For R&D companies, innovation is like catching lightning in a bottle. They can’t predict when lightning will strike, but they can find a better bottle.
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Cambridge Consultants' expertise is assisting companies with the transition from innovation to product, but it also develops products. One recent introduction is the Vena technology platform, a low-cost, single-chip wireless device that serves as the standardized basis for blood pressure, heart-rate or blood-oxygen level monitoring. Photos: Cambridge Consultants
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Innovation can strike at any moment, without warning. The discovery of Teflon in the 1930s occurred when young DuPont chemist Roy Plunkett was working to make a new kind of chlorofluorocarbon. He mixed a compound with hydrochloric acid, which made strange white flakes. He thought he had failed and handed it over to other DuPont scientists who discovered the material's unique properties.
Penicillin, vulcanized rubber, Bakelite plastic, and even the pacemaker were discovered accidentally. But in each of these cases, the inventors were making a conscious effort to find an answer to a problem. Innovation is a necessary, almost instinctive task. Even in this recessionary period, companies realize that success lies in innovation, not in retrenchment. And they must pursue it even if it means no “eureka” moment.
“There is a realization that the ability to cut costs has a wall to it. There has to be top-line growth as well,” says Jim Sonnett, vice president for science and technology, Life Sciences, Battelle Memorial Institute, Columbus, Ohio.
“Being able to harness a collection of disciplines into a highly-functioning team is, I think, a key competitive advantage of Battelle,” says Sonnett, referring to Battelle’s size and breadth. With 20,400 employees it has deep resources when it comes to idea generation. In Life Sciences, he says, one group is working together to reinvent how safety testing of drugs is done. Materials specialists, chemical engineers, molecular biologists, “omics” specialists, and more are collaborating on this goal. “The good news is that we have a lot of resources and lot of people with really creative ideas.
“The challenge is sometimes getting people from various organizations to drive things aggressively and efficiently,” says Sonnett. “My two biggest concerns are really reaching all of the prospective innovators in a particular area where we have a need.”
As innovation increasingly happens in the “open”, companies must adapt quickly to the arrival of new ideas. At the same time, they can’t let new ideas fall in their lap. An active strategy to acquire, understand, and apply new ideas that spring from research and collaboration is necessary. As a result, R&D is seeing a scramble toward development of effective tools to spur innovation.
New concepts in innovation
According to Sonnett, innovation typically falls into three categories: product, process, and business model. New product development (NPD) is the most obvious and common area of innovation, but process innovation is also important to industry. Lean manufacturing is one example.
The third type is more profound and involves a fundamental change in an entire industry. The sudden explosion in home computing, or the rise of wireless telecommunications, occurred because of innovation on the business model level. Obviously, a company would love to impact an entire industry and create a new segment for R&D, the way the invention of the integrated circuit did more than 50 years ago. But this isn’t easy.
“At the highest level, there are really two answers for companies. They need a context for people to innovate toward. In other words they need to be really clear from a business strategy standpoint,” says Sonnett. “The second thing is the system. They need to provide an environment to help that innovation happen.”
In an effort to learn a little more about how R&D Magazine’s readers create an environment conducive to innovation, the editors conducted a survey that sampled the presence of innovation policies currently in place at laboratories in industry and academia. Respondents included lab executives, researchers, lab directors, and project managers at companies of less than 25 employees (32% of responses) on up through large companies of 1,000 or more employees (34% of respondents). They manage or produce R&D in more than two dozen fields, particularly manufacturing, chemicals, electronics and semiconductors, and materials.
The survey showed that seven in 10 firms have a general policy in place to help promote the generation of new ideas that benefit the business, and more than three-quarters of respondents believe that these policies have helped generate quality ideas that result in new business. Overwhelmingly, these policies are focused on new product development (NPD). More than 46% of respondents reported new product development as the leading reason for pursuing an innovation policy.
The difficulty is to figure out how to generate concepts, how to transform them into products, and how to decide what tools can be used to assist in that effort.
