This University program has been a huge success, according to Bill Maris, Google Ventures’ managing partner: “This is a program that people are vigorously signing up for,” Maris said. “We have a waiting list of teachers, and these are all people who have started companies before, and who have been there. We can’t feed this stuff to our portfolio companies fast enough,” so he said to the Wall Street Journal. Therefore, Google Ventures is expanding: from 1100 m2 to 2250 m2 in the near future. The total amount of capital has grown from 100 million dollar annually in 2009 to 200 million dollar annualy in 2012.

Some of the most successful results of Google Ventures are the exits of HomeAway vacation rental services and gaming company Ngmoco who exited for 400 million dollar each last year. Another company, Silver Spring Networks, developing smart grids, went public last year.

Read the full article here.

This article was brought to our attention by one of our readers; thanks for sharing this example with us, Aravind Ananthakrishnan

We are talking about Lupin Pharmaceuticals, Aurobindo Pharma, Zydus Cadila, Orchid Chemicals  and Pharmaceuticals, Dr Reddy’s Laboratories and Ranbaxy Laboratories, together generating annual revenues of more than €6 billion euro. The collaboration gave themselves a name: LAZORR.

In the first months they have learned many lessons from each other, for instance:

• They used Ranbaxy’s best case of buying power from India and so cutting on the energy bill.
• When visiting each others plants, they saw Orchid using a condensate recovery system in their boilers, which cut down water usage.
• From Ranbaxy, they learned to use poweroperated boilers instead of steamoperated ones, increasing efficiency.
• They joined forces on procurement, such as buying crude oil. “Procurement calls are being taken on the basis of our discussions and collective understanding of the market,” says H.T. Patel of Zydus Cadila, who heads LAZORR’s purchase and procurement platform.
• They also joined forces to see trends coming, looking out of the industry borders itself.

More examples can be found in the original article at Business Today or download a copy here.

To be precise: the authors refer to Open Innovation as the use of “search openness”, i.e. the use of external ideas and developments as an influx for internal research and development. According to research findings, almost 70% of these companies indicated they absorbed external knowledge from one or more source. Because it is near-to-impossible to gather information on all these sources, the authors focused on gathering data on the influx of ideas from 5 sources: customers, suppliers, competitors, research institutions and government.

Most importantly, they defined four “moderating factors”: factors that could distinguish organization that absorb from the above-mentioned 5 sources from those that are not. Explanation of these four can be found in this table:

Table 1: four factors that are studied.

Study:

The authors gathered information from 1170 different organization, mainly from Germany. They are based upon a larger survey of which only a certain percentage was led to useful information regarding this study. The sample group spreaded out across several sectors:

For more information about the methodology used, please see the attached document.

Results: what factors are more present in Open Innovation organizations?

The study reveiled that 3 out of 4 hypotheses showed different results for companies that act on Open Innovation compared with companies that do not act on Open Innovation.

1. The Incentive System: having a high Incentive Design, companies that use Open Innovation generate much more revenue from New Products.
2. Research Capacity: having more research capacity, companies that use Open Innovation generate more revenue from New Products.
3. Cross-Functional Collaboration: having higher cross-functional internal collaboration, companies that use Open Innovation generate more revenue from New Products.

The study also showed that Technology Leadership, although, like the rest, is generating more revenue when more present, doesn’t show significant differences between companies that use Open Innovation and those that don’t. In other words: Open Innovation companies with great system of Technology Leadership don’t necesseraly generate more revenues from new products, then Closed Innovation companies with a great system of Technology Leadership.

This figure shows the results:

Download the paper:

Click here to download the full paper.

Now in its fourth year, Breakthrough Innovation 2012 will once again bring together leading experts from the world’s most innovative companies to share best practice tips and discuss the latest trends and developments.

The conference will feature a variety of sessions designed to maximise social interaction and knowledge exchange, including brainstorming sessions, talking circles, panel debates and keynote case studies.  There will also be plenty of time to discuss the content with your peers during our networking breaks.

Last year’s event attracted over 100 attendees from FT500 companies and from as far away as Brazil & Canada.  We are expecting 2012’s Breakthrough Innovation conference to be as popular as ever!

Openinnovation.eu readers can benefit from a 10% discount off the registration fee by using the discount code BI12-06 on the registration form.

More information can be found here.

Epxerience economy

Most of the trendwatchers are seeing trends in the way consumers are acting in the market. Started off already years ago, the experience economy will get to its highest point in 2012. Consumers are no longer looking for products, new technologies or sustainable services only, they are digging deeper, willing to get unique experiences that come along with the products and services they buy.

Time-to-innovate is outrunned by speed of market

Another trend is the fact that, due to globalization and rapidly increasing access to broadband internet and mobile apps, consumers needs are changing faster than we could ever imagine. This doesn’t mean they aren’t loyal anymore, they are just looking for great experiences and consumers will get loyal to companies who can adopt faster than the consumers can even imagine. If we don’t innovate faster, we are running into the opportunity that our Time-to-Innovate will be much longer than our consumer loyalty can handle.

