. Although the car struggles in heavy snow and rain, the initiative has been a huge success and
the cars are seen as a way of transforming the lives of disabled and elderly people who might struggle to drive. Additionally, the Google car could signal the end for car parks, garages and gas stations.
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GOOGLE’S ROBOT BRIGADE
the car “although struggles in heavy
snow and rain, the initiative has been a huge success and the cars are seen as a way of transforming the lives of disabled and elderly people who might struggle to drive
”
As an extension of this, Google invested in eight robotics companies last year, including Schaft Inc., Boston Dynamics and Redwood Robotics to expand its portfolio. The functions of these robots vary widely, some are used as disaster relief, some can run at speeds of up to 30MPH, whilst others can nimbly climb up and down ladders. One thing that they all have in common however is that they are becoming increasingly data driven, something that’s central to Google’s overall business strategy. With this in mind, it’s almost logical that Google would invest in robotics to guarantee that it remains as innovative as possible. At the moment it’s hard to envisage a world where robots are readily available on the consumer market, but with the acceleration of change in technology, and the public’s acceptance of new innovations, it’s feasible to expect that something as alien as robotics could be available in not too distant future. Tom Austin, VP and Gartner Fellow, states that the development of Artificial Intelligence (AI) is one of the
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biggest contributing factors to the advancement of robotics. On the subject he says, ‘We believe we’ve finally turned the corner because of new algorithms, new hardware and great seas of data to feed to the hardware and algorithms’. Austin also believes that AI will bring robots into the public domain by ‘the second half of the decade’. If this is the case, it’s possible that Google could be stockpiling all the expertise it needs to successfully launch a robot that’s ready for our homes. Currently, robotics is used in structured environments, like factories, where they are protected from changing conditions that they can’t handle. Robots struggle to adapt to new situations and lack the ability to improvise when faced with new situations. Google’s new ‘robot brigade’ is without doubt one of its ‘moonshots’, just like the Google Glass and augmented reality projects. The Google Glass, arguably a disappointment for the internet giant, will be fresh in their minds, meaning that they will want to reassert their technological prowess
GOOGLE’S ROBOT BRIGADE
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with the development of this innovation. By investing in robotics they are using breakthrough technologies that have the capacity to be highly influential. Google’s driverless car has been a great success, but there are still certain issues that hold it back - with reflections in puddles and litter getting in the way of its sensors just two examples of this. Whilst these issues persist, there will always be questions regarding robotics capacity to interact with humans in a safe and reliable fashion. Google’s acquisitions however remain an exciting prospect and is a major sign that artificial intelligence is making robotics within the consumer environment a real possibility. With Google determined to maintain their position as the world’s most innovative company, their work within robotics feels like a natural progression. This is such an exciting space, let’s hope that they deliver on this ‘moonshot’.
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HOW THE SHARING
EC N MY IS CHANGING OUR
W RLD by yulia ivanova event organizer innovation enterprise chief innovation officer
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HOW THE SHARING ECONOMY IS CHANGING OUR WORLD
naysayers “the cannot deny that the sharing economy helps with overconsumption and gives consumers the option to use their resources more efficiently
”
The Sharing Economy has affected many different spaces over the last couple of years. We’ve seen companies like Uber, Airbnb and Recruitloop give their customers a different outlook, by giving them a more convenient way of consuming goods and services. Not something that sits well with everyone, a recent article in The Guardian states, ‘At its worst, the sharing economy turns us into perpetual hustlers, cementing our connection to the global market’ - but the naysayers cannot deny that the Sharing Economy helps with overconsumption and gives consumers the option to use their resources more efficiently. Uber, the app-based transportation network, was recently valued at over $40 billion, with the company’s business model being emulated to such an extent that it’s coined the term, ‘Uberification’. Not without its critics, some have claimed that Uber’s business model is based on evading regulations and breaking the law. Banned in many countries, Uber is never far from the headlines,
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with some even calling it bad for the economy. Uber has created an environment where it’s completely acceptable for an unlicensed cab driver, who you’ve never met before, to take you on an hour long journey - surely the exact opposite of what everyone’s told when they’re growing up. When put like this, travelling with Uber comes across as a real risk, but in the ‘Sharing Economy’ trust trumps danger. There is however clear evidence to suggest that Uber can be dangerous for the people using the service. It’s because of this that the service has been banned in France, Germany and some cities in India such as Dehli, where a passenger was assaulted by a driver. Peer to peer collaboration promotes trust in transactions. As a society, we’re told to expect the worst when it comes to strangers, so the fact that companies like Airbnb and Uber are valued in the billions demonstrates how much our perception of trust has developed at the hands of the Sharing Economy. This newfound trust creates an environment where innovation
HOW THE SHARING ECONOMY IS CHANGING OUR WORLD
drives down prices and gives people the chance to make money in ways which weren’t previously possible. However, we shouldn’t think that companies operating in this space are fine with sharing their profits. Uber and Lyft, another transportation network, are already at loggerheads, with Lyft recently accusing Uber of requesting rides from its drivers only to cancel them at the last second. Airbnb has gone from being a couch surfing website to an upmarket lifestyle brand
that’s going into the restaurant business. This has the feel of the economic landscape that we’re all accustomed to and will dampen everyone’s belief that these types of companies will reject more traditional business models if they promise sustained success. With Uber for example, the fact that they’ve been banned from operating in a number of major European countries might mean that it’s just not feasible for them to continue with their current model. If more countries implement bans they could be forced
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to move away from being a ‘sharing’ company to a more traditional enterprise. Whether the Sharing Economy will actually completely reshape our economy remains to be seen. What is undeniable is that its presence is helping form some the most innovative companies we have ever seen, and their business models could well shape the future of the business environment.
