Open Innovation*: Gateway to Breakthrough Ideas

Transcription

1 1 Best Practice Guidebook Open Innovation*: Gateway to Breakthrough Ideas guidebook summary Firm: Amway Corp. (Health & Beauty Division) Industry: Consumer Goods Headquarters: Ada, Michigan, United States Geographic Footprint: Global Ownership: Private Revenue (2011): Amway is one of a family of companies that reported revenue of $10.9 billion USD Problem: Amway needs to develop a process to draw on ideas and technologies outside of the company and increase its capacity for systematically identifying and developing breakthrough innovations. Solution: Amway establishes an open innovation (OI) team to capture emerging technologies and support the stage-gate product development process. Key steps include: Creating a formal ideation process (discovery process) spanning need identification and entry in the stage-gate development process Assessing the technical feasibility and market potential of new technologies Instituting project checkpoints for approval, resources, and funding Establishing cross-functional engagement points between OI, Product Development, and Marketing Business Results: Amway s open innovation practices have led to: 17 high-impact products launched in 55 markets $700 million (USD) in revenue Resources Required: Dedicated team: a team manager and two or three technology scouts Systems: searchable database to centralize technology submissions Budget: funding to evaluate or develop the technology Applicability of Best Practice to Executive Functions: Function Applicability R&D/Innovation Corporate Strategy Marketing * Open innovation is based on the tenet that ideas can come from anywhere, that they can be used throughout the new product development process, and that unused ideas can be utilized by other businesses, or new markets or licensed externally.

2 2 Amway institutes an open innovation process to identify and develop external technologies that address prioritized research needs Open Innovation (OI) Discovery Process Identify Needs Discover Technologies Evaluate and Refine the Technology Develop a Solution Advocate the Solution Stage-Gate Product Development Process Need* Technology Solution Potential Product Objective Objective Objective Objective Objective Objective Create a technology map of prioritized needs Identify external technologies that address needs Evaluate each technology s feasibility Translate the technology into a solution Submit the solution for entrance into the new product development process Develop the solution into a market-ready product Participants Participants Participants Participants Participants Participants Technology Planning Committee Technology scouts Brand Manager Technology scout Technology Review Board Technology scout Brand Manager Division s global marketing team Technology scout Marketing Business Line Management Team Product development team Marketing Project Management Activities Activities Activities Activities Activities Activities Identify a list of potential needs for development Prioritize needs and build a technology plan Assign needs to the appropriate R&D department Assign team lead and technology scouts to each need Conduct comprehensive research on potential external sources for technologies Carry out initial viability screening of identified technologies Conduct feasibility assessment based on the relevant development category for the technology Submit the technology to the Technology Review Board for approval, resources, and funding Secure buy-in from the business line s marketing team Collaborate with Marketing to conduct concept development and testing with customers Create a business case to illustrate the solution s commercial and customer value Present the solution to Marketing and the Business Line Management Team for the go/no-go decision on further development Place approved solutions in the product development process Cultivate the project through the stage-gate product development process * A need refers to any unmet customer demand, differentiating technology, or product component.

3 3 key takeaway: Create a dedicated open innovation team and give it a distinct role within R&D Amway s open innovation (OI) team is a separate department with its own budget and staff within R&D Open Innovation Team s Role within the R&D Organization Business Case for a Dedicated Open Innovation Team Director of Health & Beauty, R&D VP of Health & Beauty, R&D Product Development Team: Beauty Division Health & Beauty Division, R&D Department Vice President of Health & Beauty R&D Open Innovation (OI) Team Product Development Team: Health Division Amway conducted a five-year analysis of its innovation pipeline, which highlighted the organization s disproportionate focus on incremental innovation. This realization spurred the business case for a dedicated OI team. Business Case Components Explain how an OI team can create competitive advantage by: Focusing on long-term projects outside of the stage-gate process Concentrating on breakthrough or disruptive technologies Identifying and incubating emerging technologies Differentiate the OI team s purpose from Product Development s role and articulate how it should integrate with Marketing Present case studies from companies with successful OI teams (i.e., Procter & Gamble, Kraft, and Pepsico) Emphasize that the OI team would consist of six existing research staff and require no additional personnel New Technology Manager The manager leads the OI team, defines the team s role, and manages the OI process. Technology Scouts* Technology scouts are veteran researchers with years experience in new product development. Responsibilities Identifying and evaluating new technology solutions Scouting for solutions to core business needs Developing key relationships with suppliers and other OI sources Bringing immature solutions to the appropriate level of technology readiness for transfer into the product development process Open Innovation Team s Focus The OI team spends 80% of its time on the discovery process, or the pre-stage-gate phase. The team spends the remaining 20% on managing projects through the stage-gate product development process. * See the Tools & Resources section for a complete technology scout job description.

