Category Archives: Value Creation

The Shapley Value, Nobel Prize in Economics, and Collaboration

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Lloyd S. Shapley

Lloyd S. Shapley, professor emeritus of economics and mathematics at UCLA, has been awarded the Nobel Prize in Economic Sciences, along with Harvard University economist Alvin E. Roth. (Photo courtesy of UC Irvine.)

I have to be honest with you: The Nobel Prize committee has not been riding high on my favorite list ever since they awarded the Peace Prize to the EU. What a myopic definition of peace. It’s not just the absence of war — what about social peace and economic peace? Besides, I still haven’t forgiven them for not having awarded the prize to Mahatma Gandhi.

So, when I read a few mornings ago that the 2012 Nobel Memorial Prize in Economics, aka the Sveriges Riksbank Prize in Economic Sciences, had been awarded to Stanford’s Al Roth and UCLA’s Lloyd S. Shapley I didn’t know what to make of it — not because I thought that the Committee had goofed, but because I knew nothing about their work.

Ignorance had to be banished. Time for research and reading. What I discovered was all very good stuff — market design and game theory, with applications in education and medicine. Knowledge and the application of knowledge. Exquisite! And in the process, I discovered a very interesting link between the work of one of the prize winners and collaboration. Yes, you heard me right — collaboration. No, it’s not a Freudian slip, and no, I am not promoting my own agenda.

Prof. Shapley’s mathematical and economic achievements are many and numerous to be recounted and recognized in one blog post. However, he is best known for the concept named after him, the “Shapley Value.”  At its core, the Shapley Value focuses on the cumulative benefits reaped by all participants in games in which participants cooperate rather than compete.

OK, I admit that “cooperate” and “collaborate” are not the same. But cut me a little slack, will you? Let’s for a moment transcend the semantics and focus on the underlying dynamics: intellectual, personal, and social.

We are all products of our conditioning. From a very young age we are brought up with a passion for competition. We worship winners; we loathe losers. It’s drilled into us that winning is not everything — it’s the only thing. But very rarely are we brought up to respect and value collaboration, let alone recognize it and reward it. For some inexplicable reason, a desire to collaborate and cooperate is seen as a sign of weakness.

But that’s so inconsistent with the nature of the times we live in. In today’s complex, interconnected, information-rich, and data-saturated world, collaboration is not only important, it is essential, and, in some cases, downright indispensable. Viewing collaboration as a sign of weakness can, in many cases, actually prove detrimental to sustainable, long-term growth. Imagine trying to solve some of the world’s most vexing problems — urban poverty, clean transportation, green behaviors, education, social innovation — without collaboration.

A competitive mindset has definite bounds, it can only get us so far and no further. So, it’s very refreshing and extremely pleasing to find the importance and value (pun intended) of collaboration being recognized and rewarded — the Shapley Value — albeit indirectly. Adopting a new mindset that mixes and matches collaboration and competition sensibly and in an enlightened way can be exciting and fun. We owe it to ourselves to give it a try.

I, for one, look to be inspired by the Nobel Prize awarded to Prof. Shapley and by his most important idea, the Shapley Value. I hope you will too. Bring your friends, your family, your community, your town, your country.

Before we know it, the world will be here!

The Tools for Innovation and Co-Creation

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Businessman Running on Graph

The most powerful applications of social technologies in the global economy are largely untapped. By fully implementing social technologies, companies have an opportunity to raise the productivity of interaction workers — high-skill knowledge workers, including managers and professionals — by 20 to 25 percent. [McKinsey Global Institute, July 2012.]

We recently reported on the general outlines of this recent McKinsey Global Institute (MGI) study and now would like to fill in some of the most important details about knowledge workers and collaboration.

When it comes to collaboration, companies utilize a mix of tools and technologies. There are many large companies, such as IBM and SAP, that produce innovations to existing products by collaborating outside the company with customers, partners, and experts as well as people across the company.

The question is, what tools and resources do engineers and other innovation workers use to promote collaboration and knowledge-sharing, and accelerate product development?

The tools vary by industry and by task, and include an array of traditional internal repositories and systems, external content sources, and a number of new social technologies that enable greater collaboration and new forms of content creation, sharing, and consumption.

