That's Just the Half of It!

What you know is only half of innovating. The other half is the new knowledge you can and must create.

After years of helping others generate ideas, I am now humbly aware that idea generation is less likely innovation’s critical path, despite what many assume. Ideas—particularly ones that deserve serious attention—are more likely outcomes, not the input, driving successful innovations. Peter Drucker alluded to this over 25 years ago when he declared in Innovation and Entrepreneurship that the bright idea is the least reliable source of innovation.

Innovation’s more likely critical path is knowledge-creation—what most of us call learning. Strong ideas come from knowledge-creation. Weak ones eventually reveal some form of knowledge omission or commission, especially about what is valuable to the customer. When R&D-based innovations break through an otherwise “me-too” crowd of look-alike products, it is not because someone made a lucky guess. It is because some new learning occurred, some new observation was made, some knowledge was created, and correspondingly, something new and valuable was conceived.

What most see in successful innovation are outcomes. However, the paths leading up to these outcomes are filled with:

•     experience and experiments (physical, virtual, mathematical) that create data,

•    interpretations of data that create information, and

•     applications of the information, successful or not, that create understanding of what works and what doesn't, and why...and that, in turn, develops knowledge.

These knowledge-creation paths twist and turn and cycle back, far from the mythical straight line hindsight suggests—more like a “Slinky” than a taught string.

R&D organizations are filled with knowledgeable experts—those who understand not only what works, but why. However, it is not simply what experts know that creates value.  It’s what experts do with what they know that leads to value creation—the critical path for innovating. 

The irony of the expert’s knowledge is that it can be the very thing that blocks learning, especially about the customers’ value ecosystem. It has often been said, “all value is derived from context.” If true, then to create new knowledge the expert must interpret the context (the ecosystem) in which the customer lives. That is where new value emerges and where innovation is nourished.  

Identifying where gaps are in our knowledge, especially of what’s meaningful and valuable to customers, may be where the critical path begins for the knowledge creators in R&D. Selecting and describing gaps in our knowledge may be one of the more reliable ways of targeting where we should focus our efforts. Successful innovations always seem to emerge from that kind of knowledge-creation. 

What you know is only half of it.  


This article was originally published in Innovating Perspectives in September 2011. For this and other back issues of our newsletter, please visit our website at innovationsthatwork.com or call (415) 387-1270. 

Reducing “Waste” from Innovating

“We already know we need to keep innovating. What we don’t know is how to do it more cost effectively.” 

A client and colleague said this in a recent phone conversation. He had just returned from giving some bad news to an outside patent counsel regarding the need to curtail their services. It was one of many similar conversations he has had in the past several months. Absorbing reactions was getting to be a real drag. His remark–understandable given the economic “reset” most are experiencing–caught my ear. 

Just what are the costs, hidden and otherwise, of innovating? Certainly there is cash. Perhaps more “costly,” however, are the time and attention of our more experienced innovators and inventors. These costs are felt even more acutely with fierce internal competition for the time and attention of these veterans.  

Innovating costs, of course, must be weighed against risks of not innovating. Opportunity costs. Most innovation portfolios are designed to hedge against opportunity costs through some form of diversification. Given the risks associated with innovating, the conventional wisdom goes, if several options are kept open, risk can be spread across multiple, simultaneous efforts.

There are implicit costs associated with spreading risk, however. When too few innovators are chasing too many opportunities, delays, interruptions, divided attention and diffused effort is the result.  Innovating waste. These two words don’t normally appear so close together (not to be confused with innovations from waste, which is a well-mapped territory.) 

Most conversations about innovation and its management concern themselves with effectiveness. Few address reducing waste, partly because waste from innovating may be more difficult to pinpoint.  Identification and elimination of waste can and should be a part of the conversation about innovating. 

Without a coherent diagnosis of innovating waste, managers are left with little alternative but to treat symptoms rather than causes. And if Ikujiro Nonaka and Hirotaka Takeuchi (The Knowledge Creating Company, Oxford, 1995) are correct–it is not merely what a company knows which creates wealth, but its ability to create new knowledge where it matters most–then relearning and reinvention may be the most costly form of innovating waste.