and lyft, another transportation “uber network, have created an environment
where it’s completely acceptable for an unlicensed cab driver, who you’ve never met before, to take you on an hour long journey
”
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faster to protection, faster to profits?
by ryan marshall patent attorney, shareholder brinks gilson & lione chief innovation officer
14 Companies in today’s business environment succeed by offering innovative products that differentiate them their competitors. Due to this, they expend significant resources on research and development to become more innovative. However, the danger for any business that creates something innovative is that its competitors steal their ideas, or mimic them to arrive at the same success.
FASTER TO PROTECTION FASTER TO PROFITS?
Patent protection enables companies to fully capitalise on their inventions by guaranteeing that their competitors don’t duplicate their inventions. For start-up companies, patents also help assure investors that the company will be able to profit from its innovations, allowing them to maximise their returns. Today’s Chief Innovation Officer will need to understand the patenting process as a proactive strategy to help ensure future profit streams and to protect nascent technologies in the product pipeline. The patent examination process has however been fraught with delay, with the average patent prosecution at the US Patent and Trademark Office (USPTO) now taking more than four years. US patent applications are taken up for examination in the order of their effective filing dates, and typically do not receive a first examination action for eighteen months. A final action allowing or rejecting the application typically takes at least two years, and in some technology areas, as long as five.
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This delay at the USPTO has created uncertainty over the scope of patent protection. Despite this however, there is some good news - techniques that expedite the examination process do exist and these should be considered as part of a Chief Innovation Officer’s intellectual portfolio management.
Patent Prosecution Highway (PPH) Several international patent offices, including most of those in important jurisdictions where companies will want their products protected, have agreements enabling an applicant to obtain the same claims at one patent office following the allowance of claims in another. In such proceedings, the patent applicant presents the allowed claims from one patent office to a second with a ‘Patent Prosecution Highway request’. Such requests significantly shorten the examination period as the presented claims will be examined to ensure that they meet the second patent office’s formal requirements. However, the
FASTER TO PROTECTION FASTER TO PROFITS?
patentability of the claims will be given deference based on the first patent office’s findings. This procedure works well if you have already received allowance for your claims in some jurisdictions. Participating jurisdictions include the US, Canada, the UK, China, Japan, Korea, the European Patent Office (EPO), most Scandinavian countries and various other patent bureaus. There are also similar cross-border agreements in Germany and Mexico.
Special Status Applicants at the USPTO can also request special status. An application can qualify for special status based on two points. First, an inventor’s infirm health or if they’re 65 years old or over and secondly for inventions that materially enhance the environment, conserve energy resources or counter terrorism. Many frustrated applicants, however, have found that special status has not resulted in quicker examination.
Accelerated Examination US applicants may also file a special procedure request called ‘Accelerated Examination’. Such requests must be accompanied with a statement that the applicant conducted a pre-examination search. This procedure is not often used by applicants because of the amount of pre-filing diligence required, and the risk that someone could challenge an applicant’s characterisation of prior art as misleading, which could negatively affect the enforceability of any resulting patent.
