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Slide 1: How to generate and manage Breakthrough Innovation OSE Consulting point of view based on best practices – extract 2007-2009 OSE Consulting © 2009 November 2009
Slide 2: Agenda  Introduction  Typology of innovation organizations  Best practices for breakthrough innovations ext rac t Breakthrough innovation successes OSE Consulting © 2009 2
Slide 3: Foreword  Innovation • Where people switch to the new pattern • Where the customers change their old patterns and use the new product ext rac t  Breakthrough innovation • When there is an after, and a before Breakthrough innovation successes OSE Consulting © 2009 3
Slide 4: Generally speaking innovation follows this macro process ext rac t Idea generation / scouting Concept selection & validation Fund & manage development Market release Get the right ideas / concepts Balance between short, medium, long terms Deliver in a faster & efficient way Be able to reinvent business model But to be successful, the challenges to overstep are multiple: • • • • • • Product launches in mature sectors are accelerating... with few competitive advantages Short term business lowers the ambitions of sciences Open up to other technologies or other ways of commercializing can be unsurpassable It is difficult to manage breakthrough innovation because of its high level of risk Getting business talk with R&D often leads to giving priority to short term innovation The company might not be able to welcome changes in the current business model Breakthrough innovation successes OSE Consulting © 2009 4
Slide 5: Methodology of study ext rac Since 2007, OSE Consulting has been conducting long term study nourished by t experimentations in the generation and management of breakthrough innovations for its clients. Our specificity in these works was to conduct it across our two practices: Strategy and Change Management consulting. We encountered a large number of acting ways, organizations which could be radically different, processes, company ambiances and individuals who where all trying (with successes and failures) to innovate more and faster. Breakthrough innovation successes OSE Consulting © 2009 5
Slide 6: Agenda  Introduction  Typology of innovation organizations  Best practices for breakthrough innovations ext rac t Breakthrough innovation successes OSE Consulting © 2009 6
Slide 7: We found 4 organization typologies to manage innovation in large organizations R&D centralisatio n Centralised and integrated R&D Centralised R&D integrated with Business through processes ext rac t Telecom Cosmetics Automotive Pharma Centralised R&D with separation between R and D Hub R&D between a central entity and development entities within the BUs Food Chemical ITS ITS Consumer Electronics Silo R&D isolated from business Entertainment Internet Conglomerate Chemical Food & Beverage Network R&D integrated into Business entities Consumer goods Business / Research integration R&D split between several divisions No link Functional link with downstream entities Functional link with downstream and upstream entities Breakthrough innovation successes OSE Consulting © 2009 Development managed by business entities, functional link with upstream entities Integrated : R&D managed entirely by business entities 7
Slide 8: Inventory of best practices identified Chemical Pharma Chemical Congl. Innovation culture & struggle against NIH syndrome Identification innovation tracks R&D portfolio management & project steering Leadership Business / Research Integration Design / Research Integration People enablers xxx xx x Internet x ITS x ITS x Food Consumer Entertain Telecom Cosmetic goods Auto x x xx x ext rac tBeverageConsumer Electronics x x x x x x x x x x x x xxx x xxx x xx x x x x x xx x xx x x x x x x x x x x xx x xx x x xx x x x x xx x x x x x x x x x x x x xx x x xx xx xx xx x xx xx x x x x External sourcing xx x x x x xx x x x x x xx x x x Time to Market x x x x x x x x x x x x x Creativity & ideation Information management xxx x x x x x x x x x x x xx x x x x x x x x x Breakthrough innovation successes OSE Consulting © 2009 8
Slide 9: Agenda  Introduction  Typology of innovation organizations  Best practices for breakthrough innovations ext rac t Breakthrough innovation successes OSE Consulting © 2009 9
Slide 10: For OSE Consulting 3 key ways to succeed in breakthrough innovation ext rac t Open model Dedicated process Top management implication Innovation environment & culture Breakthrough innovation successes OSE Consulting © 2009 10
