Point: Experiment with new business models in a “connected adjacency” before committing to them.

Story:  Saul Kaplan, founder of the Business Innovation Factory (BIF), just wrote a new book, The Business Model Innovation Factory.  Kaplan shares 15 business model innovation principles, weaving in his personal experience (from Eli Lilly to Accenture to BIF) as well as experiences from numerous presenters at BIF’s Collaborative Innovation Summits. My favorite chapter in the book was “R&D for New Business Models.”

In the chapter, Kaplan describes how to deal the challenges of testing a new business model.  Organizations can’t easily jump from an entrenched business model to a new one.  There’s too much support for the old model and too many unknowns about the new one.  The solution is to test the new business model in what Kaplan calls “connected adjacencies.” A connected adjacency is like a real-world sandbox or living lab. For example, Kaplan details how Accenture changed its business model from being a systems integrator to being a business integrator.  Accenture (Andersen Consulting at the time) started to rapidly build a strategic capability alongside its existing systems integration business. As Kaplan writes,

“It was a connected adjacency that was given the autonomy and resources necessary to scale a rapidly-growing strategy practice from scratch – right next to the huge systems integration practice.  We were an entrepreneurial business unit within the context of the behemoth. The emergent strategy practice would never have worked if it had to live by the rules of the core business model at the time.  If not protected, it would have been swallowed alive by line partners from within the core business model. The new business model needed to be shielded, at least temporarily, within the relative safety of a connected adjacency.”

Part of the success of experimenting in a connected adjacency is letting employees self-select to participate.  In Accenture’s case, the company went so far as to hire partners directly from outside the company – something the company had never done before in its “promote from within” philosophy of the past.  The connection between the existing business and the innovation sandbox is vital, however, because it lets ideas and experiences be transferred between the two spheres.

In another example, Kaplan describes Babson College’s creation of Babson Global, an entity separate from Babson’s core business model that serves as an R&D platform for creating, prototyping and testing new approaches for teaching entrepreneurship and creating entrepreneurial ecosystems in communities worldwide.  The entity is separate from the college but adjacent to it – faculty and staff from the college self-select to participate.

Action:

• Nurture the new business model in a “connected adjacency” — a sandbox, living lab, or side unit of the main business.
• Protect the developing new business model effort from the old model’s metrics and pressures.
• Allow staff to self-select or volunteer for the new model, or hire outsiders so that you have open-minded enthusiasts for the new model rather than adherents to the old.

Tags: Business Innovation Factory, business models, Innovation

Point: A collectively-motivated group of peers can develop innovations in a distributed online environment.

Story: When Hernando Barragán created a nontechie-friendly microcontroller board for artists, designers, and architects in 2004, his thesis adviser, Massimo Banzi, liked the idea.  But Banzi wanted something simpler and cheaper for use in design class projects at the Interaction Design Institute Ivrea in Italy.  In particular, Banzi wanted a low cost, an integrated software environment, programmability via an everyday USB port, and a project supported by a community.

So Massimo Banzi, David Cuartielles, Dave Mellis, Gianluca Martino and Nicholas Zambetti created Arduino, an easy-make, easy-to-use circuit board about the size of a business card.  Anyone can use the device to create all manner of computer-controlled devices such as prototypes of products, pieces of art, or just fun hobbyist contraptions.  The team’s device was about 1/3 the price of the predecessor device and 1/3 the price of commercial products.  Best if all, the group released Arduino under Creative Commons Attribution-ShareAlike licensing, which means anyone can copy the Arduino and make the circuit board without payment or permission from the Arduino group.

The Arduino project uses open source methods to develop its hardware and software. Open source is a type of connected innovation based on the collective contribution of peer innovators to a project or product.  Open source allows free access to the internal design specification of the product such that anyone in the world can modify the design to correct a problem, improve performance, or add a new feature.  With this openness comes a cultural norm that if someone does improve the design, then they should share that improvement with the community for inclusion in the public version of the design.  Through this open process, Arduino now has 12 different models and 5 supplementary function boards.

