Rewriting the Rules in R&D Doesn't Mean Starting Over From Scratch

BIF Research Advisor Alph Bingham and I shared an interesting exchange last week about new organizational models for R&D. Alph is the founder of and former CEO of InnoCentive - a Web-based community launched in 2001 that matches companies facing R&D challenges with scientists who propose solutions. It's one of the few open innovation models that has found financial success. It's worth heading over to Alph's blog for a full run through of our conversation but what I want to explore here is something Alph mentioned about sticking with the old (and how that "just ain’t gonna cut it") versus abandoning the old (which is equally short-sighted).

I've had many conversations over the past few months with organizations looking to embrace an open innovation model. Some have expressed desire to tear down the walls of internal R&D departments, opening up the few to embrace the many. Others, just don't know where to start. Here's what Alph had to say:

I actually remain a huge fan of “CLOSED innovation.” Only INSIDE can they understand the problems and programs to the extent that they can wisely dissect and reassemble pieces of solutions. And some of those pieces should be sought inwardly and some outwardly. And in that they will often have to come to grips as an organization learns and evolves.

Alph's point reminded me of an article I wrote a while back profiling another BIF Research Advisor, Larry Huston. Larry was the chief architect of P&G's groundbreaking Connect + Develop open innovation business model. (He's since moved on to found his own consultancy, 4Inno.) Today, P&G is network crazy - they have embraced the concept wholeheartedly and over 50% of their innovations are now sourced externally.

Here's what Larry told me back in 2006: We're talking radical re-design here. Most r&d organizations haven't changed since the days of Edison. Transitioning from an invention model to a connections model required a lot of new capabilities to be developed. In the same breath though, he also said that by far, P&G had the best and brightest the world had to offer working inside their R&D laboratories.

Connect + Develop's roots go back to the late 1980s. At that time, P&G changed its R&D model from a centralized structure based in Cincinnati to a transnational structure where P&G laboratories were linked around the globe. This transnational approach accelerated P&G's global time to market and revolutionized the way future organizations would structure their R&D organizations. Like all good models, this worked for a while but by the late 1990s, the company wasn't meeting its growth objectives and it was spending greater and greater amounts on R&D.

Following 3 years of concept work, Connect + Develop was born. Of the process, Larry says: Connect + Develop is really the tip of the iceberg. There's a mountain underneath in terms of the learning that took place, the evolution of programs, the various types of experimentation.

With their global solution networks, P&G is practicing what sociologist Mark Grannovetter calls "the strength of weak ties" in that the most efficient networks are those that link to the broadest range of information, knowledge and experience. At the same time, the only way to maximize the power of those networks is to have a strong internal organization which carefully and deliberately defines the criteria for accessing the networks.

Bottom line: Rewriting the rules in R&D doesn't mean starting over from scratch.

Photo courtesy of Flickr narly (photoshop hates me)

Posted February 26, 2008 by Chris Flanagan | Permalink | Comments (2)

Free Event: Hear from BIF Research Advisor Clay Shirky on Feb. 28th in Boston

BIF Research Advisor will be talking about his new book Here Comes Everybody this Thursday, February 28th at Harvard's Berkman Center.

Here's the skinny on this free event:

One of the culture’s wisest observers of the transformational power of the new forms of tech-enabled social interaction is Clay Shirky, and Here Comes Everybody is his marvelous reckoning with the ramifications of all this on what we do and who we are. Like Lawrence Lessig on the effect of new technology on regimes of cultural creation, Shirky’s assessment of the impact of new technology on the nature and use of groups is marvelously broad minded, lucid, and penetrating; it integrates the views of a number of other thinkers across a broad range of disciplines with his own pioneering work to provide a holistic framework for understanding the opportunities and the threats to the existing order that these new, spontaneous networks of social interaction represent. Wikinomics, yes, but also wikigovernment, wikiculture, wikievery imaginable interest group, including the far from savory. A revolution in social organization has commenced, and Clay Shirky is its brilliant chronicler.

And here's the link to learn more. If anyone from our community goes, let me know - I'd love to hear your thoughts on Clay's interesting points-of-view.

