teleconference innovation networks: progress report 2006 navi radjou vice president forrester...
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![Page 1: Teleconference Innovation Networks: Progress Report 2006 Navi Radjou Vice President Forrester Research July 12, 2006. Call in at 12:55 p.m. Eastern Time](https://reader036.vdocument.in/reader036/viewer/2022062519/56649e4a5503460f94b3e0e9/html5/thumbnails/1.jpg)
TeleconferenceInnovation Networks: Progress Report 2006 Navi Radjou
Vice President
Forrester Research
July 12, 2006. Call in at 12:55 p.m. Eastern Time
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2Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Theme
Early adopters across industries and regions are profiting from
“Global Innovation Networks” — a new business model
that allows firms to innovate faster, cheaper, and better.
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3Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Agenda
• Topic Overview: Global Innovation Networks
• What benefits do early adopters receive?
• What challenges do early adopters face?
• How can R&D, marketing, and IT help operationalize global Innovation Networks?
• Q&A
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4Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Agenda
• Topic Overview: Global Innovation Networks
• What benefits do early adopters receive?
• What challenges do early adopters face?
• How can R&D, marketing, and IT help operationalize global Innovation Networks?
• Q&A
![Page 5: Teleconference Innovation Networks: Progress Report 2006 Navi Radjou Vice President Forrester Research July 12, 2006. Call in at 12:55 p.m. Eastern Time](https://reader036.vdocument.in/reader036/viewer/2022062519/56649e4a5503460f94b3e0e9/html5/thumbnails/5.jpg)
5Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Back in June 2004:
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6Entire contents © 2006 Forrester Research, Inc. All rights reserved.
The innovation imperative
Customers Competition Compliance
• Generation Y
• Aging population
• Atkins dieters
• Shorter product life-cycles
• BRIC countries (Brazil, Russia, India, China)
• Europe’s WEEE
• Sarbanes-Oxley, BASEL II
Innovation market drivers:
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7Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Brazil, Russia, India, and China
Over the next 50 years,
Brazil, Russia, India, and China could become a much larger force in the world economy.
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© 2006, Forrester Research, Inc. Reproduction Prohibited
Firms must cast a wider net to source innovations
June 2006, Trends “Innovation Networks: Global Progress Report 2006”
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9Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Old model New model
A new approach to innovation
T
S
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10Entire contents © 2006 Forrester Research, Inc. All rights reserved.
The “what” — global Innovation Networks
• Global Innovation Networks is a new market structure (ecosystem) in which:
» Firms seamlessly weave internally and externally available invention and innovation services to optimize the profitability of their products, services, and business models.
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11Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Global Innovation Networks
BrokerInventor Transformer Financier
T S
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© 2006, Forrester Research, Inc. Reproduction Prohibited
The “Who” — Roles In A Global Innovation NetworkJune 2006, Trends “Innovation Networks: Global Progress Report 2006”
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13Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Agenda
• Topic Overview: Global Innovation Networks
• What benefits do early adopters receive?
• What challenges do early adopters face?
• How can R&D, marketing, and IT help operationalize global Innovation Networks?
• Q&A
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14Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Fast forward to 2006:
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15Entire contents © 2006 Forrester Research, Inc. All rights reserved.
20+ Fortune 500 firms have deployed and benefited from global Innovation Networks
• 3M
• IBM
• AMD
• Best Buy
• Caterpillar
• BP
• Reuters
• Whirlpool
• SAP
• Boeing
• Cargill
• Esselte
• BASF
• Procter & Gamble
• Norwich Union
• Bharti Airtel (Tele-Ventures)
• Eli Lilly
• BT
• Apple
• General Electric
• Dell
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16Entire contents © 2006 Forrester Research, Inc. All rights reserved.
P&G
Global Innovation Networks in action: Procter & Gamble
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17Entire contents © 2006 Forrester Research, Inc. All rights reserved.
How does Procter & Gamble benefit from Innovation Networks?
• Boosted new product hit rate to more than 90%, up from 70% in 2001.
• Profitability per R&D employee has skyrocketed.
• Since 2000:
» Sales revenues have grown 40%.
» Profits have doubled.
» Market cap has doubled.
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18Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Global Innovation Network in action: BT
• Opened labs in emerging markets like Malaysia.
• Innovation brokers in India, China, Japan, UK, and Silicon Valley to source local technologies.
• Licensing IP to external go-to-market partners(e.g., “ARMS” software to Infosys).
• Partnering with global VC firms to spin off promising technologies as startups.
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19Entire contents © 2006 Forrester Research, Inc. All rights reserved.
How does BT benefit from Innovation Networks?
• Externally sourced inventions generated nearly £500 million in new product and service revenues since 2002.
• IP licensing generates dozens of millions of pounds each year.
• Starting in 2006, revenues generated from licensing and commercializing its own inventions — using external transformers — will cover a significant proportion of BT’s annual R&D spend.
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20Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Global Innovation Network in action: Norwich Union
Progressive
Norwich Union
1998: Progressive invents “Pay-As-You-Drive” (PAYD) model.
2002: Progressive licenses PAYD to Norwich Union (UK).
2003–2004: Norwich pilots PAYD in UK — with IBM, Orange.
2005: Norwich launches branded PAYD in UK.
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21Entire contents © 2006 Forrester Research, Inc. All rights reserved.
How does Norwich Union benefit from Innovation Networks?
• PAYD, launched in 2005, won thousands of new clients, increasing Norwich’s UK market share(there were 100,000 new subscribers by the end of 2006).
• Its annual profit increased 23% in 2005.