Track I Program Prioritised Examination Track I requests, also called prioritised examination, became available for US applications on September 26, 2011. The USPTO’s objective with Track I requests is to reach a final disposition on patentability of an invention within a twelve-month period. Final disposition occurs when there is a notice of allowance, a final office action, a request for continued examination (RCE) or notice of appeal filed by the
15 applicant, or abandonment. Also, an application reverts to regular status at final disposition unless the applicant files a petition for any extension of time. Track I procedures result in immediate examination rather than falling into the queue of backlogged applications. Patent office guidelines require the examiner to issue an office action addressing the merits of the invention within four months of the application reaching the docket. Thereafter, prosecution follows normal procedures, with the applicant responding to the office action and the examiner reconsidering the application based on that response. The USPTO has more stringent, formal requirements for applications undergoing prioritised examination, although the patentability standards are the same. For example, an application can have no more than thirty total claims and four independent claims and claims cannot be presented in a multiple dependent format. Normal examination requires payment of about $1,600 in filing fees ($800 for small
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16 entities). In addition to the normal examination fee, a prioritised examination fee must be paid of $4,000 ($2,000 for small entities) plus a $130 petition fee. If a petition for prioritised examination is denied, the prioritised examination fees will be refunded except for the petition fee. Eligible applications include utility and plant applications and continuation and divisional applications. Design, reissue and reexamination applications, and Patent Cooperation Treaty (PCT) applications are ineligible for Track I. Finally, applicants also should consider at what point during the year they file a Track I application. The USPTO may suspend the procedure if more than 10,000 Track I applications are filed in its fiscal year which runs from October 1 to September 30. Fortunately, the USPTO identifies the running number of applications filed online and no more than 9,100 applications have been filed in any of the three years since the procedure became available.
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FASTER TO PROTECTION FASTER TO PROFITS?
Prioritised examination enables a number of new strategies. For example, an applicant can quickly ascertain the patentability of an invention. If unpatentable, this early determination may remove the need for filings in other national patent offices, thereby avoiding related fees. If an invention is not a strong candidate for a patent, an applicant can request nonpublication of the application and maintain the innovation as a trade secret. On the other hand, following a successful prioritised examination, an applicant can pursue Patent Prosecution Highway (PPH) proceedings in some countries to rapidly acquire foreign patent rights and reduce or avoid some prosecution expenses. As an example of the procedure, this author filed a Track I application in June 2013 for a company with a medical diagnostic invention. The USPTO approved the Track I request four months later. The patent applicant then discussed the patent application with a patent examiner in an examiner interview, which resulted in an unfavourable office
action identifying reasons for rejecting the claims in April 2014.
, following “however another interview and amendment to the application, the examiner allowed the patent application in september 2014. therefore, the patent application was allowed within 11 months of the granted request for prioritised treatment.
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To date in 2014, the average period from Track I approval to grant is just over six months in all technology areas. In sum, Track I examination provides an effective process that allows companies to quickly secure competitive advantages arising from patent protection. The procedure can also be used to reduce or avoid costs when pursuing patent protection outside the US as well. Selectively applying the Track I process to key technologies can make the difference between a good result in many years time and a great result within twelve months.
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how do you tackle fear?
by abigail fletcher strategic partnerships cino magazine chief innovation officer
If you look down a coffee aisle in a major supermarket, you’ll notice that there’s a huge variety of high quality, fair trade coffee, something which wasn’t the case a decade ago. Cafedirect were the original investors in this field and were also the first coffee brand to carry the fairtrade certification.
HOW DO YOU TACKLE FEAR
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a company fears “iffailure , it’s likely
that they will opt for the safest bet, which commonly just maintains the status quo
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With their market share standing at around 30%, Cafedirect’s fair-trade idea is an excellent example of a breakthrough innovation, as their product shifted the market towards a superior product. Not only did fair trade coffee have the capacity to be highly profitable for Cafedirect, it’s also ethically sound, helping farmers around the world get more money for what they produce. At the time, investing in fairtrade coffee would have been a high-risk initiative that would either have failed disastrously or paid considerable dividends. Commonly,
breakthrough innovations like this are an advantage which come from open cultures that encourage employees to contribute ideas. Companies cannot escape from the fact that sustainable strategies, that tackle issues such as rising energy costs and the scarcity of natural resources, are going to be central to their future success. Due to this, companies have been encouraged to come up with and protect radical ideas that drive these types of innovations.