But these concepts do not address the larger questions of how break free of the insular research model and innovate in a world where a free exchange of ideas is the norm. It has given rise to terms like collaborative model and open innovation. The term “open innovation” was probably coined by Univ. of California, Berkeley professor Henry Chesbrough in the 1960s in an effort to explain the benefits of remaining open to external ideas. His argument, published in a book called “Open Innovation”, placed the traditional model of innovation in the “closed” category, wherein firms exercised full control over the NPD cycle, from idea to distribution.
Open innovation describes a new approach to NPD, writes Chesbrough, in which “firms can and should use external ideas as well as internal ideas, and external paths to market, as the firms look to advance their technology.”
His concept followed on the success of industrially-sponsored innovation incubators like Bell Labs and Xerox’s Palo Alto Research Center, and presaged the 1980 Bayh-Dole Act that jumpstarted licensing of federally-funded R&D. Closed innovation still exists, but today’s firms must have a toolkit that is specifically geared to taking advantage of available solutions.
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An optical fiber connection is held up to the transmit module of a 50 Gbps silicon photonics link, unveiled by Intel Corp. in July as the world's first silicon-based optical data connection. The company, which had prevously published some of the underlying technology, hopes the invention will change the business model of communications. Photo: Intel Corp.
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Software: indispensible to innovation?
R&D Magazine’s survey focused on the software tools that researchers use, and there are thousands of options out there. Everywhere companies are shifting their goals and priorities to accommodate software solutions designed to make their idea generation run faster. Some companies have even transformed themselves from companies that produce products for researchers to those that generate software for researchers.
Two-thirds of survey respondents reported that specialized software is used to aid in NPD or idea collection. This is not surprising as most researchers spend a large percentage of their time in front of the computer screen. First and foremost of these tools in the minds of many researchers—including technicians, engineers, and chemists—are the concrete development tools. Nearly 50% of the R&D professionals surveyed report using either design-oriented software or specialized scientific software. This number is likely underrated because many of our survey respondents work in executive-level or management-level positions and may not require use of these tools. Computer-aided engineering (CAE), visual electronics design, computational fluid dynamics, finite-element analysis, and other modeling solutions fall into this group, as do discrete scientific software such as symbolic math engines and statistical analysis software.
Complementing these nearly universal design solutions is the software that helps manage projects, product portfolios, and ideas. More than 40% of respondents said that project management software (PMS) is in use at their company or lab, and about 16% reported the use of dedicated laboratory information management system (LIMS) software. Despite ranking low on the innovation agenda for most companies, quality control software is another essential in use by more than a fifth of the firms responding.
Innovation software is among the less influential tools in use by labs (a little more than 15% of respondents report using it), but it fares well in comparison to other specialized software sectors, including virtual prototyping (13.5% use these tools), supply chain management (12.6%), and product portfolio management (8.1%).
Virtual prototyping is increasingly being fulfilled by mainstream design software, but it can promote innovation through efficiency and visualization. A typical example is Autodesk's Inventor. An example of a product portfolio management solution is PowerSteering, London, UK. This is an enterprise SaaS solution that connects IT, lean Six Sigma, mergers and acquisition (M&A) management, NPD, and project management offices in an effort to provide management for companies with lots of products. Solutions like these are useful in that they can reward strongly performing products with better development and find ways to improve or eliminate failing products.
But many companies are too small to require such a service, and innovation isn’t really its modus operandi. Software companies like Innovia, Miami, Fla. and Spigit, Pleasanton, Calif., are eager to fill that role. All provide idea management solutions that try to help a company learn about its own intelligence and assets and use analytics to provide strategic answers. Some, like Spigit, are selling software. Others, like Innovia, are geared more toward providing product development advice. Some have high-profile clients, but some of these platforms are still relatively new to industry. However, they do distinguish themselves in a couple of important ways: they provide guidance that venture capital often can’t; and they offer a way to energize a company that has become insular.