4 4 key takeaway: Embed cross-functional engagement throughout the open innovation process Throughout the discovery process, cross-functional planning and review committees help ensure all open innovation projects support the company strategy and product development teams Cross-Functional Engagement Points OI Discovery Process Marketing Product Development Open Innovation PD M OI Steps Identify Needs Discover Technologies Evaluate and Refine Each Technology Develop a Solution Advocate the Solution Reviews Annual Technology Planning Monthly Discovery Phase Project Review Monthly Business Line Review Committees Technology Planning Committee Purpose: Identify, prioritize, and assign ownership of topics for development in the annual Health & Beauty division s technology plan. Members: The Vice President of R&D for Health & Beauty R&D managers: Product Development Technology Regulatory Customer Sourcing Analytical Services New Technology Manager (OI Team) Health & Beauty brand managers Technology Review Board (TRB) Purpose: Prioritize, fund, and track the pipeline of new technologies in the discovery process. Members: Chair: New Technology Manager (OI Team) R&D managers: Product Development Technology Regulatory Customer Sourcing Analytical Services M&A manager Procurement manager Business Line Management Team Purpose: Create buy-in with the team that incorporates the project into its product portfolio. Members: Chair: Business Line s Vice President of Marketing Business Line Product Development Manager Business Line Marketing Lead Project Management Finance Forecasting Sales Presenters: Technology scout (OI Team) Health & Beauty brand manager benefits of cross-functional engagement 1. Transparency OI and product development teams identify synergies and overlaps in projects 2. Continuous Engagement Marketing and product development teams are aware of and committed to technologies as they move through the discovery process

5 5 key takeaway: Balance needs between open innovation and traditional R&D approaches The Technology Planning Committee meets annually to identify and prioritize development needs and assign them either to Product Development for internal development, or to the open innovation team for external scouting Technology Planning Need Identification Need Prioritization Assigning Ownership Research Sources Technology Plan Assignments Customer Primary or secondary customer research Competitor Primary or secondary competitive research Technology Broad assessment of emerging and current technologies, including competitors technology investments and recent partnership or acquisition decisions Contextual Inputs Potential needs are discussed in the context of Amway s strategy and past projects using the: Brand strategy Business plan Previous year s technology plan Potential needs are screened and prioritized for inclusion in the technology plan based on their: 1. Commercialization Timeline how long it will take to prepare for commercialization: a. Short-term: 1 3 years b. Medium-term: 4 7 years c. Long-term: over 7 years 2. Technical Feasibility the likelihood of developing a solution given the current status of the technology 3. Potential Value the potential business opportunities and the commercial viability of a solution Technology Scouting Open innovation team works on needs that: Consist of mediumand long-term projects Are outside the product development groups expertise Involve IP captured/ procured from external sources Internal Development Product development teams work on needs that: Consist of shortterm or incremental development projects Are in line with the expertise of the product development groups Involve internally generated IP Case In Point: Anti-Aging Product In 2010, the Health & Beauty Technology Planning Committee prioritized a need for a differentiated ingredient for a new anti-aging product. The need was assigned to the OI team because it required the use of external sources and emerging technologies. ownership of needs: team lead and technology scouts The Technology Planning Committee assigns each need to a team lead, who pursues a solution that can enter the product development process. The team lead appoints a technology scout to investigate and manage each potential solution to the need.

