Open Innovation: A NineSigma Solution Provider s Perspective

Transcription

1 SOLUTION PROVIDER INSIGHT PAPER

2 Open Innovation: A NineSigma Solution Provider s Perspective An interview between Dr. Charles Roe, program manager for NineSigma and Amlan Gupta, founder and president of CG 2 NanoCoatings Executive Summary Open Innovation is the next frontier for advancement in research and product development. For organizations that are looking to enhance their own technological advancements, open innovation is a method of working that eliminates pigeonholes, changes conventional thinking, establishes new channels of communications, triggers opportunity, and embraces external contributions and expertise. For innovators with technology solutions, open innovation provides opportunity, leverages expertise and builds businesses. Entrepreneurs, scientists, researchers and academics can use their knowledge and solutions to help solve the technology challenges of organizations around the world. Open innovation has revealed just how small our world really is, and helped both innovation seekers and solution providers understand how much they need each other. This white paper will provide a single perspective about open innovation through the eyes of Amlan Gupta, founder and president of CG 2 NanoCoatings, a research and development company specializing in nanotechnology-based coatings and polymeric materials. CG 2 is a frequent participant in NineSigma s Request for Proposal (RFP) process, beginning in May Since then, CG 2 has responded to more than 25 RFPs. In the following interview with Mr. Gupta, Dr. Charles Roe, a program manager with NineSigma, discusses how a small company in Ottawa, Canada, can help large global organizations identify new, innovative ways to solve their technology challenges. Through this discussion, Amlan will share his insights and his company s experiences with NineSigma, its process, and what other solution providers should expect from participating in an open innovation marketplace. page 1

3 NineSigma Since 2000, NineSigma has been partnering with Global 1000 companies to help solve a variety of business and technology challenges. At the core of our open innovation solutions is a proprietary RFP process, which helps to translate the client s business or technology need and distribute it to a broad community of innovation providers across industries and technical disciplines to find a solution that can be adapted or readily applied. NineSigma has offices in the United States, Belgium and Japan, and represents companies in a variety of industries, including automotive, chemicals, consumer goods, electronics, food and beverage, medical and manufacturing. To date, NineSigma has run more than 1,200 open innovation projects, thus helping clients to dramatically improve speed to market while lowering product development costs and reducing risks. CG 2 NanoCoatings Founded in 2004, CG 2 NanoCoatings provides custom solutions to meet specific needs by tailoring its technology portfolio to individual requests. The company does not have a manufacturing facility. It either licenses its technology or partners with third-parties for any manufacturing. To market its expertise, CG 2 uses both targeted trade shows and its web site. However, a critical component of its marketing is NineSigma s RFP process. A connection with NineSigma was initially made in February 2006 when CG 2 was identified by NineSigma as a possible solution provider for a project for a global chemical company. Since engaging with NineSigma, CG 2 has experienced a variety of levels of interaction with NineSigma s clients. CG 2 is actively working on a development project while several of its responses to RFPs are under review and in various stages of progression towards contracting. Additionally, CG 2 has also been involved in negotiations with clients on projects that have been abandoned or where the parties could not agree on terms. For CG 2, open innovation is its business. The company does not manufacture products, nor does it currently warehouse ready-made coatings. CG 2 provides its customers with custom solutions, and CG 2 can only provide solutions to customers that are embracing open innovation a requirement that makes NineSigma an ideal partner. View of Open Innovation Dr. Charles Roe, NineSigma: Why is open innovation good for industry? Amlan Gupta, CG 2 : Companies can t be experts in everything. To think one can is at worst arrogant, and at best, naïve. While large companies can afford to increase staffing and facilities, this is not always the most cost effective means of achieving a solution. In addition, the required expertise is often necessary for a relatively short period so it does not make sense to invest significant resources in hiring permanent staff. Companies that outsource their R&D or supplement their internal innovation with external expertise can achieve results faster, thereby improving their products, revenues, market share and profits. View of NineSigma s RFP Process CR: Why have you chosen to work with NineSigma? page 2

