Creating New Value between Venture Capital and its Corporate Investors

Venture Capital has traditionally been funded by institutional investors but increasingly corporate investors have seen investments in VC as a component of their open innovation strategy. Kraft Foods has invested in Burrill & Company, one of the leading life sciences venture capital firms, to broaden its open sourcing of innovation and to gain access to emerging new technology. New innovative approaches utilizing the venture model to enhance value creation are being developed. Examples include the Brand New Brands H&W Incubator which spun out four new companies from product concepts in one year and the next generation model, A Brand Accelerator, to rapidly launch and realize value from Corporate “stranded innovations”.

This presentation will provide perspectives on the benefits of VC investments, how to build the relationship to maximize value, pros & cons of managing your own funds vs. VC partnerships and early learnings from a Corporate investor viewpoint.

Making a Corporate Research and Venture Capital Partnership Pay-off

Venture Capital (VC) firms are much more accustomed to striking deals with entrepreneurs and start-up companies rather than large corporations. The slower pace and multiple levels of bureaucracy within large corporations typically clashes with the speed and agility of VC firms. However, finding a way to bridge these difference business styles and set up a compatible business model can yield a win-win partnership.

George Dies will outline HP Labs’ approach to working with a VC firm, Foundation Capital, by building a long-term relationship centered on technology evaluation, versus individual transactions . He will explore some of the key outcomes of the relationship for both parties and the potential value that can be realized from this open business model as well as lessons learned.

Key take-aways include how to:

• Select the right type of Venture Capital firm to partner with

• Manage concerns over IP leakage or contamination

• Derive (and maintain) value from the relationship

Key Steps for Formalizing an Effective Open Innovation Strategy

JohnsonDiversey Inc (JDI) is one of the worlds largest manufacturers of institutional cleaning and sanitation products and solutions. Over the past three years, JDI has developed a formal open innovation strategy. This strategy involved creating a dedicated department for Open Innovation and implementing basic processes to source, evaluate and facilitate the adoption of external technologies. Building on existing pockets of knowledge within the company worldwide, JDIs Open Innovation group is now fully functional with processes and tools designed to harness areas of strength and improve those that are lagging.

In this presentation, Dr. Ramirez will provide an overview JDI's open innovation journey and will discuss lessons learned and key steps JDI took to:

• Create a process for handling unsolicited proposals
  Establish a virtual, worldwide network for initiative evaluation

• Organize an efficient and focused scouting function that leverages the existing IT infrastructure

• Revamp its intellectual asset management processes to better suit the needs of Open Innovation

How to Create Value and Drive Competitive Advantage Through Your Licensing Program

Licensing is a two-way street. In the context of Open Innovation, licensing fundamentally implies that we are creating value - return on investment - from assets that one party alone could not realize. This can apply equally to the acquisition of technology to meet our strategic objectives and goals and to the out-licensing of our IP to others with business propositions that can leverage that IP to drive value in their markets.

In this presentation, Amy will address four fundamentals that are critical to consider as you embark on a licensing program:

• Know what you have – understanding your estate is the first key step in identifying licensing opportunities and the value they may bring

• Know what you need – being connected to the business strategies that define the “want” will enable you to seek out and engage with potential partners

• Understand your musts – there are always critical criteria that must be met – know what they are before you embark

• Know the players - who are your sponsors, who are the stakeholders and who else has influence and the ability to impact

People, processes and tools all need to come together to yield a successful licensing program. While this may look different for different companies, you will hear about some of the ways Kimberly-Clark has approached this and where they have achieved success.
 

The anthropology of open innovation

Connections are at the heart of the Open Innovation business models. P&G’s ability to innovate quickly depends upon employees’ ability to search out the best ideas and approaches wherever they exist. Think global, act local is in our blood. We get to know the consumer better by spending time observing the consumer in their homes rather than in focus groups. A similar approach we apply in establishing trustful relationships with our partners: we take the time to really understand their needs and the cultural differences. The closer you get to the end user, the more important it is to pay attention to cultural differences. Partnership dynamics are different when dealing with a wide range of local partners, i.e. from the national labs to the small family business. This presentation will highlight the barriers as well as the enablers to get open innovation to work on a global scale.

