Open Innovation is now a very fashionable term and many companies are rushing to implement an open innovation process without fully understanding its value nor how it fits within their existing product development process. In this Chapter of the “Beyond Stage Gate” series we will discuss the different definitions of Open Innovation, where does it fit in the development cycle, software tools available and a case study. We will show how Smarty Ears, a developer of iPad apps for Speech Therapy and Communication, has used open innovation to greatly increase the number of ideas to market, as well as accelerate the product development cycle.
What is the Benefit of an Open Innovation Process?
1. SMARTY EARS’ OPEN INNOVATION PROGRAM
FOR THE DEVELOPMENT OF IPAD APPS
ProductCamp Austin 8
February 2012
Jose A. Briones, Ph.D.
SpyroTek Performance Solutions
Twitter: @Brioneja
2. Agenda
Background
Definitions of Open Innovation
Industry Successes
Open Innovation Services and Software
Case Study:
Smarty Ears Use of Open Innovation for
Development of iPad Apps
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3. Legalese
• “The fair use of a copyrighted work, including such use
by reproduction in copies or phonorecords or by any
other means specified by that section, for purposes
such as criticism, comment, news reporting, teaching
(including multiple copies for classroom use),
scholarship, or research, is not an infringement of
copyright” - Copyright Act of 1976, 17 U.S.C. 107
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4. Background
Open Innovation is now a very fashionable term
and many companies are rushing to implement an
open innovation process without fully
understanding its value nor how it fits within their
existing product development process.
In this Chapter of the “Beyond Stage Gate” series
we will discuss the different definitions of Open
Innovation, where does it fit in the development
cycle, software tools available and a case study.
www.Brioneja.com
Twitter: @Brioneja
5. Case Study
We will show how Smarty Ears, a developer of iPad
apps for Speech Therapy and Communication, has
used open innovation to greatly increase the number
of ideas to market, as well as accelerate the product
development cycle
www.Brioneja.com
Twitter: @Brioneja
6. Clayton M. Christensen
• “There’s a better way for
management teams to grow
their companies. But they will
need the courage to challenge
some of the paradigms of
financial analysis and the
willingness to develop
alternative methodologies”
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7. Classical Innovation Process
Idea Idea Generation
Idea 2 Idea Selection
1
Project Management
Idea
3
Projects
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9. Classical Stage-Gate
Process
Source: Product Development Institute, Inc.
Project is managed in a linear fashion
“The Stage-Gate system assumes that the proposed strategy is the right
strategy, the problem is that except in the case of incremental
innovations, the right strategy cannot be completely known in advance”
– Clayton M. Christensen
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10. The Spiro-Level™ Approach to Innovation
Resources
Launch
Quadrant IV Quadrant I
Roadmap/Timeline
Level Idea
Generation
Risk Analysis 3
2 VOC
Customer
Testing 1
Time Time
Technology
Supply Chain Assessment
Analysis
Business
Value in Use Case
Analysis Regulatory
Quadrant III Prototype IP Strategy Quadrant II
Development Resources
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11. Definition
s
What is Open Innovation (OI)?
It is a paradigm that assumes that firms can
and should use both internal and external
ideas to further their technology goals.
Henry Chesbrough
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13. P&G
Connect and Develop – Launched in 2000
Accelerating internal R&D by leveraging the
ideas, knowledge, expertise, know-how of a
network of individuals, businesses and
institutions from around the world
P&G needs are posted on website in classified
categories, and then anyone who is interested
or has the solution can propose their ideas
and get assessed by a specialized team.
Payments can range from US$10,000 to
US$100,000 (Bessant and Tidd, 2008)
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14. P&G Open Innovation
Results
By 2006, 35% of all P&G products had
an external component vs. 15% in 2000.
Over 50% today.
R&D productivity increased 60%
Today P&G has more than 1000
agreements with innovation partners
Source: Veristlabs.com
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15. Clorox
Clorox wants to use open innovation to:
Find ideas, technologies and products
Outsource entire chunks of product development
License / sell internal ideas and technologies to others
Clorox says that for open innovation to work,
need:
Strong internal and external networks
Clear choices in corporate strategy that direct the “find”
activities
Capabilities, teams and processes to find more ideas
AND capabilities, teams and processes to enable what’s
found to be used: combined with other inputs, quickly
assessed and built into business opportunities
Source: The Clorox Approach to Open Innovation.
