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winter 2020

Innovation at Unilever - Local activities making a global impact page 8

Open innovation at Israel’s national transport infrastructure company page 12

Alpha Strauss and the creation of Israel's food-tech industry page 26


CONTENTS Business Title

04

How To Build a Loyal Customer Base

06 THE LARGER-SMALLER CORPORATIONS SYMBIOSIS

08 Innovation at Unilever Local activities making a global impact

10 It Takes Two to Tango

16 The Pre-Contractual Stage of Technology Transaction

18 Customer oriented innovation at Amdocs

22

Designing Around Without Playing Around

26 Alpha Strauss and the creation of Israel's food-tech industry

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12

Open innovation at Israel’s national transport infrastructure company


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EDITOR’S NOTES Dear reader, We at The Funnel team are tremendously excited to be releasing the first 2020 edition of the magazine. This special edition is all about openness and the ability to harness the energy and momentum of external forces to the benefit of our organizations. Established organizations are very, how to put this…, established meaning that they are set in their ways and it is very difficult to use the same techniques that brought us to this point in order to get ourselves to the next level. This is where open innovation comes in and allows organizations to get exposed to and utilize technologies that came from startups, Academia and even other established organizations for the purpose of breaking out of their limitations of growth and progress. In this special edition you can learn about how open innovation is handled within organizations of various types. We cover Israel’s national transport infrastructure company and its first foray into the exciting domain of open innovation. We also have a fascinating glimpse into the open innovation activities of one of the largest food products manufacturers in Israel which had the unique challenge of actually facilitating the creation of the local food-tech pillar. Continuing this line we also had the opportunity to learn about the inner workings of a major global food corporation in its dealings with both open and internal innovation. A major hi-tech Israeli corporation also shares how it involves its customers in open innovation endeavors in ways that benefit both the customer and the corporation. One of the strongest insights I took from this issue is that sometimes, startups that could be relevant to an industry don’t even know that this is the case. How will you identify such startups and their potential contribution to your organization’s future? How will you position your organization as an attractive partner for those startups? Do you have the appropriate level of internal readiness to work with these startups and actually capitalize on such opportunities? I invite you to dive in and learn about what organizations on the cutting edge of open innovation are doing, take a page out of their playbook and make it yours.

Ahi Gvirtsman

Chief Editor & Duco Global Partner


HOW TO BUILD A LOYAL CUSTOMER BASE

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MOSHE ELZARA CEO AT BOOYA DIGITAL

BIG OR SMALL, BUILDING A LOYAL CUSTOMER BASE IS CERTAINLY A FUNDAMENTAL SKILL THAT EVERY BUSINESS REQUIRES FOR SUSTAINING HEALTHY, EXPONENTIAL GROWTH. WHEN STRATEGIZING YOUR GO-TO-MARKET GOALS, IT’S CRUCIAL TO ACCURATELY DEFINE YOUR TARGET AUDIENCE AND THE INDUSTRIES THEY FALL UNDER. UNDERSTANDING YOUR AUDIENCE IS WHAT GIVES YOU THE PROPER FOUNDATION TO CONNECT WITH POTENTIAL PARTNERS AND CLIENTS IN YOUR FIELD. TO BUILD AN EFFECTIVE CUSTOMER BASE, CONSIDER THE GEOGRAPHIC REGIONS YOU WANT TO APPROACH AND WHICH KEY PEOPLE YOU WOULD LIKE TO CONNECT WITH. IT’S IMPORTANT THAT YOU KNOW WHO IS THE DECISION MAKER AND WHO ISN’T. ONCE YOU HAVE A CLEAR TARGET AUDIENCE, YOUR CUSTOMER BASE WILL BUILD ITSELF.


REACH OUT WITH A PERSONALIZED MESSAGE APPROACH LIKE, COMMENT, AND SHARE INDUSTRY RELATED CONTENT FUNNEL YOUR RELEVANT LEADS TO YOUR CTA (BOOK A MEETING, LANDING PAGE, EVENT, ETC.) PROPER TARGETING TIPS AND BUILDING A LEAD FLOW When it comes to proper targeting and lead flow, there are a few parameters to consider as mentioned above i.e. region, language, industry, title and industry-specific key tag words. With your target defined, you can begin reaching out with personalized messages simply requesting to connect. The most important factor when asking to connect with a stranger is the common interests that are shared between you and your potential clients. One of the best ways to prepare your leads to engage with you on a professional level is through the content your brand promotes. By sharing interesting and relevant content with your network of leads, your subtle digital presence will surely assist in converting those cold leads into much warmer leads. Remember to research trending industry topics and popular social media groups in order to discover even more targetable leads that are within your network.

BEST PRACTICES For gaining the most out of your efforts, there are a few tips to consider when building your customer base. It’s important to remember that having a loyal client base doesn’t necessarily reflect the value of those clients when it comes to keeping the lights on. Always remember that loyalty is built over time and consistency plays a big role. Your main focus should be put towards bringing in new opportunities that will eventually be converted into loyal clients and added to your loyal client base. Best practices recommend remaining relevant in your industry by using powerful content you can share with your digital network. Using your industry’s best keywords, hashtags, and mentions will help your brand’s content gain organic traction and more attention.

