Story: This week’s Innovation Summit at the Shell Technology Center Houston (STCH) highlighted the need for innovation and collaboration to solve society’s most pressing challenges. As the world’s problems become more complex, the best way to tackle them is with a cross-disciplinary approach.

What are some ways that companies can foster this multidisciplinary collaboration to achieve breakthrough innovation? One way is to create an open mechanism inside the company that solicits promising ideas regardless of where they come from — including outside the company — and offering seed funding that’s outside of the company’s traditional R&D programs to give them time to develop.

GameChanger

Shell is doing this with its GameChanger program, headed by Russ Conser.  GameChanger seeks out and invests in early-stage ideas that could potentially revolutionize the energy industry. GameChanger plays the role of an angel investor; a panel screens ideas and selects ones to fund. Idea submissions can come from any Shell employee as well as from outside the company.

Shell actively solicits ideas from academics and entrepreneurs alike through its web site www.shell.com/GameChanger.  Ideas that pass the initial screen receive seed money — $25,000 to develop a robust proposal and on up to $500,000- $1 million a year to actually test and develop ideas that graduate into projects.

Example

For example, Erik Cornelissen, a research scientist, was in a toy store looking for a gift for his nephews when he saw a science toy that many of us have seen before: a dinosaur that grows in size when placed in water. A nifty, fun gift. But Erik made a connection back to a perplexing problem that had plagued Shell and other oil companies for a long time. Specifically, oil wells contain water, not just oil. Over time, more and more water gets pumped up relative to oil.  Not only does that make the well less productive, but it pumps water that increasingly is becoming a scarce resource itself. The question is, how to detect that water and prevent it from mixing with the oil?

Erik realized that the same principle behind the dinosaur toy — a material that expands upon contact with water — could be applied at the oil well. Erik needed to identify a “swellable elastomer” that would seal off the pipe when water started to mix with the oil flowing through it. The idea was not difficult to articulate or explain, but finding this kind of material proved long and difficult. GameChanger provided Erik with the time and funding he needed to go through hundreds of experiments to find the elastomer that fit the demanding conditions at the oil well site.

Results

About 40% of Shell’s core Exploration & Development R&D portfolio has evolved from ideas submitted to GameChanger, and 70% of the GameChanger portfolio includes collaboration with people outside of Shell.

Since its inception in 1996, GameChanger has funded 3000 ideas, investing $350 million and resulting in 250 commercial projects, said Gerald Schotman, EVP, Innovation, R&D and Chief Technology Officer at Shell.

Action

• Publicize clear and explicit selection criteria, so external submitters know what you want and will fund.  For example, GameChanger uses 3 primary criteria:

1. Novelty: is the idea truly and fundamentally new and different? (There’s no point in funding ideas that would qualify as traditional R&D projects.)
2. Value: Could the idea create substantial new value if it works? (Wild ideas are welcome, but ultimately they need to deliver value if they come to fruition.)
3. Credible Plan: is there a plan to manage risks prudently? (New ideas are risky, but many risks can be identified up front and plans can be put in place to stay ahead of them.)

• Have an end game for how you’ll commercialize an idea that demonstrates feasibility. For example, GameChanger uses 3 commercialization strategies:

1. Move the idea into the company’s internal R&D portfolio.
2. License the idea externally.
3. Spin off a new company to bring the idea to market.

Story: I’m looking forward to hearing Henry Chesbrough, originator of the term “open innovation,” speak at the World Innovation Forum tomorrow.

In his latest book, Open Services Innovation, Chesbrough writes about co-creating with your customers, particularly in services where it’s harder for customers to specify what they want because so much of the experience is tacit.  Whereas innovative physical products can excel on objective measurable performance, innovative services often entail a greater degree of subjective perceptions.

What’s exciting for innovators is that precisely because the information is tacit, finding ways to elicit or manage that tacit information will bring strategic advantage.  One way that customers can “tell” you this tacit information is through their behavior, which in most cases is through their purchase and usage patterns. If customers have a good subjective experience, they do it again; if the service was bad, they don’t come back.  Yet passive observation can be hard to interpret, can miss a lot, and is better at providing feedback on existing offers than for creating true innovation.

A better solution is for companies to actively encourage open feedback and ideas from customers.  As Chesbrough says, “When customers tell you – rather than everyone else — their tacit needs, you have a unique insight that can help you differentiate yourself in the market.”  Companies that can find ways to engage customers to co-create — or that can create systems that elicit such tacit knowledge — accrue benefits. LEGO, the building-brick toymaker, is one such company.

LEGO created a software toolkit and online space for customers to create and share new designs that go far beyond what’s possible with the manufactured physical product.   The components of the toolkit and space include “LEGO Digital Designer” software, “My LEGO Network” for children, and a 4.2 million-member LEGO Club.  The social media elements, design contests and customer-created galleries let LEGO fans of all ages build and share ideas.

In turn, LEGO gains tacit information into what customers really want to build, which supports LEGOs product development efforts.  For example, LEGO got the idea to sell kits of leading architectural designs from around the world, such as the Empire State Building, the Taj Mahal or Frank Lloyd Wright’s Fallingwater home. Not only were many of these designs created by users, but LEGO gained entry to a new market — adults — which it had not envisioned nor would have initiated internally.

What Chesbrough is talking about is a kind of meta-innovation — an innovation in the innovation process.  Open services innovation converts innovation from an internal process into an external service.  Providing customers with a toolkit for self-expression not only satisfies customers but also creates an incoming flow of tacit knowledge about customers and about new ideas that may be more widely implementable.