Stephan Lindegaard
www.Brioneja.com
Twitter: @Brioneja
16. Keys to Success
OI is a way to speed up time to market and increase
probability of success
OI includes sourcing for products, technology, intellectual
property and ideas.
OI is NOT outsourcing. OI requires constant interactions
between companies and inventors. It requires huge
partnering capabilities on both sides.
OI will not decrease a company’s costs – it will only move
it among line items. R&D budget may be less over time,
but Legal and Business Development budgets will
increase immediately.
Source: Open Innovation – Paradigm Shift or Program?
September 21, 2009 by Suzanne Harrison
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17. Open Innovation Services vs.
Software
Open Innovation Services offer a
communities of experts in a variety of
fields.
Problems are posted for a fee to get
feedback from the community
Open Innovation Software relies in the
company’s customer base and a
broader reach
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19. Open Innovation Software
Spigit
SpigitEngage for Facebook,
organizations can engage their
customers in social co-creation by
tapping customer insights through
idea generation, free thought,
campaigns, contests, and game
dynamics.
Ryma
Ideascope integrates customer
feedback with other systems like
Help Desk, Customer Relationship
Management (CRM), Demand
Management
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20. Open Innovation
Software
Imaginatik
Innovation Central
collaboration platform allows
organizations to include or
exclude whichever groups or
individuals are most
appropriate for the topic
Nosco
Idea management software
Publish, rate and collaborate
on ideas
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Twitter: @Brioneja
21. Smarty Ears’ Open Innovation
Program
Smarty Ears is the largest
app publishing company in
the segment of speech and
language development.
34 total Apps
Most for iPhone and iPad but
some for Android.
Promotion is via Social
Media and Website
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22. How The Program Works
Just like in traditional publishing,
there are authors to
books/therapy materials and
there are publishers.
Smarty Ears is the App
publisher and the submitter is
the author
Submitters continue to own
the idea and materials they
provide, and therefore they get
paid royalties for it.
The final application, coding,
and any art work developed
belongs to Smarty Ears.
Typical contract is 5 to 10 years
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23. Royalties
Authors receive a
royalty of 5% to 15%
on all sales for their
app.
The amount of royalty
is decided based on
Level of expertise
Amount of material
provided by you to us on
the creation of the app
Complexity of the
application.
Apps have name, bio,
photo of author www.Brioneja.com
Twitter: @Brioneja
24. Program
Growth
In the past Smarty Ears’
open innovation program
was limited
Apps that Smarty Ears could
not do on its own because of
lack of expertise.
Today the program has
expanded to include apps
that Smarty Ears could do
Looking for submitters that
can devote the time to Co-
development and not just
submit ideas.
Higher probability of success
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25. Benefits of Co-Development
Submitters are
passionate
about their
idea
They want it to
be perfect
Test with their
heart
Become the
most effective
salespersons
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27. Open Innovation Program
Results
~10 ideas for new
apps/month
1 out of 10 becomes an
app.
7 new apps are a result of
this process
More apps to market - faster
Recent app release from
Open Innovation program
“Fun and Functional” is
currently on top 50
educational app list on
iTunes
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28. Program Lessons
Win-Win Scenario
Not a one-time payment
Both the company and the
submitter benefit from the
success of the product
% Revenue sharing goes
down if author does not
participate in updates with
content.
Does not include bug fixing
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29. Acknowledgements
Thanks to Smarty Ears, LLC for allowing
me to be part of this exciting new field of
product development
www.smartyearsapps.com
www.Brioneja.com
Twitter: @Brioneja
30. Contact Information
Jose A. Briones, Ph.D.
Brioneja@SpyroTek.com
Twitter: @Brioneja
www.Brioneja.com
Twitter: @Brioneja
31. Resources
Making Open Innovation Work. Author: Stefan Lindegaard
Open Services Innovation. Henry Chesbrough
A Guide to Open Innovation and Crowdsourcing. Paul Sloane
The Open Innovation Marketplace. A. Bingham and D. Spradlin
Open Innovation – Paradigm Shift or Program? September 21,
2009 by Suzanne Harrison
Innovation Killers, 2008 - HBR http://hbr.org/product/innovation-killers-how-
financial-tools-destroy-you/an/R0801F-PDF-ENG?Ntt=innoation%2520killers
Stage-Gate® is a registered trademark from Stage-Gate
International’s Product Development Institute Inc.
www.Brioneja.com
Twitter: @Brioneja