6 6 key takeaway: Combine a broad network of ideation sources with a filtering system The OI team uses external and internal portals to solicit new technology submissions, which are then captured in a database New Technology Submissions The technology scouts use a variety of sources including the New Technology/Concept Database to identify new technologies and perform an initial viability screening Identifying and Filtering Technologies The OI team uses portals to post the current needs for new technologies and for formal technology submissions internally through a SharePoint site or externally using Amway s supplier portal. Additional submissions are received through informal channels such as the sales force, the advisory board, or senior executives. Suppliers Government The technology scout searches for potential ideas for their assigned needs via: New Concepts/Technology Database Patent databases Topical literature and technology websites Broad external network of topical experts (in academia or industry) and suppliers Search for Applicable Technologies Case in Point: Anti-Aging Ingredient The technology scout identified a promising lead on an exfoliation ingredient via a news release from Cosmetic Design Europe. A meeting was held with the supplier of the ingredient and its information was logged into the New Concepts/ Technologies Database. Other Businesses Customers Conduct an Initial Filter on Technologies Open Innovation Organizations Academia New Concepts/Technologies Database The New Technology Manager reviews the technology submissions, their IP, and then logs them in the New Concepts/Technologies Database. Once in the database, the technologies are available to the OI and product development teams for further investigation, development, and tracked to completion or termination. OI OI M The technology scout works with a brand manager to filter the potential technologies by examining their: 1. Relevance to the technology plan (Does it meet a customer or technology need?) 2. Commercial viability (Is it commercially viable? Can it be produced at a reasonable cost?) 3. Alignment to innovation and business strategies (Is it applicable to key markets?) The product only had limited in-vivo data and was temporarily shelved due to a lack of feasibility. A year later, new information was identified that supported the efficacy of the ingredient. 1. Relevance to the technology plan the ingredient could be used for the new anti-aging product need 2. Commercial viability the ingredient is already being produced by a reliable source 3. Alignment to innovation and business strategies the ingredient would create a competitive advantage, since it is new to the anti-aging market The project was reactivated for further evaluation and refinement.

7 7 TR1 and TR2 technologies typically require additional investment in internal or external development to bring them to TR3 status. key takeaway: Apply a fixed set of criteria to assess each technology s viability The technology scout classifies each technology using three technological readiness categories Technological Readiness Categories TR1 TR2 TR3 and then works with the brand manager to use five criteria scaled to the technology s technological readiness categorization to evaluate the technology s feasibility Efficacy/Functionality OI Measures likelihood of the technology becoming a solution Feasibility Assessment Criteria* Tier One (TR1): Conceptual Definition: The technology has potential to solve a problem or address an opportunity, but it remains at the conceptual level. Most of the information for this concept can only be found in secondary literature. Technical feasibility assessment conducted by the technology scout. Likelihood of commercial success: 1 20% Tier Two (TR2): Feasible Definition: The technology has been developed in a lab, tested, and is supported or accepted by the industry. Technical feasibility assessment conducted by: Technology scout Legal Likelihood of commercial success: 20 60% Technology Regulatory Marketing Tier Three (TR3): Viable Definition: The technology is effective, meets a precise customer need, and has a developed business case. Technical feasibility assessment conducted by: Technology scout Legal Marketing Likelihood of commercial success: 60 80% Technology Regulatory Product Development Third-party IP vendor (to conduct a final IP and Patent search) IP/Exclusivity Identifies any patents on similar solutions and the technology s availability Safety and Regulatory Pinpoints any safety and regulatory compliance issues for potential markets Market Assessment Establishes the market size, alternate solutions internally and externally, and the market strategy Commercial Viability Examines market integration, manufacturing cost, supply chain partners, agreements, licensing, and the competitive environment OI OI M OI Case in Point: Anti-Aging Technology The exfoliating ingredient was categorized as TR3, and its technical feasibility assessment indicates: 1. Efficacy has some support data from use by the supplier and from anecdotal evidence 2. IP/Exclusivity was the property of a small supplier; recommend creating a strategic partnership for the ingredient 3. Safety and Regulatory already addressed by the supplier 4. Market Assessment high potential but needs further clinical testing 5. Commercial Viability addresses a specific customer need; supply and licensing would be addressed through a strategic partnership with the supplier * See the Tools & Resources section for more information on how the criteria are scaled for and applied to each category.

