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Revolutionary Soldiers

Revolutionary Soldiers

At the heart of Silicon Valley in Palo Alto, John Seely Brown boards an elevator in the rabbit warren of a building called Xerox PARC and greets a colleague. "Still making trouble?" he asks.

"You bet," comes the hearty answer.

"That's good. That's good," nods Xerox's director of research. He means it.

Brown encourages his researchers to upset apple carts and hurl the occasional monkey wrench that jams conventional wisdom. Intellectual trouble breeds new insights, new solutions and sometimes entire new businesses. A few miles south down Route 101 in Santa Clara, 3Com Corp. Senior Vice President and CTO John H.

Hart agrees. Hart says the telltale sign of an important idea is "if a lot of people yell. That lets you know it must be close to something important." Hart tips back his chair, laces his fingers behind his neck and crosses his cowboy boots at the ankles on the conference table and adds, "No one bothers to fight a wimpy notion."Wimps never boldly go where no one has gone before, but that's the only route to breakthrough progress-what some experts call radical innovation. Most R&D shops cautiously pursue low-risk incremental changes in existing products and processes, a process known as continuous innovation. To cut costs and save big bucks, a program such as Six Sigma refines business processes with a goal of achieving 99.999 percent accuracy. Similarly, a program such as Total Quality Management incrementally refines products based on the notion that the bottom line will swell when customers are happy, an important competitive edge.

Certainly most diversified companies will earn their bread and butter having their R&D labs focus on quality. But any company that relies solely on step-by-step advancement risks suffering the fate of the guy who perfected the buggy whip just as the final acre of concrete hardened on the Santa Monica Freeway.

Brown believes no company can survive the long haul without accepting the risks that come with a commitment to radical innovation. He wrinkles his nose at super-refinement kinds of research that, coupled with a merger strategy, have made millions for such companies as General Electric Co. What it doesn't or can't invent, it buys. "[Chairman and CEO Jack] Welch is running an aggressive holding company," Brown snorts, "and that can only go so far."But what distinguishes radical innovation from innovation of other kinds? Can executives manage radical innovation? Are there ways to forecast the shape of the future to ensure that products or processes that are radical innovations will have a market? How can shareholders be assured that pure research won't bleed a company white as mad scientists spend billions to design a transverse warp drive powered by dilithium crystals (a project only Captains Kirk, Picard and Janeway might appreciate)?What Is Radical Innovation?Radical innovation -- also called discontinuous innovation to contrast it with incremental, continuous innovation -- is defined by experts as the kind of change that drastically reduces production costs, boosts a product's performance tenfold or creates an entirely new set of product performance features. Under that definition, it's clear that radical innovations don't just arrive on the schedule of a Swiss railroad. So can they be planned? Joseph G.

Morone, president of Bentley College in Waltham, Massachusetts, and former dean of the Lally School for Management and Technology at Rensselaer Polytechnic Institute in Troy, New York, has directed studies that indicate radical innovations are, in most cases, the result of corporate projects that zigzagged over time-in some cases, over 20 years. They started off in one direction, got shelved, then later resumed, often in a fundamentally different form than what was initially imagined.

Take penicillin, for example. Scottish scientist Sir Alexander Fleming discovered the stuff in 1928, but he was looking for a topical antiseptic, and penicillin wasn't the answer. It wasn't until World War II that internal administration of penicillin was used successfully as an alternative to sulfa drugs for wounded soldiers. Though a failure as an antiseptic, penicillin became the world's most widely prescribed antibiotic. Brown's derision of GE's current strategies notwithstanding, GE's work on digital X-ray technology began in the 1970s as part of its aerospace business, sputtered off and on for years, but was brought to fruition with the advent of the Internet and online medical consultations. GE Medical Systems is now delivering digital X-ray machines. The process of radically innovating can be likened to teeing off on the 14th hole and hooking your drive so badly that your ball disappears into the upper branches of a sycamore. Three weeks later a hail storm knocks it free and blows it straight into the cup.

