knowledge & innovation management

The Future of Business at the CrossroadsThe Future of Business - at the Crossroadsof Knowledge & Innovation ManagementAssemblée générale du CIO-Club Wallonie/BruxellesJeudi 1er avril 2010 à 17 heures - Cercle de Wallonie

Christian De NeefFast Track Consulting – Brussels

Understanding Innovation…

Every solution to a problem has already been found/applied elsewhere!

Possibly in another context industry or even scientificPossibly in another context, industry, or even scientific discipline…

Innovation is happening/can happen anywhereOrganizations that are “open” to innovation will ultimately reap the benefits


Let’s look at the “invention” of the Light Bulb!First electric light: Humphry Davy (1800)

English scientist connected wires to a battery and a piece of carbon, the carbon glowed, producing light (an electric arc)

Carbon paper filament: Sir Joseph Wilson Swan (1860)worked well, but burned up quickly

C b fil t i f b lb Th Al EdiCarbon filament in an oxygen-free bulb: Thomas Alva Edison(1879)

experimented with thousands of different filaments40 hours 1500 hours!40 hours 1500 hours!

Tungsten filament: William David Coolidge (1910)lasted even longer than the older filaments… until?


SuccessfulInnovation requires Knowledgea vast amount

of the right

Domain Specificdetailed, focused, precise, , p

Other Knowledgebroad, open, and… often surprising!

Is there any good reason to believe that this Knowledge would be available “in” your organizations, rather than “outside”?y g ,

Innovation Levels

“Researchling” A solution found in another discipline of science

Invention A new, so far inexistent scientific concept/creation

“Borderling” A solution found IN ANOTHER sector or industry

p

“Actling” A i l il f d d l t t d d l ti

“Knowling” A solution found WITHIN the sector or industry

True Invention represents only a fraction of a % of Innovation…

Actling A simple, easily found and almost standard solution…

SSome Key Principles

Solution DrivenFew tools/techniques exist that deliver solution direction, most of them only analyze problems…

Customer Driven Organizations must listen to “the voice of the customer”Innovation that is not adopted, is not innovation!p ,

Focus on FunctionIn-depth understanding of “function” allows us to find fundamentally different solutions, not incremental change, but… y , g ,change of paradigm!

Systems evolve towards “ideality”“function without resource”

The Innovation Paradox…

The greater the potential of an idea, the harder it will be to find anyone willing to try (and adopt) it!

Rejecting new ideas is mostly unrelated to their potentialpotential

Samuel Morse vs. Alexander Graham BellSony's Betamax vs. JVC's VHS

So it’s not about Knowledge… Is it about Culture & Change?

“If HP only knew what HP knows, we would be much more we would be much more

profitable”

(former CEO Lew Platt)

&Knowledge & Innovation Levels

“Researchling” “If we only knew what Academics & Science know…” C i tifi ll b ti t

Invention

“Borderling” “If we only knew what Organizations Worldwide know…” Multi-sectoral collaboration, technology databases, etc.

Cross-scientific collaboration, etc.

“Actling” “If l k h t O O i ti k ”

“Knowling” “If we only knew what Our Industry knows…” Benchmarking, professional associations, certification, etc.

Actling “If we only knew what Our Organization knows…” Norms, standards, common knowledge, reuse, etc.

A New Innovation Paradigm…Traditional Innovation The New Paradigm

Inside the organizationR&D is confined to a specialized departmentP t t k id f

gOpen and collaborativeEveryone can have a brilliant new ideaId h d h ll dPatents keep ideas from

spreading/being appliedKnowledge is power

Ideas are shared, challenged, testedKnowledge is opportunity

Up to recently, more than 90% of Procter & Gamble’s 27000

In 2005, IBM made 500 Linux related patents available to the

patents remained unused… community for free…

Traditionally, organizations protected ideas that they had developed but did not market… developed but did not market…

A New Innovation Paradigm…

How does Open Innovation work?Networks of organizationsExtended to users/clientsExtended to users/clientsUnique complementary capabilitiesWorking in collaboration

This requires different skills, different culturefrom protecting to… Sharingfrom isolation to Collaborationfrom isolation to… Collaboration

These are the new sources of competitive advantage!


Why this (r)evolution? We live in an exponential worldThe complexity of products & services is increasingThe complexity of products & services is increasingIt is no longer possible to master all skills and competenciesThere is a new supply of low-cost high-capability laborNew economies develop unique skills and capabilitiesNew economies develop unique skills and capabilitiesToday’s technology is a facilitator for Collaboration

The new philosophy - Winning by sharing!p p y g y g


What is Collaboration? NOT subcontractingNOT outsourcingNOT offshoring

These work for Production, not for Innovation

NOT offshoring

Collaboration in Innovation means…Sharing globally dispersed KnowledgeSharing globally dispersed KnowledgeAcknowledging strengths and weaknesses of each partnerAccessing distant capabilityLeveraging new capabilitiesSh i i k d b fitSharing risks and benefits

Rewarding the ideas, not just the effort...

