A spark of success: 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.(Cover story)(Company overview)

Livingstone, Paul. "A spark of success: 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." R & D
52.4 (2010): 8+. Expanded Academic ASAP. Web. 3 Mar. 2011.
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Full Text:COPYRIGHT 2010 Advantage Business Media

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.
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
flares 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 riley 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.
To read innovation suggestions from our readers, visit
www.rdmag.com and go to "Publications".

Gale Document Number:A239263793