The report from McKinsey Global Institute indicates that:

[...] knowledge workers spend 28 hours each week writing emails, searching for information, and collaborating internally. Per MGI, Web 2.0 technologies — such as social networks, ratings and reviews, wikis, discussion forums and crowd-sourcing, among others — could represent a 20-25 percent improvement in knowledge worker productivity. With internal knowledge and external information more readily available via social media — a typical information worker could reduce information searching time by as much as 35 percent, returning over 6 percent of an innovation or knowledge worker’s workweek to other tasks.

MGI estimates that two-thirds of the value creation opportunity afforded by social media technologies comes from an organization’s ability to better communicate within and across the enterprise.

MGI also estimates that in using social technologies to gather customer feedback and gain customer insights, improve internal and external collaboration, and enable the co-creation of products, advanced manufacturing companies can capture value equal to 12%-15% of the costs.

Other findings of the study include the following:

  • Just 3% of companies are “fully networked” and using social media to interact with customers, partners, and employees.
  • In the U.S., only 5% of all communications and content takes place on social networks.
  • Companies that seek consumer input to drive product development have an opportunity to generate consumer insights and market intelligence via social media.
  • Social technologies could add an estimated $170-200 billion in value annually for advanced manufacturing industries.

Here is an infographic from the study:

Social Technologies Today graph

Untapped Potential graph

What social media tools and technologies does your team use to collaboratively solve problems? We would really like to know, so please add your thoughts to the comments.

Source: “The social economy: Unlocking value and productivity through social technologies,” MGI, July 2012
Source: “Collaborating Across Geographies to Foster New Ideas, Innovation,” Goldfire Blog, 06/13/12
Image by FreeDigitalPhotos.net.

Innovators, Not Presidents, Change the Economy

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Exploration-Innovation

Now that we’re headed for the voting booths, the BIG discussion is which nominee will be able to change the economy. Having studied the last nine presidents and their impact on improving the economic strength and welfare of this country, the answer is clear. Neither. Presidents alone do not change the economy.

A recent Washington Post-ABC poll showed that nearly three in four Americans said the candidate’s approach to the economy will be a “major factor” in deciding between President Obama and Gov. Mitt Romney. That’s because the common wisdom is that the president can make it all better. Or worse, depending on who is ranting at the podium. Again, the president alone cannot change the economy.

It’s really all about intersections. Past campaigns show that presidential leadership is just one of the many roads that can lead to a stronger economy. And it’s not one of the more important roads. Of all the intersections, it is the one of technological innovation that is the great disruptor, as the old, faltering economy gets out of the way for the more robust and exciting new economy.

In this case, it’s the multitude of innovations — from the Idea Economy — changing the way we do business in the old Industrial Economy. It’s the chasm between the old and the new that we’re looking into. And it’s the innovators, not the politicians, who should be elected if all we care about is changing the economy.

Let’s take a closer look at this idea. Who has changed the economy more during the last four years of President Obama’s time in office — the president or Steve Jobs? Who did more to change the way we do business and impact on the economy, President Reagan or Bill Gates?

Add to the list all the other innovators and their creations: Electricity. Light bulbs. Telephones. Mass production. Automobiles. Walmart. MacDonald’s. And so much more. Not a president in sight.

Right now, we are looking at 3-D printing, cloud computing, the Internet of Things, zettaflood data, quantum networking, homemade solar panels, robotics, artificial intelligence, and all the other innovations that are still working their way out of labs and startup companies. It’s the innovations that will change the economy. It’s the innovations that have always changed the economy. The president is just someone who takes the credit or the blame depending on how things are going.

Now, if we had a great innovator who was running for office, then maybe…

Source: “Romney edges Obama on economy, overall race deadlocked,” The Washington Post, 08/28/12
Source: “Who Really Changes The Economy?,” NPR, 08/30/12
Source: “Getting to Ten in Ten,” Real-Time Cloud, 06/07/12

Article on Collaboration Wins Beckhard Prize

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It’s official. According to the editors of the prestigious Sloan Management Review at the Massachusetts Institute of Technology (MIT SMR), an article on collaboration and innovation MIT SMR published in 2010, “The Collaborative Organization: How to Make Employee Networks Really Work,” won the Richard Beckhard Memorial Prize. The article was written by Rob Cross and Peter Gray, professors at the University of Virginia’s McIntire School of Commerce; and industry co-authors Robert Thomas, Shirley Cunningham, and Mark Showers.

