Tuesday, March 4, 2014

The new model to achieve disruptive innovation is here!

At the Front End of Innovation Venice, Rick Wielens, the CEO of NineSigma Europe will introduce a new model to achieve disruptive innovations through open innovation. We had a chance to ask Rick for a sneak peek into his session and here's what he shared with us:

During the event you will introduce the new model to achieve disruptive innovations through open innovation; can you explain how this model works? 

Rick Wielens
Maybe I can start with an important perspective that Harvard Business School professor Clay Christensen introduced, which is a way to look at different forms of innovation. If you look at the traditional way that companies have used open innovation, what you see is that most of them are using it for sustainable innovation purposes: better products for better profits.

In the past years we have been working with a number of clients on real breakthrough innovations and technologies, for instance the Canadian Government who wanted to tackle a huge environmental CO2 challenge, that result from the oil sand extraction in the province of Alberta. They were looking for disruptive innovation so they could find solutions for capture, re-­‐use and repurpose of C02.

If you want to create a disruptive result, then obviously you need to match that ambition with the scope of the open innovation program. And that is exactly what they did, they have created a stretch goal, a really tough objective they wanted to achieve and matched it with a prize reward structure. This prize reward structure is crucial, as you need to create a real benefit for the people to respond with their innovation solutions. They did this by defining a budget of $35 million Canadian dollars for a multi-year challenge.

And when I say people that respond, what I am really talking about are experts, universities, companies and organizations that have real relevance. They will generate options for the future that are perhaps five or ten years into the future. The grand challenge approach provides now a pathway to commercialization for these early stage technologies.

Can you give a clear example, related to the outcome? 

I will refer to the GE/NFL‘head health challenge’ as an example. The number of responses that you typically get if you do a sustaining innovation focused open innovation approach, is in the ten to forty option range.

 In the GE/NFL case we are talking about over 600 options, all focused around head health diagnostics. So, it is the richness in terms of quantity of ideas; it’s the originality that you are getting in through the cross industry outreach and it's about the quality of the responses, because we are targeting the right communities of experts and people in the field that have relevance to the topic. Because of the prize money, the size of the challenge and the enormous push that we are giving in terms of public relations, this generates a huge response of exceptional quality.

How did GE/NFL choose NineSigma as their partner? 

Well, one of the reasons why they chose NineSigma is because we had already proven to General Electric, in another challenge we had done for them, that we actually pull this quantity and quality of input. When GE started with their breast cancer challenge, they thought what they needed to do was to build a portal, on a website, do a lot of PR and then all the fantastic proposals would just come in, automatically.

They quickly understood that it is really about the design of the challenge, the outreach and the ecosystems that you are able to tap into. Just having a website, making 50 million dollar reward money available and generating all this publicity, does not bring the proposals that you need to really make an impact. So, what we have done? We have actually reached out to them to offer to boost the number of proposals and improve the quality of the proposals. In a few months we were able to push the thirty or forty proposals that they had up to 300 / 400 that they had on that challenge. Which showed GE that it is all about having access to the right networks and ecosystems, to experts and also the type of messaging.

Don’t forget that when you do a PR activity you reach out to the general audience, people that are in the public domain, usually with the wrong message and to the wrong crowd. Those people are not necessarily the experts and the doctors, and the teams that are developing new tools and methodologies that are doing scientific research. They usually do not respond to these open PR activities, because they are not invited explicitly to respond with what they have as a technology and basically do not see what is in it for them. I think that is what we are great at and that is why they came to us.

You just told actually that there are 3 important things there: the size of the challenge, the prize of the challenge that is used and the PR amount that is used here which makes it different from regular Open Innovation models. But is there something else that differentiates this model? 

What we are seeing and what we are learning from working with companies like GE is that these programs are not driven by R&D, or by the CTO, or by the technology teams only in the company. These programs are primarily driven by a Chief Marketing Officer. So there is a different starting point for these kinds of programs. You can imagine the impact it has on their organization when the Board of the company is involved, in terms of follow-­‐up, necessary investments that are following from this.

The kind of impact that it needs to bring is different if you are working, let’s say with only the technologies community, because of they are typically focused on costs not on the upside perspective for the business. To make it explicitly; if you are working with the marketing people they are looking at it from a business opportunity perspective; “what is the impact that we as a business can have by having this portfolio of options available”. And from the opportunity side, the limits in terms of allowable expense are directly related to the upside that you are able to create.

So in other words, the impact that you can have because it is about developing and growing markets and growing market share. A pure technology community approach focuses on efficiency, doing innovation as efficiently as possible with a preference to utilize the internal resources. But there is no upside perspective in that scenario; it doesn’t address market growth or market access.

The starting point for this one is really a marketing perspective, an upside perspective. So that really means that in the sharing of the opportunity and the sharing of the profits that come out of this, there is a different dynamic inside those client organizations. I think it is not so visible from looking inside a grand challenge itself and what are the ingredients. But it's very clear from the interaction inside.

What is the period for this grand challenge, from the beginning until the end? 

These are typically multiple year programs. For the first phase of the challenge that we have done for GE for instance, you are talking about a year. The challenge itself is only open for 4 to 6 months, so that is not that different from our RFP kind of model where we are basically opening it for six or five weeks.

As a sort of response time, in this case we are leaving more response time because we are obviously building it up, also in terms of communication, PR and visibility. And the typical thing is that the day before the deadline a big part of the proposals come in, so there is an enormous so called hockey stick effect that you get towards the deadline.

We know people work against these deadlines. We want to make sure that people just have a bit more time to create a fantastic proposal, to make sure that they do respond. But it needs a deadline and it needs to be limited to get sufficient traction.

About

Rick Wielens joined NineSigma in 2010 and is responsible for NineSigma Europe. Previously, Rick worked with his own company in open innovation and expert services mainly in the High Tech area in The Netherlands and Germany.

Over the past three years Rick and his team have worked with many of the innovation leaders in Europe, delivering concrete results in their open innovation programs. With a background in supply chain management and traffic engineering, Rick has experience in business development, open innovation and innovation management, business strategy and large organizational change and ICT implementation programs.

Rick brings international experience working in Germany for SAP and in The Netherlands for Royal Philips Electronics in various roles and industries. Rick holds a M.Sc. in Transport Planning and Management from the Westminster University in London and a BA in Traffic Engineering from the University of Applied Science in Tilburg.

NineSigma is an Innovation Company, established in 2000, a two-time Weatherhead 100 Winner headquartered in Cleveland, Ohio, with offices and service delivery in North America, Europe, Japan, Korea, South Africa and Brazil.. NineSigma partners with its clients to accelerate innovation in four areas: Organic Growth, Managing Risk, Overcoming Gaps and Stimulating Culture. NineSigma brings knowledge and solutions from around the world with the power of our Open Network. Their client industries are varied and include Automotive, Apparel, Building Products, Chemicals, Consumer Products, Electronics, Financial Services, Food, Materials, Medical Devices, Mining, Pulp & Paper and many others.

Editor's Note

To accelerate innovation you need to connect to the smartest, most accomplished thought leaders across industries, which you will find at the Front End of Innovation Venice. Join Rick Wielens and other fearless innovation peers this 17-19 of March at Ca' Foscari University, Venice, Italy where together you will build an ecosystem that drives continuous value creation.

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