Posted February 25, 2008 by Chris Flanagan | Permalink | Comments (0)

Arrogance & Humility: A High-Wire Balancing Act

It's always fun when we add a new member to our research advisory council because I get to dig into their background, points-of-view, experiences, etc. I love this quote I came across by our newest member, Clay Shirky:

Arrogance without humility is a recipe for high-concept irrelevance; humility without arrogance guarantees unending mediocrity. Figuring out how to be arrogant and humble at once, figuring out when to watch users and when to ignore them for this particular problem, for these users, today, is the problem of the designer.

This quote could just as easily be describing the high-wire balancing act of business leaders managing their employees; civic leaders and their constituencies; even teachers and their students.

You can read Clay's original blog entry here

Illustration by Louise Ma; appearing on A Brief Message

Posted February 13, 2008 by Chris Flanagan | Permalink | Comments (0)

Don't Build Your Experimentation Practices on Eureka

He may have retired as President and CEO of Innocentive, but BIF Research Advisor Alph Bingham is far from retired. He recently launched is own blog - Innoblogger - writing about the wide-open rationale for open innovation. His recent entry, Edison, Archimedes and Solution Space goes indepth on a subject near and dear to us here at the Business Innovation Factory - what's the right way to organize around problem-solving and experimentation?

From Alph's blog:

In a nutshell, the distinction is one between the thoughtful application of trial and error (admittedly informed to varying degrees) and that of serendipity or the “aha” in which novel breakthroughs present themselves not in analytic response to prior experimental results but as sudden flashes of insight.

The complexity of innovation has given me a new found appreciation for the use of metaphor. I’ve used Alph's contrasting Archimedes/Edison example quite a bit over the past few years. So how should you organize for innovation - like Edison or Archimedes? It certainly makes you think about where you are on the spectrum and what opportunities might present themselves if you're willing to change your perspective and, more importantly, bring other problem-solvers into your equation. Again from Alph's blog:

Some may argue that “Eureka” has ALWAYS been a part of our scientific endeavors and hence our scientific institutions, whether the NIH, Bell Labs, university research, DARPA or the garage work preceding Kitty Hawk. True. I don’t disagree.

But our organizational practices COULDN’T be built on the Eurekas – we loved it when they happened but we ORGANIZED around a solid cycle of experimentation. Design can’t be trivialized by saying simply that we’ll assign problems to our own “Archimedi” or implement a series of random lateral exercises (i.e., bathing) to stimulate the experience. But thinking of the Archimedean model as “stepping on a star,” what can we do? My simple-minded answer is to take a LOT of steps “into space” and see if one of them doesn’t qualify. Don’t start with one or even a few hypotheses and “tack to the light,” but start with dozens, hundreds, maybe even thousands of initial hypotheses and judge them based on the brightness of the original point of entry rather than the subsequent efficiency of navigation. (Of course, maybe the future will hold more clever approaches (I actually hope so)).

No one can corner the market on smarts and diversity of exposure does create novel solutions. Innocentive is certainly testament to that. Thomas Edison once said that genius is 1 percent inspiration and 99 percent perspiration. Alph thinks it’s time to update that equation. At our summit a couple of years ago he said, "There will always be a lot of perspiration involved, but should the inspiration be 1 percent, or should we make it 10 percent by opening it up to a diverse net of human beings before you put the perspiration in?"

Related BIF content
Watch Alph at the BIF-2 Summit

Posted by Chris Flanagan | Permalink | Comments (0)

BIF Research Advisor Clay Shirky Launches New Blog

Just in time for the publication of his new book, Here Comes Everybody, BIF Research Advisor Clay Shirky has launched a new blog, conveniently titled with the same name. Later this month I'll be conducting our first podcast interview with Clay. Send me a note if you have questions I I should dive into with him.

In the meantime, check out his video from SuperNova and his first few blog posts which talk a bit about the new book. Described as a book about organizing without organizations, Clay writes "both the book and the blog are dedicated to the proposition that the internet isn’t just a decoration on contemporary society, but a transformation of it."

Sounds interesting and I'm looking forward to digging in.

Posted February 12, 2008 by Chris Flanagan | Permalink | Comments (0)

The MinuteClinic Disruption: Classic story in the 21st century

The Boston Herald ran a story over the weekend about Rhode Island-based CVS’s plans to locate low-cost health care clinics in retail stores in Boston. I'm sure CVS knew they were in for a fight considering the lengths many Rhode Island primary-care physicians have taken to block their efforts to do the same here in our state.