In the project funded by the Rockefeller Foundation, the authors explored what enables continuous innovation across the enterprise. During the course of an extensive resources search on the topic, there were several surprising findings. The first was that more innovation is not necessarily better. Second, many of the current ideas and assumptions about innovation are incorrect. Finally, and perhaps most surprising for me, they discovered that pushing innovation in the organization can often disable the innovative process as much as it seems to enable it.

The research primarily focused on the question of how companies can build more collaborative and innovative organizations. In general, executives need to analyze the networks the employees use to “collaborate to discover how high-performing individuals and teams connect.” In response, these networks need to be designed to optimize the flow of good ideas across all roles, responsibilities, titles, locations, and time zones. The emphasis should be on finding and streamlining the bottlenecks where too much network connectivity slows decision-making.

The gist of the study is that we need to move from “innovation as an ideology to innovation as a process.” The study offered six recommendations to help make this happen:

  • Treat innovation as a process, not primarily as an outcome.
  • Treat innovation as an independent variable, and reflect on multiple positive and negative outcomes during the innovation process.
  • Recognize that innovation processes integrate different organizational and external factors.
  • Understand the prevailing cognitive, normative, and political dimensions within organizations to determine how they might enable or stifle innovation.
  • Capture insights from successful and unsuccessful innovations in organizations over time.
  • Reflect on the differences in innovation processes, influencing factors, and outcomes across different cultures and geographies rather than on general innovation factors.

The goal of taking these steps is to help develop a more effective way in which organizations use employee networks to “reduce costs, improve efficiency and spur innovation.” It is a brilliant analysis well worth the time it takes to read and consider how to modify the collaboration in your organization.

As the MIT Sloan Management Review stated, the study shows how “The traditional methods for driving operational excellence in global organizations are not enough. The most effective organizations make smart use of employee networks to reduce costs, improve efficiency and spur innovation.”

Source: “The Collaborative Organization: How to Make Employee Networks Really Work,” MIT Sloan Management Review, 10/01/10

12 Quotes on Innovative Thinking

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Articulate

A friend recently asked how I manage to keep so interested and inspired on the topics of innovation and collaboration. I said, “I collect quotes.”

At the start of every week I choose one and put it over my desk for that week. I read them to learn. They remind me that all the great and successful things that have been done in the world were done by people who believed in the power of working together, of taking failure as a pit stop on the road to success, who understood that an idea is only a thought until it is realized, and who knew that any great innovation is the sum total of all others that existed before.

Above all, these quotes highlight the internal compass of people who made a difference because they learned what innovation, invention, and collaboration really mean. They become the distillation of these teachers’ lives.

Below is a collection of quotes on innovation assembled by Mitch Ditkoff, author of the book Awake at the Wheel: Getting Your Great Ideas Rolling (in an Uphill World) and the insanely popular blog, Heart of Innovation. This is just a taste of the 100 inspiring quotes on innovation waited for you at Ditkoff’s site.

Please feel free to add your own favorites in the comments on this post.

1. “If you have always done it that way, it is probably wrong.” – Charles Kettering

2. “There’s no good idea that cannot be improved on.” — Michael Eisner

3. “Swipe from the best, then adapt.” — Tom Peters

4. “What is now proved was once only imagined.” — William Blake

5. “If the only tool you have is a hammer, you tend to see every problem as a nail.” — Abraham Maslow

6. “The way to get good ideas is to get lots of ideas and throw the bad ones away.” — Linus Pauling

7. “Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity.” — General George Patton

8. “Whenever anything is being accomplished, it is being done, I have learned, by a monomaniac with a mission.” — Peter Drucker

9. “I failed my way to success.” — Thomas Edison

10. “After years of telling corporate citizens to ‘trust the system,’ many companies must relearn instead to trust their people — and encourage their people to use neglected creative capacities in order to tap the most potent economic stimulus of all: idea power.” — Rosabeth Moss Kanter

11. “The best way to predict the future is to create it.” — Alan Kay

12. “I am looking for a lot of people who have an infinite capacity to not know what can’t be done.” — Henry Ford

Source: “100 Awesome Quotes on What It Takes to Innovate,” Innovation Excellence, 05/31/10

Prize-Based Innovation Challenges: Learning From Yester Era’s Giants, They Were There Before Us!

