The Future of Open Innovation
Paul Isherwood
21st October 2010
Agenda
OI – what is it, why do it, who is doing it?
Adding rigour to the “fuzzy front end” of the process
Bringing R&D and commercial teams closer together
Balancing technology push with market pull
Key trends, developments & challenges in OI
Conclusions & questions
Agenda
OI – what is it, why do it, who is doing it?
Adding rigour to the “fuzzy front end” of the process
Bringing R&D and commercial teams closer together
Balancing technology push with market pull
Key trends, developments & challenges in OI
Conclusions & questions
The growth of open innovation
CLOSED INNOVATION
“Use the best available”•Research networks
•Knowledge diffusion
OPEN INNOVATION
“Do it yourself”•Corporate research centres
•Knowledge concentration
What happens in R&D, stays in R&DSource: Harvard Business Review, December 2006
Getting unusual suspects to solve R&D puzzlesSource: Harvard Business Review, May 2007
Source: Chesbrough, H. (2003). Open innovation: the new imperative for creating and profiting from technology. HBS Press, Boston, MA
Biotechnology
Aircraft engines
Different industries & adoption of open innovation
Motion pictures
CLOSED INNOVATION
Oil & Gas
Nuclear reactors
Automotive
OPEN INNOVATION
PharmaceuticalsConsumer electronics
Clothing
Food & drink
Communications
Personal computers
Semiconductors
Mainframe computers
Investment banking
External innovation focus is essential
Innovation occurs outside large companies
Recognition of IP in small organisations
Reduced time for taking an idea to product
Increasing competitive pressure
Open innovation in practice
“We believe the next big advance, which may reshape the food industry, has already been invented by someone outside the company, and our goal is to be the first to find it”
• Source: Peter Erickson, Senior VP of Innovation, General Mills, February 2007
“Collaboration is key to innovation and we love working with the outside. Such an approach has seen the centre’s scientists evolve from inventors into translators”
• Source: Peter van Bladeren, Director of Science & Research, Nestlé, April 2007
“It’s not that we’re not innovative. We are very innovative, but the fact of the matter is that so are a lot of other people”
• Source: Steven Goers, VP of Open Innovation & Investments, Kraft Foods, March 2008
“Compete like hell externally, collaborate like family internally” • Source: AG Lafley (CEO Procter & Gamble) & Ram Charan, The Game-Changer, April 2008
Agenda
OI – what is it, why do it, who is doing it?
Adding rigour to the “fuzzy front end” of the process
Bringing R&D and commercial teams closer together
Balancing technology push with market pull
Key trends, developments & challenges in OI
Conclusions & questions
Ideation vs. Implementation
Ideation Stage
• Short-term led?• Commercially led?• Brand/product led?• Platform led?• Pillar led?• How to measure?
Activity Management Process
Activity management process well defined
Lack of similar rigour in pre-pipeline ideation stage
Respondent industry
Source: NineSigma Open Innovation Benchmark Survey, February 2009
Current focus of OI efforts
Source: NineSigma Open Innovation Benchmark Survey, February 2009
Type of open innovation practiced
Source: NineSigma Open Innovation Benchmark Survey, February 2009
Innovation sourced from anywhere…..
GS
K N
etwo
rk&
Su
pp
liers
Indiv
idual
Inve
ntors
Search Consultants
& Scouting
Literature/Patents
Aca
dem
ia
Small & Large
Companies
Organizations
Innovation pathway at GSK
Early stage assessment and feedback
Link external innovative technology to our brands
Process can result in a win for GSK and a win for innovators
Timings represent general guidelines rather than guarantees
An ideal open innovation target
Scientific proof of principle
Solid business case
Unique
Competitive advantage
Agenda
OI – what is it, why do it, who is doing it?
Adding rigour to the “fuzzy front end” of the process
Bringing R&D and commercial teams closer together
Balancing technology push with market pull
Key trends, developments & challenges in OI
Conclusions & questions
Open innovation team in GSK
OI team are responsible from concept to delivery
Co-located with scientists & marketing experts in Innovation Hubs
Timely assessment and development of idea or technology by key decision
makers
Innovation hubs
What’s the Hub really like?
“Greater sense of community in the group”
“Open workplaceleads to greatersharing of ideas”
“More of a team mentality”
“Creative eavesdropping is phenomenal”
““More innovative ideas and more relevant ideas”More innovative ideas and more relevant ideas”
Day 2 in the NHFG Hub – July 2010
Agenda
OI – what is it, why do it, who is doing it?