In operations and production environments what flows are standard units. In an assembly process, specified parts go in, and what comes out are multiples of a standard, assembled product.  In a continuous process, specified ingredients or raw materials go in, and predictable material in an expected form comes out. It is appropriate to seek and possible to approximate, a repeatable process. This is the world where scale matters.

In innovating environments, however, what flows is not standard, nor fixed. What flows also develops, morphs and grows. When we fill our pipelines (or funnels) so full, we do not leave room for development, morphing or growth. We defeat the very thing we are trying to achieve, largely because we are hedging our bets and spreading our risk. This is the world where scope matters and repeatable process may be a misguided quest.

Scope requires making difficult choices. Healthy choosing requires having viable options to choose from. Keeping options open may mean no choice has been made. Perhaps there is dissatisfaction with the option sets being presented. Perhaps there is insufficient clarity about where innovations are needed in the ecosystem, and why. Perhaps keeping options fresh is better than keeping them open.

Innovation Trustee

One way to reduce the cost and waste so often associated with innovating–real and perceived–is to have a mechanism that regularly creates better sets of options.  This will improve the quality of the choices made. However, when these mechanisms on the front end start, stop and then start up again, delays, relearning and reinvention are the result.   

Generating (or percolating) option sets is necessary, but not sufficient. Someone (or a few) must make a selection when a set is presented. You can hedge bets and spread risk. But as we all know, hedges and spreads don’t solve, resolve, or eliminate risk. Someone still has to make a selection. Waste is generated when we are not clear who the trustee is, when there are too many of them, and when the trustee lacks a clear understanding of the context (i.e., future ecosystem emerging).

One diagnostic principle of systems theory and systems engineering–that a system has a purpose that governs it–invites us to ask what and who is governing the company’s innovating system. 

While there is often plenty of attention being paid to the management of innovating, often there is an absence of governance. Perhaps the innovating governors (sponsors) might take on the responsibility not only of selecting what to work on next, but also reducing the waste that comes from attempts to reduce risk.

Instead of filling development pipelines with many options, a less wasteful approach might be to see to it that options are continually generated and continually pruned. Keeping track of what is being learned–the knowledge created–is likely a key lever in avoiding innovating waste to begin with.  
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This article was originally published in Innovating Perspectives in November 2011. For this and other back issues of our newsletter, please visit our website at innovationsthatwork.com or call (415) 387-1270. 

Measuring Process or Making Progress?

I have a confession to make. An uneasy feeling rises up in me whenever I am in or near discussions to define measurements for use during the innovating process. 

Measuring innovation after the fact (e.g., the classic X% of revenues or profit coming from products that the company was not making three years earlier, etc.) is certainly more reasonable than trying to measure innovating while you’re in the middle of it. Time-to-market, time-to-positive cash flow, or to time-to-break even, get close. But even these metrics are more hindsight than “now-sight.”

When you are in the midst of innovating—whether discovering a consumer pain, charting the topography surrounding a customer’s unmet need, inventing solutions, reducing a solution to practice, or iterating with inevitable adjustments—it is very difficult to find any objective metric that enables sponsors, managers or innovators themselves to avoid using their intuitive judgment. 

It turns out, I am not alone in this uneasy feeling. One of my clients devoted considerable effort in developing just such a metric system for monitoring their in-process innovation portfolio. After several years, their enthusiasm for its usefulness has faded.

The need to monitor and measure is there for sure. But the ability to fill the need may be out of reach. Outputs can be measured. Inputs can certainly be measured as well. However, what may be impossible to measure is the “throughput” of content which is by definition “developing.” This content is forming and reforming into a prototypical instantiation, the ultimate value and success of which can only be determined when it enters the market. The more generative or creative the process, perhaps, the more difficult it is to measure and therefore manage—at least for those who ascribe to the management mantra of “you can only manage what you can measure.”

What happens in our desire to manage during the innovating process is that we measure what we can (the number of ideas, the nodes in our discovery networks, etc.). But just because something can be measured doesn’t mean that the resulting measure is important or useful. As Albert Einstein said, “Everything that can be counted does not necessarily count; and everything that counts cannot necessarily be counted.” 

This difficulty reflects some misplaced expectations that we can actually manage innovation in a fashion similar to the way we manage operating or production systems—systems that have produced data and left tracks that can be measured.  Innovation systems are different in that what they produce—innovations—have produced little if any data that can be tracked until they have entered the market. And there is much about innovating that happens before that entrance. 

