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    1. Summary The Model of Open Innovation Closed Innovation vs Open Innovation Open Innovation vs Closed Innovation Case Study: L’Oréal Case Study: InnoCentive Crowdsourcing

    2. Model of Open Innovation “Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology” Chesbrough H. W. development of internal competences search for new competences through an extension of the firm boundaries

    3. CLOSED INNOVATION vs OPEN INNOVATION Traditionally, new business development processes and the marketing of new products took place within the firm boundaries The main cause behind this idea is that, in the beginning of the twentieth century, universities and government were not involved in the commercial application of science. 

    4. CLOSED INNOVATION vs OPEN INNOVATION Some companies therefore decided to do it all on their own. They created their own research and development (R&D) departments to be able to control the whole new product development (NPD) cycle inside the company.

    5. CLOSED INNOVATION vs OPEN INNOVATION

    6. OPEN INNOVATION vs CLOSED INNOVATION Throughout the years several factors emerged that paved the way for open innovation paradigms: The increasing availability and mobility of skilled workers The growth of the venture capital market External options for ideas sitting on the shelf The increasing capability of external suppliers

    7. OPEN INNOVATION vs CLOSED INNOVATION Knowledge is not anymore proprietary to the company. It resides in employees, suppliers, customers, competitors, and universities. Open Innovation can thus be described as: combining internal and external ideas as well as internal and external paths to market to advance the development of new technologies.

    8. OPEN INNOVATION vs CLOSED INNOVATION

    9. OPEN INNOVATION vs CLOSED INNOVATION Not all good ideas are developed within the own company, and not all ideas should necessarily be further developed within the own firm's boundaries Involving other parties when developing new products and technologies can be of great added value

    10. OPEN INNOVATION vs CLOSED INNOVATION After all, how and when external knowledge is required and used is to a large extent determined by the companies' business model which describes how value can be created from innovations and which elements have to be sourced internally or externally

    11. L’Oréal created a completely new market based on immaterial value: The Market of Beauty “If we want to innovate in a global market and take advantage of all opportunities, we must open our minds to collaboration: Innovation is an integrated process.” Laurent Gilbert Global director of raw materials and advanced research at L’Oréal

    12. At L’Oréal, open innovation is based on three pillars: Internal technologies External technologies Collaboration and alliances

    13. Founded in 1909 by Eugen Schuller in Paris He created the first hair dye formulae using a blend of harmless chemical compounds Presently, L’Oréal counts 500 brands (23 international), 4000 patents registered, more than 1800 patent applications

    14. It’s a large multinational (130countries) with 64.600 employees worldwide and its sales in 2009 amounted to 17.5 billion euros 609 million euros was dedicated to cosmetic and dermatological research in 2009 There are 18 research centers across the world and 13 evaluation centers

    15. The Market of Beauty The creation of this kind of market implied 5 crucial steps: 1909 breakthrough innovation: product for hair dye using safe compounds 1928 acquisition of Monsavon and the invention of shampoo 1933 develop of skin protection oil called Ambre Solaire 1945 L’Oréal became a company specialized in hair and skin treatements

    16. The Market of Beauty Fusion of the previous acquired competences; Launch of Colorelle: the first color-enhancing shampoo Launch of the first foam bath: OBAO

    17. The Market of Beauty Building of new competence through external acquisition of skin cream producers, pharmaceutical and beauty firms and through numerous R&D agreements with several international labs. Vichy (1954), Lancome (1964), Garnier (1965), between 1984-1996: La Roche –Posay, Maybelline, Biomedic

    18. The Market of Beauty This step is based on a new futuristic sector: the Nutricosmetic To be able to create this new sector, L’Oréal enlarged the firm knowledge base through a joint venture with Nestlé: Inneov

    19. Inneov combines the expertise in nutrition and food security of Nestlé R&D and dermatological knowledge of L’Oréal R&D. Nestlé & Inneov: Nestlé R&D provides to Inneov Laboratories its unique expertise to select components, to optimize their absorption and verify the quality of safety and conservation. L’Oréal & Inneov: L’Oréal R&D provides to Inneove labs its knowledge of the physiology of cutis and its experience in monitoring the effects of the components on the skin.

    20. Conclusion The evolution of L’Oréal is not inscribed into a linear process of growth. Each realized step increased the synergis among the existing segments of the group and it increased the possibility to build processes of knowledge recombinations and learning . L’Oréal showed that there isn’t a single type of beauty but a multiple-faceted quality framed by different ethnic origins, aspirations and expectations that reflect the world’s intrinsic diversity. With a portfolio of powerful, international brands, L’Oréal entered the 21st century by embracing diversity in its global growth agenda.

