Knowledge & Innovation Management presentation to the CIO-Club

1. The Future of Business - at the Crossroads
of Knowledge & Innovation Management
Assemblée générale du CIO-Club Wallonie/Bruxelles
Jeudi 1er avril 2010 à 17 heures - Cercle de Wallonie
Christian De Neef
Fast Track Consulting – Brussels

2. Understanding Innovation…
Every solution to a problem has already been
found/applied elsewhere!
Possibly in another context, industry or even scientific
context industry,
discipline…
Innovation is happening/can happen anywhere
Organizations that are “open” to innovation will ultimately
reap the benefits

3. Understanding Innovation…
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
Carbon filament i an oxygen-free bulb: Th
C b fil t in f b lb Thomas Alva Edi
Al Edison
(1879)
experimented with thousands of different filaments
40 hours 1500 hours!
Tungsten filament: William David Coolidge (1910)
lasted even longer than the older filaments… until?

4. Understanding Innovation…
Successful
Innovation requires a vast amount
of the right Knowledge
Domain Specific
detailed, focused, precise
, ,p
Other Knowledge
broad, 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 ,

5. Innovation Levels
Invention A new, so far inexistent scientific concept/creation
“Researchling” A solution found in another discipline of science
p
“Borderling” A solution found IN ANOTHER sector or industry
“Knowling” A solution found WITHIN the sector or industry
“Actling”
Actling A simple, easily found and almost standard solution…
i l il f d d l t t d d l ti
True Invention represents only a fraction of a % of Innovation…

6. Some Key Principles
Solution Driven
Few 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 Function
In-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”

7. 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
potential
Samuel Morse vs. Alexander Graham Bell
Sony's Betamax vs. JVC's VHS
So it’s not about Knowledge… Is it about Culture & Change?

8. “If HP only knew what HP knows,
we would be much more
profitable”
(former CEO Lew Platt)

9. Knowledge & Innovation Levels
Invention
“Researchling” “If we only knew what Academics & Science know…”
Cross-scientific collaboration, etc.
C i tifi ll b ti t
“Borderling” “If we only knew what Organizations Worldwide know…”
Multi-sectoral collaboration, technology databases, etc.
“Knowling” “If we only knew what Our Industry knows…”
Benchmarking, professional associations, certification, etc.
“Actling”
Actling “If we only knew what Our Organization knows…”
l k h tO O i ti k ”
Norms, standards, common knowledge, reuse, etc.

10. A New Innovation Paradigm…
Traditional Innovation The New Paradigm
g
Inside the organization Open and collaborative
R&D is confined to a Everyone can have a brilliant
specialized department new idea
Patents k
P t t keep ideas f
id from Ideas are shared, challenged,
Id h d h ll d
spreading/being applied tested
Knowledge is power Knowledge is opportunity
Up to recently, more than 90% In 2005, IBM made 500 Linux
of Procter & Gamble’s 27000 related patents available to the
patents remained unused… community for free…
Traditionally, organizations protected ideas that they had
developed but did not market…

11. A New Innovation Paradigm…
How does Open Innovation work?
Networks of organizations
Extended to users/clients
Unique complementary capabilities
Working in collaboration
This requires different skills, different culture
from protecting to… Sharing
from isolation to Collaboration
to…
These are the new sources of competitive advantage!

12. A New Innovation Paradigm…
Why this (r)evolution?
We live in an exponential world
The complexity of products & services is increasing
It is no longer possible to master all skills and competencies
There is a new supply of low-cost high-capability labor
New economies develop unique skills and capabilities
Today’s technology is a facilitator for Collaboration
The new philosophy - Winning by sharing!
p p y g y g

13. A New Innovation Paradigm…
What is Collaboration?
NOT subcontracting
NOT outsourcing These work for Production,
not for Innovation
NOT offshoring
Collaboration in Innovation means…
Sharing globally dispersed Knowledge
Acknowledging strengths and weaknesses of each partner
Accessing distant capability
Leveraging new capabilities
Sharing i k
Sh i risks and benefits
db fit
Rewarding the ideas, not just the effort...