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Longitude by Dava SobelWe live in a world of unabashed self-promotion. Politicians, academics, consultants, companies constantly in search of opportunities to unfurl their flag, looking for niches and coves they can invade, claim as their own. Not surprising, therefore, to find modern-day idea merchants claiming to be originators, pioneers, the first to have given birth to a concept or a way of thinking, without blushing or blinking.

But is it true? Are all the ideas and concepts that flood Fast Company, Wired, Fortune, BusinessWeek, and Harvard Business Review really new? If few create, and many emulate, as the sages constantly remind us, then we need a different coda. One that pays homage to those who have traveled before us on the very same paths we feel compelled to claim as our own.

Take the instance of prize-based innovation challenge. The juxtaposition of those four words gives the concept a distinctly modern ring. But words, no matter how cleverly paraded, are never enough to birth a phenomenon. They usually come after the achievement, when one has to explain what happened. Peter Diamandis is known for his X Prize Foundation, McKinsey has a white paper demonstrating the power of prize-based innovation competitions. But while Peter and McKinsey may have energized the concept, they most certainly didn’t create it.

One of the earliest examples of a prize-based innovation challenge, as we understand it today, can be found in the 18th century. Maybe not the first, but certainly one of the most consequential in transforming marine navigation, it’s the story of Longitude!

We all grew up hearing tales of seafarers, discoverers, and explorers. Those who landed and lived to tell their tale became household names — da Gama, Columbus, Cook. But a far greater number smashed against unnamed rocks and died, their stories silenced, all because they couldn’t figure out their longitude, their precise location at sea. And at sea, even small errors, a few degrees, can lead to fatal outcomes.

To overcome this intractable and embarrassingly costly problem in ships, cargo, and human lives, the British Parliament issued the Longitude Act in 1714 (following the recommendations of a committee, committees existed even then, headed by none other than the great Sir Isaac Newton). The Act urged Parliament to welcome potential solutions from all walks of life — science or art — from individuals, groups, corporations, and even countries — it did not favor British ingenuity over foreign, it just wanted a solution. Perhaps the most significant part was the recommendation to reward the solution that delivered what it promised handsomely, prizes ranging from £20,000 to £10,000 — millions of dollars in today’s currency.

The story of the Longitude has been told brilliantly elsewhere — in a variety of books and documentaries with eponymous titles (my favorite being Dava Sobel’s recounting), and is highly recommended for study for anyone even remotely connected with innovation — students, practitioners, prize-based innovation evangelists, and innovation gurus (yes, you heard me right, even modern-day innovation gurus can learn a lot from the classics, especially those they have not read).

The goal of the blog is not to retell but to provoke a realization that footprints of others exist where we think we are breaking ground. Everything that we consider cutting edge in the field of innovation today — open innovation, collaboration, silo busting, the dangers of fixed mindsets, welcoming failure, the value of experimentation, and a lot of what we have forgotten how to worship — the value of perseverance, diligence, self-education, and, most importantly, the value of backing ambitious projects with appropriate resources, notably expertise and time (because Rome was not built in a day then, and is still not built in a day), can be found in the story of the Longitude, and the prize established to specifically solve the riddle and develop an effectively scalable commercial solution.

It is at once enlightening and humbling, very humbling indeed to learn of how they missed nothing (or so little). How leading minds of that era were willing to give everything, their lives, their means (often meager), in the pursuit of unlocking the universe’s most sought-after secrets.

The two extremes, nothing is new under the sun, and everything is new, are not tenable, they are both partial truths. How then to resolve the new and yet not new paradox? There is a beautiful line in the TV documentary, “The American Triumvirate,” currently airing on the Golf Channel. It says Ben Hogan didn’t invent practice, he added several dimensions to it and raised it to a higher level.