CONTENT CREATES NEW CASE STUDIES From the extra attention gained by your outstanding content, it’s a good idea to take note of which posts performed best in terms of views, likes, comments and shares. The more engagement you can get, the better. After you know what your target audience likes most, you can begin reaching out to the newly acquired eyes watching your activity. Over time, your content will play a major role in placing your brand in the forefront of your industry and leading the way to success. With each new client gained, follow the content breadcrumb trails and look for the specific indicators that helped funnel your visitors to conversion. Once you’ve closed a new client, not only will they be loyal, but they will also provide your with great value. Now you can present your client case study in a clear and organized flow from start to finish. Now you can use your new case study to show off your success and attract even more loyal clients.

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AS A GUIDELINE, FOLLOW THE FOUR STEPS OUTLINED BELOW TO START BUILDING YOUR CUSTOMER BASE: RESEARCH AND DEFINE YOUR TARGET AUDIENCE


CORPORATIONS SYMBIOSIS

THE LARGER-SMALLER 6 THE FUNNEL

At first glance one could assume that engagement between large corporations and smaller new businesses derives from the smaller companies’ needs and motivation. However, when looking from a wider perspective, it is clear that the large corporations have their own vested interests when engaging in such transactions. Below we will focus on some of those interests and their effect. Like starlight which originated years before reaching our eyes, many of the giants’ products and roadmaps reflect the market as it existed a couple of years ago. The everlasting need to follow the market’s changing needs and new trends is challenging for a large company. At any given moment new trends

ADV. AVIV AVIDAN SHALIT PARTNER, MEITAR LIQUORNIK GEVA LESHEM TAL and needs emerge, the technology changes and competitive solutions are offered to existing market needs. Large companies work in a structured manner and have large hierarchical teams. The time and efforts necessary to implement the required change are substantial, and accordingly, larger organizations will hesitate to execute frequent change of focus due to implementation of entirely new technology, or vague forecasts of new trends. In addition, attracting young talents may be a challenge for larger companies as younger people are often looking to be part of a dynamic-innovative environment, while large corporations are not perceived as such. From the perspective of large companies, a safer way to future trends and solutions would, accordingly, be a strategic asset. Small companies normally represent the opposite. They are led by only a few, their employees have equal status regardless of their title and they normally have more intimate working relationships allowing efficient, quick exchange of views and feedback and decision making. Many times smaller companies look at the industry from a different, fresh angle, and they do not have a traditional way of doing business. Such attitude encourages creativity and novelty. Naturally young companies’ way of doing business has its own tow. Transforming technology, even if exciting and promising, into useful products and bringing those

to the market, requires funding and experience which many of the young companies don’t have. Combination between a larger company and a small business may be advantageous to both parties. The most common practices for such combination are codevelopment agreement/joint venture, an investment by the larger company in consideration for the smaller company’s equity accompanied by certain additional commercial understandings, or a merger of the smaller company into the larger company. The big companies get young blood, creativity and a quicker way to the market while becoming more appealing to younger employees; the smaller companies get stability, recognition, funding and the ability to lean on big companies’ aggregate experience.


We therefore chose to focus on some of the highlights that are, in our view, important to remember prior to and while in the process of engaging with a strategic partner. When considering approaching a strategic partner, keep in mind that you are in for a long, sometimes tedious ride. The chances of a project to be selected by a large corporation depend on many components. Large companies’ decision making normally requires approval from several office holders, usually of different disciplines. While you are focused on engaging the strategic partner, your initiative will probably be only one of many tasks handled by the relevant teams at the larger companies. Getting the relevant people to sit at the table may, in itself, require an effort. Each team will review the project from a different angle and you may only have one chance to convince those teams and be able to move to the next level of decision makers. Accordingly, when deciding to approach a strategic partner, you must come prepared and try to cover as many angles as possible in advance. Expect a long process the result of which is uncertain. Do not start the process when at the end of your resources; make sure you have enough funding to allow taking it through. Have backup plans which can be used if the main plan was not successful, such as indirect cooperation with the strategic investor through its existing partners. Assign a key person on your behalf that can focus and invest the time and effort to see this through. Consider in advance how many potential

partners can you deal with simultaneously and do not approach more people than you can handle at a time. Have backup plans in case the strategic partnership does not consummate. During the process, anything from a change of personnel to a change of corporate structure and budget allocation could happen, so try to move as quickly as possible but not at the price of looking desperate or rude. If you successfully convinced the potential strategic partner to cooperate, congratulations! At this point review the arrangement offered to you from the long-run perspective. Try to allocate a larger portion of future payments to the beginning of the process to allow your own funding. Your partner is likely to do the opposite and allocate a bigger portion of the consideration to a later, lower-risk point in time, following actual sales. Do not agree to exclusivity, irrevocable arrangements or special rights such as right of first refusal unless you have a clear way out, such as a minimum quota or predetermined objective milestones aligned with your expectations for the project, structured into the original understandings. Protect your assets – premature disclosure of information may be problematic. Remember that your partners may be looking for solutions to the exact same problem, independently or with other potential partners, while discussing the potential solution with you. Use gradual disclosure processes and if possible, disclose to only a few specific individuals within the large corporation.

Avoid contamination of your intellectual property by creating mutual ownership, granting irrevocable rights to your intellectual property or by leaving intellectual property rights vague. Try to avoid terms such as guaranteeing your partner information on critical matters, whether or not technological, that may deter other potential strategic partners from getting into business with you in the future. If possible, allow termination of agreements upon a change of control.