The use of the adjective ‘radical’ shouldn’t be taken lightly. The targets needed for breakthrough innovation will be daunting and will demand that new foundations are set and embedded within a company’s culture. These types of initiatives can be damaging if they fail, which understandably breeds fear within organizations. If a company fears failure, it’s likely that they will opt for the safest bet, which commonly just maintains the status quo. This insistence on maintaining the status quo is a state of play which companies should be wary of in today’s business
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HOW DO YOU TACKLE FEAR?
environment, as it can make them unresponsive to market developments and susceptible to progressive companies. Lack of risk also means that most of the time employees will be operating within their comfort zones, which will see their employees learn less. Although companies often put their employees on training schemes, it’s commonly new real-life situations that make an employee progress and it’s likely that a culture of fear will mean that employees are never tested and unlikely to develop. It’s not just prospective projects which can be affected by a culture of fear - current ones can be too. If a project is failing, but everybody is frightened to tell management that it’s going nowhere due to fear, nothing will be done and the project will be pursued even if it’s obviously going to fail. This means that companies waste their resources and design strategies around premises which are unfounded. If you’re company has developed a culture of fear then it’s in your interest to make sure that it’s stopped as quickly as possible. One of
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the most successful ways of doing this is to allow failures to be viewed in a different way - necessary iterations that bring insights which lead to innovation. This requires a change in leadership strategy, where management actively encourage their employees to push forward with projects that are high risk, high return. If your culture has become engrained with fear, this change cannot be done covertly, it needs be out in the open and clearly identifiable for everyone. It’s possible that many organizations will struggle to do this to begin with because their employees will be suspicious of this new open approach, but with time it is possible for the fear culture to subside. Getting rid of this type of culture is essential for companies who are looking to innovate - it will take time to eradicate fear, but it’ll be worth it in the long run as companies look to create breakthrough innovations that encourage sustainability.
HOW DO YOU TACKLE FEAR?
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measuring your return on innovation
“by separating the roii
formula, it allows for
by richard angus
discrepancies to be
head of innovation
measured and attributed
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to success
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MEASURING YOUR RETURN ON INNOVATION
Netflix has disrupted the video distribution industry, leaving a path of destruction in its wake. Blockbuster, which had once been one of the industry’s most successful companies, was one of Netflix’s victims, despite the former video rental giant having the opportunity to acquire the video streaming service back in 2010.
The unwillingness that certain companies express towards disruptive innovation is often simply down to how difficult it is to measure.
To add to this, companies such as Uber and Space X have also created niches for themselves, marking a shift in the way innovation is approached and ultimately implemented. The presence of these disruptors has meant that the model of disruptive innovation has had to reinvent itself against a backdrop of unprecedented change.
For example, organizations often measure the impact of unknown, unlikely to succeed projects, as well as less-known technologies and unspecified business models. This adds little in terms of measuring Key Performance Indicators (KPI) and rarely helps to create an innovation culture.
Large companies find themselves in a difficult situation. Half caught between executing on their current business model and attempting to disrupt what they already have. This has meant that many senior management teams have become unsure about the approach they should take to secure their companies longterm future.
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Measuring the return on disruptive innovation can be rather conceptual, measuring long-term and less set-instone targets, which are often difficult to quantify with hard-line facts.
It’s also common to see the ROII formula used (that is the Return on Innovation Investment) to determine how successful a project was, and although undeniably useful, it fails to actually measure how a company achieved a result. In the 1920s, return on equity was measured to determine how a company was performing. This changed however, when DuPont, the American chemical company, identified that an approach
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MEASURING YOUR RETURN ON INNOVATION
which included, profitability, operating efficiency and financial leverage was more likely to provide an accurate picture of how a company was performing, as it quickly diagnosed their strengths and weaknesses. With this in mind, the Harvard Business Review identified that DuPont’s formula could be applied to measuring innovation. The Harvard Business Review sub-divided the ROII into three separate categories, including: Innovation magnitude (financial contribution divided by successful ideas) Innovation success rate (successful ideas divided by total ideas explored) Investment efficiency (ideas explored divided by total capital and operational investment). By separating the ROII formula, it allows for discrepancies to be measured and attributed to success. In the Harvard Business review article it stated, ‘This split would highlight different innovation strategies available to companies. Companies that
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played it relatively safe could have a high success rate, low magnitude, and high efficiency. A company could achieve the same returns by compensating for lower success rates with higher efficiency or magnitude’. This approach would give companies a much more efficient method for measuring innovation. Above all, it’s important that a company’s innovation goals are defined before the process begins as that gives companies a clear start and end-point from which to look back at their results. In terms of formulas, the ROII is far from being a lone entity - and as companies discover new ways to innovate, they’ll also find new ways to measure what they’ve achieved. With disruptive innovation generating companies billions of dollars in revenue, the measurement of innovation should be seen as a real priority.