8 8 key takeaway: Consistently apply a formal review process to project evaluation The Technology Review Board follows a defined process to determine resource allocation for all projects Discovery Process Project Review Input Discovery Process Project Review Discovery Process Project Review Outputs One-Page Project Summary 1 Background or project status depending on its technical readiness category Project s value proposition the solution it would facilitate or customer need it would meet Required resources investments required to advance the technology Project Plan including top three critical activities and a timeline for each Project Rating the technology scout scores the project on its Business Value, Potential Risk, and Priority on a scale of 1-3 (1=high; 2=medium; 3=low) Case in Point: Anti-Aging Idea Project Summary Project s value proposition the solution is first-tomarket anti-aging technology Required resources a clinical study to improve its efficacy rating and market strategy Project plan Identify anti-aging endpoints 2 Conduct clinical trials to improve efficacy Develop product concepts/prototypes Project rating BUSINESS VALUE POTENTIAL RISK PRIORITY Technology Review Board (TRB) The TRB assesses two to three projects per month and assigns resources based on: Potential business value (rated as high, medium, or low) Similarity to products already in the market Marketing strategy Alignment to customer needs Market attractiveness Overall fit of the solution The technological readiness categorization Where it would fit in the business line s portfolio trb funding When a project requires investment beyond standard project resources more than $150,000 the TRB must submit the project for approval to the VP of R&D or the Portfolio Management Team, which is comprised of the VPs of R&D for all of Amway s Divisions. Tier-One and Tier-Two Projects TR1 and TR2 projects are either: Returned to the New Concepts/Technologies Database for future use, or Assigned resources to advance their technical readiness to TR3 status. Once the project achieves TR3 status, it is resubmitted to the TRB for review. Tier One (TR1) Tier Two (TR2) Tier Three (TR3) Tier-Three Projects TR3 projects are either returned to the New Concepts/Technologies Database for future use, or approved and assigned resources for concept testing and market plan development. Case in Point: Anti-Aging Idea Next Steps The TRB approved the exfoliating ingredient project for development. It endorsed a clinical trial and a two-phase agreement with the supplier. The agreement provided exclusivity for four of the antiaging endpoints identified in the clinical trial. 1 See the Tools & Resources section for a downloadable project summary template. 2 Endpoints are preestablished targets used in hypothesis-based clinical or lab research.

9 9 key takeaway: Combine technical insights and customer expertise to translate an idea into a viable solution The technology scout collaborates with the brand manager to convert the new technology into a product concept Developing the Solution Step One: Identify Potential Concepts OI M The technology scout identifies key features of the technology based on the clinical trials and leverages the brand manager s customer insight to: Map the features to customer needs Identify the highest-value markets associated with those needs Develop an initial assessment of the market potential Case in Point: Anti-Aging Technology Following the clinical trials, the technology scout identifies and prioritizes four viable endpoints associated with anti-aging. The technology scout then works with the brand manager to brainstorm unique features for customers. Step Two: Secure Marketing Leadership Buy-in OI M The technology scout and brand manager review the solution (including its TR3 assessment, clinical trials, and market potential) with the appropriate business line marketing team to secure buy-in for adding the solution to its product portfolio. The technology scout and brand manager present the TR3 assessment, clinical trial results, and preliminary product concepts and market potential to the Global Beauty Marketing Team for concept testing approval. Step Three: Refine the Concept OI M The technology scout and brand manager collaboratively develop and test the concept and create a preliminary assessment of the potential market by: Identifying target markets Developing multiple product concepts Testing product concepts in target markets For seven months, the technology scout, brand manager, and supplier refine the product concept for the exfoliating ingredient by: Developing multiple product concepts Optimizing and testing the product concepts in the Beauty division s top four markets nurturing collaboration between marketing and oi The OI team establishes open communication and collaboration with Marketing with: 1. Top-Down Engagement The New Technology Manager engages the 2. Monthly Meetings The OI and business line marketing management VP of Marketing to establish a mutually beneficial relationship based on teams meet monthly for an open discussion on new technologies, customer reducing redundancies and focusing on customer needs. needs, and long-range product concepts.

