At the Innovation 2014, one of the most renowned innovation conferences in Europe, the Dr. Manfred Bischoff Institute for Innovation Management of Airbus Group (former EADS) elected this year’s innovation champions. The awards were granted to The Dow Chemical Company (Best Open Innovator), Audi AG Production (Best Cross-Industry Innovator) and BMW AG (Best Business Model Innovator). And thanks to outstanding innovation performance in all three categories, SAP SE received an overall “Best Innovator” award. Outline of the innovation study 2014.
This year, more than 200 companies from the DACH region (Germany, Austria and Switzerland) participated in our innovation study from May to October 2014. According to current topics in innovation science and the latest issues addressed by the industry, this year’s questionnaire focuses on open innovation, cross-industry innovation and business model innovation.
The most promising companies were selected from all participating companies for individual case studies. Based on the company´s strategic orientation, prospector, analyser or defender (describing the degree of progressiveness), it was possible to theoretically derive optimal open innovation activity and compare it with the company´s real practice. Additionally, the degree of radicalness or disruptiveness of innovation reached with open innovation was regarded. In business modelling, the company’s willingness to cannibalize investments or capabilities was focused on as well as its innovative cross-industry activities, asking for long cognitive distance partnerships and best practices. Cultural antecedents were considered as the foundation for all those activities and can make a difference between success and failure of an initiative in open innovation.
Based on our company interviews with leading innovation experts, concrete examples clarified the company´s activities. Besides, additional sources and information about the company delivered a comprehensive view on its open innovation activities comprised in a case study. Those case studies were the basis for the jury's last evaluation round. The expert jury was formed by Dr. Hans-Joachim Weintz (J.W. Ostendorf GmbH & Co. KG), Ulf Timmann (Henkel KgaA) and Dr. Reiner Fageth (Cewe Color Stiftung & Co. KGaA). They were the representatives of last year’s best innovators. They were accompanied by Otto Gies and Caroline Legler from Airbus Group and from the scientific side, Prof. Ellen Enkel, head of the institute for innovation management, and her team.
From left to right: Susanne Klinger (Management Circle AG), Karoline Bader (Zeppelin Universität), Matthias S. Brodrück (Management Circle AG), Caroline Legler (Airbus Group), Claus von Riegen (SAP SE), Dr. Reiner Fageth (CEWE COLOR Stiftung), Michel Sérié (SAP SE), Dr. Matthias Meyer (BMW AG), Prof. Dr. Wiltrud Treffenfeldt (The Dow Chemical Company), Kai Petrick (BMW AG), Alois Brandt (Audi AG), Felix Schwabe (Audi AG), Prof. Dr. Ellen Enkel (Zeppelin Universität), Dr. Hans-Joachim Weintz (J.W. Ostendorf GmbH & Co. KG)
Copyright: Management Circle
Grounded on the jury’s rating, six of them were chosen for extended company visits in order to dive deeper into the companies´ open innovation approach and excellence. The visits took place between September and October 2014. In these workshops, the six selected companies provided a deep understanding of why they are at the top of Europe’s innovating companies with applied open innovation. After the last visit, the jury, comprised of last year´s winners, agreed on four winning companies in the categories: open innovation, cross-industry innovation, business model innovation and best overall innovator. In order to illustrate the basis of the jury´s decision, we have included a short overview of their prize winning activities below.
Dow Chemicals Company (Best Open Innovator)
Dow combines the power of science and technology to passionately innovate what is essential to human progress. Founded in 1897, the Company employs approximately 53,000 people worldwide delivering solutions to customers in 180 countries in high growth sectors such as packaging, electronics, water, coatings and agriculture. In 2013, Dow had annual sales of more than 57 billion US-Dollars. The company’s more than 6,000 products are manufactured at 201 sites in 36 countries across the globe. The jury was invited to the central innovation hub of Europe, Middle East, Africa led by Prof. Dr. Treffenfeldt. Dow is located in the B2B business; therefore, innovation communication is important from both an internal and external point of view.
One third of Dow’s revenue is generated from products that have been on the market less than five years. The majority of Research and Development is located in the business units, complemented by a Core R&D organization which is dedicated to fundamental research. Application Development is a focus in Europe. To facilitate the interaction with external partners, the “Customer Innovation Center” was recently established in Horgen, Switzerland. This center helps to integrate the external perspective and needs of customers, suppliers, equipment manufacturers and other external partners like universities. In the “Packaging Studio” for instance, a lot of industrial scale packaging equipment is available to test new materials and co-develop with external partners along the process and value chain such as converters, packaging companies and food companies.
