Overview of Open Innovation in High Technology

1. Innovation in High Technology
Boston
Guy Laliberté, March 2011
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009

2. Open Innovation Overview
What is “Innovation” ?
■ Invention or Innovation ?
An invention is useful only to its inventor unless it is offered and used in a
market.
If the invention improves some product, process or service in a market,
then that invention transforms into an innovation.
An innovation is the extension of an invention.
Innovation is not only new technologies but also improvements in
processes, design or services.
■ Innovation in the High Technology Business
 The future of most businesses depends upon their ability to innovate
 Innovation is to sustain competitive advantage, maintain market share or generate
growth
 Innovation is rarely part of a business strategies and often confused with R&D
 Companies culture and leadership are the two prominent barriers to innovation
 Tools & methods exists to “make innovation happens”
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009

3. Open Innovation Overview
What is “Innovation” ?
■ Types of innovations (High Level)
Incremental (the need is known)
Market : Extension of an existing product for
the same market
Product : Its characteristics are well-defined
Initiator : Often developed in response to a
specific market need
R&D / Marketing : Marketing Leads  “Customer Pull” Incremental
Interaction
Radical Breakthrough (the technical solution precedes the customer need)
Market : New technology creates new market
Product : Superior functional performance over
“old” technology
Initiator : Developed for a specific market opportunity
or to cover a secondary concern
R&D / Marketing : R&D Leads  “Technology push”
Interaction Radical Breakthrough
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009

4. Open Innovation Overview
Technology Adoption
■ In the 20th century, the time between standards was long enough that almost all
members of the population would have adopted the new technology before the
new standard appeared.
 A new audio media standard used to emerge every 10 years (with a 5 year overlap)
 The time between the VHS and DVD was even longer  18 years
■ Today, the time between generations of new technology is short enough and the
overlap is now long enough that it is possible to skip one or more iterations.
 In 2006, movies were still being released on VHS and DVD as well as HD-DVD and Blu Ray.
Three years later, new releases were no longer available on VHS or HD-DVD but they were
available for digital download through DVRs, IPTVs and, of course, the internet.
 With several standards to choose from, there is no pressing need to adopt a new standard.
Instead, it becomes a choice of what to adopt and when to adopt.
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009

5. Open Innovation Overview
Technology Adoption
■ “The CHASM” is changing  highly industry dependent...
The CHASM
The CHASM
Early Early Early Late
Lead Users Adopters Early Majority Late Majority Laggards Lead Users Adopters Majority Majority Laggards
2.5% 13.5% 34% 34% 16% 2% 48 % 29% 16% 5%
Early Main Stream Lead Main Possible Market (?)
Market Market Users Market
Classical The New Reality
Early market VS Mainstream Market The CHASM may have moved
depending on your industry !!!!
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009

6. Open Innovation Overview
Technology Adoption
■ Evolution of “The CHASM” (1/3)
The CHASM
 In the last 10 years, people have become more
and more tech-savvy  People are more
comfortable with technology
 Adoption of technology is faster today thanks to Lead Users
Early
Adopters
Early
Majority
Late
Majority Laggards
Internet, Twitter, Facebook and other social
medias. Lead Main Possible
 The Early Adopters area of the curve is today Users Market Market (?)
much larger  50% of the total market is now
before the CHASM. 50% of Market 50% of Market
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009

7. Open Innovation Overview
Technology Adoption
■ Evolution of “The CHASM” (2/3)
The CHASM
 Since new technologies is launched more often
and people adoption is faster, it is also replaced
faster.
 A new technology rarely has the time to become Lead Users
Early
Adopters
Early
Majority
Late
Majority Laggards
the «standard» so the leap from Early Adopters
to Early Majority is more difficult. Lead Main Possible
 Competition appears when you are still working Users Market Market (?)
the Lead Users or early for the Early Adopters 
the market is shared faster between the 50% of Market 50% of Market
competition.
 To take the market, you must prepare your
penetration strategy considering a small window
of opportunity. The Lead Users must be “internal”
to prevent getting the word out  Requires large
budget…
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009

8. Open Innovation Overview
Technology Adoption
■ Evolution of “The CHASM” (3/3)
The CHASM
 To win the market, you must prepare your
penetration strategy considering a small window
of opportunity to achieve it.
 The classical strategy to target a niche and grab Early Early Late
Lead Users Adopters Majority Majority Laggards
other niches after that may no longer be possible
since adoption is so fast  You may have to
penetrate “the market” and not only a niche. Lead Main Possible
Users Market Market (?)
 The Lead Users must be “internal” to prevent getting
the word out  Requires large budget…
50% of Market 50% of Market
 Competitors will jump-in soon after you are “visible
on the market”
 Crossing the CHASM now represents huge
investments and is riskier for a smaller portion Is it worth it for start-ups ???
of the market still available to be won. A bigger partner is often
required
Competitors will fight for it and new technology will
appear before the Late Majority can catch up.
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009

9. Open Innovation Overview
What is “Open Innovation” ?
■ Open innovation is a way to accelerate product development and
launch on markets.
■ Open Innovation is when the complete product development is
done not only internally but also using external “partners”.
■ Areas of Open Innovations are:
 Problem Solving
 Beta-Testers
 Open Data / API (use others to “grow” your product)
 Development Partnership (or Joint Venture)
 Sub-System Licensing (or buy-out)
 Patent Buy-out
 Directed Investment Funds (to target and stimulate external innovation in specific areas)
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009

10. Open Innovation Overview
Conclusions and a Few Key Remarks
1. Aligning R&D & Business Development / Marketing Efforts
■ The product development cycles must be accelerated because there is less time
before the complete product cycle is completed. Often, it is a good strategy to use
3rd parties technology to fasten the process as much as possible and reduce risks.
■ Synchronize your product development efforts with your market development
efforts. When you develop the technology for your product, you must also develop
your market in order to prepare your penetration. Actions on the market must be
done before you actually have the product completed and ready to sell it.
■ “Innovation” must be represented at the executive level of a company. Innovation is
more then technology developed by engineers and a CTO is a clear message for
investors. This allows coordination between engineering, manufacturing, business
development and marketing  A key position but difficult if the “culture of
innovation does not exist in the company”.
■ Open Innovation is a way to accelerate the launch of products in markets. Do you
have the time and resources to do everything yourself ?
This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009