BEING AWARE AND CAUTIOUS DOES NOT MEAN BEING FIXED. ACKNOWLEDGE THE CHALLENGE AND, AS ALWAYS, KEEP MOVING FORWARD.

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While funding and mergers are recognized as highprofile irrevocable transactions with everlasting implications and accordingly, are usually conducted with the assistance of overall professional support, co-development agreements/joint ventures are many times a desired common solution, which at young companies are perceived as mainly commercial deals, and hence, do not always get the appropriate support and attention of experienced advisors.


INNOVATION AT UNILEVER LOCAL ACTIVITIES MAKING A GLOBAL IMPACT Tell us about innovation activities that are currently taking place at Unilever Israel

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INTERVIEW WITH LIAT LAVEE - COMMUNICATIONS, EXTERNAL AFFAIRS & SUSTAINABLE BUSINESS DEVELOPMENT MANAGER AND YAEL BRANDT, DIGITAL TRANSFORMATION, CUSTOMER DEVELOPMENT MANAGER AT UNILEVER ISRAEL.

“We work closely with Earthbound, which is Unilever's Open Innovation Port, based in Israel. This Port is seeking solutions for various needs that we have at Unilever, globally as well as in Israel. We also actively find solutions for different challenges that we have outside the company and across Unilever worldwide. We have ties with Academia and hi-tech companies to generate value for the company. The most recent element, for instance, was internal innovation driven by a Global Idea Hackathon that engaged employees across the world to come up with innovative ideas. After the contest, a bunch of chosen employees received time and resources to develop their ideas further.” Can you give an example of a challenge the organization had, which was solved by an idea that involved a startup or had an internal source? “Three years ago, we thought about local grocery stores, which are part of our business ecosystem, and their challenge of having an online presence. Marketing is challenging for such local stores due to limited time and resources, making it even harder to handle digital realms. We started scouting for startups that could accelerate the ability of our customers to have an online presence while integrating into their various systems, like the cash register. We eventually partnered with Self Point, a digital e-commerce startup, to develop a digital platform solution and offer these grocery stores an onboarding experience to digital, which only takes a couple of weeks, mostly subsidized along with the needed training and support. For this initiative called "Shopo," we have a dedicated program manager who creates marketing campaigns, and sells this to stores, supports them with achieving their online goals. It is a Unilever's innovative non-product brand that grew out of an internal idea in Israel. "Shopo" had its budget, resources, and, most importantly, the license to try and fail. It is a big deal for such a global corporation.”


“Unilever is one of the world’s largest consumer goods companies. By working with Unilever, Israeli startups can gain an opportunity to scale up globally. Second, based on the stage they’re in, startups need access to real markets to test their assumptions and see if their products get traction and generate value. Our knowledge, experience, and crucial channels are essential to their ability to improve products on the go.”

culture and pace. Startups are often more energetic in their availability, mood, and focus areas. We are required to work with the internal teams that are startup facing and guide them in dealing with those startups. It is our responsibility to coach the internal teams that this is a normal part of working with such young companies. One thing that works in our favor is that the participants of these internal teams have realized that working with startups contributes to their skills and professionalism, assist them in becoming more flexible, being more daring and starting to think outside the box.”

Do you have a central function working with startups? Members of the business units? A combination of both?

For readers who are taking their first steps in setting up innovation activities, what would be your advice for them?

“It is a combination. We don't have an official innovation management function but rather a digital and innovation forum, chaired by the Unilever Israel's CEO. One of the priorities of this forum is open innovation. Members of this forum went through a process of defining organizational challenges and are often part of identifying solutions and following through. Therefore, the relevant sections from the units are directly involved with the startups. We also have business functions as part of this forum, like regulatory affairs and legal, that are traditionally resistant to innovation and being part of the change.”

“It is crucial to involve the company leadership to have outcomes in the form of startup-related projects becoming part of organizational work plans. Hence, engaging the broader teams is vital because, as we stated earlier, by having people from the units driving the projects forward, we can have much higher quality outcomes. This engagement can be achieved by making sure they understand what the personal benefits are. Employees have much to gain from working with startups. Identify those who are passionate about driving change and innovation and engage them early in the journey.

At what point is a decision made that a startup related project will become part of the work plans? “The head of the relevant unit makes the decision, but the link to that unit starts from the beginning of the project. When we identify a startup that has potential benefits, we involve the relevant professionals from that unit and consult with them. If they are interested, then we can guide them on the correct way of working with startups and connect them to key functions within Unilever. The driving force to such a project, however, must come from those professionals within the units since they have the clearest understanding of the potential benefits and the best chances of overcoming the possible implementation obstacles. Those project leaders get the required support internally from expert functions such as Information Technology.” What would you say are currently the most significant challenges of this process? “One of the biggest challenges is to understand the startup world. Unilever is a corporation with its own

Lastly, understanding the world of those startups in terms of their needs, how they function and think is essential since it is very different from corporations. As innovation managers dealing with startups, having this skill is critical because you spend a lot of time and effort with these young companies, and you must understand and appreciate their world to be successful. Technically speaking, this manifests itself in the form of a payment schedule, rapidly onboarding startups via the procurement process, etc.“

Where do you see open innovation activities at Unilever Israel 2-3 years from now? “We shall have an even better understanding of corporate challenges that startups can resolve and the value that we can derive, along with the ability to generate many more projects that are based on external technology from startups and Academia. To support this, we should have an operating model and internal processes to suit the specific needs of working with startups.”