14. A New Innovation Paradigm…
Critical
Mass
More ideas - Crowdsourcing
Integrated capability
Influence
User base
Lower
R&D Costs
Labor
Materials More/Better
Collaboration Ideas Innovation
Infrastructure
Superior
Capability
Agility
Skills Competencies
Skill & C t i
Process/Product Expertise
Conversation
Contextual
g
Knowledge
Market knowledge & access
Partners and Suppliers
Local Networks
Government Connections

15. A New Innovation Paradigm…
Eli Lilly Procter & Gamble
Launched Innocentive (2001) Launched InnovationNet
Focus on Pharmaceutical Internal network for Innovation
Industry Management
Open to all scientists to Focus on P&G’s 7 500 scientists
contribute (solvers) Open to 18 000 users worldwide
Open to all companies to buy Cross functional, cross organizational
(seekers) 10 million documents online
Functioning in a very
competitive landscape Focus on KM & (internal) Social Media
Establishes anonymous 30 000 + patents searchable
connections The Success Story
Focus on Crowdsourcing When searching for ways to control
Not sharing participants’ IP water hardness and improve
detergent performance, P&G
The Success Story developed a metal ion control
Eli Lilly found a new way to technology it has reapplied to
mass produce butanoic acid in toothpaste, calcium-enhanced
toothpaste calcium enhanced fruit
7 months - it might have taken drinks and bone-strengthening
two years in their own labs! pharmaceuticals!

16. A New Innovation Paradigm…
(P)eople Communication and motivation
Recognition and rewards
Managing different cultures
Working in distributed teams
(P)rocesses (B)usiness (T)echnology
Outcomes!
An Innovation “methodology” KM Platform
Distribute work - integrate Distributed development
components Standardization – interfaces
Capture best practices Traceability
KM Processes (O)rganization
Centralized/Distributed Management
Support Structure/Team
Principles & Policies
A need to develop new competencies
competencies…

17. Understanding Knowledge…
Unless we change our behavior, global warming may
be at the origin of unseen catastrophes
The difference of 0.3 C cannot be explained
0 3°C
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

18. Understanding Knowledge…
Tacit Knowledge Explicit Knowledge
80-85% 15-20%

19. Understanding Knowledge…
Why are some “experts”
performing better than
ot e s
others?
What’s their secret?
How can this expertise be
transferred?
Tacit K
T it Knowledge = 80% of
l d f
all Knowledge in the
enterprise...

20. 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)
People (including relationships with people in outside
organizations and professional bodies)
Published reference material
f
Products and services
etc.

21. Knowledge Management…
Tacit Explicit
Socialization Externalization
Team work Capture
Tacit Coachingg Diffusion
Mentoring
Learning
Understanding g Organization
Explicit
E li it Communication Classification
Internalization Combination
The Knowledge-Creating Company,
Nonaka and Takeuchi, 1995

22. How KM supports Innovation…
Abstract Abstract
Problem Solution
Problem Specific Specific
Specific Solution
Analysis Problem Specific
Solution(s) Implementation
Solution(s)
Solution(s)
Innovation
Management
Knowledge Management

23. A New Innovation Paradigm…
Focus is NOT on
Do Know
reducing cost but on
on’t
increasing value
WHAT?
Creating a relationship
that allows you to go
W
where your competitors
can’t follow you (on their
Know
own)
Blue O
Bl Ocean Strategy…
St t
Know Don’t Know
HOW?

24. Open Innovation…
How to make it work?
Find the right partner(s)
Must be WIN-WIN relationship in terms of capability, potential
be e ts, s a g s s, etc.
benefits, sharing risks, etc
Define specific (smart) objectives
Open Innovation is not open-ended…
Establish clear roles and responsibilities
Manage expectations and avoid conflict
Clear rules of engagement
Focus on people, not technology
Know what you will do with the resulting IP
Ownership & revenue
O hi
Provide for exit scenarios
Innovation remains a risky business
And…
And Open Innovation requires Knowledge Management!

25. Conclusions
Knowledge Management & Open Innovation
2 different disciplines
Complementary
A natural fit
KM fills the gaps, creates opportunities for the
g p pp
future of Innovation
Knowledge Management ‘+’ Open Innovation
A powerful mix
f l i
Interesting future for Innovation Management
A lot more research is required…