Adding dimensions — we should take inspiration from that phrase and reframe our idea goals as adding dimensions, rather than discovering and invading white spaces. Those who reframe will by definition be more cognizant and respectful of the rich histories that have preceded us.

So, next time we are impressed by how tall we are (or appear) we may want to look down and see the shoulders of the giants we stand on. Very few things, if any, especially ideas, just materialize instantly, out of nowhere. They have ancestors, gradual accumulations of thought and experiences. To deny them would be tantamount to an amputation.

Ye Too Olde Patent System?

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Samsung Galaxy S vs. Apple iPhone 3GSThe word “patent” was originally called “letters patent, which was a royal decree that gave exclusive rights to a person for a limited period of for an invention. In return, that person would be required to share that invention with the public. The goal was to support a kind of virtual co-creation, collaboration, or co-invention. You invent something, and someday I make it a better thing.

Patents were thought to make it more orderly and easier to disclosure the invention, or, more often (as in the case of a better mousetrap), innovations into the public domain. The thinking was simple: If inventors did not have the legal rights afforded by a patent, they might keep their inventions to themselves. No point giving my ideas away so someone else can make their fortune.

So the higher purpose of the patent was to makes the details of a new invention or innovation available to the public. Available for you to use (for a reasonable fee) and reinvent or recreate another patented invention or innovation. Spending time in the patent office gives credence to the idea that there is very little that is new under the sun. And that was the point. Patents were supposed to lead to co-creation, collaboration, or co-invention. You don’t need to be an Albert Einstein to understand the underlying concept.

That was the pre-digital idea anyway. The recent ginormous Apple vs. Samsung patent battle is shaping up to be the Battle Royal of patent fights, with Apple asking for more than $2.5 billion from Samsung. It also begs the question, “Is the patent an artifact of a previous age?”

This particular fight is about design, Apple’s core business strength. The claim is that the iPhone, with its gorgeous screen, no-pokey keyboard, and soft, rounded edges morphed the phone into the smartphone and once again and forever more changed the industry. Everyone after the iPhone was an iCopy.

“After iPhone was introduced, suddenly all the designs looked like black slabs with touch interfaces, no keyboards and lots of icons,” says Carl Howe, an analyst with Yankee Group. “This is officially World War III,” he added. “I think this is a case of whether the iPhone really, as Apple claims, changed the world in 2007.”

This is just one of many cases in the U.S. and around the world where one corporation is suing another over patent infringement. In every case, the company being sued pulls out a few of its own patents and sues right back. The question it raises, one that is especially poignant in this case, is whether the American patent system, based on the royal decree in the 17th century, originating here in the colonial period (1778–89) as part of the Articles of Confederation years, is enabling or disabling the co-creation and collaboration that innovation in the digital age demands.

Mark Lemley, professor at Stanford Law School, says the patent office isn’t always right. Grab your smartphone (any make or model) and stare for a moment at those rounded corners. He says:

That really is a patent of stunning breadth if you take seriously the idea, when you look at the diagram in the patent, that Apple gets to own a computer that’s shaped like a rectangle. Well, then designing around [that is] going to be awfully hard for Samsung or anybody else.

According to Lemley, it is a signal that something is upside down with the patent system, a system created to promote innovation.

Time for an overhaul? What would be a better patent for a patent?

Source: “Samsung Fight Among Many In Apple’s Patent War,” NPR, 07/30/12

Book Review: The Collaborative Organization

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The Collaborative Organization book coverI recently finished reviewing The Collaborative Organization: A Strategic Guide to Solving Your Internal Business Challenges Using Emerging Social & Collaborative Tools by Jacob Morgan. As I read it, I kept thinking about the following idea: Emerging social networks and collaboration tools are the digital water cooler in the virtual office.

The author states early in the book that collaboration isn’t new. If anything, collaboration has been around since… well, since there was more than one person who needed help pushing a boulder across the threshold of the cave. What is new is the technology that enables a digital form of collaboration that can feed into everything from co-creation of products, new innovations, customer collaboration, social innovation, and more.