Slide 11: Open Model increases the success rate of innovation Importance of lever Key advantages of applying an Open Model ext rac t Idea generation / scouting +++ + +++ + • Broaden the possibilities: Concept selection & validation • Cross-check relevance Fund & manage development • Increase capacities of R&D • Share risks and best practices • Get nearer to the market (downstream open model) • Secure revenues Market release Open model Major difficulties encountered • How to protect IP? • How to build confidence with partners? • What is the relevant contract formalization? • How to evaluate and share the usage value? Breakthrough innovation successes OSE Consulting © 2009 11
Slide 12: Open innovation 5 top practices ext rac t XXX innovation scouts XXX strategy for partnerships Transversal team at XXX Value sharing model for XXX Innovation fair at XXX Breakthrough innovation successes OSE Consulting © 2009 12
Slide 13: Top practices’ descriptions ext rac t Breakthrough innovation successes OSE Consulting © 2009 13
Slide 14: A company whose innovation strategy is based on an Open Model has to apply the following principles  Define the innovation tracks ext rac t  Use both internal and external capacities  Leverage downstream and upstream capacities Breakthrough innovation successes OSE Consulting © 2009 14
Slide 15: Creating an innovation culture is the way to manage people for being innovative... ...for their company Importance of lever Key advantages of generating an innovation culture ext rac t Idea generation / scouting +++ + ++ + • Get ideas in line with company's strategy • Increase capacity of creation, individually and collectively Concept selection & validation • Challenge and enrich concepts Fund & manage development • Facilitate comprehension between functions and increase the connections Market release • Imagine innovative ways of selling innovations Innovation culture & environment Major difficulties encountered • How to fight internal NIH syndrome? • How to deal with local cultures in global companies? • How to deal with newly acquired divisions? Breakthrough innovation successes OSE Consulting © 2009 15
Slide 16: Innovation culture & environment 5 top practices ext rac t Promotion of risk at 3M XXX innovation reference Annual Technology fest at XXXX XXX dual career ladder Working ambiance at XXX R&D Center Breakthrough innovation successes OSE Consulting © 2009 16
Slide 17: Top practices’ descriptions ext rac t Breakthrough innovation successes OSE Consulting © 2009 17
Slide 18: To develop and maintain an innovation culture, a company has to apply the following principles  Provide a frame of reference to the employees ext rac t  Create the conditions for innovation to grow  Allow the right to be wrong Breakthrough innovation successes OSE Consulting © 2009 18
Slide 19: Breakthrough innovation projects need to be managed differently from other projects Importance of lever c Key advantages of managing separately breakthroughst • Encourage out-of-the-box thinking ext ra Idea generation / scouting + ++ +++ ++ Concept selection & validation • Give the possibility to develop projects beyond usual boundaries • Secure long term funding • Keep top management tabs on the projects to facilitate their achievement Fund & manage development Market release • Enable the launch of new business model Dedicated process for breakthrough innovations Major difficulties encountered • How to get a strategic corporate vision? • How to accept risky and long term projects? • How to staff the right people on such projects? How to staff the people once project is finished? Breakthrough innovation successes OSE Consulting © 2009 19
Slide 20: Manage breakthrough projects 5 top practices ext rac t XXX’s dedicated subsidiary to launch innovati XXX’s differentiated « innovation pipeline » XXX’s Emerging Business Opportunity process Breakthrough projects tracking and funding by XXX’s CEO XXX platform strategy Breakthrough innovation successes OSE Consulting © 2009 20
Slide 21: Top practices’ descriptions ext rac t Breakthrough innovation successes OSE Consulting © 2009 21
Slide 22: To manage correctly its potential Breakthrough Innovation a company has to apply the following principles rac t  Differentiate breakthrough / emerging business projects from “classic ext innovation” projects  Involve the top management, and firstly the CEO  Prepare organization to integrate new successful emerged business Breakthrough innovation successes OSE Consulting © 2009 22
Slide 23: OSE Consulting ext rac t Edouard Blanchard Associate partner e.blanchard@oseconsulting.com Romaric Servajean-Hilst Managing consultant r.s.hilst@oseconsulting.com Breakthrough innovation successes OSE Consulting © 2009 23