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CO-CREATION AND OPEN INNOVATION TO TRANSFORM BUSINESSES 1
CONFIDENTIAL Template Innovation Day 2017CONFIDENTIAL
CO-CREATION AND OPEN INNOVATION
TO TRANSFORM BUSINESSES
Zane Smilga
Coordinator, Inno Lab
Zane.Smilga@verhaert.com
TRACK 2 - SERVITIZATION & NEW BUSINESS MODELS

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CONTENT
1. CO-CREATION AND OPEN INNOVATION: A “MUST HAVE”
COMPETENCE IN FUTURE
2. ESSENTIALS TO MAKE IT WORK FOR YOU
3. LEAN ROUTES FOR A SMART START

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CO-CREATION AND OPEN INNOVATION TO TRANSFORM BUSINESSES 3
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DOES HUMAN NATURE SUPPORT
OPEN INNOVATION?

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IS OPEN INNOVATION REALLY WORTH IT?
NOPE.
frustrating, slow
and risky!
YES.
speedy, beneficialwith
exponential growth
F A I L U R E R A T E S
O F S T R A T E G I C
A L L I A N C E S : 5 0
T O 7 0 %

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IT`S HUMAN NATURE TO THINK IN “US” VS “THEM”
co-creation requires trust, common vision, flexibility
A reliable enemy can be
preferable to an
unpredictable friend, as at
least we know where we are
with them.
http://changingminds.org/explanations/trust/what_is_trust.htm

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YET “COOPERATION SKILLS” HAVE ALWAYS BEEN BASIC TO SURVIVAL
In the beginning we were
simply another smart, social
ape trying to survive in the
wild.
T O D A Y S A P I E N S
R U L E T H E W O R L D .
..because we could
cooperate in extremely
flexible ways with countless
numbers of strangers
towards common goals.
Yuval Noah Harari,
Sapiens: A Brief History of Humankind

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CO-CREATION & OPEN INNOVATION: ENABLER FOR FURTHER EVOLUTION
2.5 M Y AGO
EVOLUTION OF GENUS HOMO IN AFRICA
200,000 Y AGO
HOMO SAPIENS EVOLVE
70,000 Y AGO
COGNITIVE REVOLUTION
13,000 Y AGO
HOMO SAPIENS: THE ONLY HUMAN SPECIE
SURVIVED
12,000 Y AGO
AGRICULTURAL REVOLUTION
500 Y AGO
SCIENTIFIC REVOLUTION /
RISE OF CAPITALISM
200 Y AGO
INDUSTRIAL REVOLUTION
People could increasingly rely on the skills of others for survival
100-50 Y AGO
MARKETING REVOLUTION
50-30 Y AGO
INNOVATION REVOLUTION
15-5 Y AGO
OPEN INNOVATION 1.0 & 2.0
REVOLUTION
Millions of years of evolution have designed us to think and live as community
members. Within a mere two centuries we have become alienated individuals?
Co-creation & open innovation once again
the key to business survival & transformation
Adapted from Yuval Noah Harari,
Sapiens: A Brief History of Humankind

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RE-INVENTING OPEN INNOVATION &
CO-CREATION TO FIT TODAY`S
ECONOMY…

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INTER-CONNECTED WORLD IS THE NEW NORMAL
Sharing economy, Circular
economy, IoT, Industry 4.0,
self driving traffic systems,
smart cities…
Working together in an
inter-connected system is
the core element of new
economy
The innovation basis of
many industries today has
increased both the need to
access new technologies
and capabilities from
outside the company

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COMPETITIVE EDGE IS AN EVER MORE COMPLEX EQUATION
THE RULES OF
COMPETITIVENESS HAVE
CHANGED
Companies need to transform
and base their competitive
strategies in business
ecosystems where platforms,
not products, rule. It is not
limited anymore to their own
assets.
(F) NEW COMPETITIVENESS=
agility & strength of your
company and the entire eco-
system
products + services +
communities + technology
platforms co-created with
partners with a lean eco-system
management …
YOUR COMPANY
CO-CREATION WITH THE ENTIRE
BUSINESS ECO-SYSTEM
TOTAL SOLUTION
Partners
Suppliers
Customers
Competitors
Products, services,
technology platforms,
sharing access models…
Well connected &
integrated set of solutions
to holistically meet the
needs of customers