But like art and pornography, what is radical may be only in the eye of the beholder. William V. Robinson is quality director of Lucent Technologies Inc.'s Bell Labs in Murray Hill, New Jersey, arguably one of the most famous corporate research cauldrons in the world. Lucent employs about 24,000 scientists and engineers in 20 countries around the world and produces patents at a rate of about 3.5 per business day. Robinson believes innovation is less zigzaggy and more like a combination of evolutionary and revolutionary changes -- incremental changes accrue, reach a critical mass of categorical change and then tumble into a development that is undeniably different. He cites how the vacuum tube begot the transistor, which begot the printed circuit, which begot the microcircuit, which begot the microchip-all so we can play electronic solitaire with more computing power on our laps than was available to the team that first split the atom. Lucent is presently working on transistors that are fewer than 200 atoms wide. "We're pushing the limits of physics," Robinson says. He expects that soon a way of painting those circuits on an organic emulsion, something less brittle than silicon, will become possible.

Translation: We'll be buying computers printed on plastic sheets we can roll up and carry in our hip pockets or pin to walls and ceilings.

Partnering for Dollars

No one can realistically budget and plan a project that will take decades, but astute executives take measures that attempt to make workplaces boil with creativity. But like any other investment, executives must be prepared to justify heavy spending on R&D to shareholders.

Polaroid Corp., the Cambridge, Massachusetts-based company that pioneered instant photography-a breakthrough product if there ever was one-has suffered from declining interest in its core technology. While its passport and driver's license photo business continues at a reasonably robust pace, the consumer side of imagery is more and more a digital phenomenon. It's tough to sell traditional film, instant or otherwise, to people who are setting up Web pages to show off their kids, the dog and this year's Christmas tree. Bottom line? Polaroid needs a new, breakthrough product, and they need it yesterday.

But when cash flow is anaemic, R&D capital is hard to come by. Fred Tuffile, Polaroid's vice president of technology and business development, follows a strategy that spreads the risks of R&D through joint development programs among a number of strategic business partners. Understandably reticent on details of which companies Polaroid has partnered with and the specific radical new products in the works, Tuffile says Polaroid has funded its research with a little of everything. Sometimes projects get funded by soliciting government grant money to support basic research or, on a rare occasion, dollars are found by giving grants-in-aid to university scientists in situations where funds are matched by other organisations. Tuffile recommends that executives pursuing radical innovation on a budget identify market opportunities, match those market opportunities to company strengths and then focus on "execution, execution and execution." He thinks it unfortunate that Wall Street's short-term focus on profits forces a CEO to walk a delicate line while guiding a company into the future. That situation creates internal tensions in a company, Tuffile says. "Competition [between R&D groups] and the traditional business units is a war that never stops."Collaborating on the FutureFinding dollars is always tough, but the most important step any executive can take to manage innovation is to create a regular procedure to forecast things to come. It may sound like crystal ball gazing or relying on the Psychic Hotline, but there are effective ways to convene predictive think tanks, both on a small and large scale.

Though IBM Corp. has fewer financial worries than Polaroid, it is no less bottom-line oriented. However, the venerable Armonk, New York-based manufacturer of computer software and hardware can afford to devote resources to imagining the future. Fifteen years ago, more than a few observers were predicting IBM's imminent demise, precisely because the company had grown rusty at posing and answering that very question. Grossly underestimating the impact of the desktop computer, the mainframe manufacturer seemed to be drifting into an ever-deepening sea of red ink. Now, IBM keeps the future directly in its sights by allocating people's time and corporate dollars to research "jams," opportunities for people to be extemporaneous and creative. According to Paul Horn, IBM's senior vice president and director of research, the most frequently asked question at such sessions is, "What will the world be like 20 years from now?" In search of tomorrow, executives, marketing and salespeople, researchers and customers regularly meet in a variety of settings. Chairman and CEO Lou Gerstner likes to mix it up with high school kids at IBM's annual Summer Jam.

Part festival, part summer camp and part think tank, Summer Jam brings more than 1,000 students from around the world together in person and via the Internet for a single task-to imagine the future.

At Xerox PARC, Brown also champions bringing together diverse thinkers to brainstorm. In addition to students, researchers work with other scientists, visual artists and MBAs.

The point, of course, is not to get the future right but to stimulate people's thinking with vigorous, fresh, new ideas. Horn, who coordinates all the jams at IBM, says three ingredients are necessary for creating a creativity hothouse.

-- Be sure that innovators always have one foot in the real world by avoiding any system that separates researchers from market development; a researcher should follow through on a project until it becomes a line of business.

