Breaking down the fortress

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From the course by EIT Digital

Innovation & Entrepreneurship - From Basics to Open Innovation

45 ratings

EIT Digital

Innovation & Entrepreneurship - From Basics to Open Innovation

45 ratings

Course 2 of 5 in the Specialization Value Creation Through Innovation

This Innovation and Entrepreneurship course focuses on the interconnection between entrepreneurial thinking and innovation. Specifically, we look at models used in Silicon Valley to grow both start-up companies as well as innovation inside large organizations. Bringing together top Haas School of Business, UC Berkeley faculty, this course addresses critical areas for successful growth, including design thinking, open innovation, business models, product-market fit, and financing. This course will teach you how to think like an entrepreneur and provides the models, tools and frameworks to further develop your business or idea. An emphasis will be placed on the IT space. In this first part, From Basics to Open Innovation, the following areas are included: innovation and entrepreneurship basics; the Silicon Valley entrepreneurship model; the importance of failure; market analysis: how to engage with customers; and open innovation.

From the lesson

Open innovation at work

Implementing open Innovation demands more than a shift in culture and may be a major challenge for any organization. You will in this module learn from cases and gain an understanding of the benefits of open innovation and work with a framework for its application.

Breaking down the fortress5:12

Meet the Instructors

Martin Vendel
Dr
KTH Royal Institute of Technology, Industrial Economics and Management
Frans Nauta
Visiting scholar
UC Berkeley Haas School of Business
Mark Coopersmith
MBA
UC Berkeley Haas School of Business
Andrew Isaacs
Adjunct Professor
UC Berkeley Haas School of Business

[SOUND]

Welcome to Module 3,

Open Innovation at Work.

When you see this picture, what do you imagine?

You see a picture that looks like fortresses,

where citadels, where knowledge was hidden.

And these are the different R&D labs, AT&T, IBM,

Procter & Gamble, and Phillips.

This is where no new knowledge has gone in and nothing has come out.

It's the knowledge that was created in these fortresses, was safeguarded.

Because the world has changed and we live in a different landscape,

in 2003 Philips broke down those walls.

Philips had 50,000 patents,

it safeguarded those patients through barbed wire.

They had 700 engineers working.

And finally, it realized that it needs to open up and

brought those silos down and tore down those barbed wire fences.

Now, the picture is something different.

And it looks like this.

Now, Phillips has over 75 companies housed inside its location.

Over 7,000 people at high tech campuses,

working within those walls.

It brought our knowledge in, and knowledge is also flowing out.

It began to leverage joint R&D across industries Extended research and

capabilities for new ideas and technologies.

Now with houses, a lot of corporate innovators,

research institutes, consulting services and economic development companies.

This is the P&G story.

Procter and Gamble.

Also believed in closed innovation and operated under closed innovation for

a long time until it had a heart attack in year 2000 where the stock dropped 31%.

They used to call the headquarter's the Kremlin of Ohio.

Because nothing came in and nothing went out of those four walls.

They hired a new CEO, who came in and said, we just need to open up.

Because he realized more money is being generated from

companies that they acquired or products the have acquired, that knowledge came in.

Then they are indeed that they have produced on the product that came up with.

So he began to [COUGH] realized that they need to open up and

bring in more knowledge inside and so they said, we will acquire %50 of

our innovations from outside P&G, because of the sheer realization

of the fact there's more knowledge outside the company than inside the company.

So this slide kind of shows you that how do you tap into the global brain?

And P&G now collaborates with 2 million scientists and

engineers outside of the company through different processes that it has devised,

which changed the direction of this company.

Instead of saying that not invented here syndrome, they began to say,

we probably found this innovation outside of our four walls.

So P&G is a great sexist turista classic case of the open funnel, were now they

collaborate with so many different entities, to bring knowledge inside.

And also to let the knowledge flow outside for collaborative activities.

That brought its R&D costs down and

the amount of money that they spend on R&D has far

more impact in generating new products that are very impactful.

So you can see how P&G has picked up again in its stock price

after this new implementation of open innovation policies.

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