CriticalMass

A New Innovation Paradigm…Mass

More ideas - CrowdsourcingIntegrated capabilityInfluenceUser base

LowerR&D Costs

Collaboration More/BetterInnovation

LaborMaterialsIdeas

SuperiorCapability

AgilitySkill & C t i

InnovationInfrastructure

ContextualKnowledge

Skills & CompetenciesProcess/Product ExpertiseConversation

gMarket knowledge & accessPartners and SuppliersLocal NetworksGovernment Connections


Eli LillyLaunched Innocentive (2001)Focus on Pharmaceutical Industry

Procter & GambleLaunched InnovationNetInternal network for Innovation Management

Open to all scientists to contribute (solvers)Open to all companies to buy (seekers)Functioning in a very

Focus on P&G’s 7 500 scientistsOpen to 18 000 users worldwideCross functional, cross organizational10 million documents online

Functioning in a very competitive landscapeEstablishes anonymous connections

Focus on Crowdsourcing

Focus on KM & (internal) Social Media30 000 + patents searchableThe Success Story

When searching for ways to controlFocus on CrowdsourcingNot sharing participants’ IPThe Success Story

Eli Lilly found a new way to mass produce butanoic acid in

When searching for ways to control water hardness and improve detergent performance, P&G developed a metal ion control technology it has reapplied to toothpaste calcium-enhanced fruitmass produce butanoic acid in

7 months - it might have taken two years in their own labs!

toothpaste, calcium enhanced fruit drinks and bone-strengthening pharmaceuticals!

(P)eople Communication and motivation Recognition and rewards

A New Innovation Paradigm…Recognition and rewardsManaging different culturesWorking in distributed teams

(P)rocesses (T)echnologyKM PlatformDistributed development

An Innovation “methodology”Distribute work - integrate

(B)usinessOutcomes!

(O)rganizationStandardization – interfacesTraceability

Centralized/Distributed Management

componentsCapture best practicesKM Processes

Support Structure/TeamPrinciples & Policies

A need to develop new competenciesA need to develop new competencies…

Understanding Knowledge…

The difference of 0 3°C cannot be explained

Unless we change our behavior, global warming may be at the origin of unseen catastrophes

During the Summer, the average

The difference of 0.3 C cannot be explained statistically and may point to climate change

During the Summer, the average temperature for Brussels is 18.1°C. Over the past decade, the average was18.4°C

18.1 – 18.4

Understanding Knowledge…Explicit KnowledgeTacit Knowledge Explicit KnowledgeTacit Knowledge

80-85% 15-20%

Understanding Knowledge…

Why are some “experts” performing better than others?ot e sWhat’s their secret?How can this expertise be transferred?

T it K l d 80% fTacit Knowledge = 80% of all Knowledge in the enterprise...

Knowledge Management…

“KM is the process through which organizations generate value from their Intellectual and Knowledge based assets”Knowledge-based assets

Intellectual Capital (patents, copyrights, trademarks, brands, registered designs, trade secrets and processes, licensing and partnering agreements)licensing and partnering agreements)People (including relationships with people in outside organizations and professional bodies)

fPublished reference materialProducts and servicesetc.

Knowledge Management…Tacit Explicit

Tacit

SocializationTeam workCoaching

ExternalizationCapture

DiffusionTacit gMentoring

OrganizationLearningUnderstanding

E li it OrganizationClassificationCombination

gCommunicationInternalization

Explicit

The Knowledge-Creating Company, Nonaka and Takeuchi, 1995

How KM supports Innovation…

AbstractProblem

AbstractSolution

ProblemAnalysis

SpecificProblem

SpecificSolution(s)

SpecificSolution(s)

SolutionImplementationSpecific

Solution(s)

Knowledge Management

InnovationManagement

Knowledge Management


Focus is NOT on reducing cost but on increasing value on

’t K

now

increasing valueCreating a relationship that allows you to go where your competitors W

HAT

?D

o

where your competitors can’t follow you (on their own)

Bl O St tW

Kno

wBlue Ocean Strategy…

HOW?Know Don’t Know

OOpen Innovation…

How to make it work?Find the right partner(s)

Must be WIN-WIN relationship in terms of capability, potential benefits, sharing risks, etc. be e ts, s a g s s, etc

Define specific (smart) objectivesOpen Innovation is not open-ended…

Establish clear roles and responsibilitiesManage expectations and avoid conflictManage expectations and avoid conflict

Clear rules of engagementFocus on people, not technologyKnow what you will do with the resulting IP

O hi &Ownership & revenueProvide for exit scenarios

Innovation remains a risky business

And Open Innovation requires Knowledge Management!And… Open Innovation requires Knowledge Management!

CConclusions

Knowledge Management & Open Innovation2 different disciplinesComplementaryComplementaryA natural fit

KM fills the gaps, creates opportunities for the g p ppfuture of InnovationKnowledge Management ‘+’ Open Innovation

A f l iA powerful mixInteresting future for Innovation ManagementA lot more research is required…