Technologietransfer und Open Innovation, Saarbrucken, 06.02.2014 Technologietransfer und Open Innovation, Unterstützende Portale (nicht nur) für TT Büros INTRASOFT Intl S.A. Research & Innovation Unit Dr. Raimund Bröchler 2

Content INTRASOFT International S.A. at a glance Introduction to Innovation Open Innovation for SMEs and Universities What? Why? How? Methods Open Innovation Service Segmentation The future of Open Innovation 3

INTRASOFT: WHO WE ARE Leading European company in IT services since 1996. Key player in E.U. Institutions and Agencies for more than 15 years. Major multinational IT solutions integrator, serving governments, large public institutions and private enterprises in more than 70 countries around the globe. Headquarters in Luxemburg, established in 12 countries. About 1.500 professionals from 20 different nationalities. 4

WHAT WE DO Deliver seamless business systems through software development and IT systems integration. Offer vertical IT solutions in specific business domains and industries. Offer a wide portfolio of managed IT services, infrastructure and application outsourcing. Provide highly-skilled professionals through consulting and IT capacity services. 5

WHAT WE DO Highly-skilled personnel 1.500 professionals 20 nationalities Distributed around the globe 6

GEOGRAPHICAL FOOTPRINT IN EUROPE Office Location Athens / Bucharest / Brussels /Luxembourg / Sofia / Copenhaguen /Nicosie / Amman / Riyadh / Manilla Activity Alicante Ankara Apeldoom Astana Belgrade Bern Budapest Dublin The Hague Helsinki Kiev Kishinev Lisboa Ljubljana London Lulea Malta Minsk Moscow Nicosia Oslo Podgorica Riga Scopje Tirana Tbilisi Vilnius Warsaw Zagreb 7 7

GLOBAL PRESENCE Executing over 100 Projects in more than 68 countries Activity Executing over 100 Projects in more than 68 countries 8 8

SUCCESSES & HIGHLIGHTS Two massive application rollouts in 5.000 customs offices delivered successfully in 2004 & 2010, under a strict timeframe & 5 new rollouts in June 2013. Managed IT services (desktop, network and data-center support) for 40.000 users in various European Institutions, using cutting edge tools and methodologies. Mission-critical systems for the European Medicines Agency Over 100 critical applications for the European Trademarks & Designs Registration Office (OHIM). 9

SUCCESSES & HIGHLIGHTS The Risk & Compliance platform (ESKORT) has been installed in 25 countries on 5 continents. One of the leading providers worldwide of Tax Compliance Solutions for Government Revenue Agencies according to Gartner. Software labs and development centers in 5 countries. INTRASOFT International is included in the first 500 companies worldwide that hold an ISO 20000 certificate. 10

How would you describe innovation? Innovation is… How would you describe innovation? As you can see, generating ideas is easy. But not all ideas turn into an innovation.

Innovation is… “The successful exploitation of new ideas” (UK Department of Trade and Industry. 2004) “A tool by which entrepreneurs exploit change as an opportunity for a different business or service.” (Drucker, P. 1985) “Not just coming up with good ideas but the process of growing them into practical use. ” “ Not the same as invention. Invention is turning cash into ideas and innovation is turning ideas into cash.” (Hacklin and Wallin, 2012) “A new good, new quality of a good, new method of production, entering a new market, finding a new source of supply, a new organization of industry or a new combination of recourses.” (Schumpeter) Needs to be actionable to create sustainable value. Innovation is not a linear process but it is dynamic and constantly needs to be evaluated and changed. 12

Question What is the difference between invention and innovation according to you?

Innovation versus invention Invention is creating ideas out of money while innovation is creating money out of ideas. Example: Thomas Edison and the light bulb. (Bessant, J. & Tidd, J., 2009) Invention is creating ideas out of money while innovation is creating money out of ideas. Example: Thomas Edison. He not only did inventions, but also found a way to commercialize them (i.e. invented the light bulb and created a network to plug it in and use it and now it is used all over the world). (Bessant, J. & Tidd, J., 2009) 14

Open Innovation is… How would you describe Open Innovation? Distinguish the company. Research shows a strong correlation between market performance and new products. Improved products are constantly needed because of shorter product life cycles. When you are standing still and everyone is moving, you will get behind. Innovative companies typically show stronger growth and more success. The stock market has shown large successes for innovative companies.