Influencers

Another interesing trend is the rate of influencability of “the guy from the block”. Well, a guy with a lot of twitter followers, a huge Facebook fan list or some other form of social influence. We all know that influencers are paid by large brands, but hey, if they are integer, they will also publish about those small brands that we didn’t know of. And it’s those influenceable posts that start ruling our marketing. It makes our campaigns viral and it can ruin multi-million-dollar campaigns in seconds as well. Just be prepared.

So what do you think:

Please fill in our poll and we’ll come back to this later!

What is the greatest advantage of Open Innovation?

The result was not completely unexpected. Obviously, on the first hand, Open Innovation is meant to innovate faster and better. To my opinion, and some of the comments support this, gaining and sharing knowledge, building a network and having close insights in customer needs, are just the means to get there.

According to Vincent Toepoel: “In my experience, the financial plan will be easily accepted. But rolling it out within the organisation and the social aspect that comes with that, is more often than not a great barrier to managers. [There is no reason for that, because] the execution of an Open Innovation project is something that gives a lot of satisfaction to all participants.”

Jan Mölls dropped the interesting question: “I would like to specify “faster” and “better”. They both have strategic as well as operational aspects.” He then provides some intesting aspects to keep in mind. And Toepoel reacted: “Besides being faster and better, Open Innovation can be potentially be much cheaper.”

Herm Verbeek summes it all up: “Sometimes Open Innovation is not only a faster or better way, it is the only way.”

New Poll: What trends make Innovation Managers Sweat?

The talk focuses on Open Innovation and the role that companies and users play in the process. He addresses three steps:

1. Obtaining
2. Integrating
3. Commercialization

In obtaining external knowledge for innovation, he firstly shows some examples of companies collaborating. When the talk continues, he moves towards the increasingly important role of consumers in this process, building a bridge between Open Innovation and, for instance, Co-Creation. Marcel Bogers referring to an example of the development of the internet:

“Is it something that came about because some large firm invested a lot in R&D and is now making a lot of money from it? Not really. It was Tim Berners-Lee - who was working at CERN in Geneve – who invented the internet. Did it came from large R&D investments? No, he just needed something to work more effeciently. So in fact, users are very important sources of innovation.”

His elaboration on co-creation as a substantial element of Open Innovation, is (in my opinion) one of the best parts of the lecture. Bogers gives several great examples of products that make up our daily routines and are basicaly invented by ourselves. Bogers: “Sometimes, it doesn’t come from users, but from specialists or small groups of users. And sometimes the experts and users join forces.”

He also refers to a recent study on the impact of consumers in R&D. In the UK alone there are some 3 billion people involved in innovating activities and they spend approximately £5 billion  on technological innovations. This is incomparable to the roughly 22.000 people actually working in R&D and is twice as much expenditure as corporate R&D. This leads to the hypothesis that the closed model of innovation isn’t longer valid anymore.

Watch the full lecture:

Do you have any further questions?

Bogers indicated that he will be glad to answer any questions regarding his talk: “If you are interested in
some of the references, let me know, as most of the references to the research upon which I base the talk aren’t visible in the lecture. Most of the material is coming from my own work with various collaborators, and I would be happy to share or discuss this work.” Please feel free to drop your question or remark below.

We will update this post once it has been aired on Danish Television.

*As of Febraury 1, 2012.

Deloitte’s Innovation Maturity Model: a short explanation.

Below, you’ll see the adopted version of Deloitte’s Innovation Maturity Model. The goal of the model is to “score” companies performances on innovation in the model. As Marc and Klaas said, probably in slightly other words, the line should be straight and preferably as high up as possible. Take a look for yourself:

So in the basis the model contains two axes, both unnamed. I’ll try to figure out correct names for them later on. On the vertical axe we’re basicly seeing four forms of doing business. On the horizontal axe we’re seeing management topics, three of which are combined into one: the innovation process. The result of the model would look something like this (I tried to complete them for Philips and BAM, two companies I know fairly well):

Royal BAM Group (my interpretation).

Royal Philips Electronics (my interpretation).

Why is it good?

Now, it is time to look into some literature and give the two axes name plates. First of all, the vertical axe. The four aspect seem to correlate on “innovation effectiveness”. In innovation literature, when researching the effectiveness of innovation, scholars are often referencing to Organizational Development. Basically, the four above-mentioned steps have a lot in common with Greiner’s model of organizational growth (Greiner, 1972), which still is the most valued model about organization growth. Another perspective would be Rothwell‘s generations of innovation, who looks into adopted innovation models over time and shows the increasing professionalization of innovation management literature. The first three aspects are based on Greiner’s work, the “Network”-factor in Deloitte’s model is more or less based upon Rothwell’s work. Moreover, another traditional model organizational development – and later oftenly used to explain cultural differences – is Quinn & Cameron‘s model for Organizational Growth.