At a recent gathering of veteran innovators in Denver in October, one of the participants, Andrew Zander, a veteran director of engineering of many instrument innovation efforts, said something simple, but very profound.  My paraphrase, with apologies to Andy if I got it wrong, is as follows:

“We shouldn’t confuse process with progress when it comes to innovating. We can’t measure process (in any meaningful way), which may not be that important to measure in the end anyway. What is important, however, is to make progress, which we will not be able to determine until, at various points in time, we stop and assess what we have learned, determine where we are, and clarify what our next steps should be. When we compare these points, then we can determine whether we are making progress or not. Only when we have determined whether progress is being made or not, are we really in any position to make decisions.”

Perhaps the key point for innovators, sponsors and innovation midwives is to let go of our quixotic quests for innovation metrics and get down to the business of making and assessing progress, not process. Then we will know better what decisions we need to make; and then, of course, we need to make them.

For measuring during the innovating process, perhaps Italian physicist Enrico Fermi said it best: “There are two possible outcomes: if the result confirms the hypothesis, then you’ve made a measurement. If the result is contrary to the hypothesis, then you’ve made a discovery.”

This article was originally published in Innovating Perspectives in November 2010. For this and other back issues of our newsletter, please visit our website at innovationsthatwork.com or call (415) 387-1270. 

Earning Follows Learning

Just recently I heard several conversations suggesting a potentially troubling misperception about innovating and learning. One senior executive at a major manufacturer said to a subordinate about an innovation effort underway, “We pay you for what you know, not for what you can learn.” Another executive said, “We don’t train people anymore. We hire those with the know-how and expect them to bring it to work everyday.” A third executive, a veteran software architect, was bemoaning several incidences of places on product development road maps where it says “acquire” the sub-system, ignoring the fact that acquisition does not eliminate integration, something for which learning is required.

In these three snapshots, each from a different context, the intent of the company’s senior leadership may have been to emphasize urgency and speed of execution. However, the way the messages were expressed reveals a troubling perception: that productive work derives more from what is already known than from the ability to learn. Just the opposite is closer to the truth.

In the late 1990s, Ikujiro Nonaka and Hirotaka Takeuchi’s observed that it’s not what a company knows that creates wealth, but its ability to create new knowledge, which was introduced in their book The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation. Shortly after, Al Ward—one of the more insightful commentators on Toyota’s Development System—defined innovation itself as “learning applied to creating value.” Then Arie de Geus, completing his 38 year career in Royal Dutch/Shell’s celebrated scenario planning group, coined the phrase “the learning organization,” where he said learning capability is the primary differentiating factor in a company’s longevity in his book, The Living Company: Habits for Survival in a Turbulent Business Environment (1997). One of the more serious “learning disabilities” companies suffer from is learning what learning itself is and how basic it is for effective innovating.

Having facilitated a variety of brainstorming sessions for more that 30 years, I am convinced of the direct correlation between the quality of the ideas flowing and the presence of learning going on, at the same time. When there is learning going on among the people generating the ideas, the ideas are more original, fresh and interesting to those generating them. When there is scant learning going on among those generating ideas, the ideas are more conventional. While the quantity and quality of ideas typically receive the most attention in brainstorming exercises, the flow of learning going on among and between the diverse and relevant experts may be as, if not more, important. This tends to be one of the dissatisfying aspects of internet-mediated idea generation exchanges: the ideas are flowing, but interactive learning is missing.

Not all learning is of the same type. 

Learning by searching (enabled by Google, Wikipedia and networking) is likely a necessary first step not only to determine what has been thought of or tried already, but also to discover who the experts are and what they are saying. Nonaka and Takeuchi refer to this as knowledge-creation that happens by connecting.

Another type is called learning by expressing. When one expresses what has impressed, the learning that occurs is similar to what is learned when we are put in a position to teach. Writing as a form of expression is a healthy and rigorous discipline that forces learning. Nonaka and Takeuchi refer to this as knowledge-creation that happens by articulating.

There is also learning by doing–gaining first hand knowledge through direct experience, as in lab or field experiments. Learning by doing requires both time and a safe, insulated space to gain this kind of experience, given that learning is greater from mistakes made and corrected than successes enjoyed. Nonaka and Takeuchi refer to this as knowledge-creation that happens by embodying or reducing something to practice.