Open Innovation is… A strategic tool to explore new growth opportunities at lower risk1 A managerial answer to globalisation.2 More about increasing R&D options than replacing existing ones. External technological collaboration is complementary to internal R&D investments.1 Open technology sourcing offers higher flexibility and responsiveness without necessarily incurring huge costs1 A mix of approaches: technologies purchased from other companies, acquired through licenses, partnerships and alliances or developed internally1 Large companies are four times more likely to collaborate for innovation activities than SMEs1 There are 4 types of openness of innovation: revealing, selling (from inside the firm to outside), sourcing and acquiring(from outside the firm to inside). Example: P&G is developing 50% of innovations with external partners3 1Open Innovation in Global Networks, OECD 2008 2Living Labs and Open Innovation, E. Almirrall, eJOV-Volume 10 3OpenInnovation.de/523-Procter-Gamble-P-G 16

One picture says more than... Source: University o f Cambridge, Institute for Manufacturing, 2009 PS: Open Innovation does NOT mean free like i.e. in open source

Open Innovation is…? Open Innovation can be best characterized as a …1 OI is rapidly changing and there is a growing gap between theory and practice. 1exnovate, newsletter, June 20, 2013 18

Why being open? Basically this is a synergetic way for companies to share their once guarded ideas with organizations and individuals outside the company to accelerate the innovation process*. Open innovation allows companies to talk with other companies or customers during an earlier stage of development and to even include them in the product or service formation stage*. This allows the companies to afford the ability of not only innovating faster but also saving resources on guesswork so that they can make the improvements that will matter most to their customers*. *www.InnovationGrow.com

Why Open Innovation? Closed Innovation is focussed too much on who solves the problem rather than how the problem is solved, while OI makes use of the talent everywhere inside and outside the organization. OI makes use of the diversity these different perspectives offer. Example: Oil problem solved by concrete industry Diversity is central to CDI because different perspectives often approach and solve challenges in unique ways. For example, after the Exxon Valdez oil spill in Prince William Sound Alaska, a method was needed by the Oil Spill Recovery Institute (OSRI) to break the viscous shear of crude oil un­der cold weather conditions to allow oil to flow to a pump inlet. Basically, the pumps could not handle the near-solid oil sludge. The challenge was posted on InnoCentive.com and a solution was proposed by the most unlikely of sources: An Illinois chemist – who once poured concrete for a summer job – wrote the award winning solution based on a technique that had been used for years to vibrate and move viscous concrete. As a result, the chemist won $20,000 and the oil industry solved a thirty-year old problem within two months of posting the challenge to InnoCentive’s global solver network. 20

Why Open Innovation? 450 articles 136 scientific journals show an intensive discussion of OI “The ability to innovate and launch successful products is critical for competitiveness.” (Chesbrough, 2003) “As the emphasis for many firms is on the inbound OI process, new methods have been emerged and are being tested for the acquisitions of ideas and technology” (Mortara, L. 2011) “Current research on OI in SMEs is limited and is not revealing the creative use of OI that SMEs are implementing” (Vanhaverbeke, 2012) 77% of the survey respondents (229 OI decision makers) believe that OI is an essential mandate and key to long-term success. (Forrester Report by InnoCentive, 2012) 21

Why Open Innovation? Open Innovation is an approach for Innovation Management1. Open Innovation… allows to acquire, integrate and process external information more efficiently and effectively. supports organizations to overcome local search bias, acquire precise information needs and innovate more successful and cost efficiently. creates new forms of interacting and collaborating with the external environment including potential actors (beyond suppliers, customers, universities etc.). requires working with external parties, because not all talent and knowledge is in your company. Boundaries between firm and environment are broken down so the company can develop both its own ideas and those of external parties  more input and thus higher chance on success. 1The Market for Open Innovation, F. Piller, K. Diener, 2010 22

How to apply Open Innovation? OI requires a system to formulate problems and opportunities into concrete challenges and then bring them to the right audience. OI is managing and reducing of uncertainties by accessing and transferring different types of information: Customer and market needs: Builds on in-depth understanding of customers’ requirements, operations and systems. Technological solutions: Solution information addresses the efficiency of the innovation process and enables product developers to engage in more directed problem-solving. Question? Which approach is more successful; Push or Pull? 1The Market for Open Innovation, F. Piller, K. Diener, 2010 23 23

Top 5 OI companies* >Lego: GE, Philips, Lego, Unilever, General Mills >Lego: The household building company has a strong open innovation program, including their partnership with Cuusoo. Cuusoo itself is a platform for open innovation and LEGO integrate this crowdsourcing platform with great success. With the current program for the creation of a product it requires 10,000 votes. * www.InnovationGrow.com