25 With the Innovation Enterprise running the best known Chief Innovation Officer summits in the world, we are blessed with an extensive pool of talent to interview. Open Innovation is touted as a way of increasing the success of innovation projects by using external sources to supplement internal ideas. It can accelerate technological and product innovation whilst also reducing the risk of failure.
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All three of this edition’s contributors are experts in the field and will be speaking at this year’s Open Innovation summit in London on the 30th April to the 1st May.
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IE INTERVIEWS
name:
Carlos Almasque position:
Senior Manager, Open Innovation company:
Firmenich
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Carlos started his career in advertising, speed-dating with many roles in Brand Consulting, CRM and Planning. Seduced by the possibility to design new sensorial experiences, he moved to the Flavour and Fragrance industry. During the last four years he has been working on designing, developing and implementing a new model of business-driven open innovation.
1 How has the perception of
open innovation changed in the last 5 years?
I don’t think the perception has fundamentally changed, but the hip is gone and now we have a longer-term view on what the initiatives can deliver. Also the way in which Open Innovation is being implemented has evolved.
2 Many people are
still worried about the risks of open innovation programmes, how do you negate these? Those risks are very real and people should not act blindly.
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Having said that, operating in a trust environment is key. It is always about hedging the risk of sharing, with commercial interests against breaking the trust.
3 How should you measure
the success of an open innovation programme?
Same as any business initiative: sales growth and profitability. In case of NGOs and other non-profit organizations, the same metrics as for other projects should apply. Innovation should always be an engine for growth, never some abstract idea-generation activity.
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4 Which organizations do
you think have been key to pushing open innovation and why? Technology conglomerates and large FMCG companies have played a big role, but the roots of open innovation will always be in academia and the scientific community.
I think open innovation should happen at all levels and for multiple different projects. It should be a way to bring part of the solution that cannot be found in-house, and this can be applied at all levels. One thing is a fact: the narrower the scope is, the more indepth the knowledge can be shared.
5 Do you think it is better
to allow open innovation to take place within an entire company or silo’d to particular departments or projects?
For the Leading Global Voice of Innovation
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channels.theinnovationenterprise.com/innovation chief innovation officer
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IE INTERVIEWS
name:
Denise Powell position:
Open Innovation Manager company:
IQE
interviews Denise holds a PhD in semiconductors and experience in various Product Development, Process Engineering and Integration roles at NXP, CIT and International Rectifier. Bringing together stakeholders across industry, academia and government, Denise is focusing the programme on Three Grand Challenges; Healthcare, Advanced Engineering and Materials, Low-Carbon Technologies and the Environment.
1 How do you think open
innovation has developed in the last 5 years? Open innovation has definitely become much more widespread in the last 5 years, not only across industries, but also across supply chains. It has moved away from being an intriguing concept to becoming increasingly integrated in business development strategies. There has definitely also been a large growth in the number of OI software providers and sector-specific OI support organizations and agencies. Perhaps the most striking development in OI has been the explosion
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in innovative ways of using crowdsourcing. On the other hand, open innovation has become the latest buzz term and with that comes a risk of dilution. I have come across organizations claiming they do open innovation, but don’t understand the shared risk, shared reward concept and become very worried that other companies want to steal their IP!
2 What challenges did
you face in starting an OI programme from scratch at IQE?
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IE INTERVIEWS
The first real challenge was to pick the right approach and tools for IQE. There are numerous OI methodologies, strategies and software available to pick from, but not all of these are right for every organisation. Our key enabling materials and technologies feed into various downstream applications, including Wireless, Solar, Photonics, Power and Computing. As IQE doesn’t take end products to market, some of the OI tools are less applicable to our position in the supply chain. We needed a first-time-right approach and worked with 100%Open, a well-established OI agency, to put together a programme specific to IQE. The OI programme, OpenIQE, was launched in February 2014 and allowed us to have some influence on downstream applications; an influence we normally would not have. Once the programme began to take shape, the next challenge was to ensure that incoming ideas were aligned with internal activities and this can be tricky when internal resources are already fully deployed.
