An somewhat irreverant intro to Open Innovation for advanced beginners. The presentation discusses 13 poisons (and their antidotes) to Open Innovation. Companies covered include AirBNB, Best Buy, LudoBites,Netflix, NPR, Starbucks, Saatchi & Saatchi, RelayRides and Threadless.

1. Start Innovating Already.A Punk View of 13 Poisons to Open Innovation& Building Engaged Communities Lisa ThorellRutgers University PDS - Keynote Address, June 7, 2011 Off the Grid PR

2. Build It All Yourself 1 POISON Source: © Henry Chesbrough, 2006 Slow time to market High Fixed Costs Closed Pool of Talent

3. That model arose in the early 1900s. Concerns of the day were… Economies of scale – Coordinating large numbers of people – Limit Liability

4. Today we buy in more quickly…

5. We throw out more quickly… 18 Months from purchase to discard of a cell phone for a person living in the US or UK. Months from purchase to discard for a cell phone user in Japan. The number of iPods you would own if you upgraded to every new iPod that had come onto the market from 2001 to 2009. 12 18 Source: Rachel Botsman & Roo Rogers book ‘What’s Mine Is Yours: How collaborative consumption is changing the way we live (2011)

6. Creating 100 gigapascals of pressure Source: http://www.mckinseyquarterly.com/The_challenges_ahead_for_supply_chains_McKinsey_Global _Survey_results_2706Nov 2010

7. Also rocking our world… Source: McKinsey Quarterly Riding Asia’s Digital Tigers

8. Rocking it still more: Hyper Innovation Source: Adrian Ott, The 24-Hour Customer: New Rules for Winning in a Time-Starved Always-Connected Economy

9. What’s a way to go faster? Take in more ideas from outside? Spin out ideas for others to use? Solution: Punch more holes in the funnel.

10. Open Innovation ANTIDOTE Source: © Henry Chesbrough, 2006

11. Get to Market Faster

12. Break into Partner Markets

13. Transfer risk to someone else

14. Make your customers crazy-scream with rage… …If they can’t get your product.

15. Employees as Lifeblood 2 POISON Expensive fixed assets Salary independent of performance

16. As Bill Joy said, “There are always more smart people outside your company than inside it.” Bill Joy, Founder, Sun Microsystems Partner, Kleiner Perkins

17. Crowdsourcing:Lifeblood on steroids ANTIDOTE Example: Netflix $1 Million Challenge Pay only on Performance Off the Grid PR

18. Crowdsourcing:Netflix $1 M Challenge ANTIDOTE Netflix $1 Million Challenge 55,000 Engineers Enter A huge virtual workforce Decrease HR costs: Talent finds you!

19. Crowdsourcing:Netflix $1 M Challenge ANTIDOTE Movie Recommendation Engine Improved 10% Problem Solved: 5 2 years Decrease Time to Market

20. 3 The Human Resources Department

21. Hire People HR would Never Hire ANTIDOTE

22. People HR would Never Hire ANTIDOTE 1760 A self-educated clock maker invents longitude 1990’s Design firm Ideo creates up the best-selling kid’s toothbrush by working with anthropologists A home-schooled coder invents WikiLeaks 2007 An oil-industry outsider provides the solution for cleaning up oil spills borrowing from the concrete industry . .

23. Diversity + Will-to-Win Trump Superstars ANTIDOTE Off the Grid PR

24. Trad Market Research 4 Interviews Secondary Research Roundtables Focus Groups Surveys Great…brilliant clarity on the past Usually company internal Budget-constrained sample size

25. Customer Crowdsourcing ANTIDOTE Up-to-minute 24 x 7 customer feedback Community vetted Social Proof of Open Brand MyStarbucksidea Build it? No!

