Best Practices for a Full Value Chain Approach Open Innovation Matthew C. Heim, Ph.D. President, NineSigma Inc.

Overview 1. NineSigma Background 2. An Introduction to Open Innovation 3. Open Innovation for the Entire Value Chain 1. Key Takeaways

NINESIGMA IS THE LEADER IN OPEN INNOVATION SERVICES NineSigma works with Clients... to discover innovative ideas, technologies, products and services from outside their organizations... to connect with the very best innovators and solution providers from around the world... to quickly and cost-effectively solve their business needs... and to transform their innovation processes NineSigma profile:  Offices in USA, Europe and Japan  Over 1,200 Open Innovation projects completed  >2 million solution providers contacted  14,000+ proposals received from 73 countries  South Africa regional partnership with RIIS Some of our many global clients Our clients tell us we help  Accelerate the innovation cycle  Provide greater access to new ideas, innovation, knowledge  Help hedge risk  Provide an expandable, low-cost network of innovation partners  Expand access to different skill sets and competencies

E N G A G E E N A B L E StrategicTactical Internal External T H E O P E N I N N O V A T I O N U N I V E R S E HighlyEngagedOptimizedInnovation HighlyEnabledClosedInnovation

Why Open Innovation? Value Speed Capacity Time Value created by internal innovation with limited external network Value created through combined approach of internal innovation and externally tapping the global innovation community

The best connections are often the unobvious ones

The Evolution of OI Capacity Over Time Open innovation capacity Time STAGE 1 Launch Time STAGE 1: LAUNCH  Project focused  Experimentation  R&D Centric  Learning to be Open  New roles  New processes  Change management

STAGE 2: CONSOLIDATE  Emerging best practices  Defined workflow process  Emerging role of the OI champion  Emerging organizational structure  Areas addressed outside R&D  Evolving reward systems  Emerging metrics structure  Begin to link OI and strategy The Evolution of OI Capacity Over Time Stage 1: Launch Open innovation capacity Time STAGE 2 Consolidate STAGE 1 Launch

The Evolution of OI Capacity Over Time Open innovation capacity Time STAGE 2 Consolidate STAGE 3 Embed STAGE 1 Launch STAGE 3: EMBED  Open Innovation strategy clearly articulated inside and outside the company  Well defined, visible OI organization  OI champion with full value chain credibility  Reward systems standardized  Knowledge captured and managed to drive competitive advantage  Standard metrics and reporting  Full Value Chain approach

Open Innovation: A Full Value Chain Approach Page 10

Open Innovation: Upstream Research Page 11 Ideation Support: Identify key technologies available, or in development, That will present joint development opportunities or risks

Open Innovation: Upstream Research Page 12 Project Types: Competitive technology intelligence assessments Emerging disruptive technology threats Strategic technology intelligence landscapes Identify potential partners Identify potential IP acquisitions

Open Innovation: Design & Development Page 13 R&D Support: Identify non-core technologies and talents that can help accelerate the new product development lifecycle

Open Innovation: Design & Development Page 14 Project Types: Specific technology searches Specific talent searches Crowdsourcing (conceptual problem resolution)

Open Innovation: Manufacturing Page 15 Manufacturing Support: Find new technologies, processes, etc. to create a more reliable, leaner and cleaner manufacturing process

Open Innovation: Manufacturing Page 16 Project Types: Product-specific manufacturing technologies Lean manufacturing technologies Green manufacturing technologies Quality-related (inspection) technologies Safety-related technologies

Open Innovation: Process Improvement Page 17 Process Support: Find experts and methods to help enhance existing processes, or to develop new processes outside your core competency

Open Innovation: Process Improvement Page 18 Project Types: Process expert sourcing Specialized technology processes Chemical processing Bio-Technology processing Quality/Regulatory Specialized business process

Open Innovation: New Markets/Applications Page 19 New Channel Support: Identify new markets for existing competencies and intellectual property via Open Innovation Intelligence

Open Innovation: New Markets/Applications Page 20 Project Types: Find new markets for existing products (intelligence) New applications for existing markets e.g. Augmented Reality in greeting cards “Greening” of existing products e.g. bio-acrylics vs. plastics

Open Innovation: Ready-Products Page 21 New & Existing Market Support: Identify existing products and services that can be introduced to an existing portfolio to strengthen current capabilities and improve market penetration

Open Innovation: Ready-Products Page 22 Project Types: Ready-products needing funding Near ready-products needing R&D support Ready-products needing channel or supply chain support Bundling opportunities for existing products

Key Takeaways: A Full Value Chain approach requires an empowered and credible OI function Develop a balanced portfolio of “Engage” and “Enable” tools and capabilities Whole-Systems Thinking leads to the highest return on your open innovation investment Commit, align & build momentum behind your OI effort

Matthew Heim, Ph.D. President, NineSigma Inc. Thank You For Your Attention!