Some larger companies have recognized the demand for this type of service. Recently, scientific informatics giant Accelrys Inc., San Diego, Calif., merged with Symyx Technologies Inc., Santa Clara, Calif., to expand its ability to serve the scientific community’s need for both computer-aided design and simulation, and innovation management. Symyx, in fact, has changed its course in recent years from delivering biotechnology solutions to becoming purely a software services firm.
These moves reflect the lack of innovation software currently in use at companies. When asked whether the software they used was geared for the generation of new ideas, most software users we surveyed had not been exposed to such tools. Just 8% of respondents believe the project management software they use is oriented toward innovation. LIMS users (4.7%) showed similar low numbers. Other categories had still fewer users. Only the design or scientific software users showed optimistic numbers. Of those respondents, about half report using software for innovation purposes.
These numbers makes sense. Not every company will be breaking new ground with new products. But they do highlight the disconnect between the priority that companies put on the generation of useful new ideas and the ability—through software tools—for company researchers, technicians, and leaders to get those ideas in the open. Just 25% of respondents report that their innovations software—if their company uses it—is integrated with other software at the company. Yet, most respondents (nearly 75%) said that the innovation software in use was at least somewhat valuable.
Solutions beyond software
Software can be crucial for generating innovative ideas with regard to NPD, but a management approach is at least as important when it comes to encouraging innovation. Some of the important strategies companies take when innovating is building networks of valued partners that either might do some of the upfront work for the firm that’s trying to innovate or in some cases might do the creation of a very credible prototype with a network partner.
“There are a number of either services or software offerings that suggest that they can substantially improve an innovation output of an organization. I think that having some clearly understood process in an electronic environment is necessary,” says Sonnett. “I think the whole culture and what to innovate toward aspect within a firm is at least as important if not more so.”
Not so long ago, innovation often meant simply pulling parts out of a bin and tacking them together. In an elaborate example of this, a technologist at Eastman Kodak, Steve Sassoon in 1975 famously invented a solid-state imager—the core of digital photography—only to see it neglected until supporting technologies like electronics and semiconductors improved enough to spark the proliferation of digital cameras in the 1990s. But his invention did not spring from out of the blue. He had read about another electronic camera developed at Texas Instruments Inc. three years earlier that also produce filmless images, but analog not digital. Sassoon felt he could do the same with a home-made analog-to-digital converter and the newly invented CCD.
Even today, researchers are doing similarly things on a microscopic and nanoscopic scale by piecing together parts of materials, such as carbon nanotubes or gold nanoparticles, and biological materials, such as cells or proteins to arrive at new architectures for battery electrodes, or to perfect drug delivery systems.
But for most industries on the macro-scale, simply piecing parts together is inadequate. With the global reach of innovation, it’s difficult for a new venture to know if its product is truly unique or if it’s already been done. Innovation software, while helpful for directing discovery, often can’t snap the big picture.
Outsourced product development partners are one solution. Cambridge Consultants, Cambridge, Mass., and Cambridge, UK, retains the services of more than 300 scientists and engineers for the purpose of helping clients develop their products. According to Ruth Thomson, a product development consultant at the company, these experts help determine whether a start-up’s new technology is actually new, and whether it can succeed in the marketplace.
“They can recommend changes and help guide the development process,” she says. Cambridge Consultants hones its expertise in NPD by doing its innovative product launches. Notable recent launches include the Vena technology platform, the first device to demonstrate full interoperability to the Continua Health Alliance Standard. The company’s experience of developing low cost, high performance single-chip wireless solutions, combined with its access to the Bluetooth stack, put it in a position to deliver a novel product.
But there are other solutions out there for smaller companies. M.J. Soileau, vice president of the Research and Commercialization Center at the Univ. of Central Florida, Orlando, points to the incubator as an alternative way for a company to achieve NPD while still heavily involved in the research and innovation stage. The Univ. of Central Florida, which has experienced tremendous growth in the past 10 years, set up its own incubator to do just that.