Then there is learning by collaborative problem solving. Learning in this manner with diverse and relevant experts is an effective and efficient way of reflecting on experience and exploring possibilities that would not otherwise be imagined. Thinking things through—in what Einstein referred to as thought experiments—is an especially productive form of learning by problem solving. Nonaka and Takeuchi refer to this as knowledge-creation that happens by empathizing.

Innovating requires the presence and mix of all four types of learning. The first lends itself to exchanges of information and knowledge and is enabled by a network social architecture for connecting to others. The other three types of learning happen where face-to-face dialogue occurs. Thinking out loud together breeds understanding. The Institute for Research on Learning taught us that learning occurs in community (not to be confused with networks). In these kinds of “learning spaces”—what Nonaka calls “ba” or a trusted, safe space between diverse experts—trust and collaboration can build sufficiently to carry the creative tension required for original and inventive thinking. 

Learning to learn may be the secret so often missed by those who are quick to pursue a clever idea or too easily seduced by a seemingly bright idea—something that Peter Drucker referred to as the least reliable source of innovation. When the four types of learning are present and balanced, the quality of ideas flowing in and through our innovating efforts can improve significantly.

This article was originally published in Innovating Perspectives in March 2011. For this and other back issues of our newsletter, please visit our website at innovationsthatwork.com or call (415) 387-1270. 

The Collecting Habit and Innovation and The Inventor's "Junk Pile"

“We'll know it when we see it.”  That is what is often heard in response to questions about how concepts will ultimately be judged. 

Yet “I’ll know it when I see it” is maddeningly subjective, especially for less experienced innovators. Some will attempt to eliminate or reduce this subjectivity as much as possible. Experienced innovators, on the other hand, have learned to not only accept it, but also to anticipate it. 

Recently I had the privilege of talking shop with Don Toht, veteran designer and head of research and development at RC2, a leading producer and marketer of high quality innovative collectibles and toys targeted to adult collectors and children. We were comparing the similarities of playing and collecting (e.g., collection being a more “adult” kind of play). Don revealed an interviewing strategy he has cultivated over the years to assess the interviewee’s proclivities for creative work. Don asks the prospective designer to tell him about his or her collection (Don’s collection, by the way, is robots!). How one answers this question, Don suggests, has been a fairly reliable indicator not only of someone’s passionate interests, but of their creative potential as well.  

Don’s strategy has the resonance of sound, practical wisdom. The principle behind it—using collecting as an indicator or window into someone’s interest and passion, not to mention a view into their creative skills—has been gnawing at me every since. When Dick Cheverton and I were working with Bill Wilson on the book, The Maverick Way, we thought there might be some significance to collecting. Bill had a passion for collecting that included rocks and gems, tools, miniature tin soldiers, and even life-sized tractors, not to mention his collection of people.  A frequent caricature of the inventor pictures him with a junk pile nearby.  “Almost all scientists start out as collectors,” says Elaine Hoagland, executive director of the Association of Systematic Collections. “Collecting teaches us to observe similarities and differences. In fact, children are the best at observing because they don’t have preconceived notions“(from Acquiring Minds by Lisa R. Price).

While there may not be a causal relationship between collecting and discovery, a hypothesis I would offer is that the two may be strongly correlated.  In other words, collecting can increase the probability of significant discovery or as Voltaire said, “chance favors the prepared mind.”

Of all the idea generating sessions I have facilitated, I find the most productive ones (those efforts which produced something that made it into the marketplace) have been populated by people who had both mentally gained some distance from the core business and had immersed themselves in a new context or frame of reference. As a result, we typically counsel clients to not be too quick to jump to idea generation activities, until the core team has done its market discovery homework or has deep knowledge of the invention domain(s).  

Collecting—prior to any formal idea generation—may be what those of us prone to confuse action with motion need to consider more often. Some form of collecting—whether artifacts, hypotheses, opinions, facts and/or observations—can help “prepare the mind” to increase the probability that serendipity will occur. Collecting can facilitate the immersion into a new frame of reference so necessary for the discovery of some new and proprietary insight, perspective, benefit or truth. The collection itself may even develop an aesthetic sensitivity on the part of the collector to enable the ability to recognize a truly elegant and fitting idea from one that is simply new.