3 Do you think that open
innovation lends itself to the high tech industries better than others? It may perhaps be easier to engage in open innovation in high tech industries due to the nature of the supply chains; modules and technologies can be integrated relatively easily into new products, but also, significant resources would be required to be able to create all the modules and components in-house. Perhaps the outcomes of open innovation are more tangible in high tech industries, but the concepts and processes are certainly equally applicable to other sectors. However, even today, there is still a fine line between OI and contract manufacturing in the high tech industry; with some organizations exploiting the term open innovation to find the hottest component they can plug in immediately, but are not wanting to share any risks of innovation.
4 What advice would you
give to somebody who is implementing an OI strategy? Be ready internally! Everyone tells you this when you first begin to develop an OI
programme, but you only truly appreciate the meaning and importance of internal readiness once you go through a steep learning curve! At the same time, you need to go through a learning curve to know what processes are needed to allow a smooth flow of external ideas and technologies into the business. Organizations are made up of people, processes and influenced by cultures, so methods for internal readiness are not always transferrable from one company to the other.
5 How would you define
success in an open innovation programme? The success factors can be different depending on a company’s position in the supply chain, but ultimately, the common denominators here are probably linked to money and people. If your business has become more profitable through open innovation strategies and your internal culture has changed to allow for better external engagement and easier adoption of new ideas and technologies, then you’re probably heading in the right direction.
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IE INTERVIEWS
name:
Frank Hatzack position:
Head of Innovation Development company:
Novozymes A/S
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Frank and his team are responsible for nursing Novozymes’ innovation culture and to facilitate innovation processes internally and externally. Frank has many years of experience with early opportunity assessment and new business creation. He holds a PhD in biochemistry from Freie Universität Berlin and began his career in Novozymes as a scientist with the Animal Health and Nutrition division.
1 How has the perception of open innovation changed in the last 5 years?
The perception in Novozymes has changed a great deal. It all started in 2011 when our R&D management set an open innovation initiative in motion. We realised that engaging in innovation with external communities, beyond customers, partners and academia, is important for the long-term growth of the company. The question then became: how can we as a B2B company engage with the crowds of enthusiastic makers and do-it-yourself people around the world? And why
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would they engage with us? This was new territory for us but we started taking our first steps with a couple of grassroot initiatives which all turned out quite positively. We co-created first technology prototypes together with makerspaces and imported the, hackathon‚ concept from the DIY-space into our corporate context. This was actually was a lot of fun and invigorated our innovation culture. Now, since the start of this year Novozymes has a new long-term strategy which is all about partnering for impact, reaching out to the world to create change together.
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Our leadership talks about‚ coalitions of the willing‚ for better lives in growing world. I see this as a strong aspiration towards open innovation.
2 Many people are
still worried about the risks of open innovation programmes, how do you negate these? These worries will never go away and the risks are real‚ however, the more important question is: can we afford not doing open innovation? My gut feeling is that open & collaborative innovation is going to be a key competitive parameter of the 21st century. We cannot accelerate innovation without opening it up. We will also not be able to tap effectively into social needs and profound sustainability issues without using open and collaborative approaches. We will not be able to create innovation that matters without engaging with the communities and customer segments in need first‚ making them part of the change.
3 How should you measure
the success of an open innovation programme?
One thing is measuring acceleration and cost reduction through distributed task solving‚ or crowd-solving. But what matters more is the question of whether the outcome achieved has a substantial positive impact for the people involved as well as the environment they live in.
4 Which organizations do
you think have been key to pushing open innovation and why? There are so many inspiring examples around us but if I should point out a favourite then it would be Tesla. In the summer of 2014 Elon Musk made the entire IP portfolio of Tesla accessible to all who want to use it in good faith. From a strategy point of view Tesla’s move raises a number of questions such as, Who is the next Elon Musk? Could it be somebody in your industry? If somebody‚ pulls an Elon Musk on you‚ what is your reaction? And finally: could you be the next Elon Musk? All of these questions are around competitiveness‚ and I guess
there could be a new strategic paradigm emerging here: open innovation increases competitive unpredictability.
5 Do you think it is better
to allow open innovation to take place within an entire company or silo’d to particular departments or projects? By its very nature open & collaborative innovation is for everybody in the enterprise. It needs to be enterprisewide in order to maximize the benefits and positive returns. If we take that as a given we still find answers to a couple of questions: One being how can we educate all employees to make empowered and diligent decisions about which data to share freely and which to protect? The other being how can we secure enough absorptive capacity to discriminate signal from noise and how to moderate the mass of conversations which will ensue in an open environment?
chief innovation officer
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