Challenge Driven Innovation? What do you think Challenge Driven Innovation is? Can you give examples? 1The Market for Open Innovation, F. Piller, K. Diener, 2010 25 25

Challenge Driven Innovation The company publishes a challenge that everyone can try to solve Challenges are more concrete than ideas. The company pays per performance rather than for trial and error, which saves money. CDI is time saving CDI proves that not all talent has to work for you, as long as they want to work with you. Allows for applying solutions of other industries (i.e. cheese cutting techniques for cutting tires) Better problem solving with the same amount of staff or less staff 1The Market for Open Innovation, F. Piller, K. Diener, 2010 26 26

How to apply CDI? External talent gets involved for fun, purpose or passion, so these motivations need to be addressed CDI requires an external talent strategy to attract the right “problem solvers” The company needs to create a “common language” between internal and external talent The company needs to build an external “talent community” 1The Market for Open Innovation, F. Piller, K. Diener, 2010 27 27

Innovation Contests Examples CDI often results in Innovation Contests (IC); the generation of input for all stages of innovation process, usually done via searches for innovative approaches to a technical problem within a wide range of problem solvers Examples EEN www.enterprise-europe-network.ec.europa.eu NineSigma www.ninesigma.com InnoCentive (Eli Lilly spin-out) www.innocentive.com I-Prize (CISCO Systems, 2 rounds, 2000 ideas collected, price: 250k$) AUTOHARVEST www.autoharvest.org focus on automotive and manufacturing Threadless has an ongoing t-shirt design contest by which it made the customer their designer instead of hiring one. They get over 800 designs submitted every week and have new designs in their shop regularly. They do not advertise and have not hired any sales people. These are not necessary since their user community exists of hundreds of thousands customers who talk about them in social media and blogs. L. Mortara et al, 2011 28 28

Innovation Contests ICs are idea competitions that source and exploit technologies. Large companies have the capacity to organise ICs independently, SMEs more often use Intermediaries like EEN, NineSigma, InnoCentive, yet2.com, etc. ICs are need driven! This is more successful than a push approach. ICs are not new, they are known and used since 18th century1 Most OI services are based on online crowdsourcing. Example: www.Threadless.com 29 1von Sippel, 1988, 2005

Toolkits Instruments supporting organizations by transferring information needs into new product concepts. Mash up/ convergence/ fusion: A new combination of "resources"; connecting things from different industries into a new product. Mind Mapping Software: A brainstorming tool that creates a digital word web. Creative innovation sessions Benchmarking Innovation audit Examples: EEN (Enterprise Europe Network) Yet2.com www.yet2.com A new combination of resources is called a mash up or convergence and is one form of open innovation: it means connecting things from different industries into a new product. This requires stepping away from logical thinking and using creativity. Mind Mapping Software: A brainstorming tool that creates a digital word web which forms an oversight of ideas and associations. Creative innovation sessions: These sessions make use of association exercises and other exercises that make participants think in another way than the most logical one. Benchmarking: Comparing your company to a company that has a lot of similarities to find out where you offer added value and where you can improve. Innovation audit: A measurement of the level of efficiency and implementation of innovation in the organization. This way flaws can be noticed and improvements can be made. 30 L. Mortara et al, 2011 30

Open Innovation Services 6 - Partnership Development Source: University o f Cambridge, Institute for Manufacturing, 2009 4 -Technology Scouting 3 - Landscape Analysis 1 - Innovation Management 5 - IP Licensing 2 - Market Intelligence Innovation Management - Needs analysis, roadmapping, and multi- disciplinary ideation sessions that generate creative ideas to solve tough problems Market Intelligence - Analysis of the market opportunity for a new technology or innovation for use in strategic business and product development plans Landscape Analysis - Research of a technical field that identifies global technology innovators, describes the state of the art, and illustrates innovation trends Technology Scouting - Proactive processes to identify solutions to existing R&D challenges or uncover innovations that can revolutionize current product lines Partnership Development - Identification and prequalification of targeted organizations with appropriate technical matches and interest in collaboration, plus relationship management and negotiation support for licensing and partnership agreements Technology Fusion “7” – Technology Fusion Services? 31 31

