On this week's episode of Inside Outside Innovation, we sit down with Kevin Leland, CEO and Founder of Halo and Matt Muller, Director of Applied Innovation at Baxter. The three of us talk about the changing world of open innovation and what it takes to connect and collaborate, to solve big industry problems. Let's get started.

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Interview Transcript with Kevin Leland, CEO and Founder of Halo and Matt Muller, Director of Applied Innovation at Baxter

Brian Ardinger: Welcome to another episode of Inside Outside Innovation. I'm your host, Brian Ardinger. And as always, we have another amazing set of guests. Today, we have Kevin Leland, who is the CEO and Founder of Halo. And Matt Muller, who is the Director of Applied Innovation at Baxter. Welcome.

Kevin Leland: Thank you.

Brian Ardinger: Hey, I'm excited to have you both on the show to talk about a topic that's near and dear to a lot of folks out there. That's the topic of open innovation and how to corporates and startups and new ideas get started in this whole world of collaborative innovation. Kevin you're the CEO and founder of Halo. What is Halo? And how did you get started in this open innovation space?

Kevin Leland: Halo is a marketplace and network where companies connect directly with scientists and startups for research collaborations. It's about as simple to post RFP or a partnering opportunity on Halo as it is to post a job on LinkedIn. And then once it's posted scientists submit their research proposals. We went live in January. Matt and the team of Baxter was our very first customer. So, the earliest of early adopters and they were a really fantastic partner.

I came across the idea of Halo and got into open innovation really kind of by accident. The original concept for Halo was crowd funding for medical research. So, a little bit different, but we would work with technology transfer offices at universities to identify promising technology that just needed a little bit of funding to get to the next level.

And through that experience, I learned that scientists needed more than just funding. They needed the expertise and the resources of industry. Meanwhile, I was learning how industry was actively trying to partner with these scientists and these early-stage startups, because they realized that they were less good at the early-stage discovery process of research. And so to me, it seemed like an obvious marketplace solution. And so that's where the impetus of the business came and how we started.

Brian Ardinger: Let's turn it over to you Matt. From the other side of the table, from a corporation, trying to understand and facilitate and accelerate innovation efforts. What is open innovation mean to you and how did Halo come to play a part in that?

Matt Muller: As you mentioned earlier, I'm Director of Applied Innovation here at Baxter and I am in our Renal Care Business. And so that's the business at Baxter that's focused on treating end stage kidney disease. And that's one of Baxter's largest businesses. As a company, we have over $12 billion in sales annually, and dialysis in the renal care businesses, is our largest business unit.

And it is an area that we've struggled with innovation. And particularly what we excel at, at Baxter is we excel at treating kidney disease in the home. So, this is a particular therapy called peritoneal dialysis. Patients are able to do it in their home while they sleep.

And one of the big challenges that we have today with peritoneal dialysis is that patients need dialysis solution. They use about 12, 15 liters of this sterile medical solution every night to do their therapy. And today the way we do that and the way we've done it ever since this therapy has been around since early seventies is we literally deliver that solution in bags, by trucks. We make it in big plants in the United States and trucks drive all across the country and they deliver it to patients in their home.

And as a company, we, for a long time have said, we really need to change this business model. It's not sustainable for us. It requires our patients store a lot of water in their home or the solution rather in their home. And they have to essentially dedicate a whole room of their houses to storage of their supplies.

So, we have, for the longest time said, we want to change how this is done. And we want to be able to use the patient's own water in their home. And instead of delivering all these bags of solutions deliver concentrates much like if you go on, you buy a soft drink at the movie theater, it comes from a concentrated box of syrup that is, you add water to it and you have your soft drink.

And so that's our vision. And we've struggled for many years of how to bring innovation into the marketplace for making that pure water that we need in the home. We have a lot of very bright scientists at Baxter. The problem is that as Kevin mentioned before, our scientists are really good at solving particular problems in particular getting products to market.