Via the „Strategic University Network“ Dow is conducting joint research projects with top science institutions in many disciplines to develop new technology platforms and introduce the latest scientific developments into their own portfolio. For example, Dow collaborates with several Fraunhofer Institutes, NGOs like the “Clinton Global Initiative”, or the “Bioökonomierat”. The „Innovation Playbook“ is an internal tool to manage internal and external innovation projects across business units and geographies. Increasingly other tools such as “Innocentive” and “Idea Central”, - where ideas and projects can be proposed and developed by anyone in the company are gaining importance and creating an open innovation space. “Sustainability Challenges” run at Universities and Dow’s engagement for the Olympic Games is also a driver for new innovation with the purpose to address global challenges, like clean water supply, food safety and energy conservation for example. A special effort in Europe is being made to collaborate along the value and supply chain to integrate stakeholders in an open innovation approach. Successful examples are the collaborations with Evonik Industries or last year’s award winning Henkel KgaA as innovation partners. These projects can cover R&D projects, Joint-Ventures or even licensing IPR (Intellectual Property Rights).
Audi AG Production (Best Cross-Industry Innovator)
The Audi Group delivered approximately 1,575,500 cars of the Audi brand to customers in 2013 and produced more than 1.9 million engines. The production is located in Ingolstadt und Neckarsulm, as well as in nine international production facilities, following the dictum „one name, one standard, everywhere“. Each team has to fulfill highest demands concerning quality, efficiency, environmental safety and innovation. Audi itself, which is part of Volkswagen AG, generated 49.9 Billion Euro of revenue in 2013. The company currently employs more than 70,000 people worldwide, thereof more than 53,400 in Germany.
Audi’s strategy 2020 consist of several operating items, one of the most important ones is the goal to become „innovation leader“. They want to become the first in design and technology as well as the first in providing complex mobility solutions for tomorrow’s needs. Therefore they have to find a fit between customer expectations and high end technology. For special achievements in cross-industry innovation, Audi Production is awarded the 2014 price in this category.
Cross-industry, which means to innovation and collaborate crossing industry boundaries, is interesting at Audi Production in several ways. On the one hand, they cross the boundaries of the department and use the knowledge of R&D or sales for example. On the other hand, being part of the Volkswagen Automotive Corporation, they can cross company boundaries within the same industry without dealing with the open-innovation paradigm. And not least, they inbound knowledge from different industries to learn and improve their innovation management. External knowledge is accumulated by using open innovation activities like scientific collaboration and calls for proposals. They offer test drives and do lead user analysis, also looking into the future with this methods. Several competition awards like the famous „Audi Production Award“ (production of the future), the „Tool Trophy“ (focusing on equipment), the „Audi Urban Future Award“ (for architects and planners) and “Urban Production Conference” are addressing a broad field of topics. The last one is a different approach to cross-innovate. Because the common topic is outside the context, but it deals with a superior urgency and brings together different stakeholders like a mayor, a retailer company, citizens, production, climate counsels and others. Moreover Audi Production uses intermediaries like “Nine Sigma” or “Deutscher Technologiedienst” to get subject-specific but cross-industry input. Internally, Audi Production established an innovation league with rankings and prices for best cross-industry innovation, which underlines the priority of activities as described.
Furthermore, employees are encouraged to visit conventions or exhibitions outside of their industry and to talk to external experts who might be interesting due to their different industry background. A „know-how wheel” is concentrating the information, clustering the input and supporting the staff in finding right sparing partners. To foster these approaches, informal knowledge sharing is supported by innovation events as Audi “Production Labs or Innovationscampus” as pre development and technology days or the “Innovations-Liga”, where potential multiplicators and experts from potential partners out of different industries are invited. For example, to support out-of-industry thinking, the dinner speech at the internal innovation event was hold by a nun in order to provide a completely new view on innovation for Audi Production. This leads to some business model innovation in the last years for example the “Audi Werkzeugbau”, conceptualizing and developing tools for industry solutions. With small creative concept teams, Audi Production is looking for new innovative business model innovation to push the innovation output.