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What do startups gain from working with Unilever compared to other corporations?


IT TAKES TWO TO TANGO SHULI OZERI, CEO, ERGO CONSULTING GROUP

Collaboration between corporates and startups has enormous potential for both parties. Unfortunately, in many cases this collaboration failed, leaving a bad taste and frustration. Why does it happen? Can we do better?

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Israel is known as a hub of startups (of which 20 are unicorns), and one of the world's leading places in innovation. This energy combined with today’s fast changing markets motivates corporations to adopt new technologies faster than ever. In many cases, even before the business world has tried these sometimes immature technologies, Corporations strive for an innovation advantage. Some Israeli corporations and startups even pilot several projects in parallel. The potential is undoubtedly huge. This is a classic win-win scenario. While the corporation gains innovation and access to a state-of-the-art technology, a newborn startup can get market validation, revenues, brand awareness and much more. However, in order to achieve real success and best results, challenges must be considered, understood and tackled from the beginning of this Tango. It is clear from the very first step of this Tango, that the two dancers did not study in the same school, and these differences might appear in their business goals, management and operation methods, structure, culture, language, and more.


CULTURE GAPS Corporations are large organizations, with a clear organizational hierarchy and bureaucracy, long processes of change and decision-making protocol. Corporations tend to take only small risks and usually prefer incremental continuous improvements that follow well-structured company strategies. Human capital in corporations has a relatively high seniority and in some cases it is not necessarily technology oriented. Managers in these organizations are sometimes afraid of change, afraid of losing power and afraid of technology. Startups, by nature, are a mirror to the above. They are small, rapidly adapting to changes in the market and environment. They are usually more resilient to uncertainty. They tend to be agile with a fast decision-making mechanism. They are not afraid to take risks, changing tactics and pivot the activity and even the strategy. Technology is their core business and it is the foundation for their development and growth. Human capital is a significant factor with different characteristics: creative, innovative, proactive and open for changes.

CAN WE BRIDGE THESE TWO?

Management consultancy is the art of bridging these two. In the last few years we had several projects where we took a startup that speaks about technology capabilities, infrastructure, innovation and disruption, and we mapped it into a corporation business metrics, ROI, score cards and company strategy. This English to English translation (or Hebrew to Hebrew) is where you need an experienced consultancy that can understand and work with the two parties. One might be surprised to find that the challenges are not ending after establishing the collaboration. Technology implementation raises new challenges including change management and organizational changes among each of the parties. New technology implies new ways of doing things. In our experience, implementing technology in corporations is a positive organizational revolution that requires in-depth thinking and organizational infrastructure changes in working processes, organizational structure, human resources, interfaces, roles and responsibilities, required skills, knowledge flow, internal relations, corporate culture, managers and employees engagement, etc. The chances of successful implementation over time without all of that is slim. At the same time, a startup is probably also on its way to a different type of organizational revolution that is currently in accelerating growth. At this stage, the management needs to change from entrepreneurial to business. They need to establish a supportive and flexible organizational infrastructure that is compatible with growth - adaptive organizational structure, creating processes and internal interfaces, set clear roles and responsibilities, create routines, customer focus, retention of knowledge and more. Only in such a way will the growing pains be tolerated, and the startup can develop and execute its growth strategy.

IT TAKES TWO TO TANGO IN SUMMARY, AS A MANAGEMENT CONSULTING COMPANY THAT LEADS BOTH CORPORATIONS AND STARTUPS, WE HAVE THE SKILL AND KNOWLEDGE TO BALANCE AND COORDINATE EXPECTATIONS BETWEEN EVERYONE'S NEEDS, CAPABILITIES AND BENEFITS IN THIS INCREDIBLE COLLABORATION AND, ACCORDINGLY, TO LEAD CHANGE AND ADAPT ORGANIZATIONAL INFRASTRUCTURE TO ACHIEVE THE DESIRED BUSINESS GOALS, TO GROW AND SUCCEED.

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For example, a corporation is led by the existing challenges and will be happy with a project that improves business metrics by 10-20%, while a startup seeks rapid growth, market disruption and aims at 100-200% improvement. Moreover, this project of improving 20% of a business metric is probably one of many activities happening in corporations on a daily basis. In contrast, for a startup it might be the core activity, maybe even the only one. For the corporation it is just one more project, hopefully an important one. For a startup it might be everything it has. The two types of organizations simply have two different cultures and management methods. Â


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AT ISRAEL’S NATIONAL TRANSPORT INFRASTRUCTURE COMPANY An interview with Mey Jacobson, Innovation Community Manager at Netivei Israel, Israel’s national transport infrastructure company.


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In the last two years, Netivei Israel has run two open hackathon events, and a startup pilot program that you were in charge. As a result of that you have generated six final candidates and three pilot projects sponsored by the CEO and funded by Netivei Israel. It is quite a lot for an organization that is part of a very conservative industry. Tell us how all this came about. “It is a bit odd when one thinks about it, but when we started, there wasn’t any formal strategy about open innovation. Even the term “open innovation” is something that you and I are discussing, but to this day, it is not an official goal of the organization. Our leadership was talking about its wishes to open up to the outside world. We knew there was much activity out there, and we just wanted to have an experience and see what we could learn from it. The hackathon was a great way to do it instead of having a long term plan that would cost a fortune, take forever to approve and get much resistance. What worked very well for us was to start small, show value and outcomes, and then repeat. This is how we transitioned from simple hackathons and into an acceleration program with trained internal mentors and substantial business-impacting issues. In short, I think we can say that we aren’t an organization that planned to do open innovation. We are an organization that just did it.”

