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Simon Minderhoud: Philips Front End Innovation Processes
Summary from The Front End of Innovation Conference-Europe 2008
This talk once again provided an interesting glimpse into the way a large corporation organizes Front End Innovation. At Philips, like other large technology corporations, the importance of corporate research centers is much lower now than it was some decades ago. One reason simply is that research cannot support today’s fast innovation cycles. At Philips, as presenter Simon Minderhout pointed out, in 2006 they made 54% of revenues from new products, less than two years old. In 2003, this fraction was only 25%.
Mr. Minderhoud is a consultant for product innovation at Philips Applied Technologies and a lecturer on Short Cycle Product Development at the Eindhoven University of Technology and the National University of Singapore. He gave evidence how high-tech product development has changed over the years to cope with ever shorter product cycles, faster margin erosion and global competition. An example given was the timeline for market uptake and for price erosion of VCRs, DVD players and DVD recorders. The acceleration of product life cycles is breath-taking. How can product development keep pace with it? Open Innovation is the way, according to Philips. (See Henry Chesbrough: Open Business Models)
At Philips Eindhoven, a former corporate research campus has been transformed into the publicly owned High-Tech Campus Eindhoven. Many companies and research institutes in close community cross-fertilize each other. Among those, Philips Applied Technologies, a corporate-wide contract R&D services unit, operates the Philips InnoHub, an organization for Open Innovation. Other InnoHub sites are in Singapore and Shanghai.
The InnoHub’s mission is to be the innovation melting pot transforming ideas to business success. With customers being involved from the start of a project, they integrate user, business, market, and technology aspects of innovation.
People at InnoHub work with external and internal clients, creating a network of expertise. They utilize product demonstrators for a proof of concept stage, put validate with focus groups to garner customer insights and to learn how the usability of new products can be enhanced. Furthermore, they develop appropriate business models, and provide management tools to clients to sustain and improve daily operations.
In conclusion, this presentation provided insight into the complexities of a really modern innovation practice, co-operating globally with internal and external stakeholders. It clearly demonstrated a role model for other high-tech companies.
by Ulrich Spalthoff
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Chas Martin
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