Action:

• Watch the trail of breadcrumbs left by customers to uncover tacit knowledge and subjective performance indicators
• Actively solicit feedback to understand why customers do what they do — and what they want you to do.
• Create a toolkit or sandbox where customers can create their own products and services
• Make innovation an external service your company provides to customers

Sources:
Special thanks to Walden University for sponsoring the May 8, 2012 webinar with Henry Chesbrough as a prequel to his presentation at the World Innovation Forum.

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

Story: In his second book, Best Practices are Stupid: 40 Ways to Out-Innovate the Competition, (named the 2011 best book on innovation by CEORead) innovation speaker Stephen Shapiro offers 40 tips on how to innovate efficiently.  His tip #11, for example, tackles the topic of innovation competitions and tournaments. The tip focuses on what role, if any, collaboration should play in these bounty-driven events.

Innovation tournaments can be run either competitively or collaboratively, Shapiro says.  In a competitive tournament, such as ones run by Cisco and LG Electronics, no participant can see rivals’ submissions.  In a collaborative tournament, such as GE’s Eco-Imagination challenges, anyone can see a submission and comment on or vote on the entry. The Netflix Prize and X Prize use a hybrid version, running the tournaments as competitions for prizes but allowing for collaboration within each submission.

Which approach generates the best solutions? Collaborative tournaments work best in areas where problems require “cumulative knowledge” or “building on best practices,” Shapiro says, citing research by Kevin Boudreau and Karim Kakhani in the Sloan Management Review. The collaborative approach lets players build on to each other ideas and create more refined ideas based on feedback from other participants.

Competition, in contrast, is most effective when the problem requires broad experimentation with an emphasis on truly new ideas rather than refined ideas  The competitive aspect means that many different ideas are pursued simultaneously. Whereas collaboration enjoys the benefits of players influencing each other, competition enjoys the benefits of players being independent of each other, thereby avoiding problems like groupthink, which might artificially narrow the ideas along the basis of the first idea suggested.  In some cases, a hybrid approach will use competition in phase one of the tournament to gather a lot of ideas and then use collaboration during a second phase to flesh out and refine the most promising ideas.

Action

• Hold an innovation tournament to access the innovative energies of suppliers, customers, and smart people from around the world.
• Use a collaborative tournament if you need ideas that are cumulatively built and more carefully refined by the players.
• Use a competitive tournament if you want a wider range of “left-field” ideas and plan to do your own refinement or hold a two-stage contest in which the second stage refines the ideas of the first.

Story: The inspiring origins of the Mayo Clinic illustrate the timelessness of collaborative innovation. Back in the 1880s, two brothers, Will and Charles Mayo, founded the clinic with their father, Dr. William Worrall Mayo, and introduced the concept of a group practice.  The Mayos sought medical breakthroughs by bringing together doctors, laboratory experts, and business people. As the younger Will Mayo said, “In order that the sick may have the benefit of advancing knowledge, a union of forces is necessary.”

Today, we have the fruits of many medical breakthroughs but need better ways to deliver the breakthroughs in efficient and effective ways.   Many chronic diseases, like diabetes, can be treated but depend on more than just a one-shot procedure in a doctor’s office or hospital.  For these conditions, healthcare delivery requires education and engagement between doctors and patients.  The quest for new breakthroughs in healthcare delivery calls for a new round of collaborative innovation, embodied by the Mayo Clinic’s SPARC unit.

The Mayo Clinic uses SPARC to develop new services for patients.  SPARC stands for See, Plan, Act, Refine, Communicate.  Mayo believes in a fast prototyping approach: a crossfunctional team of doctors, industrial designers, patient education experts, facilities people and financial analysts work together to create new ideas and test them in the “Hub.” The collaboration includes some of the usual healthcare and research leaders, like Blue Cross Blue Shield of Minnesota, University of Minnesota, MIT, Yale, and GE Healthcare.  But it also attracts collaborators from industry, such as IDEO, Best Buy, Steelcase, Microsoft, and Cisco.

The Hub creates reconfigurable prototypes of patient check-in counters and examination rooms. The team that develops a new service can observe the prototypes in action through glass and via video.  “We take research out of the laboratory and translate it in a very quick and meaningful way right to the patient’s bedside,” said Dr. Glen Forbes, CEO of Mayo’s Rochester, MN campus. “That takes a lot of collaboration, because you’re crossing cultures and you’re often times crossing a lot of internal organization structures and silos.”

Most crucially, the Mayo Clinic engages patients to accelerate innovation.  “Our patients have a long history of participating in our research and education endeavors,” says Barbara Spurrier, Administrative Director, Mayo Clinic Center for Innovation.  The Mayo uses ethnographic techniques to analyze the quality of doctor-patient interactions, survey patients for their impressions, and talk to patient’s families.  Human-centered design thinking ensures that the innovations aren’t just technically correct, they deliver higher quality of life for patients.

Action:

• Find a gap between technology and society, such as the gap between the capabilities of a technology (e.g., a medical treatment) and the delivery of that technology (e.g., a patient’s compliance)
• Recruit collaborators from both the technology side and the people side to bridge the gap
• Create tangible and testable examples of innovations through visualization, modeling and rapid prototyping
• Use both hard science and soft science methods to gain both objective and subjective feedback for further innovations

For more information:

Mayo Clinic

Mayo Clinic Center for Innovation Partnerships

Leonard Berry and Kent Seltman, Management Lessons from Mayo Clinic: Inside One of the World’s Most Admired Service Organizations, 2008

Evan Rosen, The Culture of Collaboration: Maximizing the Time, Talent and Tools to Create Value in the Global Economy, 2009

Glenn S. Forbes, M.D.

Mayo Clinic and University of Minnesota partnership