27. 100 ideas launched

28. Note Starbucks did not build this. They license the platform from SalesForce.com MyStarbucksidea Build it? No!

31. Share Community II(The Sequel) Play your community forward (new markets) ANTIDOTE Advertise Advertise Dell laptops – Havaianas flipflops– Griffin iPhone accessories

32. Your BalkanizedWeb 1.0 Website 1.0) 6 You control. You make your customers come to you.

33. Problem: In 2008 the average public radio station listener visited their local radio station website only 2x per month. Source: http://www.slideshare.net/davewrightjr/redesigning-nprorg

34. Different NPR Customers needed Different news formats Differentplatforms

36. 500,000 audio files

37. 30,000 blog posts

38. Content from dozens of NPR station affiliatesANTIDOTE

39. An Open API for Developers to Access Result: more formats, more platforms

40. Source: http://www.npr.org/templates/archives/archive.php?thingId=125099093

41. Business as Usual 7 7 Own the facility Build out a kitchen Operate set hours Serve familiar food Charge as much as the market will bear. Advertise in newspapers and radio Off the Grid PR

42. Business Unusual: LudoBites Restaurant/ Kitchen Operate Std Business Hrs. Charge Market Prices Serve Familiar Food Advertise Borrow Someone Else’s Kitchen Announce by Surprise + Limited opening Pay Forward Savings Serve One-of-a-Kind Food Use Social Media Chef Ludo’s famous Cheese CupCake

43. TheEconolapse “The main reason to thinkoutside the boxis there is no more oxygen leftinside the box.”. Lisa Thorell

44. You need to own it to sell it. 8 Under-utilized assets Sitting inventory

45. The The New Share Economy ANTIDOTE You broker others’ owned spaces.

46. Better than Zipcar… ANTIDOTE Example companies how they do it. You can broker others’ under-used cars.

47. ANTIDOTE Example companies how they do it. Saatchi & Saatchi showed you can even broker ad space in Out-of-the-Office email auto-replies.

48. ANTIDOTE Example companies how they do it. To cost-share its rent fees, Best Buy is offering shelf space to other retailers.

49. IP Control & Lawyers 9

51. Strategically Mine Knowledge ANTIDOTE Source: http://blogs.hbr.org/cs/2011/05/stop_obsessing_with_ip_rights-.html

52. Netflix again… ANTIDOTE Database Shared Solution Gained Solution Shared

53. ToToxic Boxes 10 Net Income Sales Revenue Taxes Operating Expenses Cost of Sales Regarding your industry cost structure as immutable & unassailable.

54. The monsters who guard the Net Income box It’s not that I’m against fiduciary responsibility. It’s the fear of shape-shifting and risk aversion that the monsters can engender. Net income can be Increased by paying attention to other boxes… Annual Report SEC Investors Net Income

55. Exploring NonToxic Boxes: Service Blueprinting ANTIDOTE http://priyankashetye.com/html/medsystem.html

56. Business is serious stuff… 11

57. Gartner Forecasts 50% of Businesses will Gamify by 2015 ANTIDOTE Use of leaderboards to inspire frequent use & competence-by-competition. Reward points that can be converted to product upgrades or discounts . Badges for frequent contributions, levels achieved, other milestones.

58. How Many Prizes did Netflix Give away? ANTIDOTE http://offthegrid-pr.com/socially-responsible-pr/2009/9/28/six-marketing-lessons-of-the-netflix-crowdsourcing-experimen.html

59. The Excruciating Politeness of Poser Innovation 12 Observation: OI consultants tend to PR their best client case studies. Open Innovation Whitewashing ->

60. A Wikileaks for Open InnovationCase Studies? ANTIDOTE How can we learn if we can’t see the parallel universe of failures?

61. Open Innovation as a “Try on” 13 No. Do or do not. There is no try.

62. Open Innovation as a Necessity ANTIDOTE If they didn’t... LudoBites P+G Connect + develop NPR Threadless Another high-overhead restaurant in a recessionary economy. More small agile CPG competitors 96% of listeners would not access online. Another commodity tee-shirt company

63. Transformers ask… What can you build for others? Whose products/tech can you build on? Find New Markets Customers saying “Meh…” How do you get closer to your community? What assets do you have to barter? Decrease Time to Market What can you give away for others to build on? How do you motivate them to become addicted to your product? Decrease Fixed Costs Whose products/tech/space/people can you partner with?

64. Moral of the story: Stomp on poisonous snakes. Transform. Start Innovating Already… Off the Grid PR