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INNOVATING FOR FUTURE INDUSTRY IS ABOUT BEING READY
FOR ALTERNATIVE (POSSIBLE) SCENARIOS
In many cases there is no
guarantee on one particular
future industry scenario…
What are the options?
A. Preparing for all
possible scenarios?
B. b) Together with other
industry leaders shape
& be in control of the
future scenario?
C. c) Preparing your
organization and
processes to react fast
when first signals of
change are visible…
in 2015 the smart home market was still a battlefield of
competing niche products and isolated protocols
KEY UNCERAINTY 1: MARKET CONVERGENCE
KEYUNCERAINTY2-DEMAND
SCENARIO 3
PEOPLE REMAIN SCEPTICAL
ABOUT TOO MUCH
TECHNOLOGY AT HOME
SCENARIO 2
SMART HOME HITS THE
MASSES – A FEW BIG
PLAYERS DOMINATE
SCENARIO 1
SMART HOME HITS THE
MASSES – MYRIAD NUMBER
OF SOLUTIONS & PLAYERS
SCENARIO 4
SMART HOME REMAINS
NICHE – A FEW BIG
PLAYERS DOMINATE

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STRONG INNOVATORS USE MULTIPLE SOURCES OF
INNOVATION ALREADY TODAY
Being a strong innovator
today means having an
innovation platform with a
large variety of external
innovation sources &
partners.
E X T E R N A L S O U R C E SI N T E R N A L
S O U R C E S
I N N O V A T I O N S O U R C E

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INNOVATION SERVICE PROVIDERS MAKE IT EASIER TO DO
OPEN INNOVATION
Hub organizations –
innovation service providers
– have unique cross-
industry experience &
knowledge that no other
organization posses under
one roof.
These players are co-
creation partners that allow
companies to enter totally
new markets & businesses.
The also act as a buffer &
bridge in case of complex
partnerships with other
parties
EXPERTS & LEAD
USERS,
START-UPs
SMEs
PSR: UNIVERSITIES/
RESEARCH
LARGE
COMPANIES
P A S T
E X P E R I E N C E
=
c r o s s -
i n d u s t r y
k n o w l e d g e
e x p e r i e n c e &
c o n n e c t i o n
l u g g a g e
INNOVATION
SERVICE PROVIDER
COMPANY X
FROM
INDUSTRY Y
o p e n i n n o v a t i o n
p r o j e c t

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CO-CREATION & TRANSFORMATION
ESSENTIALS

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Any large-scale human cooperation –
whether a modern state, corporate, a
medieval church, an ancient city or an
archaic tribe – is rooted in common myths
that exist only in people’s collective
imagination.
Thus, the secret of cooperation in ancient
civilization was probably the appearance
of fiction.
Yuval Noah Harari,
Sapiens: A Brief History of Humankind
WE CAN COOPERATE = WE SHARE THE SAME VISION
Having a strong co-created
vision is part of open
innovation success.
Creating a vision together
with a new group of
strangers is an open
innovation 2.0 competence
COOPERATION INTENSITY Long term
partnership
One time knowledge
transfer/interaction
Sharing business
model
INTER-LINKAGE
ENVISIONING FUTURE MARKET
SCENARIO TOGETHER
ENVISIONING FUTURE BUSINESS MODEL TOGETHER
ENVISIONING FUTURE BUSINESS
ECO-SYSTEM TOGETHER
ENVISIONING FUTURE PRODUCTS & SERVICES
TOGETHER
Sharing product
/ service
development
track
Cooperation on
the same value
chain/ business
eco-system
Addressing the
same
market/industry

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ENVISIONING: A PROMISE & GUIDE TO FUTURE
Nobody can give a
guarantee for events in
future.
Yet, it has an essential
twofold effect:
- guides rational innovation
efforts
- bonds people
physiologically as a
visionary inspiration & a
shared goal

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A CLEAR & ALIGNED BUSINESS AMBITION
Forming a WIN-WIN
partnership with clear &
aligned business goals
All partners need to feel
treated fair & have non
discriminatory rights to
share benefits. It is an
emotional pre-condition
leading to trust.
“money is the most universal and most
efficient system of mutual trust ever
devised.”
Money is the only trust system created by
humans that can bridge almost any gap.
Even people who don’t know each other
can nevertheless cooperate effectively.
Yuval Noah Harari,
Sapiens: A Brief History of Humankind

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SKETCHING THE FUTURE OF SHARED BUSINESS UPFRONT
Drawing a clear picture of
future business eco-system
will make sure that co-
creation partners are
aligned & can trust each
other on sharing business
benefits at a later stage.
Monetary, data, service,
product flows…..
Next to business planning, it
is also s a risk &
misunderstanding
management.