Where we've been struggling is that the science has not or at least we haven't been aware of the science that could really allow us to break this barrier and make the leap to be able to make this pure solution medical grade solution in the home.

And that's why we've reached out to Kevin and his platform as a way to do that is to go out to a really broad community of researchers to bring new ideas into the company, to help us figure out new ways to approach the problem.

Brian Ardinger: The history of open innovation is long. And there's a lot of things that have been tried in the past. Did Baxter try other methods in the past? Or how did you go about trying to determine what things we should innovate internally and try to solve that way versus when and where we go outside for solutions?

Matt Muller: I would say as a company, we probably hadn't been as involved specifically in the university and in the startups space. So, a lot of times as a company, we have a lot of people that come to us with ideas and looking for funding. Most of the time, it's a very common proposition that they give you.

They need a certain amount of funding, and in three years, they'll have a product. Three years is like the magic number. And the reality is that it's frequently the claims and the charity are very oversold, and we haven't been really successful in that type of space. And so, we've been really looking at different ways to engage a larger community.

The other element of it too, is sometimes when you talk open innovation, we're limited by our existing network of people. And so that is the employees and who they work with. Maybe it's the fact we're in Northern Illinois, we're close to Northwestern University and people here have relationships with professors at Northwestern.

So, we develop those relationships and the open innovation opportunities through those connections. We've been looking into how do we expand that? Reach a broader audience and get a global connection, so to speak and open to new ideas.

Brian Ardinger: And that's a great segue. Kevin, you've worked with companies also besides Baxter out there and that. What are some of the typical mistakes or challenges that you see corporations making when trying to get started in an open innovation.

Kevin Leland: First of all get started is kind of the big challenge, because there's still some resistance to open innovation, and even the term open can be scary to some companies because it implies, or it can be interpreted as we're letting all of our competitors know what our strategic interests are.

And so, I'm even hesitant sometime about using the word open. I mean, we're really about facilitating partnerships between companies and researchers who have mutually shared interests and can work together to solve problems.

Some of the approaches in the past to me just seemed really inefficient, like traveling around the world and going to conferences and hoping you hear somebody speak or get a referral from someone or just call up the universities. Or just more likely to just work with Harvard, Yale, and Princeton are just example of select universities as if there couldn't possibly be great research coming out anywhere else.

And so that was part of the problem that I was trying to solve with Halo in terms of democratizing access to companies like Baxter for all scientists, regardless of where they are in the world, or what institution, where they reside and making the process a lot easier for both the scientists and for the company.

Because one of the reasons that companies don't pass a wider net is because it's a lot of tedious administrative work in terms of emailing and downloading attachments and PDFs. So, the platform is designed to streamline that entire process so they can cast a wider net.

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Brian Ardinger: Are there types of businesses or types of challenges that seem to work better when tackled in this open format or open environment?

Kevin Leland: We're focused on scientific innovation. So the other key difference is that all of our community are PhDs or part of funded startups. So it's not a challenge site where just anybody can submit an idea. So that's one of the key differences.

Brian Ardinger: Are the types of businesses or types of challenges that seem to work better in this type of environment.

Kevin Leland: In the case of Halo, we seen everything from very specific requirements that were similar to what Baxter was looking for where they lay out the actual technical requirements of what they're looking for. And then on the other side of the spectrum, we have what Bayer has done, which is a very open-ended call for proposals around the area of sustainable agriculture.

And so, the platform is flexible enough that it works for either approach. The key difference, I mean, it really depends on the goal of the company. So in the case of Baxter, a lot of our other customers like Pepsi or Reckitt, they're looking for a very specific solution, to a challenge that they have. Whereas a company like Bayer kind of doesn't know what they don't know, and they're just kind of want to see what's out there.

And then from a management perspective, when you do have a very open-ended call, you get a lot more proposals and the more specific requirements the fewer you are going to get. So, it kind of depends on, on what your ultimate strategy is.