Larry Pillote, a master and veteran innovator at Sealed Air Corporation, uses the term “cute” with investing sponsors to describe innovations that meet or exceed their explicit and implicit criteria. I suspect that the ability to recognize and differentiate ‘cute’ from less attractive candidates may have something to do with a life long habit of curiosity, collecting and connecting that experienced innovators like Pillote and Toht so ably demonstrate.  

The Inventor's "Junk Pile"

By Lee Murrah

Johnny once told me that every inventor needs a well-stocked junk pile. He said it as if it were a requirement and not merely a strong recommendation. Before he gave up his workshop at age 80 and moved to an apartment, Johnny had an outstanding junk pile to go with the 55 or so patents he had accumulated in his career as an engineer. 

Johnny’s junk pile was out behind the shop, under a scrub tree with unkempt grass growing all around and a dead briar from last summer curling up through a rusted roll of barbed wire salvaged from a long forgotten Texas Hill Country fence. The junk pile had a little of everything—an automobile axle here, some used water pipe there, some angle iron to the side, and a piece of corrugated steel protecting a few rusty pieces of re-bar, some with small chunks of concrete still attached. Several pieces of scrap steel with odd-shaped cutouts leaned on parts of an old windmill. 

Johnny could slide open the back doors to his shop, and there was the junk pile only a few steps from his cutting torch and welding machine. Johnny could build anything from that junk pile. Had he decided to build a nuclear reactor to power his home, a visitor no doubt would soon have seen a glow arising from his shop. The reactor would without doubt have incorporated a differential from 1964 Coupe de Ville scavenged from his junk pile.

Johnny had always had an affinity for junk piles. When he was a teenager, he found dozens of wrecked Ford Model Ts at the local dump. From this jumble of car parts, he assembled a dozen or so operating vehicles. He left them parked on a hill on the family farm when he went off to World War II as an artillery officer. When he returned, he found to his chagrin that his father had donated them as scrap for the war effort. 

War, of course, is another junk pile story—war creates the ultimate junk pile. Life was better in Johnny’s company because of those things he made from salvaged parts found, or “liberated”, along the war torn European roads. After he found a DC motor and rigged it up as a generator to a gasoline engine, he regularly lighted two tents—his, and the commanding officer’s.

Johnny’s ability to work with junk led to one of the most amazing war stories I ever heard. Just after landing his artillery battery on the Italian mainland, he faced a swarm of charging panzers. When Johnny’s men attempted to load their howitzers to return fire, they found that the shell cases had been bent in the rough Mediterranean crossing and would not fit into the gun’s breech.  Facing annihilation, Johnny grabbed an axe and told his men to stand back. He used the flat face of the axe to drive the shells into the howitzer. He knew that if his blows were flat the axe would not strike the shell’s firing pin. One errant blow and Johnny was a goner! But it worked! Johnny’s men copied his desperate method, and they drove off the panzers!

Johnny’s wife, Wy, is an artist—a painter. Seemingly, their philosophies could not be more different. To Johnny it doesn’t matter what it looks like so long as it works. To Wy it doesn’t matter whether it works so long as it looks good. But look a little deeper though, and you will see that Johnny is an artist too—his brush is a cutting torch and his canvas is out there behind the shop in the junk pile.

Johnny’s junk pile was a magnificent thing. When most people look at a junk pile, they see an ugly tangle of rusty things with sharp edges to cut fingers, heavy things to smash toes, and maybe even a rattlesnake under that disordered pile of galvanized water pipe. When Johnny looked at his junk pile, though, he saw free parts for his projects. But he saw more—possibilities. Johnny’s junk pile was not just junk—it was also inspiration—an amalgam of ideas and the means to carry them out.

Creating—whether the medium is Wy’s paint and canvas or Johnny’s steel and welding rod—is about “seeing” differently.  Johnny could “see” things that others could not—just as Wy saw beauty when she painted her Hill Country landscapes. Johnny has a God-given talent for seeing, but he used his junk pile to even better focus his mind’s eye.