One would expect a conservative company like Netivei Israel, a state-owned enterprise, to have a very structured plan for such developments. You’re saying that this was more of a bottom-up effort. “Correct. I like to use the term “Guerilla Activity” since what we did was to recruit various stakeholders in the organization and ask them for simple contributions that they enjoyed providing. For example, we hired mentors, provided them with basic mentorship training, and invited to meet the startups as part of a hackathon event. They get a great personal experience, startups get access to knowledge and professional expertise, and Netivei Israel gains credibility in the Israeli ecosystem. We didn’t even set long-term expectations with mentors. We kept inviting them to various activities they enjoyed and gradually won them over and were able to get a greater commitment. The CEO was aware of this approach and endorsed it as he was mindful of how complicated and costly the top-down approach would have been at that early stage.”


What sort of activities did you take up to generate higher levels of internal readiness for open innovation? “The CEO was very involved from the start and openly declared that the hackathon will take place. At the hackathon, he announced the launch of the pilot program. He regularly spoke about the innovation activities during management meetings and also invited me to present the activities to the management team, which enhanced my credibility since I didn’t have an official innovation role at the time. Another great sponsor was the head of the Spokesmanship Department. Once you have senior enough sponsors, the company falls in line with what they demand. The mentors, which I mentioned before, were another critical element in my ability to prepare the organization for actually working with startups and generating successful pilots.” Tell me more about the mentors. Do you consider their contribution to successful pilots to be major? “Absolutely. I am not a professional authority within the company. I am the glue that brings this all together. However, mentors are also essential in taking startups from vague potential into real opportunities. Without their professional background, we would never be able to generate opportunities in a language that the organization and its decision-makers could understand and appreciate.” Beyond professional knowledge, what about the procedural functions that traditionally stifle innovation such as legal, regulations, finance, IT, etc’. How did you get those on board?

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“We generated outcomes and a lot of positive buzz. Once management began expecting this “Guerilla” style activity to become a more official part of the company’s practices, we started getting support in various ways. For example, the legal department was able to find legitimate means by which we could fund the pilot projects. Another example is the support we are getting from the department, which is in charge of contracting suppliers, to have a way of publishing an official tender offers that suits this pilot program and is friendly to startups.” People reading this interview who know who you are, where you were two years ago when you just started, may think that while your “just do it” approach seems appealing, in a conservative company, it might cause harm. What would you say to them?


to run a pilot, six months in the activity. We thought it wouldn’t be fair for the startup to send them to the innovation authority at that point in time and have them go through another due diligence. Moreover, we had to think about the implications of such a tedious process on future startups wanting to collaborate with us.”

What other advice do you have that could help increase the chances of success? “You have to tie the activity to a central organizational purpose. Make sure that you are harnessing this project to something that leadership truly cares about. There has to be a real need that you are addressing through the events you run. This clarifies to everyone involved the purpose of doing it. Set yourself up for success by setting up an ambitious yet achievable definition of success. In addition, make sure that the first event you run is a success. Even if it doesn’t generate tangible outcomes, besides the event being fun and enjoyable, then it will leave a positive memory and a curiosity to have more. In our case, the need we addressed was that the Israeli Ministry of Finance sent a directive requiring Netivei Israel to have an innovation department within a certain amount of time. Naturally, a traditional consultancy analysis was performed with a very distinguished consultancy firm that generated many slides, describing a long-term plan that would never have succeeded in an organization like ours. The need I was able to address was to start moving in the right direction and be able to comply with the government’s directive eventually. This was a high priority for our CEO and management team.” Tell me more about the activities and what they were able to accomplish “Our recent hackathon was a national one, in cooperation with other major players in our transport ecosystem, such as Netivei Ayalon, Israel railways, Kvish 6 & Yefe-Nof. Our partners in this event set the challenges, offered their mentors to startups, and I know of several connections that were made, and turned into projects. We also started an Innovation Lab at Sapir College and the Technion. We are the first state-owned enterprise in Israel to fund a pilot with a startup. This was an unprecedented decision that was driven by our CEO. In the beginning, we thought about getting the funding for pilots from Israel’s innovation authority. However, we decided

What do you see as the activities’ next stage of development? “First of all, starting January, Netivei Israel will have a new Innovation VP, and I‘m sure that as a result, innovation and R&D activities will receive a much broader scope. I’m excited and looking forward to this development. With regards to the innovation community, several projects have started this year and are scheduled to continue into next year. From where I’m standing, it looks like the community activities at Netivei Israel should mature into something that involves the broader workforce and not just a selected few. These activities are very exciting both at the company level and for me, personally. The potential of connecting the knowledge, expertise, and execution power of Netivei Israel with the different mindset of the entrepreneurial world and startups is driving the company to continue investing in startup relationships through exposure events, joint projects, and ongoing personal contacts.”

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“To clarify, “just doing it” doesn’t mean you go at it alone. From the earliest stages, you must have key partnerships in the form of sponsors and stakeholders who will help you move forward. These should be people with the connections and influence that allow you to go ahead and do it. In addition, you should get great external advisors, like the ones I had, who have experience in driving corporate innovation and involving other people internally to gain support and have a network that is helping you”.


