Point: Innovation can bring tremendous value to the problem of scarce resources.

Story: The World Health Organization reports that water scarcity affects one in three people on every continent, including areas that have plenty of rainfall. Access to clean drinking water or adequate amounts of water for farming and industrial use are at issue. Further research shows that by the year 2035, two-thirds of the world will have water shortages. In China, two-thirds of its 660 cities already face water issues today; by 2035, they will see severe water shortages.

The fact, however, is that the world has plenty of fresh water — 2 trillion liters per person. But, the resource is not well distributed. Worse, water quality matters as much as water quantity. Contaminated water creates problems for human consumers, agriculture, and high value marine ecosystems. Only uncontaminated water counts toward solving this crisis.

What can be done? Companies like IBM are harnessing IT to address the problem. One example is the SmartBay project in Ireland, which seeks to monitor water properties in Galway Bay to help manage commercial fishing & aquaculture. Networks of sensor buoys, tide gauges, wave riders and data analysis nodes provide up-to-date environmental information to monitoring agencies and the public. In a second example, IBM is applying its materials science research to create better desalination technology for producing purified water. In particular, the new filter material can remove more toxic metals than can the old technology. Third, IBM is leveraging is expertise in super computing to offer “Deep Thunder” for advanced weather predictions and simulations that could affect water supply or water reservoirs.

IBM’s efforts on water resources are part of a broader pattern and opportunity for innovators. The world has no shortage of scarcities. Applications, people, companies and even countries compete for water, energy, minerals, money, and attention. This means that innovators can create value by inventing clever means to improve the production, utilization, and productivity of each scarce resource.

Action:

To address the problem of any scarce resource:

• Collaborate with experts to understand the supply-side issues of a scarce resource.
• Survey resource users to understand demand-side patterns, value propositions, and capability gaps.
• Look for solutions that:

• *** maximize production of the scarce resource
• *** improve quality of the resource
• *** help connect supply with demand
• *** increase efficiency of use, prevent waste, or support recycling of the resource.

Point: Lower-cost testing and diagnostic tools mean new opportunities for the innovation of personalization.

Story: The declining cost of genetic assays provides a new basis for innovative products and services in medicine. The company 23andMe exemplifies this trend. The company provides a fascinating personalized service. Here’s how it works: a customer submits a saliva sample to the company, and the company analyzes the person’s DNA. In particular, 23andMe identifies common genetic variations and provides the customer with a list of the genetic variations he or she has. Further, 23andMe explains the likely implications of those variations. For example, one variation might indicate a person’s increased chance of getting a disease, like diabetes. Other variations might give clues to the person’s sensitivity to various drugs.

For the individual, 23andMe provides reports as well as forums where people can converse with others who share similar genetic patterns.

But 23andMe doesn’t just providing an innovative service — the company uses the data it gets from customers as a foundation for future innovation. Here’s how: 23andMe aggregates each individual’s data to enable analysis of broader patterns. In particular, this aggregation can lead to new lines of research that support personalized medicine.

Personalized medicine could change which drugs people take, and it could affect which drugs make it to the market. Today, pharmaceuticals that are beneficial to a subset of the population aren’t approved for use or are pulled from the market because of increased risk of adverse reactions in a different subset of the population. If genetic testing can identify which consumers would respond well to a drug and which might react poorly to a drug, then more drugs can stay on the market, available to those who would not have adverse reactions to using them.

More broadly, the story illustrates how a new dimension of low-cost testing or diagnostic technology can create a new ecosystem for innovative services and products. Lowering the cost of data on the customer improves the fit of products to customers. This increases satisfaction, reduces product returns, and enables higher profits on smaller niche customer populations. Thus, the data enables incremental innovation of new variant products and as well as more radical innovation such as 23andMe.

Action:

• Look for new low-cost technologies that enable the collection of new data on customers or enable customers to know more about their individuals needs.
• Consider how to leverage that deeper personalization data through personalized products, better segmentation of services, or affinity groups for open innovation
• Reconsider failed innovations or products — would the prior flop succeed if a low-cost test could identify the right customers for that product?

For more information: Linda Avey, co-founder of23andMe presented at the World Innovation Forum May 5-6, 2009

Point: Innovation doesn’t have to be expensive

Story:
Current surveys indicate that more companies are reducing innovation budgets this year, but the good news is that innovation doesn’t have to be expensive. Here two stories that show how to innovate inexpensively:

J.B. Hunt was just a truck driver in the 1940s when he saw that rice mills in Arkansas were disposing of rice hulls by burning them. Rice hulls are the fluffy tough fibrous shells removed to create white rice. The waste hulls gave Hunt an idea: he contracted with the mills to haul away their rice hulls, and then he sold the hulls to poultry farmers as chicken-house litter. After Hunt’s revelation of the potential value of rice hulls, others found additional innovative uses for the material: pillow stuffing, high-fiber additives for pet food, natural building insulation, filler for injection-molded plastics, and using rice hulls to improve apple juice extraction.

Similarly, old rubber tires are being ground up and made into roads and shoes. And clothing & outdoor gear maker Patagonia asks customers to bring in their worn-out Capiline clothing (a polyester fabric) rather than throwing it away. Patagonia has devised a way to break down the discarded fabric into plastic chips and then respin them into new synthetic yarn. Given the increasing concerns about proper waste disposal, waste products provide attractive opportunities as no-cost or low-cost sources of innovative raw materials.

In addition to innovating with waste products, companies can leverage fallow innovations. During the early 1980s, IBM Corp was spending at least a hundred times more on R&D than Apple Inc. But upstart Apple found a way to leverage some new underutilized technologies (the computer mouse, high-resolution display monitors, the power of the 32-bit microprocessor and the graphical user interface) to create the Lisa and then the Macintosh. What existing technologies could you put to use in new ways?

Action

• Survey existing supplies of materials and streams of byproducts
• Look for materials that are underutilized or are discarded
• Consider how those materials might be recombined, repurposed, or refurbished for other, valuable applications

For More Information:

Patagonia’s Common Threads Garment Recycling Program

Innovation to the Core by Peter Skarzynski and Rowan Gibson

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