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 01:29 PM by Chris Flanagan | Permalink