4 AG: We like NineSigma s process, which is much fairer to both parties than programs used by other organizations. By submitting only non-confidential information, we can attract the interest of the prospective client, but neither party makes any significant commitment (e.g. intellectual property ownership) at the early stages. This leaves everyone free to focus initially on finding the best technical solution. The RFPs contain the right amount of description about the customer s problem, aims, and constraints, as well as other information relevant to each request. The broad standardization of the RFP format and style across all of NineSigma s clients, combined with the standardized proposal templates, helps us to produce good proposals. Limiting the responses to 3-4 pages helps us to focus on the critical details, and makes responding to all the pertinent RFPs possible. Having gone through the process many times, we know what to expect from NineSigma and we are now usually able to adapt previous proposals, saving us even more time and allowing us to focus on the specifics unique to each customer. From my perspective, NineSigma has developed a process that works for everyone. To have an ongoing stream of potential customers coming to us for ideas and solutions, with minimal investment on our part, is the best business development program we could have. CR: Given your experience with submitting RFPs, what would you tell other solution providers to expect from this process? AG: While NineSigma naturally represents its clients, they also respect solution providers information, provide them with any necessary clarifications and treat them fairly. In all the proposals we have submitted, NineSigma has always been willing to provide as much information as they are able. In addition, not once have we felt that our proposals were reviewed in a haphazard or superficial way, which would be a waste of time and effort for all concerned. The process is straightforward and fairly simple. As a small company, we have limited resources for marketing and advertising. NineSigma s process allows us to put our technology in front of top class companies at minimal cost. In addition, we are submitting proposals to potential customers that have already been sold on the idea of open innovation, and know that they will be funding the technology development. Through NineSigma, we are doing work right now with well-known, reputable clients. This type of work is essential for a new business looking to grow. For example, even if we can t disclose the name at this point, being able to say that we are doing work for one of the largest coating companies in the world is a true validation of our capabilities at CG 2. CR: What advice would you give other solution providers regarding the RFP process? AG: I would tell them to only submit proposals when they are confident that they could deliver a solution that would meet most, if not all, of the requirements. Read the RFP and project requirements carefully to make this determination, keeping in mind that the client is not looking for technology as such, but a solution to a business challenge. We are finding that NineSigma gets many proposals for each RFP, thus submitting proposals where one s solution does not meet most of the requirements is inefficient for all concerned. Having said that, it is important that solution providers also recognize that the problems posed are very challenging and having a potential solution that meets at least the higher priority requirements may be sufficient. page 3

5 CR: What should solution providers expect from NineSigma and its clients during the RFP process? AG: Solution providers should recognize the key operational limitation for NineSigma: the client, not NineSigma, is the one making the ultimate decision and driving the schedule. We have submitted a few proposals that have taken many months to be reviewed or the projects were simply abandoned by the client. Negotiations can be slow (clients will not simply buy the proposal as submitted) and clients are often working on more than one project at a time. Circumstances change the client s focus can shift, people can leave, funding can be affected, etc. Any of these can impact the project. It can be frustrating, but be ready for this and accept it. Also, keep in mind that NineSigma will do as much as possible to facilitate a mutually beneficial agreement between client and solution provider, as NineSigma s revenues are derived from these success stories. As a small company, we have limited resources for marketing and advertising. NineSigma s process allows us to put our technology in front of top class companies at minimal cost. Amlan Gupta, founder and president of CG 2 NanoCoatings CR: How should solution providers address key client concerns, such as intellectual property (IP), with potential partners? AG: I am glad that you asked that question. IP is definitely one of the most important concerns for both parties, and I would make four recommendations: 1. Briefly state your expectations on IP ownership in the proposal. Many clients may be new to the Open Innovation model and may have a very different expectation about IP ownership than yours. One of our development projects did not proceed for this very reason, and in several other negotiations, this was the major focus area. 2. When you first start conversing with the client, address key business issues in addition to technical details, such as the provision of samples to demonstrate your technology. This is also the time to have an initial discussion regarding IP. Don t let the excitement of the opportunity get in the way of addressing potentially touchy issues. 3. Separate out what is background IP from new IP to be developed as part of the client solution (foreground IP). Make sure the client understands that you own what you bring to the table. Other open innovation intermediaries may try to have you sign over the licensing rights to your technology. NineSigma does not do that, so whatever you bring into the relationship is yours when you leave, unless otherwise negotiated with the client. Of course, ownership of foreground IP will almost always be an interesting discussion. 4. Don t let lawyers drive the process and make business decisions. Business managers and technical people need to communicate their requirements to lawyers, rather than having lawyers decide what the business should or should not do. This applies to both innovation seekers and solution providers. And make sure that you execute a mutual nondisclosure agreement before having any discussions involving confidential or proprietary information. page 4