The driving force SMEs participate sooner, move faster and adapt more readily to opportunities1. Increased R&D activities of SMEs make them attractive as technology receiver and solution provider. Being a partner of choice in your industry is increasingly important and innovation can help to achieve this 1H. Chesbrough, 2010 32 32

OI in academia To evaluate the importance of OI for acedamia1 participant of a survey were asked to determine the importance of OI within Innovation Management. 1Dr. A. Braun, K. Hoelze, “exnovate”, June 2013 33 33

US-EU-match - Technology Matching Supply Demand Large Corporations University, Federal lab, SMEs, Research Centers Market Pull Partnerships Technology Push “Technology Requests” “Technology Offers” US-EU-MATCH SERVICES Business support services How to set up a business in the US? Commercial partners searches Trade missions organization Technology Partnerships Technology Scouting Technology brokerage Horizontal Services Web Site Collaborative research projects Prior Art 24 34

US-EU-match - a couple of cases Problem Solution Benefits Cleaning sponge to USA New product introduction Environmental focus Reusability versus simplicity Sponge on a roll found in Europe Consumer samples found with two companies Go to market time reduced US Exporter of Dairy Products EDTA for cleaning Production process Possible replacement because EDTA in Europe Research Project Clarified that EDTA is not banned in Europe Identified replacements for EDTA Avoided project and saved money and HR costs Avoided project and saved money and HR costs 25 35

Win-win deal EEN and EU-US-match Average Success Rate 9% (~1000 agreements per ~11.000 Technological, Business, and Research profiles ) EU-US-MATCH Average Success Rate 14% (32 agreements per ~ 230 profiles) NINESIGMA (EU-US-MATCH partner) Average Success Rate 50% 26

Industry examples Five large enterprise (17k-287k employees) Idea Contests and one OI agency were analysed from the USA, UK and France, covering ICT, Telecomm, Consumer Goods and Conglomerate. Three examples are in-house and three by external Intermediaries, all addressed SMEs as participant targets beside start-ups and students. Between 700 to 72,000 participants were attracted and between 72 and 3,844 ideas submitted. In three cases, 0 to 12 technologies were acquired after the second round. IC organisers list as main target: Technologies acquired, market intelligence, technology intelligence, competitor intelligence, publicity (PR), access to people and testing opportunity. 37 L. Mortara et al, 2011, Idea Competition under scrutiny as a mechanism for acquisition

IC Study Results Deals 1 5 12 38 L. Mortara et al, 2011

Facilitator: InnoCentive Supports Challenge Driven Innovation and bridges the gap between ideas and solutions to drive measureable results Registered solvers:~250,000 from nearly 200 countries (stable since 2010) Solver reach: More than 12 million Challenges posted: More than 1,420 Project rooms: 409,000 Solution submissions: 30,000 (4.7% awarded) Award dollars posted: $35+ million Range of awards: $500 to $1 million based on the complexity of the problem Total awards given: 1,140+ Average success rate for seekers: 50%+ InnoCentive, April 2012 39

Facilitator: NineSigma A leading innovation partner which helps companies across industry sectors to engage with the global innovation community to find knowledge and solutions that accelerate the time to market. 500+ clients on projects including knowledge searches, technology landscaping and enterprise-wide open innovation programs. More than 2,200 open innovation projects since inception in 2000. Distributed innovation requests to more than 2 million solution providers globally. Received 35,000+ innovation proposals from solution providers in 135 countries. 90% identifying viable solutions. NineSigma, May 2012 On 243 technology requests submitted, EEN is bringing 106 EoIs whereas NineSigma is receiving out of 243 technology requests 5000 EoIs with 1800 EoIs out of the 5000 just from Europe. 40 40

Conclusions IC is a great tool for SMEs if possible (dis)advantages are known from the start. IC sources technologies and ideas at several levels of maturity to be used by current and new businesses. The efficiency of new inputs compared to the number of ideas posted is sometimes questionable. Engagement of intermediaries helps SMEs to outsource work to experienced players, but solutions may be limited by the imagination of the intermediary. ICs improve the pace and smoothness of the acquisition process significantly and reduce part of the acquisition risk i.e. lawsuits. To keep OI momentum going, rapidly proving value through quick (i.e. 6 month) trials/pilots is essential. The role beyond acquisition is often forgotten but can be successfully used, especially by large companies. Costs benefit calculation cannot be easily given, since secondary outcomes can outnumber original targets. 41

What will the future bring? ...stay interested! 42

What will future OI research bring? ...stay interested! 43

THANK YOU FOR YOUR ATTENTION 44