So much more that if your organization has not geared up to use these emerging social and collaboration tools, you will find your organizational IQ falling and your ability to compete diminishing in a hypercompetitve global marketplace in which customer collaboration and co-creation have become Standard Operating Procedure.

According to Jacob Morgan, there are four critical drivers that make modern digital technological collaboration more important to your business than ever before:

  • Knowledge sharing and transfer
  • New opportunities and ideation
  • Thinking out loud
  • Collective intelligence and memory

Of the four, guess which one jumped off the pages for me as the hallmark of a truly modern collaborative organization? I’ll tell you in a minute…

Most of us who have worked in an organization have experienced sharing and transferring knowledge. We’ve known for a long time that there are two types of information that are shared in an organization: formal and informal. Formal is characterized by the fact that it is explicit and captured. Written, recorded, taped, filmed, emailed, copied, powerpointed, one way or another, it is captured and made explicit for others to review.

Informal knowledge is implicit; it flies about like memes on wings, spoken in short conversations. It used to be the more innovative and creative type of information. The one that could actually help a company move forward, be more competitive, increase efficiency and improve productivity. It was also harder to capture in order to make it explicit.

Now, thanks to a variety of social networking platforms, implicit knowledge sharing and transfer is simple and easy. You learn something, you share it, and other people learn it and even improve it if they can. Knowledge, explicit and implicit, flows through the corporate mind. We often pass around new and interesting opportunities and ideas. I’ve been doing this in organizations for years.

Again, it’s the new technology that creates communities of learners and communities of practice that facilitate this like never before. One of the nicer elements of the new sharing technology is that you can be a quiet introvert and still get your ideas — and your thoughts about other people’s ideas — out there. The technology opens the whole community and creates a group mind unlike other forums in the past.

As for collective intelligence — and what I call “tribal” memory, the tribe in this case being the organization — Morgan sums it up best:

Lew Platt, the former CEO of Hewlett-Packard, once said, ‘If HP knew what HP knows, we would be three times more productive.’ Collective intelligence refers to the ability of an organization to use the wisdom of its employees to make business decisions.

Being able to leverage the knowledge of a collective, to co-create, to have open and continuous collaborations, is always more accurate and far more powerful than leveraging the knowledge of just a few. In a time when the shelf life of knowledge has decreased from years to months, no one has the time to become The Expert anymore, the cycles of learning, forgetting, relearning happen too fast. The group has now become the expert.

So, the answer to which of the four drivers surprised me the most? Thinking out loud. Listen as the author thinks out loud about thinking out loud:

One of the ways people learn from themselves and from others is by thinking out loud. This allows coworkers and colleagues to see the thought process around how certain decisions are made within organizations. I know many of us have that little internal voice we hear when working on something, especially if it’s an exciting project. I’m sure many of you often talk to yourselves out loud. You are not the only one who can benefit from that little voice inside your head. I guarantee that you have several colleagues who could learn from you by tapping into your thought process, and you could learn from them. For example, let’s say you want to develop a business model for something you are working on. You can share your thought processes publicly as you begin to crank out ideas. Other employees will then be able to provide you with feedback and their own ideas, which you may be able to incorporate into your model. This ability to think out loud was never possible before.

It’s also the newest one on my list of technologies for social innovation, co-creation, and collaboration. And you can even do it when you’re in the library.

Source: The Collaborative Organization, Jacob Morgan, 06/05/12

The Endless Immensity of the Sea

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sailboatCollaboration is an art and a science. We know a good deal about the science. We tend to overlook the art.

A few weeks ago, my nephew asked me what the word “expert” means. I told him it was all about learning. The expert was a person who learned a lot about something, and learned more every day, until people agreed they were The Expert. He listened carefully, then nodded and asked, “So, am I the expert about superheroes yet?” It made me think about how that question would translate in the companies I consult with and what it meant for building successful collaborative teams.

Joi Ito, Director of the MIT Media Lab, writes about “neoteny,” the retention of childlike attributes in adulthood. This ability to learn is like the compounding interest on an investment; after two or three years, a relentless learner stands head and shoulders above his peers. It stands to reason that a team of relentless learners is optimized for successful collaboration.

