The document discusses the rise of innovation networks as a key success factor for companies. It notes that innovation is increasingly a collaborative cross-company process. Successful companies now manage external innovation networks that include partners like suppliers and research institutions. The presentation provides examples of both physical and virtual innovation networks and discusses how companies can develop open and collaborative innovation capabilities.

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Innovation networks
Key paradigm of
and
Future Key Success Factor in
Open / Collaborative Innovation

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Innovation networks are a Key Factor For Success in
the third generation of innovation management
● Firms are spending 2 – 20% of their sales revenue on one of their core processes: Innovation
• Figure depends on industry, innovation strategy, firm-specific factors
● The way firms are managing this core process is changing
● This change is profound and for good: A third generation of innovation management has begun
● This third generation is highly social – The network is the paradigm
● Innovation networks are increasingly becoming an arena of competition / a Key Success Factor
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% of the global innovation managers believe
that innovation in the 21st century will be
fundamentally different
The hard facts of innovation are changing …
75 %
% believe: Innovation in the 21st
century is a cross-company discipline
86 %
% see SMEs and consortia driving innovation –
Not the MNCs (Exception: China, Saudi-Arabia / UAE)
67 %
Source: GE Innovation Barometer 2011 / StrategyOne / innovation-3
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… and so are the “soft facts” …
● Work environments are getting more
complex
● Work environments are getting more
collaborative
● More interactions with persons that are
not personally known
matrixed
acquisitions
globally-dispersed
remote
telecommuting
mergers
joint-ventures
specialization
on-demand
who-are-you
collaborate
teamwork
Forrester: Today, more
than 85 percent of a typical
S&P 500 firm’s market value
is the result of intangible assets.
For many firms the bulk of these
intangible assets is in its brands
and its people, its human capital.
It is no longer what you own that counts but what you know.

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… and so are the “soft facts”
Generation
60+
Generation
50+
Generation
40-50
Generation
Facebook
Training The hard way
Too much
and I’ll leave
Required
to keep me
Continuous and
expected
Learning style Classroom Facilitated Independent
Collaborative and
networked
Communication style Top down Guarded Hub and spoke Collaborative
Problem-solving Hierarchical Horizontal Independent Collaborative
Decision-making
All good comes
from above
Team informed Team includes Team decides
Leadership style Command and control Get out of the way Coach Partner
Technology use Uncomfortable Unsure
Unable to work without
it
Indispensable
Job changing Unwise Sets me back Necessary Part of the plan
Source: Adapted from Lancaster, L.C. and Stillman, D.: “When Generations Collide”;

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The third generation of innovation management has begun
Outside-in + Inside-out Open Innovation
Web 2.0 tools for ideation, expert search and collaboration
Management of innovation networks becomes Critical Success Factor
Innovation management: Execution  Transformation
3
2
1985 1990 1995 2000 2005 2010
1
2
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Andrew McAfee, 2006
“Enterprise 2.0”
Henry Chesbrough, 2003
“Open Innovation”

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„The network is the innovation“
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Open Innovation and Enterprise 2.0 merge into „Open / Collaborative Innovation“
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Please click on image above to learn more

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Success in innovation networks: Just a matter of gravity?
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R&D as share of Revenue
Total R&D in MEUR
0% 2% 4% 6% 8% 10% 12% 14% 16%
2.000
500
1.500
1.000
DSM
Akzo
Bayer MS
Evonik
F = G
m1*m2
r²
THE BIGGER THE MASS
THE MORE YOU ATTRACT
BASF
Dow
Du
Pont
BI

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No. Success in innovation networks is not just a matter of gravity.
Success lies in defining and managing the right type of innovation networks
● Collaborative / Open Innovation inside the firm and across the firm‘s boundaries
● Platforms, processes, organizational framework, governance, IP provisions for
• Winning new innovation partners / managing the innovation partners
• Collaborative / Open Innovation with the partners
• Integration with formal innovation management
● There are three dimensions for characterizing innovation networks
Physical
Virtual / Web based
Inside the firm
Cross BU
Open to the world
Co-creative
Collaborative
Competitive
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Example for (semi-open, Web-based, competitive) Open / Collaborative Innovation networks:
Beiersdorf Pearlfinder, Bayer Grants4Targets -
● Beiersdorf Pearlfinder
• Requests-For-Expertise in confidential,
semi-open environment
• Initial focus: Supplier
• Hub-and-spoke
● Bayer Grants4Targets
• Requests-For-Proposal in confidential,
semi-open environment
• Focus: Research institutes
• Hub-and-spoke
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Web-based
Physical

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Example for (open, Web-based, collaborative / competitive) Open / Collaborative
Innovation networks: Deutsche Telekom Developer Garden
● Hub for
• APIs to Telekom services
• Components for mobile app
developers
● Strategic partnership between
DTAG (+Microsoft + Intel) and operator
of component marketplace
● Hybrid model: Hub-and-spoke plus
Spiderweb
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Web-based
Physical

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Example for (semi-open, physical, competitive) Open / Collaborative Innovation networks:
Volkswagen Forum Innovation
● Sequence of topic-focused physical OI
networks
● 8-4 years ahead of SOP
● 6 months, competitive set-ting (Joint kick-
off, then hub-and-spoke)
● 2007-2011: 14 forums, 120 suppliers
● VW panel: Procurement, R&D, Marketing,
Quality
● Benefits to suppliers
• Benchmark
• Business opportunity (also in new
business fields)
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Web-based
Physical

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Two pathways to get to Open / Collaborative Innovation networks
● The Before-Facebook-Generation needs to learn
how to manage and how to work in a 2.0 world
● In order to find the specific way (personally and
corporate), decision makers need to make
personal experiences
● Good: Learn on-the-job in a specific task
● Better: Pick up managers and staff
in their day-to-day business
• Philosophical considerations will not work
• Demonstrate benefits / elimination of pain points
● 2.0 qualification is necessary
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Work in networks
and communities
Open / Collaborative
Networks
Work 1.0
Excellence in
Social Technology
Collaboration
Use of
Social Technology
Low High
LowHigh

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Would you like to start our conversation?
Frank Mattes
Founder and CEO, innovation-3
Grillparzerstr. 4 II / III
65187 Wiesbaden
Tel.: +49-(0)611-59057-0
frank.mattes@innovation-3.com
www.innovation-3.com