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ENABLING AND MAINTAINING KEY OPEN INNOVATION PROCESSES TO SUPPORT GLOBAL

DEVELOPMENT

HANNES ERLER, INNOVATION EVANGELISTFEB 2017, BERLIN, PI CONFERENCE

FOR INTERNAL USE ONLY – © COPYRIGHT SWAROVSKI AG, 2017

2

OPEN INNOVATION

THE SOCIAL MEDIA REVOLUTION AND HYPERCONNECTIVITY AS A

GLOBAL TREND HAVE OPENED UP NEW FORMS OF COLLABORATION

How to make out the very best use of what emerges?

4

• Why and how Open Innovation is Dramatically Disrupted by Hyperconnectivity and the Digital Revolution

• How Swarovski built a Structure for Utilization of Innovation Ecosystems

• Learnings from 3 years of Open Innovation Networks Management

5

CUSTOMER VALUE CREATION 3 YEARS OF OPEN INNOVATION LEARNING

Va

lue

fo

r C

us

tom

er

Innovation Funnel:

Linear ModelOpen Innovation Funnel:

Chesbrough Model

Open Innovation Networks:

Connecting Ecosystems

The New & Unknown

© Copyright Swarovski AG, 2016

INNOVATION

ECOSYSTEMS

Integrate exploration

(knowledge) and

exploitation (business)

ecosystems

KNOWLEDGE

ECOSYSTEMS

Focus on generating

new knowledge and

technologies

BUSINESS

ECOSYSTEMS

focus on creating

customer value

Model based on K. Valtikari, VTT

7

…TO CROSS BORDER COLLABORATION

Web 1.0

Cash

Flo

w

Time

Physical World

EX

PA

ND

CollaborateWeb 2.0

TEST & FAIL

AND FAST FAIL & LEARN

OPEN INNOVATIONENABLES A CLOSER LINK TO THE OUTSIDE WORLD

• US$ 600 Billion World R&D Investment

• 90% of IP are not utilized by those who invented it

• Innovation driven by speed, transparency,

connectivity and openness in new ecosystem

environments

• Balancing of internal and external stakeholders

seems to be the challenge

• Implementation of OI Networks cross over company

boarders is the key

MAIN DRIVERS FOR INNOVATION IN A HYPERCONNECTED WORLD

CONNECTIVITY TO ECOSYSTEMS VALUES OPEN MINDSET OF PEOPLE

10

LEVELS OF VALUE CREATIONVALUES ARE THE COMMON LANGUAGE FOR THE DEFINITION OF STRATEGIC COLLABORATIONS

With allowance from: Elke den Ouden,

Innovation Design, Springer 2012

Significant Positive

Change

SERENDIPITY = DISCOVERY

11

12

• Why and how Open Innovation is Dramatically Disrupted by Hyperconnectivity and the Digital Revolution

• How Swarovski built a Structure for Utilization of Innovation Ecosystems

• Learnings from 3 years of Open Innovation Networks Management

13

IT WORKS BETTER WHEN IT‘S OPEN!

THE INNOVISIONARY

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• EUR 3 billion annual turnover generated by the Swarovski Group

• 30,000 employees in 170 countries

• Headquarter in Wattens, Tirol

THE WORLD’S LEADING PROVIDER

OF PRECISION CUT CRYSTAL

15

THE BRAND APPROACH

As a component and

services brand (B2B)As a finished

goods brand (B2C)As a component within third

party products (B2B2C)

16 Figurines

Jewelry Watches Beauty

EyewearHome & Interior

THE CONSUMER GOODS BUSINESS

17

SWAROVSKI CRYSTALS

Jewelry and

Watches

Apparel and

AccessoriesInterior

Packaging and

ElectronicsCreate Your

Style

18

1956 AURORA BOREALIS COATING

CROSS INDUSTRY INNOVATION

1931TRIMMINGS

1949OPTICAL INSTRUMENTS

1956NEW COATING EFFECT

AURORA BOREALIS

1975HOTFIX TECHNOLOGY

1993CRYSTAL MESH

2001CRYSTAL FABRIC

2009CRYSTAL CERAMICS

2010CRYSTAL ROCKS

2011ADVANCED CRYSTAL

2012XIRIUS

Together with Christian Dior, Swarovski develops the

Aurora Borealis effect, a shimmering finish that

enhances the sparkle of cut crystal, transferring the

thin film physical vapor deposition technology from

the optical industry into the fashion industry.