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22Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Share riskCurb talent shrinkage
Address emerging markets
Reduce new product and
service failures
Increase market responsiveness
• Costly efforts
• Disruptive innovations
• E.g., new drugs
• Western firms’ talent shortage
• Leverage BRIC skills
• Address BRIC consumers
• Leverage feedback from customers (embedded in Innovation Networks)
• Competitor threats
• New market demands
Global Innovation Networks: market benefits
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23Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Agenda
• Topic Overview: Global Innovation Networks
• What benefits do early adopters receive?
• What challenges do early adopters face?
• How can R&D, marketing, and IT help operationalize global Innovation Networks?
• Q&A
![Page 24: Teleconference Innovation Networks: Progress Report 2006 Navi Radjou Vice President Forrester Research July 12, 2006. Call in at 12:55 p.m. Eastern Time](https://reader036.vdocument.in/reader036/viewer/2022062519/56649e4a5503460f94b3e0e9/html5/thumbnails/24.jpg)
© 2006, Forrester Research, Inc. Reproduction Prohibited
CEOs Face Internal, External Hurdles In Implementing Innovation Networks
June 2006, Trends “Innovation Networks: Global Progress Report 2006”
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© 2006, Forrester Research, Inc. Reproduction Prohibited
CEOs Face Internal, External Hurdles In Implementing Innovation Networks
June 2006, Trends “Innovation Networks: Global Progress Report 2006”
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Senior execs must help firms shift from vertically integrated value chains to global Innovation Networks
R&D Mktg Sales IT Ops
Inventor Transformer
TBrokerFinancier
$
Company A
Company B Company C Company D Company E
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28Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Agenda
• Topic Overview: Global Innovation Networks
• What benefits do early adopters receive?
• What challenges do early adopters face?
• How can R&D, marketing, and IT help operationalize global Innovation Networks?
• Q&A
![Page 28: Teleconference Innovation Networks: Progress Report 2006 Navi Radjou Vice President Forrester Research July 12, 2006. Call in at 12:55 p.m. Eastern Time](https://reader036.vdocument.in/reader036/viewer/2022062519/56649e4a5503460f94b3e0e9/html5/thumbnails/28.jpg)
29Entire contents © 2006 Forrester Research, Inc. All rights reserved.
How can R&D help operationalize global Innovation Networks?
Best Practice: Caterpillar’s CTO office
• > 80% of market cap is tied to intangible assets (patents, trademarks, and copyrights).
• Invests $1 billion annually in R&D and has generated 7,000 patents (e.g., GPS, sensors).
• Formed Intellectual Asset Commercialization (IAC) team — with representation from R&D, business units, and legal — to maximize Cat intellectual asset portfolio’s value.
• By redefining IP as “Intellectual Partnering,” the CTO office maximizes Cat’s profit from its intellectual assets by systematically trading them like financial assets.
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30Entire contents © 2006 Forrester Research, Inc. All rights reserved.
How can IT help operationalize global Innovation Networks?
Esat SezerCIO, Whirlpool
Scott GriffinCIO, Boeing
Robert A. WillettCIO, Best BuyCEO, Best Buy
International
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31Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Collaborative global IT infrastructure: Whirlpool
• Global ERP/supply chain/CRM backbone
• SAP NetWeaver platform allows regional units to adapt business processes to meet local demand.
• Global Intranet system enables “knowledge reusability” across countries.
• CIO: “I am the (global) business.”
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32Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Secure global ITinfrastructure: Boeing
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33Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Flexible/adaptive global IT infrastructure: Best Buy
Inventor
Sand Hill VC Partners
Financier
$
BrokerTransformer
T
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How Can Marketing Help Operationalize Global Innovation Networks?May 2006, Best Practices “The Essentials Of Consumer-Driven Innovation”
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35Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Whirlpool drives customer-focused innovation
• End consumer input drives incremental innovation.
• Co-develops product lines with retail B2B clients(e.g., Lowe’s).
• Lead user engagement: Male users who built their dream garages inspired new Gladiator product line.
• Working with development economists at RTI International and University of North Carolina to create new business models to cost-effectively serve the “bottom of the pyramid” (emerging markets).
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36Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Summary
• Globalized innovation is an ever-expanding trend that poses both opportunities and challenges for corporations.
• Global Innovation Networks is essential for a successfully integrated global enterprise.
• R&D, IT, and marketing can operationalize global Innovation Networks by deploying a secure, collaborative, and adaptive IT infrastructure.
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37Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Q&A
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38Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Selected Research
• June 14, 2006, Trends “Innovation Networks: Global Progress Report 2006”
• October 2006, “How Consultants Will Deliver On Innovation”
• June 17, 2004, Forrester Big Idea “Innovation Networks”
• June 1, 2006, Topic Overview “Innovation Networks”
• March 20, 2006, Best Practices “Transforming R&D Culture”
• June 24, 2005, Trends “The Seeds Of The Next Big Thing”
• June 24, 2004, Best Practices, “Networked Innovation Drives Manufacturers’ Profit”
• August 3, 2005, Best Practices “Memo To CEOs And CIOs: IT Innovation Capacity — Not IT Spend — Is What Matters”
• December 6, 2004, Trends “Fortune 500 CEOs Embrace Innovation Networks”
• March 16, 2005, Forrester Big Idea “Consumer-Focused Innovation”
• March 24, 2005, Best Practices “IBM Transforms Its Supply Chain To Drive Growth”
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39Entire contents © 2006 Forrester Research, Inc. All rights reserved.
Navi Radjou
+1 617/613-6119
Thank you