1. Innovation Management 2012 Stefan Wuyts
Creativity
Innovation Management 2012
Stefan Wuyts

2. Agenda The Case of PARC Managing for creativity
Encourage!
Remove roadblocks
Reaching out: open innovation
Examples
Open innovation contests

3. Dec.‘69: George Harrison leaves press conference, plays chords to words ‘Hallelujah’ & ‘Hare Krishna’.
Other band members join in, lyrics are developed. Result: “My Sweet Lord”.
Several people contributed, song was accredited to Harrison, became #1 hit in the US in 1970.
4 months later, Harrison sued by Bright Tunes who had legal rights for “He’s So Fine” (The Chiffons).
This motown song was short hit in ‘63. Harrison denied plagiarism, “might have heard the song and unconsciously used similar chords without considering their source”.

4.  Relativity of creativity
A creative solution is not necessarily a unique solution that comes to the inventor “out of the blue”, importance of prior knowledge & recombination!
The secret to creativity is knowing how to hide your sources
--Albert Einstein
Only an inventor knows how to borrow, and every man is, or should be, an inventor
--Ralph Waldo Emerson

5. The case of PARC
Palo Alto Research Center (Tellis and Golder 2002)

6. ‘Xerox’ stems from xerography technology
When digital technologies started to develop, PARC was created.
The intentions were good:
Close to Stanford University
Far away from the established laboratories and headquarters
Large budget
Efforts to attract the brightest minds
Vision: to create the architecture of information

7. Many innovations, among which the first graphical user interface, mouse, Ethernet, laser printing, many basic protocols for the Internet, and the first PC ($32,000)

8. But: Xerox did not manage to benefit from many of the solutions created at PARC
In contrast to: Apple, Microsoft, 3Com, HP, DEC, Adobe…
Metcalfe invented ethernet, but moved to 3Com to commercialize it.

9. Reasons for PARC’s failure?
1. Xerox did not manage to put the pieces together, to combine old and new: focus too much on the novelty dimension of creativity
Creativity is the production of novel and useful ideas
(Amabile 1996)
Same dimensions are identified in context of ad creativity
“the art of establishing new and meaningful relationships between previously unrelated things in a manner that is relevant, believable, and in good taste, but which somehow presents the product in a fresh new light” (Leo Burnett)

10. Reasons for PARC’s failure?
2. Also incompetence in terms of developing internal support and building supporting (internal and external) networks.

11. What happened?
2001: Mark Bernstein, the CEO of PARC, reorganized PARC into an independent research company.
PARC kept close strategic relationships with Xerox and creates value by cooperating also with a number of other global firms.

12. Managing for creativity: Encourage!
3M: scientists and engineers have to dedicate 15% of their time to exploration to maximally utilize individual talent.
Ensure top management involvement and facilitate the creation of support networks
Nurture individual talent
Personality: select creative people
Tolerate mistakes
Be supportive and show appreciation (e.g. constructive attitude, use of rewards)
Look beyond the individual: collect ideas in idea bank, engender competition, encourage interaction

13. Look beyond the individual
Example: Siemens Information and Communication Networks (MacCormack 2002)
End of the 90’s: much changes, need not only for technological products, but also for consultancy and solutions
Many years of experience, employees (worldwide >400000): How can we exploit that?
No best-practice sharing in sales/marketing
Need for a global knowledge sharing project 13

14. ICN/ICM ShareNet® – The Knowledge Sharing Network
" “Why didn’t you call me? I could have told you that they have done a similar project in …”
" “I worked for … days on that and (s)he didn’t tell me (s)he already had that info”
" “Who should I address this information to?”
" “It would have saved so much time if….”
" “If I had known that before I would have made another decision…”
" “Are there any special USPs on our solution that will convince my customer?”
" “I really cannot understand why they didn’t take my offer. It was much better than my competitors…”

15. ShareNet: urgent questions, forums for sharing knowledge (chat rooms, community news boards, discussion groups)

16. Major Challenge? Stimulate people to use ShareNet
Lack of time
Unwillingness to share knowledge
Lack of trust in solutions
Doubts about creativity
Siemens tried out the following incentives:
First at the country level
Then at the individual level (compare with airmiles)
Quality control & ShareNet managers
Also control on contributions to ShareNet
Success stories: Switzerland, $460,000 contract for the development of a telecommunication network for 2 hospitals, despite a higher bid. Via ShareNet, technical data from the Netherlands were used to show that the system of Siemens was more reliable.