10 10 key takeaway: Advance projects to the stage-gate process based on their commercial potential and role in the portfolio The technology scout and brand manager present the product concept s business case to the Business Line Management Team (BLMT) to secure approval for entry into the stage-gate process Securing Project Entry to the Stage-Gate Process Presentation Components The technology scout and brand manager present a: Summary of the solution s technical readiness, customer need, and business value (the business case* standardizes these inputs) Preliminary action plan for developing the product concept Product prototype demonstration (when applicable) Technology Scout Business Line Management Team Brand Manager The BLMT meets monthly to review three to seven projects (a mix of OI, product development, and product renovation) for entrance into the stage-gate process. technology portfolio: from oi to product development 100 Of every 100 technologies submitted to the OI team, only 60 qualify for a Feasibility 60 Assessment. Of these 60, approximately 12 are considered breakthrough ideas. 12 Of those 12 breakthrough ideas, 6 are approved by the Technology Review Board for funding and development. 6 Of the 6 approved projects, only 2 enter the stage-gate development process (i.e., they meet the cost, technology performance, and customer 2 appeal criteria). Revenue & Profitability Based on the findings in the business case Market Appeal Based on the number of markets and customer appeal. How many of the company s prioritized markets would embrace it? Did customers respond favorably to it during concept testing? Value to the Portfolio Based on the role the new product would play in the business line s portfolio. Does it fill a gap? Will it replace an existing product? How will it add value to the current portfolio? Project Review Criteria Case in Point: Anti-Aging Idea Next Steps The Beauty Division BLMT review the anti-aging project based on the three criteria: 1. Revenue & Profitability The technology would be the key differentiator for a first-of-its-kind product, resulting in a multimillion dollar product launch. 2. Market Appeal The new product has potential appeal for multiple markets including testing well in four of Amway s top 10 markets. 3. Value to the Portfolio The anti-aging product concept is a disruptive technology and would supplement incremental innovations in the portfolio. The new anti-aging product exceeds expectations, is approved, and receives funding for development in the Beauty division s product development process. * See the Tools & Resources section for a downloadable business case template.

11 11 Business Results Since 2005, the open innovation team s activities have led to multiple high-impact, new product launches Health & Beauty Division: Number of High-Impact Launches while generating more than $550 million in revenue from Amway s prioritized markets Health & Beauty Division: Revenue from Open Innovation (In Prioritized Markets) Number of High-Impact Launches Revenue ($ million USD) Launch Year Launch Year High-impact launches exceed a specific revenue threshold and are linked to an increase in average sales for the entire product line. The introduction of a high-impact product renews interest in all of the products within the line. overall impact of open innovation Since 2005, the OI team has had a demonstrable impact on revenue and has contributed to numerous successful product launches. The OI team s projects are directly responsible for more than $700 million in revenue for all the markets served by the Health & Body division and 17 high-impact products launched in 55 markets.

12 12 Profiled Company Perspective Key Lessons Learned Review all technology submissions with a long-term view: though a technology may not be a good fit currently, it might match an emerging customer need or priority in the future. View all technology submission parties as a potential partner, and try to determine what is valuable to them. In some instances, money may not be the greatest driver. For example, the exfoliating ingredient supplier required additional data to validate the product s efficacy but lacked the experience in conducting clinical trials. Build your OI team with existing staff. Amway assembled its OI team by reassigning six researchers each with a different specialization from its product development departments. Once the OI team had demonstrated ROI generating revenue and creating a steady stream of product concepts for product development Amway began recruiting externally for additional technology scouts. Outsource technology scouting for well-defined needs to OI vendors such as Nine Sigma, InnoCentive, and Innogent. Vendors can use their networks to identify potential technologies, overcome initial IP complications with their prenegotiated NDAs, conduct preliminary IP and feasibility assessments, and negotiate early-stage agreements. This additional resource allows technology scouts to focus on needs that require additional development (TR1 or TR2 category technologies) or specialized expertise. Involve representatives from Procurement early in the review, assessment, and negotiation processes; this inclusion will enable you to: Apply Procurement s supply chain expertise to feasibility assessments Create buy-in on technologies before they get to the procurement stage many OI projects require IP negotiations and supply agreements Improve financial returns by effectively managing the deal and keeping decision-making in line with the estimated project financials It is critical that technology scouts develop a network of external topical experts and innovators to tap into. By focusing on a know-who not a know-how approach to building networks, the scouts are able to make non-obvious connections between needs and potential solutions. Consequently, these networks help build the OI project pipeline.

