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Changing the Innovation Game at Shell

Mon, 04/28/2014 - 17:29 -- KevinMcFarthing

Open Innovation has gained a lot of traction since Henry Chesbrough’s eponymous 2003 book.  Simplistically, it can be split into two.  The first, the vast majority, is inbound, where a business uses the assets of other companies to develop something new and take it to market.  The second is outbound, where a company licenses its assets to somebody else to take to market.  

Inbound Open Innovation usually employs a portfolio of approaches, from university collaborations to supplier-derived innovation.  Companies need to attract potential partners and make it easy for them when they interact, so one useful tool is to provide a gateway to the company, to advertise specific needs and to channel interesting proposals to the right people.

Shell employs 92,000 people, spending $1.3bn on R&D.  Despite this great strength, there is a strong complementary Open Innovation programme.  A core component of this is Gamechanger.  I’ve been involved with several innovation portal projects, and as a result have taken a strong interest in the area.  Gamechanger is one of my favourites.  I found out more on a recent visit to Shell Technology Centre Amsterdam where I met Jaco Fok, GM for Open Innovation at Shell.

The best Open Innovation programmes are fully aligned with strategy and have a clear view of what they need to deliver.  This may be a continual stream of incremental innovation or more radical options for stepwise growth, or for entry into new businesses.   As stated on its website, “The Shell GameChanger programme identifies and nurtures unproven ideas that have the potential to drastically impact the future of energy.”  So the positioning is clear, underlined by that important word, “drastically”.  The way it works is outlined in Figure 1 below.

 

Figure 1 Shell’s Gamechanger process

Once an idea is submitted, it is reviewed by a screening panel, consisting of any 2 members of the 12-strong Gamechanger team, which responds to the proposer within 48 hours.  The inventor and the team then work together to develop the idea further before a review by an extended panel, bringing in other relevant business experts. 

There are 4 key criteria on which proposals are judged:

1.  Novel – Is the idea fundamentally different and unproven?

2.  Valuable – Could the idea create substantial new value if it works?

3.  Doable – Is there a plan to prove the concept quickly and affordably?

4.  Relevant – Is the idea relevant to the future of energy?

The final destination for the Gamechanger team is a proof of concept, investing anything from $10k to $500k along the way.  The overall budget is protected.  Interestingly, the Gamechanger team has the final decision on which projects are funded; Jaco can’t be totally directive.

Gamechanger is open to internal as well as external proposals.  This principle embodies my view of the longer-term goal of Open Innovation – an idea meritocracy, where the best proposals are accepted and implemented, irrespective of the source.

Intellectual Property (IP) is almost always a challenge in Open Innovation.  For that reason, Shell takes a relatively flexible approach to IP ownership, depending on the nature of the technology and opportunity.  It’s also partly why they use a range of business models with external partners, definitely not a “one size fits all”.

 

Since its inception 17 years ago, Gamechanger has invested $250m into over 3,000 ideas, implementing over 100 and working with 1,500 innovators,.  One of the successful projects is massive, developing a Floating Liquefied Natural Gas (FLNG) plant, a truly radical innovation.  Another good example is using solar power to make oil extraction more efficient.

Shell is now considering expanding the remit of Gamechanger to build serial relationships with inventors and entrepreneurs.  In the near term there are also plans to establish a Social Incubator.  It’s likely to remain a leader in the energy industry as none of Shell’s oil and gas competitors appear to have anything similar in place.  With a truly impressive track record and a transparent and rapid process, Shell’s approach to Open Innovation has already changed the game.

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