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The ThePre-Contractual Pre-Contractual Stage Stage of of Technology Technology Transaction Transaction


When entering negotiations towards an M&A or an investment transaction with a technology-based company a thorough check of the intellectual property of the target is essential and crucial. Anyone contemplating an M&A transaction, or investment in a technology-based company, should be well acquainted with the importance of the precontractual Due-Diligence process. Due Diligence is regularly performed when purchasing a house or a car, however Due-Diligence performed when facing an M&A transaction, or an investment where advanced and innovative technology is involved, is trickier, and requires professional knowhow to ask the relevant questions and to perform a thorough review of the data provided by the target company. First, one should define the technology which lies at the heart of the transaction, and then identify the Intellectual Property rights related to such technology. For example, if the target company has developed a software tool, it may already have patent protection, and copyright and trademark rights (especially when the software tool has reached the marketplace and is already known under a certain trade name). Once such rights have been identified, it is important to perform a thorough check of the patent portfolio protecting the software product, and the strength thereof. The ability to prevent others from using the same product has a direct effect on the price of the target tool, whereas in cases where the target

company’s tool is not adequately protected, the entire transaction should be reconsidered. No Due Diligence process is complete without ascertaining that the target company is the owner of all the rights in the technology discussed. Verifying the chain of title involves the review of employment agreements (whether these include any restrictions on the assignment of the works done by the employees of the target to the target itself); review of consultant and contractors agreements involved in the R&D stage of the target’s technology (whether these include an unconditional assignment of all the rights to the target); review of open source software if such was used by the target company, and verifying the terms of the licenses thereof, etc. Lastly, despite protection provided through registration (of patents, designs, trademarks), it is important to identify the know-how of the target, make sure such know-how is part of the transaction, and was kept as a trade secret. A proper Due-Diligence process involves legal and technological issues, thus it is always advisable to appoint a team comprised of legal counsels, as well as a patent attorney, in order to perform a comprehensive review. This will ensure that all relevant issues are addressed in a thorough and proficient manner.

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Advocate Orit Gonen Partner in Gilat, Bareket & Co. of the Reinhold Cohn Group, specializing in counsel and legal services to corporates and start-ups in the Intellectual Property field.


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Customer oriented innovation at Amdocs

Edo Segal is the Open Innovation Lead at Amdocs Israel. We reached out to Edo to learn more about open innovation at Amdocs, a leading software and services provider to communications and media companies.


When companies establish open innovation programs, they usually involve multiple external players such as startups, partners, customers and so on. How is open innovation pursued at Amdocs? At Amdocs, we leverage best-in-class open innovation practices and methodologies to drive full innovation cycles, from ideation, validation and experimentation to commercialization of solutions, taking a two-pronged approach: On the one hand, we regularly search for partner technologies that can enhance our portfolio to deliver more value to customers of the Amdocs group. On the other hand, we work with group customers to address their company-specific challenges. We look to open innovation as one of the ways to address these challenges. Together we define them and then identify startups that can assist in addressing them. As part of this, we have several programs that help us identify relevant startup technologies:

Startup fast-pitching events We have numerous sessions with customers throughout the year, typically with CxO and VP level executives. During these sessions, we discuss how we can collaborate to drive innovation and expose them to startups that may interest them. Before meeting the customer, we help startups fine-tune their pitch based on our familiarity with the people they are going to meet.

Executive challenges

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An executive business challenge is defined together with customer executives to address one of their key challenges. It is then crowd-sourced to all Amdocs employees, as well as to our eco-systems of partners and startup communities. We tailor the challenge to the customer’s business need in terms of target audiences, duration, judging committee and prizes. The final solution may contain ideas from employees, partners and startups.

Ad-hoc business challenges “Inbound” requests received by the Open Innovation team from the Sales may help address specific customer challenges. Solutions can then be further leveraged to help other customers and to enhance our portfolio.

Joint innovation centers with customers Joint innovation centers with customers is a more strategic and structured way to bring innovative technologies and solutions to specific customers. Business stakeholders at the customer provide business challenges. For each challenge, we look at a few alternative solutions to identify the right startup that can either solve or mitigate the issue. The business stakeholder will then select the solution that will continue to the Proof of Concept stage. This process is built to allow for short time-to-value. In all these programs, our mission is to bridge the gap between leading communications and media companies, and startups. We assist startups in communicating more effectively with these large organizations and speak to the right business stakeholders directly about their specific business needs. We actively assist them in defining and formulating the PoCs, KPIs, and go/no-go criteria. So far we’ve discussed activities that are usually initiated by customer needs and challenges. Do you also reach out to customers with innovation opportunities? Yes. We have several such programs. Amdocs has been at the forefront of innovation in the communications industry for more than three decades. Our ability and determination to look ahead and come up with the solutions that customers of the Amdocs group will need tomorrow is key to our ongoing business success and strong customer relationships.


Launchpads We analyze long-term future trends and opportunities. We start by researching and exploring a selected domain and the relevant ecosystem of startups, partners, experts, thought leaders, VCs, academia and professionals. We then bring them all together to take the stage in an event we call “Launchpad” in which they share their vision with a crowd of around 100 professionals, most of them being relevant Amdocs employees which we “cherry-pick” in advance. This event kicks off the ideation and incubation of innovative solutions in collaboration with customers and partners. The processes you describe have great potential value for Amdocs. Very true. They help us further strengthen our position as a trusted partner to customers, allowing us deep insight into their challenges and creating the solutions that can offer them the most value. Can you share any data regarding the outcomes of open innovation at Amdocs? We see hundreds of startups a year and maintain a working catalog of about 200 which we share with Amdocs group customers. We create hundreds of opportunities every year for startups to pitch their offerings to business stakeholders in the communications and media industries. We have patents and products that were created as a result of our open innovation programs.