Brian Ardinger: That's a great way to segue it back to Matt. I'm assuming that your work with Halo is not the only type of innovation initiative that's going on at Baxter. Can you talk a little bit about some of the other innovation efforts that are going on there and how does your work with Halo fit in with those?

Matt Muller: As a company, really, a lot of our innovation framework is built into our core business objectives. The way we're structured as a company we're in business units. So, as I said, I work in renal care, so everything, we start with our business and understanding what does that business strategy. Where do we want to play as a company? And then what are the key problems that we want to solve?

And I mentioned up front one of the key problems right now that we want to solve, is we want to figure out how to be a more sustainable business and get away from shipping water across the globe. So that's a key strategic initiative for our business.

So, then what we define at that point, what are the key elements or the problems that we need to solve in meeting that strategic initiative. One is how do we purify water in the home? And then we figure out what are the ways, you know, based on those specific problems we find we have, what are the best ways to solve that problem?

So, in some cases, we're at a point where we need more ideas. Whereas a company, we stagnated and we tried these pathways are not fruitful. We're kind of keep banging our head against the wall. Let's really go out there and see what's out there. And that was an example of what we did with Halo.

We also have our own internal engineering organization. We're a global company. So, there are specific things that we may do from an innovation project where we would work on it internally because we feel like we have the internal expertise. Or a lot of times what we will do is we'll look for external partnerships and that may be in the form of through various engineering consulting companies and product development consulting companies that we may partner with because they may have very specific experiences in a space that we're interested in, or maybe an adjacent space.

And that's another big element is we get siloed and focused in medical. But there are a lot of adjacent areas where technologies are being developed and, you know, maybe it's the petroleum or refining industry, or maybe it's, you know, some other area of medical that we just don't play in. And we can bring in these consultant firms that just have much broader exposure. And so that's also an element that we look at. So it's really a mix between this open concept like what we do with Halo, engineering consulting and partnerships, and then internal.

Brian Ardinger: You know the world is changing so fast and everything is happening so rapidly that it's tough to keep up. Even if you're an expert in your particular industry, like you said, even understanding what's going on in cross industries and that. Kevin, can you talk a little bit about the types of industries that you serve and why a platform like this can give advantage to corporate?

Kevin Leland: Yeah, absolutely. I thought it was interesting when Matt was talking about getting inspiration from other industries like oil and gas or petroleum, because that's really what the platform is designed for.

Researchers don't necessarily think in terms of what the commercial application is. They think of what their expertise is. And by collecting all this data on what their focus area is and then on the flip side, what companies are interested in, we can more programmatically find connections that in potential partners where otherwise, it would really have no idea that there might be a fruitful opportunity there.

In general, we've been focused like broadly on the area of sustainability, which can include anything from sustainable agriculture, like Bayer to sustainable packaging or work with PepsiCo and then water treatment, which is what we did with Matt and his team.

So that's a really broad category. We do have a few other opportunities are kind of outside that scope. But we are also looking at doing more in the medicine and pharmaceutical areas as well.

Brian Ardinger: Matt, can you talk a little bit about the early days of finding an innovation effort like this? What were some of the challenges or pitfalls or things you had to do to get buy in and then go and actually execute on this particular challenge?

Matt Muller: It's hard to sometimes in a large company get traction. And so, you need a champion. And Kevin's known that cause we've actually worked together to help to get that traction within Baxter. I think it helped as we got started because Kevin had some prior connections with some core people at Baxter, which helped to get some initiative.

But I think the biggest challenge is getting started and showing the value and gaining the buy-in to get something like this funded internally in a large company. I think a lot of people have an opinion of large companies have endless resources. And can do anything they want. But the reality is everything's looked at very closely.

You're constantly getting distracted with the new crisis or the new area of focus. And people are constantly changing roles and companies. So, you need that champion internally. You need to then be able to get that own internal opportunity to influence. To get the approval, to fund something like this.

