Last night I had an enlightening conversation with Alph Bingham, the co-founder of InnoCentive from Eli Lilly. This guy is fascinating!
Alph suggested that many people do not like open innovation (external crowd sourcing) because it runs counter to a widely held belief of the R&D community. Researchers often throw around the Edison quote, “I have not failed 700 times. I have not failed once. I have succeeded in proving that those 700 ways will not work. When I have eliminated the ways that will not work, I will find the way that will work.”
Researchers use this quote because it “validates” the iterative development innovation process; the cornerstone of most R&D departments. They have convinced themselves that they learn as much from their failures as they do from their successes. Call it what you want, the 700 attempts were failures.
When some R&D people look at open innovation, they see it as linear rather than iterative: post a challenge and get a solution. This seems inconsistent with their belief in learning from failures.
Alph made the point that in the R&D world, the value of iterative development is overrated.
What if Edison found a solution to the light bulb challenge on the first try? Would that be bad? Would he have continued to find the 700 ways that did not work? Did the 700 failures really add that much value? Can R&D organizations afford to fail 700 times? Not in today’s competitive environment.
Alph suggested that open innovation is a massively parallel process where failures and successes happen at the same time. You post a challenge and you get dozens or hundreds of solutions. Some won’t work. But all you need is one solution that does work. And with open innovation, you only pay only for the solutions that do work. Failures cost you nothing in terms of time and money. With internal iterative development, you pay for the successes and the failures. Do you really learn enough from your failures to justify the extra cost and time involved?
Alph’s perspective is fascinating and I fully agree with him for analytical/deterministic challenges. Creative challenges and their solutions, on the other hand, often can’t be proven correct until they are tried out in the real world. Iterative development – via small and scaling experiments – may still be the best approach for solving less deterministic problems. I call this approach the “build it, try it, fix it” model. Having said that, the iterations could potentially be staged as a series of open innovation challenges that continue to refine concepts until they are market ready. This would be a massively parallel iterative creative development. Very cool.
This got me thinking about a conversation I had with an executive from Chrysler many years ago while I was working at Accenture. I asked him who he felt his biggest competition would be in the future. He pointed at me and said, “You.” Although he was half-joking, it’s true that the role of car manufacturers these days is less about manufacturing and more about integration. The Accentures of the world are masterful at integration.
And maybe this integration skill is the MOST important skill for your organization to have.
As platforms like InnoCentive continue to grow, problem solving of all types –creative and analytical – will be outsourced in a massive parallel way to a huge network for solvers. If we take this to an extreme where all challenges are outsourced via crowdsourcing, the role of a company would only be to integrate these solutions together into a seamless offering.
Although this is easier said than done, this one skill may be critical for the survival of your business…and maybe even the US economy.
China and India have a growing base of highly educated engineers and experts. Eastern European countries and parts of Asia have large creative bases. The world is truly flat. And all of these countries have people who are willing to work for pennies on the dollar.
If we try to beat these countries at their game, we will lose. We could never educate enough people. And even if we could, our workforce would probably not be willing to labor for lower wages.
Integration is the key. Yes it is difficult. And that is good news. While the rest of the world is focused on the trees (the point solutions to specific challenges), we need to become masterful at defining the forest (the strategy, architecture, and integration of the point solutions). This is where value is created. And this is much harder to outsource.
It reminds me of something from my 24/7 Innovation book I wrote back in 2001…
“(As innovators,) we are architects of companies and industries. An architect is not a ‘reengineer.’ To illustrate this point, I often ask clients what is the difference between an optimist, a pessimist, a reengineering consultant, and an architect. The optimist looks at a half filled glass of water and sees it as half-full. The pessimist looks at the same glass and sees it as half-empty. The reengineering consultant sees too much glass. Cut off the top. Downsize. An architect looks at the same glass and asks questions such as ‘Who’s thirsty?’ ‘Why water?’ Or ‘Is there another way to satisfy the thirst?’ It is this questioning, challenging and rethinking that differentiates architects from those who rearrange the deck chairs on The Titanic.”
Find solutions everywhere. Embrace open innovation. And think like an architect. Ask the difficult questions. Assess what matters most. And build a core competency around integrating point solutions.
Remember, we are no longer in the tree business…we are in the forest business.