Arduino, like other open source projects, relies heavily on connective technologies to coordinate its loose global team of project participants.  Email lists, online wikis, discussion forums, and content management systems help the project participants maintain the core product as well as developing new ideas that later become incorporated in the main products.  Arduino uses Google Code to host the project to provide a central connection point for anyone who wants the software.  People can report defects or suggest enhancements. Google’s tools help the project participants track the status, priority, and milestones of the idea.  Other tools aid collaborative problem solving.  The main Arduino discussion forum has nearly 70 thousand members and over 700 thousand posts on some 90 thousand topics.

Action:

• Determine if there’s some technology that you (and others) need more access or control over than is permitted by commercial suppliers with proprietary products
• Start an open source project to create and share the technology
• Use connection technologies to link to distant contributors and coordinate activities
• Pool innovation from across the technical and user community

Tags: collaboration, open source

Point: Additive manufacturing (also called 3D printing) technologies enable new design methods and local manufacturing by entrepreneurs.

Story:  When designing a new part to be manufactured, designers traditionally had to define the shape they wanted and then pick the material that could support that shape (based on strength, flexibility, etc.). That is, they designed the piece separate from picking the materials. For more complex products, designers had to decompose the product into semi-independent parts that were designed and manufactured separately and then assembled with screws, welding, clips, glue, and so on.  This deconstructive process risked incompatibilities between the parts, added complexity, and increased costs due to a assembly labor.

But, nature does not design in this deconstructive way. A tree trunk, limbs and leaves aren’t built separately and assembled. Rather, nature designs and grows the entire tree in a progressive, additive fashion, and largely from one material. Nature starts with a material (e.g., cellulose is the material for trees) and deploys that material in various densities, shapes, thicknesses, and modified formulations to create an integrated object.  The same basic building-block material that makes the thick rigid truck of a tree also makes the broad, flat leaves of the tree, thin flexible twigs, and hard shells of the tree’s nuts.

Additive manufacturing mimics nature (unlike traditional reductive manufacturing that removes material to make a form).  Additive manufacturing can build almost any shape that can be drawn on a computer, including hollow and contorted forms impossible to make in other ways. Specialized machines (essentially 3D printers) lay down layer after layer of material or draw with a bead of molten material to grow the part the 3D shape that was downloaded from the computer. Virtually anything that someone can imagine, draw or compute in 3D can be made with additive manufacturing.

Several competing 3D printer technologies let designers and manufacturers choose between clear resins, colored opaque thermoplastics, powered metals, and even powered ceramics.  Companies can use the technology to create prototypes, customized shapes, spare parts, and intricate parts in low quantities.  For example, Boeing used metal hybrid additive manufacturing processes and powdered metal manufacturing to create parts that reduced the weight and fuel consumption of its aircraft.

Although industrial printers like Boeing’s cost upwards of $500,000, consumer-grade printers cost only $1300.  The low price point creates a vast new opportunity for entrepreneurs to provide 3D printing services.  For example, online service company Shapeways prints any design that its customers upload, from fashion and jewelry pieces to gadgets and art. Even better, Shapeways lets is members open virtual storefronts on the site to sell their products. Some of the most popular products for sale include a PirateBay ship model, a Dymaxion world map, and a customized metal branding iron that will brand any text you want when attached to a BIC lighter. In addition, open source communities (such as MakerBot Industries, RepRap, Thingiverse) are dedicated to creating ultra-low cost printers and sharing designs for cool additive manufactured parts.

Action

• Think about how in-house 3D printing (or in-home 3-D printing) might change your business.
• Design new additive manufactured products based on shapes that would be “impossible to build” with traditional manufacturing.
• Create new business models based on products or services that support additive manufacturing or that transcend the curse of economies of scale needed by traditional manufacturing

Tags: 3D printing, additive manufacturing, biomimickry, Boeing, Entrepreneurs, imitating nature, Innovation, MakerBot, Shapeways