13 13 Frequently Asked Questions The following is a summary of the question-and-answer session with David Groh, Manager of Health & Beauty New Technology R&D, during the Ask the Thought Leader Webcast conducted on 12 July To view the webcast, please click here QHow does Amway manage to stop ideas and projects at the right time? Are churn metrics used to determine how many projects should get through each phase of the ideation process? Terminating projects at the right time is a constant struggle. Researchers are passionate about their work and lose objectivity as they become attached to a project. The ideation process weeds out projects based on their fit and minimizes the amount of resources a project receives prior to the Technology Review Board assessment. Because of its cross-functional structure, the Technology Review Board is able to evaluate each project s worth objectively. The ongoing collaboration between the open innovation (OI), product development, and marketing teams also helps maintain objectivity. The technology scouts have metrics for how many ideas are evaluated, receive a feasibility assessment, and enter the stage gate process. The team uses the funnel for its metrics: Of every 100 technologies submitted to the OI team, 60 qualify for a Feasibility Assessment. Of these 60, approximately 12 are considered breakthrough ideas. Of those 12 breakthrough ideas, 6 are approved by the Technology Review Board for funding and development. Of the 6 approved projects, 2 enter the stage-gate development process (i.e., they meet cost, performance, and customer requirements). QHow long does it take to complete the ideation process? The ideation process can take between 2 and 18 months. The duration depends on two factors: (1) the maturity of the new technology, and (2) the OI team s familiarity with the technology and the customer need. QDoes the OI team own the front-end (idea generation) phase of innovation? Should that be the case? The OI and product development teams work together on idea generation. The technology scouts spend about 80 percent of their time, and the product development staff spend about 20 percent of its time, working on idea generation. There are 10 product development researchers for every technology scout in the Health & Beauty division, so this essentially boils down to the same amount of hours spent on idea generation by each group it s just spread out more on the product development side. QHow can the current OI process be improved? Additional resources to help with the technical due diligence and applications work. The team can continue to improve its transparency and communications; it is necessary to periodically reassess how and when discussions are held about the projects in the technology portfolio/ pipeline. The team also needs to work on its external focus. The OI team is currently investigating how to collect innovation ideas from Amway s employees.

14 14 QWhere there any cultural barriers to overcome before open innovation (OI) was successful at Amway? The two largest cultural barriers were (1) a lack of understanding about why OI is important, and (2) the not-invented-here mindset. Senior management s consistent, ongoing communication and support were vital to overcoming these barriers. It was important to communicate to the staff that: Amway has a lot of really smart people on staff, but not all of the smart people across the globe work for Amwway. Amway has limited resources and can only do so much with the current staffing levels so it needs to look outside for technologies. An OI team is not an indication that the research staff is unable to do its job. OI is focused on broadening the perspective of the experts in product development. The important thing to remember is that widespread acceptance will not happen overnight, and it takes a concerted effort to communicate the benefits and success stories. QWhat core skills do the technology scouts need? Technology scouts need extensive product development experience and networking skills. A strong product development backgrounds ensure technology scouts can identify new technologies, assess their technical feasibility, and develop them if need be. Many of the technology scouts ideas are sparked by conversations within their networks. To create a steady stream of ideas and new technologies, the technology scouts require an extensive network of external experts in academia and industry. Frequently Asked Questions (Continued) QHow did the OI team get approval to pull researchers out of product development to start the OI team? Were the technology scouts volunteers or assigned by management? Are the technology scouts permanently assigned, or are they rotated to generate fresh ideas and perspectives? Part of the business case for an OI team included a request to use preexisting research staff because the technology scouts would already be familiar with Amway s needs and processes and it would reduce the initial start-up cost. The initial six technology scouts were assigned because they were already doing some scouting in their existing role. However, only two of the original six technology scouts are still part of the OI team. This was due to an evolving understanding of which skills are vital for the technology scout role. Scouts are assigned to areas that are aligned with their product development background. Some technology scouts rotate to different areas to broaden their perspective and apply their expertise to new areas. QIs the New Technologies Database an off-the-shelf system? Amway custom built the content management database to handle all of the content and currently uses a SharePoint system to manage projects/ workflow. However, this system is not ideal and Amway is looking for a more robust off-the-shelf system. QWhat are Amway s methods for acquiring new technologies (e.g., joint ventures, collaborative development, M&A, licensing)? Amway s approach to new technology acquisition is generally through licensing or supply agreements. There have been a few acquisitions of a technology, but those are rare, since they require more resources.

