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Webinar: KLM Royal Dutch Airlines: A Lean Approach to Open Innovation Innovation Masters Series October 21, 2014 Rogier van Beugen, KLM Geoff Carss, Imaginatik © Imaginatik plc 2014 | www.imaginatik.com Why the Innovation Masters Series? Hear about innovation best practices from real-world practitioners Advance the state of the art of innovation discipline Share your perspectives and learn in a “community” setting 2 © Imaginatik plc 2014 | www.imaginatik.com The Age of Innovation Today’s leading companies excel at both Operations and Innovation 3 © Imaginatik plc 2014 | www.imaginatik.com Innovation Programs Imaginatik works with clients to build Innovation Programs that unlock new levels of innovation maturity. Innovation Maturity Framework 4 © Imaginatik plc 2014 | www.imaginatik.com Sustainable Innovation Competence The core elements of a mature enterprise-wide sustainable innovation competence 5 © Imaginatik plc 2014 | www.imaginatik.com Today’s speaker Rogier van Beugen Director of Innovation, KLM Royal Dutch Airlines Rogier is the Director of Innovation at KLM Royal Dutch Airlines. Over the past decade, Rogier has held a number of leadership roles at KLM Royal Dutch Airlines. The focus of the past three years has been organizational change, including innovation. Rogier is responsible for stimulating employees to be innovative and optimizing innovation by bringing in external ideas and inspiration. 6 © Imaginatik plc 2014 | www.imaginatik.com KLM’s innovation strategy & the Green Aruba Challenge 7 Introduction to Air France KLM and the aviation industry Innovation Strategy @ KLM Open Innovation endeavors © Imaginatik plc 2014 | www.imaginatik.com Air France-KLM is a global leader in air transport with more than 77 million passengers and €25.5 billion in revenues in 2014 KNOW HOW FLEET MODERN, FUEL EFFICIENT NETWORK & HUBS BRANDS 8 © Imaginatik plc 2014 | www.imaginatik.com Airline traffic will double in the coming 20 years 9 © Imaginatik plc 2014 | www.imaginatik.com Industry characteristics Core business unchanged since foundation in 1919 All Competitors have access to same suppliers (OEM’s) Highly cyclical, commoditized industry 10 © Imaginatik plc 2014 | www.imaginatik.com Competition = Battlefield Compete where all competitors have the same ‘hardware’ Where costs are everything Where all competitors share (roughly) the same business model 11 © Imaginatik plc 2014 | www.imaginatik.com The world around us is changing rapidly with many potential game changers impacting our industry… Exponential Change Aging population Urbanization / Megacities Migration Generation X,Y,Z Digital Natives Changing workforce Digitization & Internet of Things Automation & Robotics Energy game changers Networked organization 12 © Imaginatik plc 2014 | www.imaginatik.com Big data analytics Re-shoring Emerging economies/ Rise of middle class Imbalanced population growth Transparency & Trust Personalization & Choice 3D Printing Environmental concerns Globalization & State Capitalism Security 13 © Imaginatik plc 2014 | www.imaginatik.com Sources of innovation Use knowledge & Capabilities Enhance products & services Improve processes Develop skills Find value outside Other industries Technology Developments Startups 14 © Imaginatik plc 2014 | www.imaginatik.com Key elements of KLM’s innovation strategy Competences Programs (Cross company, multi department) 15 Venturing / Open Innovation Startup Scouting BioFuels © Imaginatik plc 2014 | www.imaginatik.com Big Data Business Model Innovation Robotics KLM is a leader in sustainability, which is recognized by its unique WWF partnership & 8 year consecutive number 1 position in the DJSI 8 times #1 sector leader, 4 times #1 super sector leader KLM targets and measures: Climate action Plan follow up: • From 2007 carbon neutral growth with enablers on low, mid and high impact level, including offsetting. • Partnership WWF 2008- 2012 and renewed to 2015, including biofuels: • 20% CO2 savings in 2020 and 1% biofuel in 2015. 16 © Imaginatik plc 2014 | www.imaginatik.com Open Innovation plays a key role in KLM’s innovation approach Connecting Knowledge & Resources Reducing Costs & Adding New Revenues Divestures Spin-offs Revenues New Revenues Licenses Own market revenue Own market revenue 0 Internal development cost Internal & external dev. cost Cost & Time savings from leveraging external development Costs Closed Innovation Our main OI challenges KLM Engagement Strategy & frameworks Internal Open Innovation Culture Technology Scouting Specific competencies 17 Open Innovation © Imaginatik plc 2014 | www.imaginatik.com Corporate Venturing KLM’s Green Aruba Challenge Why did we do it / why Aruba? The partnership KLM-ARUBA What did we do? What was the response? Selecting the winner 18 © Imaginatik plc 2014 | www.imaginatik.com Why Aruba? But we wanted to do more… biofuel flights can go anywhere 19 © Imaginatik plc 2014 | www.imaginatik.com Green Aruba: world-wide recognized ambition Richard Branson: “Aruba will set the lead for all other Caribbean islands” Source: TedX Binnenhof 31 march 2014 - Global challenges Dutch solutions 20 © Imaginatik plc 2014 | www.imaginatik.com Mike Eman, Prime Minister of Aruba about Green ARUBA: ” We looked for a development where we could connect growth and progress to wellbeing of our society” Building an entrepreneurship challenge The objective: help Aruba reach their goals through entrepreneurship The prize: launch of their business on Aruba (parallel to launch of biofuel flights) Activating the Dutch and Aruban ‘green’ startups to contribute Using the combined KLM and Aruba networks Finding the best innovations and supporting them 21 © Imaginatik plc 2014 | www.imaginatik.com The partnership Aruba - KLM Dividing the effort Feet in both continents KLM main organizer of the challenge Aruba facilitator of the prize (launch of 2 x 2 weeks, stay on Aruba) Commitment from Aruba to help bring the winner but also other submissions forward 22 © Imaginatik plc 2014 | www.imaginatik.com Using Innovation Central as the platform 23 © Imaginatik plc 2014 | www.imaginatik.com The selection process 50 + solutions e.g. 10 good idea’s Top 5 concepts Winner takes off 3 weeks April 7th 24 KLM Team 2 wkn April 28th Online © Imaginatik plc 2014 | www.imaginatik.com Dutch Jury Jury 2 wknon Bonaire May 2nd Offline May 17th Offline 1st selection will be done online by expert team comparing pairs of concepts 25 © Imaginatik plc 2014 | www.imaginatik.com Semi finals; Dutch expert jury 26 © Imaginatik plc 2014 | www.imaginatik.com High profile jury in the finals 27 © Imaginatik plc 2014 | www.imaginatik.com And the winner is… 28 © Imaginatik plc 2014 | www.imaginatik.com The results 50 (proper) submissions Strong top 20 Excellent top 5 Great reception on Aruba, in media but also among relevant partners both in NL and on Aruba (government, airport etc.) 3 from top 5 have started business Very positive perception; internal and external 29 © Imaginatik plc 2014 | www.imaginatik.com The winner has successfully launched! 30 © Imaginatik plc 2014 | www.imaginatik.com