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An internal or external
intermediary party helps to:
- connect companies in relevant
partnerships
- guide a co-creation to secure
interests of all parties
- manage joint envisioning,
planning & partnership building
- facilitate discussions,
consensus and mutual
understanding
- Fill the gaps and provide a
complementary expertise
SOMEBODY NEEDS TO MAKE A BRIDGE TO ENABLE OPEN
INNOVATION
“Merchants, conquerors and prophets
were the first people who managed to
transcend the binary evolutionary division,
‘us vs them’, and to foresee the potential
unity of humankind.”
Yuval Noah Harari,
Sapiens: A Brief History of Humankind
PARTNER 1
PARTNER 2
PARTNER 3 PARTNER 4
CROSS-INDUSTRY
BRIDGEMARKER &
INNOVATION EXPERT

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TRANSFORMING ORGANIZATION TO ENABLE OPEN INNOVATION
1. Structure & processes
to support and enable Open
Innovation;
Who & how can pick up the question
on potential partnership request and
opportunities?
2. Investment & leadership
sponsorship
How can it be financed?
3. Culture
Incentives and rewards
Support of bridgemakers.
Will people accept & devote
themselves to new co-creation
initiatives?
FINANCE THE PARTNERSHIP
INVESTMENT
Start-ups
R&D centers /
universities
suppliers
SMEs & Large
companies
CONSIDER THE PARTNERSHIP
DEDICATED PROGRAMS & STRUCTURES
A P O O L O F P O T E N T I A L
C O - C R E A T I O N & O P E N
I N N O V A T I O N P A R T N E R S
competitors
customers
MAKE THE PARTNERSHIP SUCCESS
CULTURE & BRIDGEMAKER`S SUPPORT

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MEANS FOR A LEAN START

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FOCUS EFFORTS ON EARLY SIGNS OF LONG TERM TRENDS
WITH HIGH GROWTH POTENTIAL
To be ahead of the industry
you need to scout for early
signs of change in market,
technologies, consumption
patterns, legislation…

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ABILITY TO WORK WITH MULTIPLE SOURCE OF INPUT FOR
INNOVATION
When trying to transform
business there is a lot of
“newness” to handle…
New types of technologies, markets,
complementary products/services,
business models, resources,
capabilities….
It is relatively expensive, yet
it is cheaper & faster to
access them from outside
the company
PATENTS &
TECHNOLOGIES…
FUTURE DOMINANCE &
EVOLUTION
MARKET PATTERNS &
EVOLUTION POTENTIAL
COMPETITION & RULES
OF THE GAME
COMPETENCES
CUSTOMERS & BEHAVIOUR
PATTERNS

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RE-THINKING & REINVENTING INNOVATION APPROACH
EVIDENCE BASED
INNOVATION
Business transformation =
tapping into unknown full
with uncertainties and risks.
Customer validation will
play an important role -
testing ideas and concepts
in the real world and
checking their relevancy.
E V I D E N C E B A S E D
I N N O VAT I O N /
VA L I D AT I O N
INSIGHTS & VALIDATION PLATFORM

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START WITH TEMPORARY INITIATIVES - DEDICATED SPRINTS
WITH SELECTED PARTNERS
Fast-forward your open
innovation project & see
what the end result
might look like, how
customers will react and
whether the partnership
is right…
• every sprint has a
specific goal (first
working prototype,
alternative concepts
etc.)
• Joint business
interests & customer
needs are at the
center of efforts

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NEW VEHICLES THAT MANAGE BOTH: INTERNAL & EXTERNAL
SOURCES: A “MUST HAVE” TO STAY COMPETITIVE
Common models: corporate
venture capital,
accelerators, incubators,
innovation labs, co-creation
with partners.
Safe environment for
experimentation, rapid
incubation and fast failure
that will enable any
business to speed up the
evolution of ideas and
opportunities.
Investment needs
Organizationalchange
Innovation labs
Co-creation with partners
Accelerators
Incubators
Corporate venturing
F I R S T M O D E L S T O T R Y

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SINCE 2010 A RAPID GROWTH OF THE MOST COMMON TOOLS
These tools have an
evolution from being first an
experimentation platform to
becoming a strategic
innovation source & co-
creation platform

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OPEN INNOVATION: IS IT FOR YOU?

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OPEN INNOVATION CAN ACCELERATE BUSINESS
TRANSFORMATION
ENVISION THE FUTURE
OF YOUR MARKET &
BUSINESS
IDENTIFY THE
KNOWLEDGE/
TECHNOLOGY/ EXPERTISE
GAPS TO GET THERE
FIND A PARTNER TO FILL
THE GAPS & ENGAGE IN
CO-CREATION
&
ACCELERATE

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Innovation Day is an initiative of Masters in Innovation,
the umbrella brand of the Verhaert Group which aims
to connect, train and accelerate professional innovators.
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