So, why then are so many teams of smart people so stupid?

The answer has nothing to do with their collective IQ. I think the answer can be found in an obscure quote I pinned years ago on my actual pre-Pinterest cork board. It was written by Antoine de Saint-Exupéry, best known for his work The Little Prince. Here is the quote:

If you want to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.

The quote focuses on the art of collaboration.

Amazing how some people knew so much about collaboration before it became the business word du jour. The key to a great collaborative team is their ability to look outward in the same direction, to share a deeply felt goal or, as Saint-Exupéry wrote, “[…] to long for the endless immensity of the sea.”

Seems almost too simple to repeat. Yet I cannot tell you the number of times I listened to team members who had no idea what it felt like to long for the “endless immensity of the sea.” When we build teams to collaborate, we need to make sure that the first item on the punch list is to build a deeply felt desire, a “longing” if you will.

The next time you bring a team together, ask yourself a question: What is the longing — the deeply felt longing — which will drive the team, even if they do not have all the tools and knowledge to “build a ship”? What will wake them up every day and make them want to go wherever they dream of going? When you can articulate that longing, then you are on your way to a great collaboration.

Here are some examples that punctuate this idea:

We want to be the ones to actually feel what it is like to step onto the surface of the moon.

The team will take the first pictures of life, life on the very bottom of the ocean.

We will see the proof of the ‘god particle’ that started all creation.

In the beginning, it is not all about the wood and the work. It’s about the art of collaboration, describing that longing that drives collaboration forward. I will spend a lot of time in this column researching and studying, thinking and writing about the science of collaboration. I just want to make sure we never lose sight of the art, of that longing for “the endless immensity of the sea.”

Source: “Neoteny,” Joi Ito Blog, 12/15/09
Image by Itdan (Dan Dickinson), used under its Creative Commons license.

David Grebow is the news editor at GauravBhalla.com. David is a writer, editor, and author of many books, including A Compass for the Knowledge Economy. He has been called one of the “most original thinkers in the fields of human performance, human capital solutions, learning and elearning.”

Reverse Innovation: A Conversation with Vijay Govindrajan

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Thumbnail image for Thumbnail image for vijay_govindarajan.jpg

Meet Vijay Govindrajan, VG to the world.      

Widely regarded as a leading expert and thinker on strategy and innovation, he is the Earl C. Daum 1924 Professor of International Business at the Tuck School of Business (Dartmouth).  More relevant from a personal perspective, he was my Professor at IIM Ahmedabad, first year, first trimester, Managerial Accounting, summer of 1974.  

While his accomplishments and awards are too numerous to list in a blog, two deserve a special round of applause.

First, Thinkers 50 recently awarded him the 2011 Breakthrough Idea Award for sparking a global conversation and challenge to build a $300 house (I was part of the effort), and ranked him number three in the definitive listing of the world’s top 50 thinkers

Second, a 2-year stint as Professor in Residence and Chief Innovation Consultant at GE, led to a celebrated HBR article on reverse innovation, co-authored with Jeff Immelt and Chris Trimble, which recently culminated into a book – Reverse Innovation: Create Far From Home, Win Everywhere.

The book was launched globally on April 10, and it is where we pick up the action.  He very kindly agreed to visit with the readers of this blog to share his thoughts on Reverse Innovation and the key themes of his book.

VG, hearty congratulations on the Thinkers 50 award, the HBR article with GE’s CEO, Jeff Immelt, and the book on Reverse Innovation, must be very heady times?

Thanks Gaurav.  Yes, heady and humbling times.  The book is the culmination of decades of research, but the reverse innovation journey is just beginning, gaining global momentum, as we speak. All that I can say is I am truly excited about the road ahead and the potential impact of reverse innovation thinking on the growth of multinationals in emerging countries.

Reverse Innovation – in a nutshell?

Historically, large multinationals, residing in rich, developed countries, innovated in their home countries, and then exported that innovation to the not so rich, developing countries.  Reverse innovation is exactly the opposite. Innovations are developed and adopted in poorer, emerging economies, and are subsequently adopted by customers and companies in richer, more developed economies.