19

SWAROVSKI OPEN INNOVATION PROCESS

21

BUSINESS DRIVEN SEARCH FIELDS

PREEMINENT PLAYER IN THE JEWELRY INDUSTRY: FASHION MEETS TECHNOLOGY

New

Ma

teri

als

an

d M

ate

ria

l C

om

bin

ati

on

s

• Innovative and attractive materials for all fashion oriented segments

• Materials with different physical characteristics e.g. ceramics

• New inspiring carrier materials

Ap

pli

ca

tio

n T

ec

hn

iqu

es

• New application techniques enabling unexpected and easy to use jewelry solutions

• Application of crystal on other materials than usual (outside of the box)

• Automation

New

Lo

oks

an

d S

urf

ac

es

• Functional and

smart surfaces

• Brilliance

• Colors and

effects

• Surface

structure

• Durability

Je

welr

y M

an

ufa

ctu

rin

g E

xc

ell

en

ce

• Disruptive manufacturing technologies

• Process innovations to increase speed and efficiency

• Setting of jewelry stones

• Smart packaging

New

Bu

sin

es

s

• New business concepts along the value chain from production to retail

• New markets and industries

• Digital transformation opportunities

Global

OPEN INNOVATION @ SWAROVSKI

Chemicals

Consumer Goods

Design

FoodFurniture

Industrial Coatings

Manufacturing / Engineering

Materials

Medical

Optics

Personal Care

PlasticsPrint

Product Compliance

Toys Computer / IT

Our SEARCH FIELDSCustomer Needs

TECHNOLOGY in FocusPartner Technology Portfolios

Diversified NETWORKPartner Industries

Global COVERAGE“Somewhere, someone has already solved your problem”*

New Looks and Surfaces

New Application Techniques

New Materials and Material

Combinations

New Jewelry Manufacturing

Technology

New Business Models

* Slogan accredited to Creax, a worldwide reference in innovation consulting

A B R A S I V E S

A D D I T I V E M A N U F A C T U R I N G

A D H E S I V E S

C H E M I L U M I N E S C E N C E

C O A T I N G S

D I G I T A L

M A T E R I A L S & P R O C E S S

N A N O T E C H N O L O G I E S

P O L Y M E R S

P R I N T I N G

R O B O T I C S & A U T O M A T I O N

T H I N F I L M S

ENA

BLI

NG

TEC

HN

OLO

GY

ACTIVE ENGAGEMENTS© Copyright Swarovski AG, 2016

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INNOVATIVE PRODUCTS

Energy Autonomous Activity Tracker

The activity tracker producer Misfit developed in

collaboration with Swarovski a new Shine product,

working without battery thanks to the new “Energy

Harvesting Crystals” technology which transforms

the energy of the daylight into electrical power.

2015 SWAROVSKI SHINE

Digital Transformation in the Jewelry Industry

FASHION MEETS TECHNOLOGYOPPORTUNITIES

© Copyright Swarovski AG, 2016

Wearable Technologies in the area of

Energy Harvesting and Connected Mobility

Next Generation Manufacturing in the

Fashion Industry

Platforms for premium and luxury customers enablingvalue creation

Virtual & AugmentedReality

Robotics & Machine Learning

Big Data

Once a new technology rolls over you, if you‘re not part of the steamroller, you‘re part of the road.

Stewart Brand

Make it beautiful and versatile

Work

Sleep

Sports

Leisure

night

Leisure day

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NEW INNOVATIVE PRODUCTS

2016 COLOR CHANGING CRYSTALS

New Technology allows cycling of colors on

crystals. Together with the Designer Tory Burch

Swarovski integrated it’s color changing

technology first time into a garment. Shown at

the famous New York Met Gala Night in May

2016 and worn by actress Freida Pinto.