How is someone in your role measured at Amdocs? What does success look like? Among the metrics that are easier to measure are the number of customer engagements we lead as part of our various open innovation programs and the number of PoCs generated. The number of solutions we propose as add-ons to our portfolio of products and solutions is an additional metric we measure.

Clearly, there is value that is harder to measure; for instance, the knowledge we continually feed into the company and into customers around new technologies and solutions, helping to elevate our positioning as an innovation leader and a trusted advisor and thought leader.

By embracing open innovation, we connect customers’ business aspirations with startups’ technologies, delivering value to all, faster. Everyone wins.


Designin gA

The benefits of an interdisciplinary approach

By Advocate Ran Kamil and Patent Attorney Sharon Godesh of Soroker Agmon Nordman

g Around:

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yin

t i h W o u d t n P u l o a r


Often, there comes a time during the development of a new product, when a prior-art search reveals that someone obtained a patent for an aspect of the product, and the development process hits the patent wall. In such cases, the developer has numerous options: abandoning the product altogether, obtaining a license from the patent holder, applying to revoke or cancel the patent, purchasing the patent, launching the product anyway, and risking being sued for patent infringement. These options, however, are disadvantageous due to high costs and the requirement to reveal the information regarding the development of the new product prior to its launch.

Going Around the Wall Another way around such a problem is by applying the development process known as “designingaround.” This process entails harnessing the inventive thought that brought the developer to hit the patent wall, to find another solution to the same problem. A new solution would be sufficiently different to avoid falling into the claims of the patent, thereby circumventing that patent. This process is often easier said than done.

Not Going Around in Circles Patent laws do very little to define the difference between a product and the invention claimed within the patent that will be enough to avoid infringement. Courts around the world repeatedly ruled this as being not quantifiable and must be decided on a case by case basis, usually after lengthy and costly trials. Judicial doctrines such as “equivalents” and “variants” have been developed to ascertain whether an allegedly infringing product genuinely employs a different technological solution than the one covered by the patent, or whether the product utilizes the essence of the patent-protected invention, with changes that are insignificant or merely “cosmetic.” Whereas engineers and developers can easily understand the need to design a product that is built and functions differently from a competitor’s product as they have a reference of what is in

existence, it is often insufficient to avoid patent infringement. It is because patents usually cover more than one embodiment of the invention and thus include more than the description of a specific product. Therefore, to successfully design-around a patent, it is recommended to have the design and development team work together with professionals versed in reading, understanding, and interpreting patents both technically and legally.

Case Study In one case, the client's competitor had a patentprotected product, which included two components pushed away from one another by a spring. In an attempt to design the client's product around that patent, the client's engineers suggested using some rubber element instead of a spring. Luckily for the client, he had sought clearance ("freedom to operate") opinion from his legal advisors. Upon inspection of the patent itself, it was revealed that while the description of the invention's embodiment in the patent indeed described utilizing a spring, the claims of that patent were phrased to cover any elastic material or substance. Understanding the patent's claims as well as their limits (i.e., the substance requirement), gave way to a solution of not using any material or substance at all, but instead relying on the repelling force of magnets to push the two components away from one another. That alone would not suffice to avoid the patent claims, as, under the doctrine of equivalents, it is not enough to substitute one element for another. Yet, in that case, the use of magnets had the extra benefit of saving the need for a room for a spring or a substance between the two components. Thus, the variation between the client's product and the competitor's patent was more than a mere equivalent.

The interdisciplinary approach The above example illustrates the importance of an interdisciplinary approach to designing-around a patent and the benefit of consulting with legal and patent experts during the design-around process. Having the patent in question well studied by patent professionals who can “translate” its claims to the engineers and developers can save a lot of trial and error as well as much more costly infringement litigation.

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Hitting the Patent Wall


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Alpha Strauss and the creation of Israel's food-tech industry An interview with Dagan Eshel, VP innovation at Strauss Group

Tell us about Alpha Strauss and the work that you do Strauss has been innovating for many years but started doing so in a systematic fashion around the year 2000. It has traditionally been incremental innovation or product innovation that could introduce enhancements to the products and portfolio. When we started looking for ways of innovating in a more significant way we realized that we had to have a novel and more ambitious approach.


Our challenge was that it had to be a lean approach since the budgets available to us weren’t close to what international conglomerates like Nestle could afford to spend. We decided to leverage our location at the heart of the startup nation and thus, establish a new local market that is labelled foodTech but our unique approach was that we defined it as any technology that could introduce innovation in productivity, quality, product edge and sustainability from field to plate. The uniqueness here was that we determined that regardless of the field the startup considers itself to be in whether it is a technology originally developed for medical devices or defense, if it could potentially contribute anything to the food industry through one of those four pillars in the process from the field to the home of the consumer then we considered it to be foodTech. When we started looking at the Israeli market through this lens i.e. entrepreneurs, scientists, startups, patents and so on and researched it we discovered numerous opportunities in the market. In addition, we realized that many of those who had potential to innovate in foodTech weren’t even aware of this fact. Also, if these people did have an idea of how to get funding, support and mentoring in other industries there was no such knowledge and experience with regards to foodTech.