    21. InnoCentive = Innovation+ Incentives InnoCentive is a business model based on Open Innovation It is a website that has a vast community of scientists and private organizations, which are seeking technical solutions or technical problems that could not be found by their internal R&D departments Problems cover aspects of organic chemistry and analytical and formulation processes of chemical compounds.

    22. Seekers: organizations that are seeking for answers Solvers: people who are interested in solving critical and pressing problems

    23. InnoCentive Challenges: An InnoCentive Challenge is a unique problem posted by Seekers in the InnoCentive Challenge Marketplace. The goal of a Challenge is to solicit solutions from InnoCentive’s community of 200,000 Solvers and ultimately choose the one that best fits the criteria set out by the Seeker. If a solution is selected as “best” by the Seeker, the Solver transfers the Intellectual Property (IP) to the Seeker and receives a financial award, which varies per Challenge.

    24. InnoCentive ONRAMP (Open iNnovation Rapid Adoption Methods and Practices): ONRAMP is a suite of professional services and technical resources developed and delivered by InnoCentive’s team of scientists, and consultants to help Seeker companies adopt open innovation rapidly and successfully within their organizations. ONRAMP provides planning, education, communication, and reporting services to help Seekers manage the process, adjust their open innovation plan, and measure the returns of their innovation strategy.

    25. InnoCentive@Work: InnoCentive@Work is an internal Web-based community customized by InnoCentive for Seeker organizations. It applies a Seeker’s internal resources to an organization’s hardest problems. Cross-fertilization of ideas and solutions accelerate success by accessing the currently untapped value of institutional experience and knowledge, so results are optimized and occur faster. As companies gain experience with InnoCentive@Work, they can move problems from inside their organization’s community to InnoCentive’s global community of Solvers to further increase the diversity of potential.

    26. InnoCentive Challenges InnoCentive Ideation Challenge: a global brainstorm for producing a breakthrough idea. This could include ideas for a new product line, a new commercial application for a current product, or even a viral marketing idea for recruiting new customers.

    27. InnoCentive Challenges Theoretical Challenge: a design that implements an idea but is not yet a proof of concept. A solution to a Theoretical Challenge will solidify the Solver’s concept with detailed descriptions, specifications, and requirements necessary to bring a good idea closer to become an actual product or service.

    28. InnoCentive Challenges RTP Challenge: a prototype that proves an idea. Once an organization has a theory or design for a product or service, an RTP Challenge requests that Solvers prove their solution will work within the organization’s specific needs, decision criteria, and manufacturing parameters.

    29. InnoCentive Challenges eRFP Challenge: a request for a partner or supplier to provide materials or expertise to help solve a business Challenge. Organizations can use the InnoCentive network to find businesses or consultants that have already developed the technology they need or have the experience to help organizations develop it themselves.

    30. Crowdsourcing Crowdsourcing is a distributed problem-solving and production model It may produce solutions from amateurs or volunteers working in their spare time, or from experts or small businesses that were unknow to the initiating organization. Using InnoCentive website, a “Seeker” posts a “Challenge” and commits to pay succesful “Solver” a cash award. In this way a “Seeker” pays only for the solution it accept.

    31. Crowdsourcing

    32. The benefits of open innovation Open Innovation allows many people from different disciplines to tackle the same problem simultaneously and not sequentially. Anyone can participate with collaborative technology and OI training.

    33. The benefits of open innovation When many minds are working on the same problem, it will take less time to solve it.  It is issued a challenge, and many Solvers answer the call at the same time. And the beauty is that they are working for free. It is payed only for a successful solution, saving time and money.

    34. Open iNnovation Rapid Adoption Methods and Practices: Once a firm has decided to implement Open Innovation in its organization, it will need to have all the resources in place to ensure that it is adopted rapidly and successfully. This adoption necessitates an organizational culture change, that must be communicated effectively throughout the enterprise. ONRAMP helps firms accomplish this by giving them tools to inspire their manager and employees to be more creative and find answers to issues important to their company’s growth and prosperity.

    35. Conclusion InnoCentive promotes a faster research process at lower costs than the alternative of using additional internal resources to explore solutions or going to an outside consultant or university institution to gain access to experts Improves the innovative culture The organization gains access to expertise and competence in new areas made available through InnoCentive’s global network: “unique solutions that we would have never come up with ourselves”. Elena Levorato, Silvia Pasquale, Sara Pravisani

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