But then secondly, you need the success stories to come out of it, because if you don't have that initial success, chances are that then you're not going to get that momentum and people aren't going to believe in following through with it. And that was key to our relationship here is getting really some initial successes that we could point to. And then things have kind of evolved from there.

Brian Ardinger: And that's a great point. I think a lot of companies are naturally more fearful because failing in an existing business model is not a good thing, but yet to innovate, you know, that there are some things that are probably not going to work and that. Open innovation almost gives you some opportunity to try and test and experiment a little bit outside of your core realm.

Gives you a little bit more ground cover sometimes to have different types of conversations than you would have, just if it was only internal and working from that perspective. Kevin, what else are you seeing when it comes to the benefits of companies reaching outside of their four walls to create their innovation initiatives?

Kevin Leland: The biggest benefit and maybe Matt can speak to this is they're identifying partners that they would have never known about otherwise. So Matt was able to identify a team in Australia. UNSW Sydney. And I don't think Baxter has anyone on the ground there, and probably wouldn't have found that otherwise.

And then the secondary benefit is it's almost like a market analysis tool or market intelligence tool because the companies are learning about new technologies and trends and different pockets of innovation around the world that they really didn't have visibility into previously.

Brian Ardinger: What are you guys most excited about moving forward?

Kevin Leland: I'm really excited to see this working. So, you know, I did a ton of customer discovery before launching Halo. I had dozens of interviews with innovation executives on one side and scientists on the other side. But you never really know until you actually go into the wild and introduce a platform to the users to see if it's going to work. And we've done 20 plus RFPs now since Baxter. We work to put 12 Fortune 500 companies, every one of them has resulted in signed agreements.

And, you know, obviously it takes time to see these products into the marketplace, but that's the next thing I'm excited about is when Baxter introduces a new home dialysis device, where patients can make the dialysis solution from their kitchen and don't have to have 900 pounds of solution sitting in their bedroom.

Brian Ardinger: Matt, what are you excited about?

Matt Muller: Well, I like your vision of the future there, Kevin, first of all. Beyond that, you know, and obviously helping us accelerate, getting the innovative products to market. The other thing that I've really enjoyed is being able to make these broader connections that we never would have before. Kevin used the example of we're connected now with the University of New South Wales on a really interesting research project.

But the other thing that this connected us with is a whole network of experts on an NSF Foundation called New, which is very well aligned with some of our core business and research interests that we never would have had before. You know, if we hadn't been involved with this initiative. And so, it's those types of things that also really get me excited because it really helps us.

You know, at the end of the day we're scientists. We're engineers. We all like collaborating with other scientists and engineers to solve problems. And this is just exciting because it broadens that network for us even more.

For More Information

Brian Ardinger: Matt and Kevin, thank you for collaborating here at Inside Outside Innovation and sharing some of the insights on what's working in this new changing landscape that we're in. So, I appreciate you both being on. If people want to find out more about yourselves or the companies and that that you work at, what's the best way to do.

Kevin Leland: For me, they can connect with me on LinkedIn. Just search Kevin Leland should be one of the top three, I think, or go to Halo. Science

Matt Muller: And similarly, you can connect with me on LinkedIn. I'm Matthew Muller, Director of Applied Innovation, Baxter Healthcare. We also have a company bio description on Kevin's platform. Halo. We also have put out two new challenge statements with respect to some of the key technical challenges that we have in our space. So, you know, go to Kevin's platform and check those out as well, please.

Brian Ardinger: Well, Matthew, Kevin, thank you again for being on Inside Outside Innovation. I look forward to continuing the conversation and thank you very much.

Kevin Leland: Thanks Brian.

Brian Ardinger: That's it for another episode of Inside Outside Innovation. If you want to learn more about our team, our content, our services, check out InsideOutside.io or follow us on Twitter @theIOpodcast or @Ardinger. Until next time, go out and innovate.

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