A junk pile is a collection of disparate parts and pieces, but it is more than that. It is a catalog of seemingly unrelated ideas embodied in shapes, structures, and mechanisms that can be harvested, modified, and re-used. Those that are fans of the "Junk Yard Wars," which appears on The Learning Channel, watch as participants race around junk yards looking for parts and mechanisms to use in building their contraptions.  As often as not they fail to find what they are looking for. Instead they find something else that works as well or that may inspire them to design and even better junkyard marvel.

 A junk pile not only provides ideas, it suggests new ones by placing unrelated ideas in unusual and random juxtaposition. In the real world a windmill gear would never be located next to an automobile steering shaft; and a home water heater would not lie atop a Chevy V-8 engine. This collision of ideas that occurs only in corroded piles of scrap spurs creativity.

Creativity in one sense is bringing disparate ideas together in new, random ways and contexts that suggest new functionality. Recall that Samuel Colt got the idea for his famous revolver by watching a ship’s paddle wheel. Nikola Tesla was inspired to invent the AC motor by watching the sun arc cross the sky while sitting in a Bucharest park. By requiring that his junk pile be well stocked, Johnny increased the number of ideas and potential random combinations.

To most observers a junk pile is an end, a graveyard for formerly useful things. But Johnny knew that under the rust and beneath the weeds were concepts waiting to be reborn. All a junk pile really needs is a Johnny to explore the possibilities.

The author, Lee Murrah, retired a few years ago as chief intellectual property counsel at ArvinMeritor. He wrote this article about his friend, John D. Bennett, who is  over 80 years old and lives in Walls Falls, Texas. He is retired from Sunoco.

These articles were originally published in Innovating Perspectives in June 2003. For this and other back issues of our newsletter, please visit our website at innovationsthatwork.com or call (415) 387-1270.  

The Free Range: A Well-Spring for Corporate Renewal

By Jane Gannon

While much of the territory once referred to as “free range” has long since been purchased, plowed or otherwise domesticated, another free range may be coming into view. This free range is about intellectual more than geographic territories. It is where ideas mix with theories, facts and the creative, inventive spirit. It is the place where new trends are born and old proclivities are transformed. It is a place where the boundaries that are crossed are more perceptual than geographic or political. It is a vast and rich territory that surrounds most every corporation, yet it remains unexplored and often ignored by many.

Few have experienced the potential that resides in these spaces. Fewer still have actually spent their careers mining this place for the seeds of innovation and corporate renewal. 

In mid-October, a group of veteran free range riders convened for a Mavericks Workshop in Tiburon, California. Experiences from multiple crossings of the invisible but distinct boundaries that exist between corporate “pastures” and the corporate free range were shared. Of great interest to this group was the role and contributions of the maverick in corporate innovation and renewal. 

Dick Cheverton, a top editor at the Orange County Register, who is writing the soon-to-be published book, The Maverick Way, kicked off the workshop by describing mavericks as those who straddle both the pastures of corporate life and the relatively vast, rule-less, and yet-to-be domesticated free spaces, which are rich with potential for corporate growth and innovation.

By being “unbranded,” the maverick moves freely within an organization, cuts across lines of power, brings people and ideas together, bends the rules and subverts authority. The maverick also moves freely outside the corporation, probing and exploring areas and developing relationships whose relevance to the corporation may not be readily evident, but frequently leads to significant innovations. Mavericks are motivated more by their love of freedom to pursue their interests. Mavericks use the corporation in which they work as a place to pursue this freedom, despite the corporation’s own ambivalence towards them.

While the workshop was titled, “Protecting Mavericks,” it became readily apparent that many of those gathered did not need or want protecting. Many did concede, however, that early in their maverick careers they did have “protectors.”

Bill Wilson, the retired Vice President of Innovation Management at Kimberly-Clark Corporation, who, as a master maverick, is the inspiration for The Maverick Way, suggested that the maverick poses a unique management challenge. By their nature, mavericks operate on the free range, between the confines of corporate boundaries and the wilderness of potential entrepreneurial opportunity. Working with mavericks requires different skills and philosophy.

Wilson defined a maverick as one who:

• thinks and acts in an unpredictable manner that results in innovative ways of living;

• doesn’t take no for an answer;

• doesn’t ask, and doesn’t tell;

• knows the network, the territory and where to go to get help;

• knows that where there is a will there is a way; and

• gets the insight into the product vision.