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And so, the next question was how can we make a move that will cause all of those actors to want to connect and start working with us. In traditional open innovation, companies formulate some sort of a brief about what they’re looking for, publish this brief in various channels and invite relevant actors to connect and work together on their ideas. What we said was that since we were making a long-term move to create a new industry and that since it did not exist at the time and we couldn’t really define something specific we were looking for we simply invited the various actors to come talk to us so we could create this market together.

We asked startups to not just tell us what they could potentially do for us but also to let us know what we could do for them. There are various ways in which a corporation can help startups in ways that do not incur direct costs and at the same time are very valuable to the startup. For example, an entrepreneur can be a technical wizard with zero marketing talent. In such a case, we can get this person some time with a marketing expert from Strauss and that creates real value for the startup. We can give them access to our factories in order to understand manufacturing processes. We can give them access to our international partners. You might ask me at this point whether my team and I are philanthropists. The unequivocal answer is “No” since we simply wanted to make it clear to the ecosystem that if you had an idea or a technology that could benefit the foodTech industry then Strauss is the company you should reach out to. So in essence, you created value for startups and made it broadly known so that you would attract actors in this nascent foodTech industry who could benefit you as a corporation long term. Exactly. This was our first move. The second move we did was to work on the organization itself in order to make it more receptive to these potential innovations. We knew that it would serve no real purpose to do all this work if nothing substantial could come out of these opportunities involving Strauss itself. This involved persuading various stakeholders in the organization that it would benefit them to work with us so that we get higher interest levels and better cooperation. We also had to make certain procedural adjustments with regards to working with startups. One example would be the NDA (Non-Disclosure Agreement) that we had to sign with a startup that in most organizations is very long and with fine print. When entrepreneurs with no resources see such a document they realize that this will require a lawyer which they cannot afford. We were able to reduce that into a page and a half and using a large font. Another example would be payment schedule which can get to 90 days from the date of issuing the request. For entrepreneurs


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we were able to bring this to almost an immediate payment schedule. And so initially, we were a sort of a matching service, getting exposure to ideas and technologies and turning them into structured proposals to the various companies of Strauss. We were not looking to invest in startups at the time. We had hundreds of meetings and generated dozens of projects so this was a successful beginning. After about three years of doing this, we realized that a lot of potential was still not being capitalized since many of the opportunities we were seeing were based on early stage startups and at the time, we didn’t have ways of dealing with technologies that were at such early stages.

What we did was to found “The Kitchen” our FoodTech incubator which is part of the same vision of turning Israel into a FoodTech valley. The Kitchen brief is to work with early stage startups with funding that is received from Israel’s chief scientist office. Since the funding involves public sources, the purpose of “The Kitchen” is to nurture foodTech startups regardless of whether they’re creating something that Strauss can use. It also invests in startups in return for equity. A more recent development is that we began to look for solutions worldwide to broad issues that Strauss is looking to solve. For example, we know that lowering the sugar content of our products is a long term issue and so our CTO scans the globe for early stage solutions that can be brought into Strauss through working with us. In addition, what I do personally is to look for business development opportunities that can be nurtured and then connected to Strauss’s business units. What would you say were the top 3 things that you didn’t know about startups and had to learn on the go besides what you already mentioned? The first thing is to realize that entrepreneurs are “free spirits” oftentimes and that when someone from a corporation meets them this person has to have a tolerance level to such communication style

and behavior. It also demands a certain level of humility. Our CTO is a professor of food engineering and at times he can step out of a meeting and tell me “This is different from what I have learned but what this person says makes sense”. This holds for the innovation manager but also for other stakeholders that might be involved. It is very difficult, close to impossible actually, to hold the following two questions in our minds at the same time: - Will this really work? - If it works will anyone actually care? And so we decided to assume that for the first few meetings, everything the startup is telling us is true and that the presented technology is going to work. We focus our attention on the second question, assuming that the technical aspects will be clarified and tested later on. Otherwise, it is very difficult to make an educated decision about the second question because doubts about the first one keep getting in the way. Our second learning is that when startups meet a corporation they usually mix between the technology they have and its application. Our answer right from the outset is: “You created a technology and that is your expertise. Our expertise is the familiarity with the market so focus on presenting your technology and let’s brainstorm together on what its most promising application should be”. Lastly, as in most entrepreneurial projects, the nurturing and execution of such joint opportunities with startups usually take more time and require more budget than planned. The corporation should realize this and understand that it is part of how these activities go. For innovation managers this also means that the way they’re measured should be adjusted according to the stage they are in. In the beginning, they should be measured on input i.e. the number of startups that were interviewed and the number that were pursued. This can be sufficient for a year and maybe even two. Then, you should add the number of projects that were generated out of these startups i.e. projects where business units actually dedicated time, funding and attention. Only after that, should you start measuring the impact on business KPI’s.


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The Funnel Magazine #8 | Winter 2020  

Dear reader, We at The Funnel team are tremendously excited to be releasing the first 2020 edition of the magazine. This special edition is...

The Funnel Magazine #8 | Winter 2020  

Dear reader, We at The Funnel team are tremendously excited to be releasing the first 2020 edition of the magazine. This special edition is...