Integration of Research & Innovation and Business strategies

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2 Integration of Research & Innovation and Business strategies Dr. Fred van Ommen CEO Bizz Innovation Group (former SVP Innovation & Strategy Philips Group Innovation) Bizz Innovation Group

3 RESEARCH is turning money into ideas. 3

4 INNOVATION is turning ideas into money 4

5 Change is the key driver of business creation We cannot solve our problems with the same thinking we used to created them 5 Albert Einstein 5

6 The Effectual Catalyst 6

7 Today s logic cannot to deal with the global trends: New ways of thinking and working are required Aging population/ Chronic diseases The rise of emerging markets Increased consumer/patient empowerment and (un) sustainable lifestyles Climate change and sustainable development

8 7 million adults die each year from Cancer 8 million people are newly diagnosed with tuberculosis every year and it remains a worldwide threat 17 million adults die each year from Cardiovascular Disease 24 million people worldwide are affected by Alzheimer's disease 285 million adults have diabetes 300 million people suffer from Asthma; more than 200 million have Chronic Obstructive Pulmonary Disease 8

9 It is getting worse. In US 75% of Healthcare costs are related to chronic diseases In China 70% of diseases are chronic diseases (260 million people) In China 85% of deaths are related to chronic diseases In China s big cities 20% of children between 7 17 are overweight/obese From number of obese people in emerging countries went from 250 million to 905 million (> x3) In 2020 emerging countries will spend 60% of their Healthcare budget on chronic diseases 9 9

10 Patient behavior and Pharma cost trend 50% of prescriptions are never filled 25 30% Of medicine are taken properly $290 billion Direct and indirect healthcare costs due to nonadherence (US) Pharma model is broken

11 Global Trends Requiring Disruptive Innovations Population growth China India United States Indonesia Brazil Pakistan Nigeria Bangladesh Russia Japan

12 Increasing needs 12

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14 The logic of the business case today Global Trends Strategic Ambition Markets Categories Brand image Right To win Technology position Market position Business Case NPV, ROI. Opportunities 14

15 with Open Innovation your are no longer limited to your in house technology/market positions Global Trends Strategic Ambition Markets Categories Brand image Right To win Technology position Market position Business Case NPV, ROI. Opportunities 15

16 HeartStart Home Defibrillator 80% of the cardiac arrests occurs at home Brain death and permanent death start to occur in just 4 to 6 minutes Few attempts succeed after 10 minutes. Only 5% survives! No time to read the manual! Easy to use Specifically designed for use at home Life saver Making a difference 16

17 Disruptiveness to the customer determines how to innovate Global Trends Strategic Ambition Markets Categories Brand image Disruptive ness Existing vs New to world Right To win Technology position Market position Business Case NPV, ROI. Opportunities 17

18 Granularity of Innovation Market life cycle OUTSIDE IN Disruptiveness to consumer OUTSIDE IN New to the world New adjacent category New in the category Improved The Granularity of Innovation, A more granular perspective on innovation types driving enduring company performance. Granularity of Innovation is courtesy of Fred van Ommen (Bizz Innovation Group) Corina Kuiper (The Effectual Catalyst)

19 Two dimensions creating view on different types of innovation Existing category New category emerging Market life cycle (Segment/geo) growth mature Product Creation New Business Creation A map to the Innovation Jungle decline improved product new in category new new to adjacent world category New category Granularity of Innovation is courtesy of Fred van Ommen (Bizz Innovation Group) Corina Kuiper (The Effectual Catalyst) The Effectual Catalyst Disruptiveness (proposition is ) 19

20 . that enables different innovation perspectives From market share battle in existing spaces to opening new spaces Existing category New category Granularity of Innovation is courtesy of Fred van Ommen (Bizz Innovation Group) Corina Kuiper (The Effectual Catalyst) 20

21 Different types of business and business models Established business Product creation New business New Business Creation Recombine existing resources Mitigating risk Existing ecosystem Market share battle Customer insights known Leverage existing channels Established business models Focus on execution/leverage Short/mid term Existing organization Generate new opportunities Deal with the Unknowable New ecosystem Building mountains Changing customer behavior Building new channels New business models Learning / iterative Mid/long term New capabilities 21

22 4x4 innovation matrix for DSM 22

23 Conclusions Invention is turning money into ideas Innovation is turning ideas into money Disruptive innovation involves changing customer behavior, the ability to understand the customer will determine success or failure Innovation has many different forms, which can be mapped on the 4x4 Innovation matrix Plot your existing and new products into the different strategic areas of the innovation matrix for your strategic portfolio management Think BIG, act small, accelerate fast 23

24 Think BIG, act small, accelerate fast 24