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THIS IS YOUR ADVANTAGE MORE KNOWLEDGE AND MORE BUSINESS

• Collaboration leading to additional

business for both sides

• Research & Development

Agreements

• Workshops for transforming your

expertise into the fashion industry

• Benefit from a strong brand

http://openinnovation.swarovski.com

FROM EMERGING TECHNOLOGY TO ON-TREND SOLUTIONS

VIA TECHNOLOGY PLATFORMS

Emerging Technology Areas

Materials

Application Technologies

Cutting & Polishing

Surface Refinement

Adhesives

Light & Optics

Digital & Embedded Systems

SWAROVSKI TECHNOLOGY PLATFORMS

Global Trends

• Sustainability

• Individualization

• Digitalization

• Globalization

Emerging Technology Areas

• Advanced Materials

• Big Data

• Coatings

• Wearable and Flexible

Electronics

SCION

OPPORTUNITY PROCESS

SCION (SWAROVSKI COLLABORATIVE INNOVATION & OPEN NETWORKING)

35

• Why and how Open Innovation is Dramatically Disrupted by Hyperconnectivity and the Digital Revolution

• How Swarovski built a Structure for Utilization of Innovation Ecosystems

• Learnings from 3 years of Open Innovation Networks Management

OPEN INNOVATION IS LIKE A PARACHUTE

IT WORKS BETTER WHEN IT‘S OPEN

THE NEW LOGICS OF INNOVATION ECOSYSTEMS

INNOVATION

ECOSYSTEMS

Integrate exploration (knowledge)

and exploitation (business)

ecosystems

SCIENCE

ECOSYSTEMS

Focus on generating

new knowledge and

technologies

BUSINESS

ECOSYSTEMS

Focus on creating customer

value

http://www.open-jim.org/article/view/337

Hannes Erler in Journal of Innovation Management:

38

Combining Explorative and Exploitative Capabilities on different levels

• Organizational

• Contextual

• Sequential

Create Understanding and use Methods to make it happen.

AMBIDEXTIRITY

PREPARE & LAUNCHUNDERSTAND

Design Thinking & Stage Gate Sequential Ambidexterity

39

GO TO

DEVELOP

GO TO

LAUNCH

DEVELOP

POST LAUNCH

REVIEWGO TO

IDEATE

GO TO

REFINE

START

PROJECT

REFINEIDEATE

UNDERSTAND OBSERVE

POST

OF

VIEW

IDEATE PROTOTYPE TEST

Innovation Portfolio Management

• Lean Start-up

• Design Thinking

• Agile Stage Gate

• Business Model Canvas

• Business Model Navigator

CREATING WITHOUT CORPORATE LIMITS

41

• Trust and Purpose

• Experimentation

• Collaboratio

A NEW CULTURE

Culture Eats Strategy for Breakfast (P. Drucker)

..... But Good Leadership Practices must take

care, that enough food is on the table!

Innovation Focus Areas

43 Innovation and Product Management

We are improving the world

by bringing sparkle to

peoples’ everyday lives!

B2C product

identification

Uniqueness

Color & shaping

possibilites Surface

solutions

Application

solutions

Usability

Diamond for

every woman

Crystal

production

Jewelry

production

Digital jewelry

platform

Platforms

Augmented reality

marketplace

Next generation

manufacturing

Application

platform

44

45

Versace, 2010

• OI enables exploration and integration of transformative

technologies

• In the digital age the number of oppportunities is exploding

• Cross-industry partnerships lead to new market opportunities

and top access points to innovation ecosystems

• Internal and external relationship management vital for

customer value creation

• Measuring success needs organizational and managerial

framework

• Transforming New Capabilities to the entire organization is

next step in evolution

LEARNINGS

46

WE ADD SPARKLE TO PEOPLE’S

EVERYDAY LIVES.

BACKUPS

Strategic TransformationFrom Search Fields to Focus Areas

48

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© Copyright Swarovski AG, 2017

SP Innovation Search Fields (2013 – 2016)

SCB InnoVision Focus Areas (2016 & Beyond)