17. Historic Roadblocks to Creativity
Managing for creativity: Remove roadblocks!
Historic Roadblocks to Creativity
“I think there is a world market for maybe five computers.” Thomas Watson, Chair, IBM, 1943.
“Computers in the future may weigh no more than 1.5 tons.” Popular Mechanics, 1949.
“I can assure you that data processing is a fad that won’t last out the year.” Business books editor, Prentice-Hall, 1957.
“So we went to Atari and said, ‘...We’ll give it to you. We just want to do it. Pay our salary, we’ll come work for you.’ And they said no. So then we went to HP, and they said ‘We don’t need you, you haven’t got through college yet.’” Steve Jobs, co-founder, Apple Computers.
“640K of RAM ought to be enough for anybody.” Bill Gates, Microsoft, 1981.

18. Historic Roadblocks to Creativity
“Who the hell wants to hear actors talk?” H.M. Warner, Warner Bros., 1927.
“Stocks have reached what look to be a permanently high plateau.” I. Fisher, Prof. of Economics, Yale, 1929.
“We don’t like their sound, and guitar music is on the way out.” Dick Rowe, Decca Records executive, rejecting the Beatles’ demo tape, 1962.
“This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication [and] is inherently of no value to us.” Western Union, 1876.
“Heavier-than-air flying machines are impossible.” Lord Kelvin, President, Royal Society, 1895.
“Everything that can be invented has been invented.” C. H. Duell, Commissioner, U.S. Office of Patents, 1899.

19. Market orientation: stimulus or roadblock for creativity?
Im and Workman examined this link. They distinguished (1) between novelty and meaningfulness and
(2) between creativity of new products versus creativity of marketing programs.
They investigate the link with market orientation, following the ‘component approach’ of Narver and Slater (1990) to define market orientation.

20. Market orientation

21. Reaching out: open innovation
E.g., Merck: everyone is responsible for all the research in his/her domain of expertise. Creation of virtual lab in one’s domain of expertise to bond with other creative minds both within and outside Merck.
Many pharmaceutical companies were unable to keep up with the scientific developments in biotechnology and acquired technologies (in development) from dedicated biotechnology firms.

22. Reaching out: open innovation
Accept that “not all the smart people work for us.”
Is both in- and out-bound: obtain knowhow technology, patents, etc.) from external partners, and also monetize technology (through licensing, sale, etc.) that is no longer consistent with corporate strategy.
The external sources are viewed as complementary to internal sources so that innovation can be more efficient.
Selecting the best partners is critical, and mutual trust is important.

23. Reaching out: open innovation P&G “Connect + Develop” program
“We want to partner with the best innovators everywhere, and we employ a number of approaches to connect with a network of top innovators around the world.”
Examples:
SunHealth Solutions developed the UV sensing technology used in Huggies swimpants with UV sensors, that help parents monitor their child’s exposure to UV radiation.
Mr. Clean scrubbing brush uses technology originally used as insulation in the auto industry.
Magic Eraser cleaning pad was sourced from a German chemicals company, and first noticed by P&G in use in Japan.

24. Reaching out: open innovation More examples
Lego: Web forum, sites, and blogs for participants to share and improve products. Result: the on-line community was instrumental in the development of the LEGO robotics system.
Philips: Specialized facility in Singapore (“the Innohub”) that provides realistic environments for end users and product developers to work on breakthrough ideas.
Apple monitored reviews and blogs and also obtained Voice of the Customer data to understand the needs of potential users, to generate ideas for the iPad.

25. Reaching out: open innovation Idea generation contests
Crowdsourcing: capitalizing on the wisdom of the crowd.
Dell’s Idea Storm: customers submitted ideas for new products and improvements to existing products online. Over 10,000 ideas were obtained from sources around the world.
Other examples include Do Us A Flavor (Frito-Lay); design contest for jewelry (Titan Inc.)

26. Reaching out: open innovation Idea generation contests
Specialized websites
Redesignme launched in 2008; 10,000 contestants in 2011
Contest for new ideas for diabetic monitors: different ways to integrate sensors in clothes or glasses.
Contest for new packaging for a food product, contestants could develop a completely new type of wrap, box, etc., and provide visuals to support their submission.

27. Reaching out: open innovation Idea generation contests
Open question: how should you organize such a contest to obtain optimal outcomes?
Specify output constraints (e.g. the new logo must match the overall positioning of our brand): output constraints increase the creativity of solutions.
Avoid input constraints (instructional guidance with respect to the use of specific materials, textures, colors, fonts, etc. during the creative process): input constraints reduce the creativity of solutions.
Craft a smart prize structure (in terms of total prize value, number of prizes, and diversity of prizes)