Appunti per il secondo parziale dell'opzionale New Product Development and Open Innovation

SUPPLIER COLLABORATION IN NEW PRODUCT DEVELOPMENT

Leveraging supplier innovation means that the suppliers serve the company and also its competitors, the company and other companies in other industries suppliers can do researches also for other players: this means that the relationship can be open (they do not serve only one company). This could be an advantage for a company, because the suppliers are seeing also other realities, other competitive environments, other trends in other industries... so they can be a source of precious inputs/information on how the future scenarios could be.

Technology strategy formulation

How to develop the innovation? Internally or externally?

Technology plan

For each technology/component that the company aims to develop it has to identify:

1. Technology (or innovation)
2. Lead time = time of introduction to the market
3. Mode of acquisition: development and introduction which is the best way to develop the project? "with enough time, money and

"luck you can do everything yourself. But who has enough?" (Ohmae, 1989) -> because companies don't have infinite time do develop projects, infinite resources and competences, they collaborate with somebody else in order to be competitive.

How to decide if it is the case of working with somebody else?

First of all, the company has to understand which are its core competences = something that the company knows how to do (it is not only a knowledge, it is a competence) that is differentiating the competitive advantage (you are better than others to do it). What defines the company in terms of capabilities, competences... The core competences respond to the VRIO/VRIN model (from Barney). They are:

• Value: create value for the company because they give competitive advantage.
• Rare: otherwise they would be only competences (common competences), not core. Others cannot copy and cannot have easy access to them. Not diffused.
• Inimitable: otherwise they would not create competitive advantage.

- Not easily substitutable - Organization: they can be exploited by the organization.

The core competences are not only referred to technological skills: they could be also about communication and getting in touch with the final customer, about the distribution phase or also about the brand value (strong presence because of the strong value of a brand).

After having analyzed which are the core competences and the technological skills and having mapped them, the company can map which are other competences, the core competences of others, that could be useful.

If the company needs a competence, but no one externally has it, it has only two choices: develop it internally or co-create that competence with somebody else. The only thing that the company cannot do is to buy that competence, because it is not on the market.

→Context foresight Competitive and technological analysis:

The context foresight is the result of the analysis of the:

1. External context driven analysis: identify

nuovi potenziali mercati, identificare l'evoluzione dei mercati esistenti, identificare le future esigenze dei clienti, identificare scenari futuri e le competenze corrispondenti necessarie (identificare le competenze tecnologiche richieste per rendere le applicazioni in grado di soddisfare le esigenze dei clienti). Fuori dall'azienda c'è qualcosa di interessante da importare nel processo di innovazione o qualcuno interessante con cui collaborare? 2. Analisi guidata dal contesto interno: mappare le competenze tecniche/esistenti (core) e le loro applicazioni esistenti e possibili. Acquisizione di tecnologia da fonti esterne per lo sviluppo tecnologico Fare - Comprare - Collaborare FASE DI SVILUPPO Se l'azienda deve sviluppare qualcosa di nuovo, la scelta strategica tipica è tra tre alternative: 1. Fare 2. Comprare 3. Collaborare (collaborare) Le nuove tecnologie possono essere "acquisite" attraverso: Come creare innovazione? L'azienda deve definire quali sono le competenze chiave e come accedere a competenze complementari. Non è solo una questione di targeting

A competence on the market that you want, you have to also be attractive/interesting as well for others, for potential partners. To access complementary competences, you have to get in contact with external players, develop your network in order to maximize the capabilities to get in contact with external potential sources (LinkedIn, professional network…), participate to conferences or gather information about external players through the browser, thought the company’s website, through suppliers…

The most difficult part is in the scouting phase (not when you have already in mind the problem starting from which you have to find a solution) and having the ability to create also opportunities to innovation thanks to insights and information that you gather from the market.

Literacy 2.0 = ability to use the web as a possibility to improve the chances and occasions of contact with others unknown.

Managerial and organizational implications of the forms of external technology

1. Impact on the firm
2. Level of risk
3. Reversibility
4. Analysis of the businesses
5. Analysis of the future sustainability of the operations

Time horizon: time in which you want to involve the supplier (a part of the project, the entire project, long term relationship…) <ul> <li>Part of the project</li> <li>Entire project</li> <li>Long term relationship</li> </ul> Control over the process: you control the way something has been developed. Collaboration in which you co-develop with somebody else or you co-define the steps of the researches. <ul> <li>Controlled development</li> <li>Collaborative development</li> </ul> Control over the outputs (results): for example, if you buy a patent (you just want to use that technology, not develop it). You just use the result. <ul> <li>Use of patent</li> </ul> Start up time and costs <ul> <li>Start up time</li> <li>Costs</li> </ul> Level of risk Level of reversibility Which is the type of external collaboration, depends on which are the objectives on these factors. Sources of innovation Sources of innovation are more and more external and the collaborations are more and more put in place, because the competitive environment is hypercompetitive: you have to be faster than others, to create something more interesting than your competitors. This is usually possible if you increase the sources of innovation that you have. R&D best

practices tend to extensively use external competencies (skills).

Examples:

• Procter & Gamble Internal R&D resources / external R&D resources ratio have to be 50/50 this means that 50% of the innovation at the end of the year has to come from external sources.
• Xerox uses Venture Capital companies in its spin offs.
• Intel partially funds start-ups.
• Cisco uses M&A to complete its internal resources/skills: Cisco funds partially start-ups and when considers them interesting for its business it acquires them.

How to measure how much of the innovation comes from outside?

There are possible performance measures:

• % of commercialized new products thanks to the contribution of external resources in the last X years.
• % of external R&D costs / % of internal R&D costs how much do I pay for developing something internally and how much do I spend to acquire something from outside.

P&G is a case that is often mentioned in the

P&G globally dispersed: the problem was that a researcher in the UK did not know what his colleagues were doing in Asia, within the same P&G's branches. First of all, they had to develop an internal collaborative network: starting from 1999 they put in place different tools that allowed to create those internal connection: - InnovationNet that is a database that collects all the projects by all the researchers of P&G in a smart way (typical knowledge management system) - Community of practice internally developed sort of page of self-help in which the researchers could ask for solutions within the 6000 researchers of the P&G.

Global Technology Council: it was a meeting in which researchers met each other and exchanged their fields of research, what they were doing in order to get in contact with other researchers of the company.

Smart Learning Reports: executive summaries of a research's outcome or innovation project that could easily be retrieved from the system. It is easy to write and read. This tool allowed to get in contact with other researchers about a project. Possibility to easily get in contact with the internal network.

Corporate Innovation Fund: allowed to internally finance small projects, such as having internal start-ups. Interesting project that can grow within the company but in a separate and parallel business that the routinely one.

Technology entrepreneurs: people that for job travel the world and find external points of contact for the company. They discover technologies or new products or applications, travelling the world, and then identify possible.

points of contact with external players.

Example: In Japan P&G found a product (Mister Clean) already existing on the market and they wanted to insert it in their cleaning products portfolio. So they agreed with the Japanese company that the Japanese market remained with that company, and they were allowed to produce and distribute the same product globally under the brand of P&G. example of a win-win collaboration on a product that was already existing. It is innovation? Yes, because it is something new in the P&G's portfolio, but the technological risk was zero.

Once you are able to internally collaborate and you know how to get in contact with external colleagues that you don't know yet, then you are ready to build the external network of collaboration with external players.

Tools:

• Internet Technology Marketplace (what we called Virtual Knowledge Brokers): get in contact with solvers.