How Philips’ Open Campus Breeds Innovation

By: Gerjan Van De Walle

As Business Development Manager at Philips Research, Gerjan van de Walle was instrumental in opening up the electronics giant’s development facility in The Netherlands to competing companies, and making open innovation the ‘buzzwords of the day’. InnovationManagement.se asked him about the process, the difficulties he had to overcome and the advantages are of cramming thousands of engineers and researchers into one square kilometre.

How would you explain open innovation?

– It’s about using the resources internal and external to the organization to accelerate innovation or to capture value that would otherwise be lost. It’s about bringing technology from outside the company inside as well as making use of technology that you don’t want to bring to the market yourself, through a spin-off company perhaps, or making know-how and infrastructure available externally in some other way.

Philips opened up the High Tech Campus at Eindhoven to other companies in 2003 – was that also when you started applying the principles of open innovation in Philips Research?

– The term “open innovation” may be quite new but the way of working has existed for decades. In the 1980s, for instance, we were working with Sony in an intense collaboration on standards for optical recording. The last 8-10 years we have applied the principles more actively, which resulted in the creation of the open campus in 2003. A year later we took a step further and introduced an open laboratory concept, which we call MiPlaza. In 2006, MiPlaza was formalized as a separate division of Philips Research.

What was it like – going from closed to open innovation?

– Adopting open innovation is not an isolated decision, it was a process that grew over time and at each step along the way we experimented. Some milestones were passed in the late 1990s when JDS Uniphase took over some of our laser technology developments but chose to keep the research activities on our – at the time still closed – campus in Eindhoven. Another step during the same period of time was when we moved 80-90 people to IMEC in Belgium to let them work for us there, even though it was not our facility, simply because it was more efficient.

What difficulties did you have to overcome?

– The biggest difficulty by far is the human factor. This way of working requires a fundamental change in the mentality, especially among the scientists and technical developers. You are naturally proud of your work, but it is necessary to overcome the ‘not-invented-here-syndrome’. That’s the most difficult and longest part of the process.

The biggest difficulty by far is the human factor

What are you still planning to do in terms of opening up you innovation process?

– We are constantly exploring new avenues to open innovation. The next step might be to look at incubators and the spin-off process in a more formalized way. One example is working with intermediary companies like Ninesigma and Innocentive, which act as innovation brokers and connect firms with spare technology with those who need it.

Today the High Tech Campus contains over 90 companies with 7,500 employees. What is the flow of ideas like in this ecosystem? How dominant is Philips?

– The only requirement for companies entering the High Tech Campus is that they must fit into the innovation ecosystem, they must add value to the companies already there. There are no rules about flow of ideas: it’s up to the companies to network, make business deals etc.

– As for Philips’ dominance, we are still the largest resident on the campus but we are stepping away from managing it. Philips currently owns the land and the buildings but is planning to sell them in order to remove any barriers to other companies moving here.

How do you handle issues such as patents and intellectual property in MiPlaza?

– There is a technical toolbox, a generic pool of know-how in MiPlaza. In Philips’ collaborative projects, the other companies usually have a specific application in mind and then the patents and other intellectual properties concerning the application will belong to them. But we claim the right to access non application-specific improvements made to our toolbox along the way.

The High Tech Campus only covers about one square kilometre. How important is the clustering effect of this close proximity between the employees of the different companies?

The High Tech Campus is like Silicon Valley, reduced to the size of a post stamp

– It’s extremely important. I sometimes say that the High Tech Campus is like Silicon Valley, reduced to the size of a post stamp. And I see that as a positive thing, it makes it very easy to keep in touch with other people. You can call them up and be in their office within 10-15 minutes. Meeting people face to face in their office or during a coffee break is crucial for getting that ‘Aha!’-experience. E-mails or other online activities cannot substitute for physical interaction.

In 2007 and 2008, a handful of small companies such as Silicon Hive and Liquavista were spun-off from Philips Research. Was this an effect of your open innovation strategy?

– Spin-offs are one aspect of an open innovation strategy – that I call ‘inside-out’. When we start a project in Philips Research our horizon is about five years to market. At some point in that process you have to question whether the project still fits the business strategy.

But would you have acted differently 10-15 years ago in this situation?

– By making the open innovation strategy explicit at Philips, we also became more explicit about the process of looking at an innovation and asking ourselves: What is the best way to create value from this? I think that this has increased the number of spin-offs from projects which might before have ended up lying on the shelf.

The projects conducted within MiPlaza range from improving video encoding, to constructing more efficient wood furnaces for third world countries. Isn’t there a risk with open innovation that projects get so diverse they are no longer relevant for Philips?

The open innovation processes guarantee that everything done is relevant to Philips

–  No, the reverse applies. The open innovation processes guarantee that everything done is relevant to Philips. Otherwise, the project is abandoned and sold off as a spin-off company perhaps, or licensed, etc. Certainly, the things we do at MiPlaza are diverse, but Philips is a big company with a large market portfolio.

An early partner in MiPlaza was the publicly supported research institute Holst Centre. What role does the academic world play in the open innovation environment?

– I think there are three major components required for an open innovation environment to function: the government, the private sector and public knowledge institutions such as universities, etc.

• the enabling role of the government is needed to provide different initiatives such as publicly supported innovation programmes, grants for startups and so on;
• the private sector is obviously needed, but open innovation cannot work with only private companies. They might start working together in a precompetitive phase, but ultimately they need to look at their own economic benefit;
• public institutions are the knowledge creators that by definition are open. They are also needed to supply the innovation environment with the highly educated people who will do the actual work.

– A good open innovation system needs a good balance between all the actors in order to counterbalance the economic forces that steer the private companies.

By Erik Olausson, freelance journalist