Point:
Monetize non-core innovation rather than pruning it.

Story:
Ursula Burns, CEO of Xerox, discussed innovation at her company in an interview at the World Innovation Forum June 9, 2010. She described initiatives to improve the return on innovation at Xerox’s  research centers such as PARC (Palo Alto Research Center). PARC’s ground-breaking inventions like the graphical user interface, ethernet, and postscript as inventions  had a large impact on the world but didn’t contribute enough to Xerox’s bottom line.  Let’s look at why that happened and what Xerox is doing now.

Unpredictability lies at the core of the innovation process.  Not only do innovators not know if an early-stage innovation will succeed or fail, they also can’t know all the possible applications or value latent in that innovation.  Thus, it’s far too easy for an exciting innovation to stray outside the bounds of the company’s core competence.

At some level, reaping the greatest value from a research organization means allowing researchers the freedom to explore.  Burns noted that innovators love working on interesting projects — it’s hard to stop them from doing it.  Rather than fetter its folk, Xerox found three ways to give them freedom while still reaping the value of innovations that fall outside the company’s core.

First, Xerox expanded its definition of what is core to the company.  Previously, Xerox defined itself as a copier company, looking for innovations in how to “reproduce images on paper.” That narrow definition meant that many of the early PARC inventions were not pursued. Since then, Xerox expanded to document management and is moving toward being a more general office information process company.  Rather than fear the paperless office, Xerox wants to help customers implement the paperless office.  Xerox’s recent acquisition of ACS positions Xerox in business process outsourcing — managing the non-paperless back office functions of customers and clients.  The expanding vision of Xerox brings more innovations within the scope of the company’s core. For example, the company now has a use for its smart document innovations that can automate some of the labor-intensive discovery process in legal proceedings.

Second, rather than discarding innovations that don’t fit inside the company, Xerox now looks for partners or buyers for whom the innovation does provide value.  For example, some of Xerox’s innovations in precision printing can apply to the low-cost manufacturing of solar panels.  Xerox isn’t going to become a solar panel manufacturer — that’s too far outside its core. But rather than dismissing the innovation, Xerox partnered with a West Coast firm to incubate a new company that can leverage the value of those innovations.

Third, outside companies can now hire PARC and its portfolio of specialists to tackle tough R&D problems.  CEO Burns said that most PARC’s activities remain focused on Xerox, but the option to sell non-core innovations lets the company maintain the innovative culture of PARC while monetizing its researchers’ outputs.  In short, Xerox is expanding how it leverages the fruits of innovation rather than pruning the innovation funnel.

Action

• When evaluating innovation projects, don’t immediately rule out ideas outside the company’s current strategies, customers, or core
• Instead, also ask if an innovation might be more valuable to a non-competing outsider
• Find complementary partners who can license or buy non-core innovations or innovation expertise to reap the greatest total value from the innovation process.
• Allow innovators enough freedom to enable breakthroughs.
• Expand or reenvision the core of the company to leverage innovation.

Point: Good word-of-mouth can be made even better

Story: The Mayo Clinic is known around the world for reputable, high-quality health care. How can the company extend and expand this good word of mouth? Seth Godin provided an insightful answer during his Online Marketing Innovation Q&A, April 15, 2010 hosted by HSMAmericas.

“When people talk about the Mayo Clinic, they know it’s a good place. But does their conversation lead to an action? Is it specific enough?” People clearly do turn to the Mayo Clinic in a last-ditch attempt to survive rare or hard-to-treat diseases.  But do they also think of the Clinic for more routine (and more common) health treatments such as diagnostics?

Godin contrasted Mayo Clinic’s situation with that of the Pritikin Centers of the 1980s. The Pritikin diet taught people a way to eat that could reduce high blood pressure and cholesterol (leading edge in its time.)  Godin’s own father went on the diet and improved his health. When people commented, “Wow, you look great!” Godin’s father would reply, “I was on the Pritikin Diet. You can read the book or visit their clinics to find out more about it.” Hundreds of other customers were as enthusiastic about the results as Godin’s father was, and word of mouth quickly spread.

The key for the Mayo Clinic, Godin advised, is to emphasize some of the proactive diagnostics that the clinic offers, to give people a reason to go there before having a specific disease. The people who go there and receive the Clinic’s lauded good care and service will be naturally motivated to spread the word.