Leo Shapiro, Chairman of Leo Shapiro & Associates, who is a master trend spotter and analyst, described the various stages a maverick goes through as scapegoat, prophet and trailblazer. Despite being considered out of the mainstream, mavericks are in part defined by the “company they keep,” which is rarely limited to one company, field or area of expertise. Mavericks tend to operate as a member of a group that exists in his or her own mind rather than only as a member of the group of persons who are physically present.

Shapiro views the challenge of mavericks is to tell the corporation what it doesn’t want to hear. Successful mavericks have learned how to do that and not get terminated. As a result, mavericks are prey more often than predators, and have learned to be very aware and quick to react.

The workshop provided a chance for corporate mavericks to meet, share stories and ideas, and network with one another, an opportunity which all of the participants found valuable.

To keep this conversation and network of Mavericks forging ahead on the free range, we are promoting further discussion. Please call us if you would like more information on mavericks, the workshop, the book, or the Maverick Roundtable.

This article was originally published in Innovating Perspectives in November 1998. For this and other back issues of our newsletter, please visit our website at innovationsthatwork.com or call (415) 387-1270.  

Complementary Innovation

By Jim O'Shaughnessy

Targeted invention efforts complement a company’s organic innovation processes and thus have come to be dubbed “complementary innovation” or “non-organic innovation” to compare or contrast them with the former, more familiar innovation activities. The rationale for these complementary activities is rooted in the practical: no company can possibly afford to address every innovation challenge confronting it through its normal resource allocation process, yet no company can remain fully exposed to the innovation threats imposed by vigorous competition. This gap between necessity and affordability is the niche of complementary innovation.

The technique was born with a specific challenge in mind. In the early 1990s, Advanced Micro Devices was on the horns of a dilemma. It was paying Intel very substantial patent license fees it could ill afford but required the license from Intel as a market enabler. Intel’s portfolio was size dominant and AMD was compelled to true up the balance with cash.

This situation inspired the first targeted invention effort. Over a reasonable period of time AMD was able to complement the patent portfolio realized from its ongoing investments in organic innovation with new additions from this complementary process to achieve its goal of a strategic patent balance with Intel. AMD eventually cross-licensed with Intel at par. The complementary innovation strategy met its intended objective there—bulking up the size and diversity of the AMD portfolio to be found economically equivalent to Intel’s portfolio.

Similarly, at Rockwell we were disadvantaged for years in cross licensing in the field of telecommunications with AT&T and its patent successor, Lucent. We broke the paradigm in a way different from the approach we had previously adopted with AMD but based on certain principles that became evident in our work there.

Targeted invention efforts can contribute considerably to the negotiation calculus and dynamics. This can be exemplified by Rockwell’s negotiations with Lucent, assuredly a dominant party in telecommunications, where we used workshops to build quickly the size of our communications portfolio in comparison to historical organic innovation efforts. This had the added benefit of increasing patent velocity dramatically. In crafting the portfolio, and mindful of the typical lognormal value distribution that comes from historic practices, we determined to add to the portfolio based on a simple but powerful premise: patent things important to others, in this case, Lucent.

We took this aphorism one step further: determine where Lucent was vulnerable and patent into its weaknesses. Patents applied to points of vulnerability or weaknesses have greater blocking potential and can be felt by the other party to have greater relevance to its business. And, because we had a more favorable leverage ratio in the implicated market, the negotiation turned an important corner that favored Rockwell over the then dominant party.
 

This result did not occur overnight either in crafting the necessary portfolio, negotiating the cross license more favorably to Rockwell, or eventually in realizing the benefits of the investment. 

Complementary innovation is often used as a hedge. On the premise that no company can afford all the organic innovation it needs, here targeted invention can populate the portfolio with patents useful later as the company negotiates its entrée to the market otherwise foreclosed by competitor’s patents except perhaps at very high costs. The technique can also be used well in advance of market entry to begin developing a portfolio capable of sheltering the investments to be made as part of the strategic plan.
I have worked with many companies in many countries in many and diverse industries that use these and like practices to target gaps in their portfolios when assessing the capabilities of their patents to secure the desired or necessary objectives. This is a hallmark of complementary actions. 


This article was originally published in Innovating Perspectives in March 2008. For this and other back issues of our newsletter, please visit our website at innovationsthatwork.com or call (415) 387-1270.