15 15 QHas the OI team ever deployed a technology but decided not to market it? If so, was it licensed externally? This is not an area that Amway has looked into yet. The technology scouts are typically focused on identifying new technology acquisitions for a specific need or channel. However, the OI team will pass on promising new technologies to other divisions within Amway if they do not make it to market under the Awmay brand. Frequently Asked Questions (Continued) QAre the product launches country specific? Amway does not launch a product unless it can be commercialized in three of its top five markets. The 17 high-impact product launches discussed in the business results covered 55 global markets. QHow often does Amway use external advisors, technology champions, or open innovation vendors to complement its internal OI team? Occasionally the OI team has supplemented its efforts with external vendors and advisors. These instances are rare, require a well defined need, and are for the acquisition of technologies the OI team cannot assess on its own. QHow can a supplier or innovative company submit a new technology or idea to Amway s OI team? Amway s OI team relies on formal and informal submissions for new technology ideas. New technology ideas can be formally submitted through Amway s supplier portal or informally to any of the technology scouts, including the ATL thought leader David Groh. For additional information on collaborative innovation and strategic partners, please download the samples of GTM s Best Practice Guidebook Collaborative Innovation Process and Growth Process Toolkit Strategic Partnerships: Accelerating Growth through Principled Partnership Selection and Proactive Relationship Management. questions? If you have any questions regarding this webcast or the Growth Team Membership (GTM), us at GTMResearch@frost.com. To learn more about GTM visit us at or on

16 16 Supporting Tools & Resources Technology Scout Job Description Download the Native File ROLE & RESPONSIBILITIES: Leads the identification and evaluation of viable new technology solutions (e.g., products, ingredients, devices) by: Partnering with peers in Product Development and Marketing to identify external business and technology needs Leading the execution of scouting strategies/briefs against core business needs Building long-term relationships with external companies/ suppliers/universities/federal laboratories that are likely to develop technology solutions in specialization/areas of interest Establishing in-depth knowledge of the capabilities and culture of an identified set of key suppliers. Align key supplier capabilities with the needs of Product Development, Regulatory, and Quality Facilitating multi-level relationship development with key suppliers to set common objectives, identify success criteria, and establish milestones that ensure success for both ABG and the supplier Promoting and selling external ideas/technologies to a wide range of internal stakeholders Serving as the key technology expert partnering in collaborative outside research and feasibility evaluations Transferring new technologies to Product Development with the objective of commercializing new technologies quickly Conducting and/or leading the assessment of novel technologies/solutions Bringing non-ready technologies to appropriate level of technology readiness Documenting findings from scouting activities and effectively sharing with peers and facilitating future re-use (knowledge management) REQUIREMENTS: Education: BS or MS Basic familiarity or industry-recognized mastery of the following core skill sets and/or experience in: Entrepreneurial skills with experience selling external ideas to a wide range of internal stakeholders Open innovation skills, either as a practitioner at a company introducing open innovation or as a consultant helping multiple companies adopt open innovation Establishing new relationships and technology networks across a proven, broad base of external resources Business development and/or technology valuation Marketing, financial, and business aspects of technology development Intellectual property issues and IP protection Product development processes, principles, and practices including the critical design and development phases of a project from discovery through delivery Approaches, tools, and techniques that promote the ability to transcend traditional ideas, rules, patterns, and relationships to create meaningful new ideas, forms, methods, and interpretations in a variety of business situations Evaluating propositions or hypotheses and making judgments on the basis of well-supported evidence Identifying and anticipating problems, reviewing related information, developing and evaluating options, making decisions, and implementing solutions Effectively communicating and presenting technical complex data (both verbally and written) to influence all levels and global audiences Applying scientific research principles and practices, experimental design and execution, and creating or locating, interpreting, and evaluating research findings Planning, organizing, monitoring, and controlling projects; ensuring efficient utilization of technical resources and appropriate mitigation of risk to achieve project objectives Processing, documenting, and providing timely information with a high level of accuracy in a usable format Continuously seeking and sharing new developments, advancements, and knowledge in relevant fields Successful approaches, tools, and techniques for dealing with changes and adapting to a changing environment; adapting as needed to meet the requirements of the business