-- Recruit the very best researchers available with offers that mix compensation incentives, opportunities for personal growth and the time to pursue research passions.

-- Invest in technology and organisational structures that enhance collaboration and knowledge sharing.

Members of the scientific community have long had a history and culture of knowledge sharing. Archimedes did not shout, "Eureka!" and run naked from his bath through the streets of Syracusa in an effort to keep his discovery all to himself. In a corporate setting, however, special care must be paid to encourage people to work together. "We've worked hard to create an environment where people are at ease putting their work on the line," Horn says. At every level of research, individuals know that they are being evaluated on their performance as part of a team, not on the positive or negative outcome of a research project. If your supercomputer loses the chess match to world champion Gary Kasparov, it's no big deal provided a lot is learned about deep computing.

If enough is learned that the machine wins the rematch, well, that's just icing on Big Blue's cake.

Like IBM, DuPont Co. also encourages knowledge dissemination and teamwork.

Terry Fadem, director of corporate new business development, reports that part of DuPont's research budget has been invested in Lotus Notes, creating a virtual community for the company's 4,000 researchers worldwide. Fadem zeroes in on teamwork as the key ingredient for creativity at the Wilmington, Del.-based science company. "[Information technology] encourages quick cross-fertilisation of ideas," Fadem says.

Fadem concedes that a company that does not go after incremental product improvement will not be able to afford to pay for pure science, but he leaves the super-refinement to others. Fadem leads the quest at DuPont for "the ah-ha discovery," his term for radical innovation. In Fadem's opinion, ah-ha moments spring from discontinuities in the marketplace. For example, in the 1980s DuPont labs did a bit of genetic engineering with spiders in order to study the spider dragline silk. "We still don't sell spider silk," Fadem admits, but he justifies such research by quoting Louis Pasteur: "Chance favours the prepared mind." And prepared minds in a prepared organisation have much better odds of long-haul survival.

Killer Ideas

CIO asked Mark P. Rice, principal investigator for Rensselaer Polytechnic Institute's radical innovation research project, to name some examples of radical innovations in the 20th century.

Medicine: polio vaccine, gene splicing

Energy: nuclear power

Communications: television, communications satellitesComputing: transistor, microprocessor, personal computer, routerManufacturing: assembly line, automation technologiesMaterials: fibre opticsTransportation: airplane, jet engine, containerisationStops and StartsAn ongoing study looks at breakthrough ideasWhat's so radical about radical innovation? that's the question a team of researchers at the Lally School of Management & Technology at Rensselaer Polytechnic Institute (RPI) in Troy, New York, asked themselves. The researchers worried that U.S. companies' focus on incremental improvements-creating the perfect paper clip-in recent years was stifling breakthrough research, the kind of research that historically has been a key factor in U.S. global economic leadership. In 1994 they kicked off a still ongoing study funded by the Alfred P. Sloan Foundation in New York City. Under the direction of Joseph G. Morone, now president of Bentley College in Waltham, Massachusetts, and Mark P. Rice, principal investigator for the Rensselaer radical innovation research project, the team defined radical innovation as events that had the potential to:-- Create an entirely new set of product performance features.

-- Reduce product costs by at least 30 percent.

-- Produce a fivefold to tenfold performance boost for a product.

The RPI team decided to track radical innovation at mature companies. Working with such stalwarts as General Electric Co., Texas Instruments Inc., United Technologies Corp., Otis Elevator Co., General Motors Corp. and DuPont Co., the research team has gathered evidence demonstrating that radical innovation in a mature organisation is discontinuous. "It's an iterative process of probing and learning," says Morone, who points out that of 27 projects studied, 17 were outgrowths of past projects.

Daydream Believer

Nine ways to foster radical innovation

1 Articulate holy grails

2 Articulate strategic intent

3 Issue requests for proposals

4 Convene think tanks

5 Promote connections to external sources, such as professional journals and conferences6 Conduct technology forecasting exercises7 Include activities that foster idea generation in standard R&D procedures8 Create the "sand box," an environment where creative thinking can take place9 Rotate talent through different departmentsAdapted from "Unnatural Acts: Building the Mature Firm's Capability for Breakthrough Innovation," by Richard Leifer and Mark P. Rice (August 1998)(Senior Writer Perry Glasser can be reached via e-mail at glasser@cio.com.)

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