Adding rigour to the “fuzzy front end” of the process
Bringing R&D and commercial teams closer together
Balancing technology push with market pull
Key trends, developments & challenges in OI
Conclusions & questions
Industry/market perspective
Industry convergence
• Blurring of boundaries between industries creating new sectors
• eg nutraceuticals & functional foods
Industry differences
• Pharma & chemical - science driven technology intense R&D projects
• Food & drink - consumer focused and often purely market driven
Growth opportunities
• Working in tune with the marketplace not just the technology
• Innovation will be happening at the intersection of the two
Technology push vs market pull
Push – driven by ideas or capabilities created by R&D in the absence of any specific need that customers may have
Pull – driven by user needs and requirements (demand), rather than by ideas or capabilities created by R&D
Structured and Sustainable Pipeline Process
Consumer Insight
Superior Science
Consumer Insight
Superior Science
GlobalLaunch
ValidatedProduct
&Claim
High Launch Rate
Speed to Market
Energy science
Collaborations with 13 academic centers of excellence in psychology, cognition and physical energy; 25 publications
Strong linkage with GSK Pharma Neurology group
Brain and Body Energy claims launched in 2003 with strong science which have withstood regulatory scrutiny
Types of consumer claims we haveused based on the science
Advertising Standards Authority Approved (UK)
Committee of Advertising Practice Approved (UK)Mental Edge
Refuel yourself
Physical Edge
Brain and Body Energy
World leaders in blackcurrant breeding research
Vitamin C heritage and credibility
One of five a day
Exploring other berry bio-actives
Berry science
Global collaborations with 23 academic centres of excellence
2009: 6 oral communications, 2 publications, 7 submissions for peer review
Types of consumer claims we haveused based on the science
Rich in Vitamin C: A Powerful Antioxidant
Friendly to teeth
Naturally rich in antioxidants
1 of your 5 a day
Wildlife Trust and sustainable agronomic technology
100% recycled PET, 1st major brand to market
Sport science
Over 35 years research on sports nutrition with over 100 peer reviewed publications
Supported by Lucozade Sports Science Academy working with elite athletes and over 60 external agencies/partners
Pioneered contaminant testing regime for ATP assuring product quality for elite athletes
Recover quicker / train harder in subsequent sessions
Types of consumer claims we have used based on the science
Proven to give you an Edge
Proven to increase mental and physical performance
Gets energy to the muscles fast
33% longer
Proven to help build muscle in combination with resistance exercise
Agenda
OI – what is it, why do it, who is doing it?
Adding rigour to the “fuzzy front end” of the process
Bringing R&D and commercial teams closer together
Balancing technology push with market pull
Key trends, developments & challenges in OI
Conclusions & questions
How far will OI go, how long will it last?
Trends identified from recent research evidence & current practices:
• Industry penetration – from pioneers to mainstream
• R&D intensity – from high to low tech
• Size – from large firms to SMEs
• Processes – from stage gate to probe-and-learn
• Structure – from standalone to alliances
• Universities – from ivory towers to knowledge brokers
• Processes – from amateurs to professionals
• Content – from products to services
• IP – from protection to a tradable good
The era of OI has just begun & has a long life left ahead of it!Source: The future of open innovation, Gassmann, Enkel & Chesbrough, R&D Management, 40, 3, 2010
Sustainability trends
Designing with the end in mind
Carbon is king
Trash into cash
Breadth of external networks
Breadth of external networks
Collaboration with neighbours
FMCG open innovation forum
Share best practice & explore hot topics in OI along the FMCG value chain
From source to consumer with flexibility to include related or parallel activities
Participate in bi-lateral or multi-lateral OI collaboration projects
Accelerate OI progress, resolve challenges, create & capture value
Source: IfM’s Centre for Technology Management, University of Cambridge, July 2010
Core ForumMembership
Retailer ConsumerRaw MaterialsProcessedMaterials
FMCGProducer
Packaging
Support Networks
SMEs
Science Base
Intermediaries
Distribution, Logistics & Waste Management
Pushing several innovation buttons (1)
Unpreserved healthy drinks blended aseptically & vended on demand
Convenient resealable flexible pouches, fully recyclable
World’s first chemical free, self cleaning post mix system
Technology applicable to non-drink products inc household cleaners
Pouchlink™ can reduce the vending carbon footprint by up to 75%
Sources: packaging news.co.uk, July 2010, timesonline.co.uk, July 2010 & thegreendrinkscompany.com, July 2010
Pushing several innovation buttons (2)
Healthier planet: world’s first 100% compostable crisp bag
Made from more than 90% renewable, plant-based materials
Breaks down completely when placed in a hot, active compost bin
Solar energy instead of fossil fuel is used to make some products
Healthier you: 18g wholegrain/oz, 2g fibre/oz, 30% less fat, less salt
Source: http://www.sunchips.com/index.shtml , July 2010
One of the new biodegradable SunChips bags, after spending 12 weeks in a compost heap
Takeout from today
OI – what is it, why do it, who is doing it?
Adding rigour to the “fuzzy front end” of the process
Bringing R&D and commercial teams closer together
Balancing technology push with market pull
Key trends, developments & challenges in OI
Conclusions & questions
Embrace the unexpected
“If at first the idea is not absurd, then there is no hope for it”
Source: Albert Einstein (1879 – 1955)
Good relationships make absurdity easier to explain
GSK is changing
Visit our Annual Review, the world of GSK: http://www.gsk.com/annualreview2009/