Action:

1. Expand your product’s or service’s functionality to include common uses, not just rare applications
2. Look at brands as verbs, not adjectives — a brand should be about doing something, not just being “good” or “high-quality”
3. Create word-of-mouth that sparks action, like investigation or emulation — make the people who see the results of your service also want those results for themselves.

Update: Seth Godin also spoke at the World Innovation Forum on June 9, 2010

Point: Capture, share and reuse knowledge to make R&D engineers more productive

Story:

At Power to Innovate 2009, Boston Scientific’s Randy Schiestl (VP of R&D) and Jude Currier (Cardiovascular Knowledge Management & Innovation Practices Lead) described how Boston Scientific is redesigning its innovation processes. The goal: to accelerate time to market, increase the productivity of innovators, and reduce costs and risks.

Boston Scientific is an $8 billion company committed to delivering innovative medical technologies that improve the quality of patient care as well as healthcare productivity. The company has a broad portfolio of 13,000 products. The new products in its pipeline include drug coated stents, bare metal stents, catheter and bio-absorbable technology.

In the past, Boston Scientific drove innovation from business strategy to technology development to product development. In this staged approach, engineers created technology-driven products that were then shown to business units and customers at the prototype stage. The trouble with this process was that the later groups often found gaps or risks in the proposed product late in the product development process. As a result, the company had to spend more money than expected putting out fires while trying to hold to a launch schedule.  Boston Scientific decided to change its innovation process to bring more knowledge and resources into the earlier stages of innovation.

As part of the new innovation process, Boston Scientific began bringing in key “voices” into the innovation process earlier. By getting these voices — the voice of the customer, the voice of the business unit, and the voice of regulatory bodies — earlier, the company uncovered its knowledge gaps and risks much sooner. The second part of Boston Scientific’s innovation process redesign gave employees access and pointers to relevant information, whether that information resided in a document or in the tacit knowledge of an expert. The goal here was to reduce the amount of time engineers spend looking for knowledge. Schiestl said engineers spend 30% of their time looking for relavant knowledge. To improve upon that, Boston Scientific used Goldfire (innovation software from Invention Machine) to capture, share and reuse knowledge.  Goldfire’s semantic technology automatically categorizes concepts can and ties relevant intelligence to specific innovation initiatives. For example, engineers used Goldfire to identify past research and then validate whether that research could be repurposed. The result: Boston Scientific engineers who used Goldfire spent only 10 percent of their time researching intelligence, compared to 20-30 percent by non-Goldfire users.

Boston Scientific’s new innovation process illustrates what Mark Atkins, CEO of Invention Machine, called an innovation intelligence ecosystem.  This ecosystem represents the aggregate of information, communities, and processes that collectively contribute to innovation. Here’s how it works: using innovation software like Invention Machine’s Goldfire, companies capture and reuse information and intellectual capital created by employees as well as by external sources. Goldfire further enables collaboration by accurately reconstructing a user’s past thinking and research process, making it visible and explicit to other users. Employees avoid reinventing or duplicating research already done, thus saving time and improving innovation productivity.

Boston Scientific shared two examples of its success using Goldfire and the company’s new innovation processes. First, the company improved the design of cardiac stents to reduce a patient’s injury-response to the device. By combining knowledge from across the innovation ecosystem, the company mapped key clinical knowledge about heart disease and how different heart artery conditions affect the patient outcomes with different stent designs.

In the second example, Boston Scientific used Goldfire to solve a technical problem in manufacturing that was reducing product yields.  Using Goldfire, Boston Scientific found that previously undocumented thermocapillary effects were leading to clogged spray nozzles. By understanding the physics of the cause, Boston Scientific was able to make a simple change to the manufacturing line to eliminate the clogging and thereby improve yields.

Action:

• Uncover all the “voices” that have a say in the success of innovations (the voice of the customer, voice of technologists, voice of manufacturing, voice of regulatory compliance, etc.).  Connect key people and communities in a more collaborative, sharing-oriented environment
• Identify, organize, and access information (internal and external) needed by these communities to do their innovation-related work.
• Develop knowledge and innovation processes that find and resolve knowledge gaps or risks early in the innovation process.