From the article Competition won’t ail you:

Boston Mayor Thomas Menino is concerned about CVS’s plans to locate low-cost health care clinics in retail stores in his city. Limited service medical clinics run by merchants in for-profit corporations will seriously compromise quality of care and hygiene, he has said.

The idea of the MinuteClinic is as much a mindset problem as it is a financial threat. The model runs counter to everything a physician has been trained for. Another problem - most physicians don’t want to be businesspeople and this is a real business conundrum. Following a disruptive strategy involves fear, risk and potential cannibalization—the mindset being that current customers (or patients as the case may be) are the lifeblood of the company (physician practices) and they must be protected at all costs. Of course in the end, these fears usually become self-fulfilling prophecies.

Clay Christensen is one of our research advisors here at the Business Innovation Factory. He would emphatically say don’t bother fighting the disruption. But he’ll also tell you that if you answer the disruptive threat, you shouldn’t invest your dollars in trying to advance your existing business model to please your existing customers in your existing value network. In so doing, you force the disruptive technology to compete on a sustaining basis, and will nearly always fail.

Clay suggests shifting responsibility for answering the disruptive threat to an autonomous organization that can then frame it as an opportunity. A new organization can pursue alternative channels, utilize different suppliers, and employ different services. Most importantly, they can do this without hindering their current, and most likely profitable value network while also giving their new growth ventures a solid foundation for success.

What does that mean for a primary-care physician's practice? Here's what Innosight (the consulting firm founded by Clay Christensen) has to say:

In reality, these clinic's present a good growth opportunity, but it will require significant change in one that requires a significant change in business practices vs. operating the sort of doctor’s office to which they are accustomed. Predictably, rather than seeing local doctors seize the opportunity, we are witnessing new specialists such as CHD Meridian and Whole Health Management ride the disruptive wave.

Without a doubt, this story will be one for the record books. It'll be fascinating to watch it play out. (Even though we all know the ending.)

Posted by Chris Flanagan | Permalink | Comments (0)

BusinessWeek Editor Bruce Nussbaum and Mavericks at Work Author Bill Taylor to Co-Host BIF-4 Summit

Duo to take stage at the Business Innovation Factory's fourth annual Collaborative Innovation Summit on October 15-16

BIF announced today that BusinessWeek Assistant Managing Editor Bruce Nussbaum and "Mavericks at Work" author Bill Taylor will co-host the BIF-4 Collaborative Innovation Summit on October 15-16, 2008 in Providence, Rhode Island.

Now in its fourth year, the BIF Collaborative Innovation Summit has earned a national reputation for its unique storytelling approach to an event that has been described as more conversation than conference. BIF-4 will bring together many of today's most compelling innovators, business model renegades and true transformers to reveal the secrets of innovation success through personal storytelling.

"I'm looking forward to co-hosting BIF-4," says Nussbaum. "The Collaborative Innovation Summit brings together a diverse line up of original thinkers to share stories in an intimate way – stories that are personal but have deep business value, too. BIF-4 will surely be memorable for all who attend — storytellers and participants alike."

Two important things distinguish the BIF Summit from other events. First, BIF doesn't pay storytellers or hosts to participate. Second, storytellers only get 15 minutes on stage and must commit to sharing a personal story about their first-hand experience creating innovation and driving change. This means no canned presentations and no company infomercials.

"The BIF Collaborative Innovation Summit is my favorite event of the year," says Taylor, who also served as co-host at last year's BIF-3 Summit. "By replacing canned presentations with something personal, the summit successfully weaves together multiple voices from very different disciplines in a very provocative way. It's a pleasure to be part of this unique experience again."

BIF-4 has big shoes to fill. BIF-3, co-hosted by Taylor and The Wall Street Journal columnist Walt Mossberg, featured storytellers such as Dallas Mavericks owner and technology entrepreneur Mark Cuban, Zipcar founder Robin Chase, MIT Age Lab director Joseph Coughlin, 37signals founder Jason Fried, Harvard Business School's Clay Christensen, former IBM Vice President for Technical Strategy and Innovation Irving Wladawsky-Berger, and information architect and author Richard Saul Wurman, among others. This year's line up promises to be even more exciting.