6 Perspective on Innovation Seekers CR: What should NineSigma s clients realize about working with solution providers? AG: During the past four years, we have learned a lot from working with innovation seekers such as NineSigma s clients. Based on our experience, I would recommend the following to any company engaging in NineSigma s Open Innovation process: NineSigma s clients need to be sure that their organization has bought into the Open Innovation model. It is fine to have a Chief Technology Officer or other similar executive pushing Open Innovation, but if the people who will actually run the development projects are not on board, then it will fail, or vice-versa. This also relates to my earlier point about lawyers it is critical that they understand, and accept, the process. Innovation seekers should provide timely feedback and updates on the status of the proposal review process. Importance of Intellectual Property Many of the proposals will come from small companies or academics for whom the proposal effort will be proportionally significant. As such, they will appreciate the review committee providing detailed feedback for rejected proposals, when possible. Solution providers can use this to improve their offerings. However, it is reasonable for innovation seekers to do this for serious proposals only. Recognize that in most cases, the core product being provided by the solution provider is IP. It will be very important to them. Everyone will naturally look after their interests, but it is important that both solution providers and innovation seekers are realistic. Unless the provider states the IP itself is for sale, initially negotiate exclusivity for a period of time and/or industry, which protects both parties during the initial development, and leaves room for creative deals later in the process. Many solution providers are small companies for whom even expenses such as preparing samples, travel, printing and shipping are critical. Expect that the solution provider will ask that such expenses be paid by the client. If possible, innovation seekers should provide some forecast of what the market for the technology is expected to be. This may incentivize solution providers to offer better terms. It is recognized that this will normally be confidential information so it is not necessary to provide specifics in the RFP, but even general guidance may be useful. NineSigma s Commentary and Key Takeaways Situation: Following lengthy, productive technical discussions with one of the world s leading food packaging companies regarding polymer reinforcement technology, CG 2 began negotiations on a development agreement. When a contractual document was introduced into the discussions, it became clear that both parties had significantly different interpretations of IP ownership. Results: While the two companies could not come to terms on the contract, the experience provided a valuable lesson for CG 2. The company now appreciates the importance of discussing IP early in the process as both parties can save a lot of time and resources when they clarify up front their positions on IP and interpretations of any future licensing expectations. Dr. Charles Roe: Our Open Innovation RFP process is a great way for companies, researchers, entrepreneurs, inventors and innovators to enhance products, services and technology. Mr. Gupta provides a valuable perspective for companies and people interested in participating in the Open Innovation process with Global 1000 companies. page 5

7 It is important that solution providers understand what they have to offer before they get involved in the RFP process. Are their solutions defined and are their technologies relevant to the RFP? Can they clearly articulate how they can help solve the business and technology challenges identified in the RFP? Do they know how to handle requests for samples or licensing issues? Solution providers should know what they hope to achieve and be prepared to negotiate with NineSigma s clients to achieve gain for all parties. In any business negotiation, patience is critical. Oftentimes, our clients are managing several Open Innovation projects concurrently. As Amlan stated, unexpected things happen, problems arise, businesses and people change, and outside circumstances may result in lengthy delays or project abandonment. Regardless, be prepared for anything to happen, including requests from the client that may not fit within your expectations or parameters. Remember, NineSigma serves as facilitator, and once a proposal is accepted, negotiations are managed directly between the client and the solution provider. Should solutions providers need support at any time during the process, our program managers are always available to answer questions and assist where they can to ensure a successful agreement. Finally, Amlan s advice for NineSigma s clients is especially relevant. Effective Open Innovation strategies involve two or more parties, and innovation seekers need to understand how to properly engage those responding to the RFP. Amlan encourages all parties involved in the process to be respectful, responsive to queries and communicative. As we have discovered through more than 1,200 projects, the Request for Proposal from the innovation seeker is just one of the beginning steps in the open innovation process. About Charles Roe Dr. Charles Roe works with NineSigma clients across a variety of industries including consumer goods, chemicals, coatings, and automotive. Prior to joining NineSigma, Charles worked for ICI/Glidden Paint where he developed significant expertise in chemicals, adhesives, paints, and coatings. He has worked in a variety of functional capacities throughout his career including R&D, product development, process engineering, corporate purchasing, corporate quality, supply chain/logistics, and technical recruiting. Charles earned a B.S. degree in Chemical Engineering from the University of Pittsburgh, a M.S. degree in Chemical Engineering from the University of Pennsylvania, and a Ph.D. in Chemical Engineering from Michigan Tech. About Amlan Gupta Prior to starting CG 2 NanoCoatings, Amlan Gupta was a senior manager with Deloitte Consulting. During almost 10 years with Deloitte, Amlan s engagements involved outsourcing and large IT implementations, including financial systems, supply chain systems, and human resources systems, in Canada and the United States. Before joining Deloitte, Amlan had more than 10 years of industry and military experience. Amlan earned a Bachelor in Mechanical Engineering from Carleton University in Ottawa and a Masters in Business Administration from McGill University in Montreal. He is a Professional Engineer and a Certified Management Consultant. page 6