A few examples please, to illustrate reverse innovation?

GE Ultrasound Machines – we discuss this example in the article and the book.  In markets like India, where more than 60% of the population lives in rural areas, without reliable sources of power, you can’t have effective health care service models that rely on the patient coming to the hospital, you have to take the hospital to the patient.  Large ultrasound machines that are the size of appliances and cost between $100k to $500k are impractical and cost-prohibitive.  A light, portable, PC-compatible ultrasound machine, costing as little as $15k, was developed in India to help the local market meet its needs.  This equipment is now finding its way to developed markets – an example of reverse innovation.

Gatorade – is another fine example of reverse innovation; it’s also the first case study in the book.  Quintessentially American, Gatorade actually has its roots in the treatment of cholera patients in Bangladesh and other South Asian countries.  To treat severe diarrhea caused by Cholera, patients were kept hydrated by giving them carbohydrate rich concoctions comprising of coconut water, carrot juice, and carob flour.  A centuries old tradition on that side of the world, it was a total shock to doctors trained in western medicine, who believed that putting carbohydrates in the stomachs of cholera patients would worsen their condition.  But as they say, results speak for themselves.  So, it was only a matter of time before the British Journal Lancet covered the story, and a doctor in Florida reasoned that if it is good enough to rehydrate unhealthy cholera patients, surely it must be good enough to rehydrate healthy Football players.   

In your book you state that Reverse Innovation requires a clean slate approach – interesting juxtaposition of words, slate and innovation – but that aside, please explain what constitutes a clean slate approach?

(Laughs) Yes, it is interesting, the juxtaposition of slate and innovation, now that you bring it to my attention.  By clean slate I mean that winning in emerging markets requires much more than geographic expansion, meaning it requires more than simply ramping up sales, distribution, and production.  I recommend looking at these markets with an entirely fresh set of eyes, with an intense amount of curiosity, supported by an abiding admission that the needs of these markets are different than those at home.  It will require rewriting the script, away from exporting innovations to emerging markets, to innovating in emerging markets.

You are not a big fan of the word – glocalization?

No, I am not, because at heart glocalization is still about exporting products.  Glocalization does not take into account the fact that the structure of markets and customer needs are fundamentally different in emerging markets, and hence require a set of “clean slate solutions.” (Smiles, I smile too).

What do you see as the single biggest opportunity in the coming years for multinationals?

Emerging markets becoming more than nominal contributors to the sales and growth of multinational companies.  In the next 25 years, the single biggest opportunity I see for multinationals is customers moving from rich countries to emerging/poor countries – reverse innovation should make that possible.

Reverse Innovation is where you live, and Co-Creation is where I live – do the two intersect?

(Smiles) Is that a trick question?

Not at all! (I protest – though asking VG trick questions would be quite cathartic, given all the trick questions he asked us when he taught us Managerial Accounting).

Most definitely they do.  The $300 House initiative – you were part of that movement – it also received the Thinkers 50 Breakthrough Idea 2011 award – is an excellent example where Reverse Innovation and Co-Creation intersect.  In fact I would go one step further, they don’t just intersect, they positively reinforce each other.  If the structure of markets and consumer needs are different, then so must be the architecture of solutions and customer experiences, a perfect set up for Reverse Innovation and Co-Creation to work with each other, and for end users and customers to collaborate in co-creating innovative solutions and experiences.

Could you share three key themes from your book for the benefit of busy executives who may not have had a chance to read it yet?  

Just three?

Yup, just three.

(Groans) Boy, you sure make it tough, Gaurav. (It’s my turn to smile now).

I would say the three key themes are:

  1. You must innovate, not simply export, if you want to capture the mammoth growth opportunities in the developing world. 
  2. The stakes in emerging economies are global not local. Passing up an opportunity in the developing world today may invite formidable new competition in your home markets tomorrow. 
  3. Legacy multinationals must rethink their dominant organizational logic if they are to win in an era of reverse innovation.

Thanks VG – most gracious of you to have shared your time and thoughts.  Hope we can get together again soon for another round.

Absolutely, this was a lot of fun.  You know where to find me.