“A big trend in higher education these days is the coupling of the academic research enterprise to the innovation economy. I think all over the country people understand that this is an important thing to do,” says Soileau. A lot of this change, he continues, has to do with the diminished contribution of corporate research in the last 40 years.
The incubator, like several others around the U.S., is making an impact. In the past few years, it has helped launch more than a hundred companies with a success rate of 75-80%. Perhaps more importantly, 30% of all U.S. Small Business Innovation Research grants are going to incubator clients. To Soileau, this indicates the value of the incubator as way to help companies get through their the most difficult period, when both innovation and a business launch are taking place.
At Battelle, Sonnett has previously looked at how the proportion of R&D spending has changed from large firms of 25,000 employees or more to smaller levels. At the macro level there has been a substantial downward change, he reports.
There’s plenty of innovation to manage at a larger company, too, and it’s often a difficult task. For potentially disruptive innovations, a company can choose to share the fundamentals of the discovery in the hopes that outside firms or individuals provide valuable insights or capabilities. If they can advance the product development together with greater speed than the primary investigator did alone, then everyone wins.
Intel Corp., Santa Clara, Calif., has taken this approach with its silicon photonics technology. When Intel Fellow Mario Paniccia began his work on this technology at the turn of century, its importance was recognized by company executives. The first device, a 2.2 GHz silicon modulator, exceeded expectations and was later followed by a more substantial innovation, the first laser to be build from silicon.
But it was clear that any NPD would be a decades-long process. The inventions had little intercept opportunity with existing products, which meant it could not be spun out or licensed. It was an entire technology platform. So, the company settled on a surprising solution: publication.
The results appeared in Nature Photonics in 2003, and so did subsequent discoveries. The value here was in exposure. By sharing the technology, Intel was engaging in open innovation. Those with insights or expertise would seek Intel out.
As it stands, Intel continues to develop a silicon photonics platform that it believes will transform communications.
Innovation doesn’t have to occur at the fast pace of a chipmaker, however, for new ideas to matter. Even mature, commodity-oriented industries such as materials or chemistry must find ways to manage the NPD process, even if open innovation isn’t necessarily part of the equation.
Gas supplier Matheson, Basking Ridge, N.J., has adopted a strategy called Stage Gate to better manage its product development. Stu Muller, gas technologist fellow at Matheson, introduced Stage Gate several years ago to help streamline the NPD process.
It is much the same idea as a product portfolio management software package like PowerSteering, except that it is a set of procedures organized and executed in a team setting. StageGate starts with an idea for a new product, and proceeds when management gives the word. A leader is assigned and forms a small 4- to 6-member cross-functional base team to bring the idea to development in a controlled manner. Time and money are spent as part of this development, but according to Muller, these expenditures are not linear. Because Stage Gate is a step-wise process, it can capture the progressions as a series of management reality checks, or “gates” that can help a company determine whether or not to continue with development.
According to Muller, Stage Gate shows its value in helping to re-affirm the continued allocation of capital to NPD, and can save both time and money on the way.
Conclusion
Clearly, there is no one answer to building effective innovation. But most companies agree the concept must be addressed proactively by building a management, research, and product development environment that rewards the generation of constructive ideas. By installing the right tools, companies can be prepared to act on these ideas.
The final step then is to collect them. Battelle, says Sonnett, has picked on the open collaboration concept and has set up a computerized collaborations system in its Life Sciences division that he hopes will help promote useful ideas. The approach of somebody putting out a market opportunity or an unmet need electronically, allowing everybody to see it, allowing others to comment and rate it, and allowing others to suggest improvements is one that seems to have a strong currency with Battelle’s employees, he says.
“Highly educated, PhD-level folks can sometimes be protective about information, but by running this electronic environment we’re going to test this and see how it works. For most people it will be energetic, and for some it might be off-putting,” he says.
Innovation is never easy.
Published in R & D magazine: Vol. 52, No. 4, August, 2010, pp. 8-12.