BMW AG (Best Business Model Innovator)
BMW AG was founded in 1916 and is located in Munich, Bavaria. BMW is a motorcycle and automobile OEM generating 76 billion euros revenue a year and employing 110,000 people worldwide. As a manufacturer of premium cars, innovation is required not only for products, processes or production, but increasingly in the field of new services and business models. This is why the jury awarded BWM the best Business Model Innovation Award in 2014. Open Innovation at BMW is deeply integrated in the all-over organization. BMW conducts crowd-sourced idea and design contests on external as well as internal platforms (e.g. BMW “Co-Creation Lab”, “MINI SPACE”) to team up with the community to innovate the future mobility. The “Virtual Innovation Agency” started in 2001 as a direct interface from customers and external innovators to the BMW R&D department. BMW uses systematically cross industry innovation approaches and intensified lead-user and customer development innovation by setting up the “Innovationswerk”, an internal innovation consulting.
Remarkable, BMW is leading in the field of business transformation. It’s still about cars, but the focus shifts from building and selling towards providing intelligent mobility solutions. In former years automotive OEMs have enriched their business offer from production and sales of cars to offering financial services, after sales services or integrating new technology to individualize the product. With the help of methods like lead user integration, hackathons, design thinking or public contest, they integrate an external perspective. For example, the call for proposals “BMW Urban Driving Experience Challenge” brought radical ideas like lightning for pedestrians or duplicating the traffic sign information in the car. Today, younger customers do less focus on the possession of a car but on spontaneous and hasslefree mobility and services around it. First, it is about the shift from traditional to electric cars, where BMW completely thought differently to develop the BMW i3 for example. It is much more than “just” an electric driven car, but a holistic mobility concept also including various services around mobility. Second, using their BMW i-venture company as an investment vehicle, they started to orchestrate an ecosystem of start-up companies, offering solutions around mobility.
BMW divided their business model innovation in categories. The first one like “ConnectedDrive” offers car enabled services, the second one is car related, like the car sharing platform “DriveNow” or the parking solution “ParkNow”. The third one deals with car-independent mobility services like “Life360”, a locator for family members, a messaging tool and communication app all in one. Future complementary business models might use all kinds of data from the car, driver or even the weather forecast to provide a new value proposition for the customer.
SAP SE (“Best Innovator”)
SAP SE, located in Walldorf, is the world’s biggest software company outside the US, generating close to 17 billion euros in revenue in 2013. More than 68,000 employees are working on business process management and provide enterprise solutions for various industries and lines of business such as financials, HR, procurement, logistics, or sales. The jury rewards SAP SE as Best Innovator in all three categories (open innovation, cross-industry innovation and business model innovation).
Initially, SAP started its business offering standard software solutions and providing the necessary services for customers to install and run the software on their premises. Meanwhile, the company also provides cloud-based solutions, emphasizing that SAP has shifted from a traditional product supplier to a Software as a Service (SaaS) provider. Besides, SAP also develops and offers business network solutions. Within these networks, they support information exchange and business transactions among network participants. The latest developments are business model innovations dealing with Information as a Service.
With respect to open innovation, idea generation together with the customers is very important for SAP (outside-in process), especially during the early stage of the innovation process. These ideas are then refined in design thinking workshops and translated into the internal SAP innovation process. Besides, SAP works on the commercialization of their intellectual property, e.g. by providing start-ups early and easy access to the HANA technology platform (inside-out process).
Since SAP provides software solutions for a wide range of different industries, cross-industry innovation is an important basis for new products and services. SAP uses its own current software solutions to recognize the demands of their stakeholders. They collect the information, organize it industry-sectorspecifically and share it in the "Industry Cloud". Every employee has access to this information system describing approximately 25 industry sectors. Regular meetings of the different sector teams improve the internal exchange across sector boundaries.
Concerning business model innovation, SAP developed cloud-based solutions like the SAP Connected Vehicles or SAP Ganges. SAP connected vehicles offers various services to automotive partners to help them find their way in new connected vehicle markets. It is a modular system that is completely customizable and extendable. SAP Smart Parking service, for example, allows connected car drivers to find a reserved parking spot conveniently before they arrive. Or drivers of electric vehicles can use the Charge Spot Aggregation service to get location and real-time status information about charging points nearby.
For handling new kinds of point of interest transactions such as parking, fuelling or access to local attractions, SAP’s convergent charging solution fully integrates with SAP Connected Vehicles. Besides, the partners can create individual charging mechanisms per transaction or individually. To sum up, the idea behind Connected Vehicles is to use the car as a sales channel by transforming the point of interest (poi) into a point of profit (pop).
SAP Ganges is a business network for the many small Indian retailers. It connects the consumer product companies with their distributors and retailers and gives them real-time information to improve their supply chain efficiency. SAP started this business network in India, the country with the most retail shops in the world, but the aim is to translate it to other retail-rich emerging economies globally.
In spring 2015, we are going to relaunch the “Best Innovator Study 2015” and we look forward to your participation.