Video transcripts from past summits can be found in the BIF Innovation Story Studio at www.businessinnovationfactory.com/innovationstorystudio.

The sold out BIF-3 Summit hosted participants from 174 organizations. More than 65 percent of the attendees were CEOs, presidents, founders or senior leaders within their organizations.

"The BIF summit storytellers are all pioneers who created environments where transformative innovation emerged," says BIF Chief Catalyst Saul Kaplan. "They don't just talk about the importance of innovation, they talk about how to get the job done. That's our storyteller litmus test and it's the reason so many participants return year after year."

The Business Innovation Factory will roll-out the BIF-4 storyteller line up in the coming weeks. Participants are limited to 350 for this intimate and full-access, two-day event. For more information or to register, visit www.businessinnovationfactory.com/bif-4.

More about BIF-4 Co-host Bruce Nussbaum

Bruce Nussbaum is an Assistant Managing Editor for BusinessWeek, responsible for coverage of design and innovation. Previously, he was editorial page editor, a position he assumed in February 1993. He is also an essayist and commentator on economic and social issues. Mr. Nussbaum, who joined BusinessWeek in 1977, is responsible for the coverage of the annual Industrial Designers Excellence Awards, the BusinessWeek/Architectural Record Awards for architecture, and The World's Most Innovative Companies survey. He leads workshops on design and innovation at the World Economic Forum in Davos, Switzerland.

In addition to his numerous cover stories for the magazine, Mr. Nussbaum is the author of two books: "The World after Oil: The Shifting Axis of Power and Wealth" and "Good Intentions," an inside look at medical research on AIDS. His essays have appeared in "The Best Business Stories of the Year – 2002" and "The Best American Political Writing –2004." In 2005, he was given the John F. Nolan Award by the Design Management Institute. Mr. Nussbaum has been recognized by I.D. magazine as one of the 40 most influential people in design.

More about BIF-4 Co-host Bill Taylor

Co-author of "Mavericks at Work," Taylor is a provocative and inspiring voice on the future of business — an agenda-setting writer, speaker and entrepreneur who has shaped the global conversation about the best ways to compete, innovate and succeed. As a co-founder and founding editor of Fast Company, Taylor launched a magazine that won countless awards, and earned a passionate following among executives and entrepreneurs around the world.

Posted February 06, 2008 by Melissa Withers | Permalink | Comments (0)

John Kao Q&A: How the U.S. Can Reclaim its Innovation Edge (and why Rhode Island may hold the key!)

Today’s conversation on innovation typically focuses on individual companies or market sectors, but with his new book, Innovation Nation, Business Innovation Factory Research Advisor John Kao takes the talk to a whole new level: how can you innovate a country?

Kao may just have the most interesting–and diverse–resume of anyone I’ve come across. A celebrated jazz pianist, he’s toured with Frank Zappa's Mothers of Invention band, produced several movies including sex, lies & videotape, taught at Harvard Business School for 14 years, wrote a best-selling book called Jamming, founded a few firms and consulted to big companies, small start-ups and government agencies around the world. Along the way, he also trained in philosophy with a B.A from Yale, psychiatry with a M.D. from Yale Medical and also business with a M.B.A from Harvard Business.

His book is fascinating. When you deal with populations instead of employees and governments instead of competitors, something as simple as a “common agenda” becomes difficult to achieve. It’s clear that Kao is an innovation enlightener fervently bent on helping U.S. leaders move from just “getting” the importance of innovation to “getting innovation done.”

He writes that the U.S. is in the midst of a “silent Sputnik” moment. Since we don’t have an obvious inciting incident such as the Soviet’s putting up a satellite in space before us in 1957, we need a leader who can galvanize and incentivize smart people to tackle interesting and purposeful problems.

I spent some time on the phone recently with John. We talked about why the U.S. is desperately in need of an innovation strategy and how organizations like the Business Innovation Factory, which address the systemic nature of problems, could help the U.S. regain its competitive edge.

Download the interview

Posted February 05, 2008 by Chris Flanagan | Permalink | Comments (0)