What you will learn:

• Balance local innovation with global integration

• How to build relationship-based networks

• Lessons from P&G’s Connect and Develop hubs in India, Japan, China, Europe and the US

• Resolving cultural differences in partnerships

• How to get beyond the “karaoke” experience

Key Steps for Overcoming Cultural Barriers to Open Innovation Implementation

Cadbury began its open innovation activities as an incubated pilot study within the protection of its Global Science Centre and has evolved it into a globally linked Open Innovation team charged with the mandate to deliver commercially beneficial innovations by partnering with leading organizations and academic institutions. Internal and external cultural challenges including varying geographic business structures, IP ownership and negotiation expectations, speed of reaction, short term activity and differences in time scales and deliverables expectations surfaced as key barriers to success.

Ms. Pearson’s presentation will address Cadbury’s step-by-step approach to break through these cultural barriers by aligning its open innovation agenda with corporate strategy, embedding it into the company’s planning process and gaining buy-in from internal R&D and marketing groups.

Key Take-aways:

• Understanding the critical importance of gaining senior leadership buy-in and involving them in the planning process for open innovation initiatives

• Ensure that marketing groups are aware of the possibilities that open innovation affords and include them in direction setting

• Aligning your open innovation activities with your commercial and R&D strategy can yield higher value delivery to your business

Making a Great Product Even Better through Co-Development

For years, WD-40’s most loved product had received feedback that the only room for improvement would be to create a way to “not lose the little red straw”. However, concerned about adding costs without significantly boosting customer value, the decision was made to maintain the status quo. This was not an acceptable answer to WD 40’s Team Tomorrow—they were on a search for innovation to deliver value for their end-users!

WD-40 relies on multiple world class partners to bring its products to market and it was within one of its meeting with a prospective industrial design partner that a technology was discussed that had the potential to resolve the red straw issue in a cost effective manner.

In this presentation, Graham Milner will examine how this Co-Development partnership came to fruition, what were the key data points that helped determine if this product improvement could be implemented without significantly increasing costs, how much value would it add to a product that is a market leader worldwide and what are the preliminary results of making this product improvement?

Tassimo Hot Beverage System - Managing Success in an External Alliance

Alliance Management has many forms. For Tassimo , it means managing the relationships with both Kraft (beverages) and Bosch and Siemens Home Appliances (machines) to present the Tassimo system as one face to consumers in seven different countries.

In this presentation, Mr. Perschon will discuss:

• The importance of having synchronized cooperation between Kraft and Bosch and Siemens Home Appliances to successfully market Tassimo as a system

• The key focus of Tassimo Alliance Management is to:

  • Ensure that Kraft has a world-class network of Alliance partners to maximize success

  • Set targets and performance evaluations for its alliance partners and

  • Manage all alliance related matters in conjunction with geographic launches

• Key success factors to make the alliance work:

  • Win-win needs to be obvious for both partners, with a balanced share or opportunity and risks on both sides

  • One company has to have the clear lead, while the other needs to be fully engaged ( and accept that role)

  • Creating upfront clarity on the business model, cooperation scope, objectives, KPI and roles & responsibility

  • Compatible company business strategies and cultures are pivotal to jointly live through hard times

  • A “quadrangle” communication matrix ( Global – Global plus Local – Local) secures the clearest way to assure continuous alignment"

The evolution of Open Innovation metrics at Frito-Lay

Over many decades, Frito-Lay has built a strong business and portfolio of iconic brands through acquisitions and partnerships that leverage the capabilities and expertise of seasoning and ingredient suppliers, product developers, equipment manufacturers, universities and consultants. Measuring the value of this open innovation approach is of critical importance.

Frito-Lay measures the value of Open Innovation projects by looking at Net Present Value (NPV), Return on Investment (ROI) and Performance Metrics such as Trial Motivation, Repeat Potential, Trade Margin and Store Door Value.

In this presentation, you will learn:

• How to establish accurate metrics for open innovation projects

• Examples of different Frito-Lay alliances and metrics used in each case

• The key to accurate metrics is realizing they must be project-specific and should reflect the desired outcome for the project