17 17 Supporting Tools & Resources Feasibility Assessment by Technology Readiness Category Download the Native File Technology Readiness Level (TR) TR1: Conceptual TR2: Feasible TR3: Viable Definition Assessment Criteria 1. Efficacy/Functionality Measures the ability of the technology to become a solution. 2. IP/Exclusivity Identifies any patents on similar solutions and the technology's availability 3. Safety and Regulatory Pinpoints any potential safety hazards and regulatory compliance issues for potential markets 4. Market Assessment Establishes the market size, potential alternate solutions internally and externally, and the market strategy 5. Commercial Viability Examines the market integration, manufacturing cost, supply chain partners, agreements, licensing, and the competitive environment The technology has potential to solve a problem or address an opportunity, but it remains at the conceptual level. Most of the information for this concept can only be found in secondary literature. Evidence supporting the ability of the technology to be a solution is typically found in third-party literature. The technology scout conducts a preliminary IP review through literature and patent databases. The technology scout conducts a literature review to identify any potential safety hazards. There is no regulatory assessment done at this time. Not conducted Not conducted The technology has been developed in a lab, tested, and supported or accepted by the industry. The efficacy is determined by test data or the technology scout's assessment of laboratorygrade samples. The legal team conducts a preliminary IP review. The technology scout works with the technology regulatory team to conduct a preliminary supplier assessments on safety; quantity of supply are provided and a high-level regulatory assessment is conducted. The brand manager assesses the potential benefits of the technology against market size and interest, and identifies potential alternate solutions internally and externally. The technology scout conducts an initial supply chain review to measure market integration, manufacturing cost, supply availability, and the competitive landscape. Assessment conducted by: Technology scout Technology scout Legal Technology Regulatory Marketing The technology has proven effective, meets a precise customer need, and has a developed business case. Technology scout may conduct performance testing of the solution. The legal team conducts a formal IP review and works with an outside firm to get a third-party validation. The technology scout works with the technology regulatory team to formalize the safety assessment, conduct a stability assessment, and evaluate regulatory compliance for the technology's top five markets. The brand manager formalizes the benefits of the technology, identifies a product home (which business will take it over), develops a preliminary marketing strategy, and estimates the market size. The technology scout collaborates with Procurement to conduct a formal supply chain review to measure: market integration, manufacturing cost, supply agreements, licensing and a competitive review. Technology scout Legal Marketing Technology Regulatory Product Development Third-party IP vendor (to conduct a final IP and patent search) Likelihood of commercial success: 1 20% 20 60% 60 80%

18 18 Supporting Tools & Resources Technology Review Board One-Page Summary Download the Template X Division X Proposed Technology : Technology Single Page Summary Sheet X Division Y Background/Project Status Value Proposition Required Resources to get to milestone Possible Project Plan- List Top 1-3 Critical Activities Activities XQ Year XQ Year XQ Year Year in Development Business Value Proposed Risk Proposed Priority

19 Supporting Tools & Resources Open Innovation Project Business Case Download the Template 19 Business Case Components Strategic Category: Background: Customer/Distribution Plan: Constraints or Risks: Assumptions: Technical Feasibility: Revenue/Profitability Potential: Market Appeal: Next Phase Deliverables: defines the purpose of the project (i.e., sustaining a product line, game changer, market expansion, etc.) describes the proposed product, identifies the customer need, and the product s role within the brand summarizes the customer testing results, and identifies what resonated with specific customer segments and distributors identifies potential issues such selling price, supply chain, and regulatory compliance outlines their potential effect on the project (e.g., customer acceptance) details the TR3 report and any clinical trials details the potential market size and target market share (such as projected sales for the first 12 months) lists all regional markets interested in the solution includes an outline of work the product development team will need to complete including key milestones and resource assessment