So, to be scientifically correct, I would suggest to use “organizational development” as the dimension of the vertical axis. And, if we would like to stick to just four aspects, then use:

• Adhocracy-oriented organization
• Interal-oriented organization
• Hierarchy-oriented organization
• Market-0riented organization

The second axis looks like two groups of aspects that are of interest for innovation managers. But why these? I’m seeing two different groups of aspects:

• Change management issues: what to do when you want your organization to change (develop)?
• Innovation process: how to manage your innovation process better?

For the first item, I would suggest to use one of the widely adopted change management models. For instance, the six logical levels interpretated from organizational perspective:

1. Mission: is innovation part of your mission statement? Why (not)?
2. Identity: is innovation part of your identity?
3. Values: is innovation part of your key values? Is it part of your companies’ culture? How do you manage this?
4. Knowledge: is your company competent on innovation? Do you include innovation in HRM?
5. Behaviour: see next.

For the second item, which is all about behaviour, Deloitte has suggested three steps that make up the process of innovation. Many scholars have looked into these processes. I’ve gathered some of them:

What we see is that there is no standard for the innovation process. But most of the literature suggests at least three items to be part of every innovation process:

1. Idea Generation
2. Concept Development
3. Commercialisation

Those items are indeed very coherent with Deloitte’s model for innovation. To my opinion, “knowledge management” should be an integrated part of the innovation process. And then I mean “external knowledge management”, or, if you wish, market research or crowdsourcing. It should be step 0.

Conclusion: a practical model for innovation

All in all, Deloitte’s model would suffice for practical implementation and for companies looking for a way to place their own activities into perspective. Although it needs scientific perfectioning, it is very usable and friendly. What do you think? How is your company performing on the above-mentioned aspects?

Note: Deloitte did not instruct or reward me in any way for writing this article. Above-mentioned perspective is my personal reflection of their model. In fact, we are not only friends, we are also competitors, but that doesn’t mean I could not be interested in their perspective on innovation

Note: we have used search enginges such as Twitter’s Advanced Search, Google Search Blog, Digg Search and Delicous Search to create this list. But most of all, we have used our common sense

1. Create Employee Networks that Deliver Open Innovation – Sloan Review, MIT
   A small number of “idea scouts” and “idea connectors” are disproportionately influential in producing successful open innovation outcomes. Smart companies make sure they are linked.
   http://bit.ly/rJEkAh
2. The Continuing Payoff from Open Innovation – Strategy Business
   At the heart of the innovation process is the search for new ideas and market opportunities with commercial value.
   http://bit.ly/tZ0rme
3. 7 Ways to make Open Innovation Work – Investors Digest
   If your company isn’t innovating, it’s slipping behind the competition. With the Internet and the increasing flow of ideas and information,
   internal R&D departments alone aren’t always the answer. More than ever, business owners are embracing open innovation to stay ahead. Open innovation is more than a toolkit, it’s a mindset.
   http://bit.ly/t0iY2t
4. Lego’s $50 Million Open Innovation Failure – Innovation Excellence (148)
   The headline screams like a disaster. It’s not really that bad. Yes, Lego took a loss around that size when they decided to shut down their
   online game, Lego Universe, but they also learned some valuable lessons.
   http://bit.ly/v1hpWQ
5. From Open Source to Open Research: Horizon 2020 – ComputerWorldUK
   Last week I took part in a meeting at the European Parliament entitled “Horizon 2020: Investing in the common good”.  Here’s the background: Horizon 2020 is the EU´s framework programme for research and innovation.
   http://bit.ly/u4eccK
6. Open Innovation Program to develop extreme weather Warning System – Daily Crowdsource
   The extreme weather conditions at the heart of many natural disasters that devastate the South American continent have prompted calls for a better way to deal with these catastrophes. Since the absence of an effective early warning system is a major concern, The Planetary Skin Institute (PSI), a non-profit global research and development organization, along with Brazil’s Ministry of Science, Technology and Innovation (MCTI) have recently announced an open innovation program.
   http://bit.ly/vx06Rq
7. How Open Innovation Saved the Microsoft Brand – Innovation Excellence
   5 years ago, what was your impression of Microsoft? Even if the impression didn’t match the reality of what the company was innovating, terms like antiquated, stagnant and dinosaur of technology were routinely tossed about to describe the software Goliath. But what about today?
   http://bit.ly/sldGaZ
8. Open Innovation for Heroes: introducting the Veterans Job Bank – Whitehouse.gov
   Today, the Obama Administration launched the Veterans Job Bank, a new search tool designed to help connect veterans with employers.  The Job Bank  works by bringing jobs listings directly to veterans—instead of the other way around—via a search widget that provides a single window into the myriad job boards, social media platforms, and corporate employment sites that are currently spread across the Internet.
   http://1.usa.gov/sIn55P
9. Open Innovation Companies Help Inventors Move Ahead – NY Times
   Betsy Ravreby Kaufman is a lot of things — a freelance television producer, a former anchor, a wife and mother, a resident of Houston. One  thing she is not, she insists, is an inventor.
   http://nyti.ms/v8enhn