Something in Networks

When I started working with the Innovation Systems Research Network at the University of Toronto a few years ago, I suspected that the concept of networks of innovation was a powerful lens for understanding the process of innovation.

IBM's Global Innovation Outlook Report details the rise of global communication networks and their impact on encouraging innovation through collaboration between dispersed innovators.

The report also includes a nifty diagram that describes the future of the enterprise.

There are definitely a few gems in there about trends in innovation and enterprise development.

Speaking of...

Speaking of outsourcing innovation, Procter & Gamble is sourcing innovation from the outside in.

The outsourcing of invention and innovation is particularly encouraging to independent inventors and SMEs.

Outsourcing Innovation

A new study by Booz Allen Hamilton and INSEAD suggests that companies are increasingly outsourcing research and innovation to foreign markets.

Although the R&D activities of companies based in Western Europe are the most dispersed, North American companies have been increasing their outsourcing activity. Not surprisingly, most of the R&D activity from the U.S. seems to be heading to China and India.

The report finds that industries where knowledge is codified (i.e. expressed in a way that can easily be passed on to others; as opposed to tacit knowledge) are those that are most likely to be outsourced.

I was curious about the implications of innovation in a market where the intellectual property rights regime is weak. Since qualified workers are one of the reasons companies cite for outsourcing, I am also intrigued by possibilities of transferring tacit knowledge between workers. Would on-site training be sufficient? How do technological/manufacturing/scientific approaches that differ across countries influence R&D?

On the road again...

I'll be traveling next week and so won't have a chance to post often. I'm using my BlackBerry as a modem, which is incredibly slow but handy in emergencies.

While on the road, I'll be reading Joseph Schumpeter's The Theory of Economic Development, which is a precursor to his Capitalism, Socialism, and Democracy (and creative destruction). I've been told that Economic Development is Schumpeter's truly groundbreaking work and that it establishes crucial details for his future theories.

Fascinated by economic development (and technological change), I am really looking forward to digging into Schumpeter's book.

Call to the Audacious

I recently read an article that encourages innovators to be more audacious, stating that although more risky, audiacious ideas have the power to bring more rewards.

While "audaciousness" can certainly bring many rewards, first time entrepreneurs with audacious ideas may have great difficulties with market entry. Besides having to prove an already-risky idea, they may not have the benefit of experience that will demonstrate their competence with bringing even reasonably feasible ideas to market.

That is not to say that audaciousness should not be fostered and encouraged. FedEx, for example, was established by a revolutionary, audacious (and young) leader who changed the shipping industry.

However, entrepreneurs and innovators might consider that most of the Inc. 500 companies (a somewhat veritable measuring stick for successfully growing start-up ventures) have mostly represented established industries and offered incremental innovations that, although might not change the industry, offered benefits to end-customers that helped the companies rise above the rest.

Any audacious idea must be analyzed; sometimes, the world is not quite ready for revolutionary ideas. Sometimes, building a track record based on an incremental innovation with a proven market can be more valuable early on in an entrepreneur's career, thus enabling him or her to advocate audacious ideas a few years down the road. Sometimes, the time will never be better.

Successful entrepreneurs mix a dash (or truckload) of vision with solid analysis and proficiency in organizing resources. If these three elements come together, audaciousness might be quite reasonable, but proceed with caution.

Oh, and as a side note, Fred Smith, the founder of FedEx, initially benefitted from access to several million dollars worth of equity from family investments. If only the average revolutionary entrepreneur could be so lucky.... .

Human Ingenuity as Metric of Innovation

Statscan recently published a report that indicates that the potential for innovation in Canada is just as strong as in the United States; the report release was picked up by the Globe and Mail. The study gauges innovation capabilities based on employment data, particularly employment in science and technology-based occupation (as measured by scientists and engineers).

While I believe that talent is a key driver of innovation, I am concerned that simply counting the percentage of engineers in a region is not a sufficient indicator of drive toward innovativeness. While technological invention is mostly created by engineers and scientists, if there is insufficient managerial talent to drive the innovations to market, then the areas may remain stagnant (or technologies may be acquired by companies in other regions that do have the managerial talent - and funds - to commercialize inventions).

This makes me curious: what percentage of the technologies developed and seemingly originating in Silicon Valley were actually spawned in other regions of the world and licensed for development (or relocated) to the Valley?

On a more serious note....

Patent trolls have been in the North American headlines recently because of the NTP v. RIM case.
With the increasing recognition of intellectual property as a valuable asset, it is no surprise that patent trolls are, well, trolling.

I came across a fascinating article today that cites examples of universities acting as patent trolls.

While that may be true, I can't help but wonder whether the implications of universities (educational and research institutions) acting like patent trolls are different than those of private companies formed specifically for the purpose of trolling for patents.

After all, if the funding that universities obtain from patents are diverted back into education and research, then do they truly fit the definition of the troll? (The definition of the term is what has been abuzzing the IP blogs recently, as you will note from the article.)

Thus, the defition may include some form of note about intentions. But, as most philosophers and lawyers know, defining intentions can be a slippery slope to protracted arguments with no definitive answers.

Also (with regard to "intentions"), I wonder: if patent trolls whose primary role is to acquire and retain patents with developing them, were to donate a portion of their proceeds back to educational institutions, whether their "good intentions" would mitigate some of the uproar against them. (My guess is not, by the way.)

Good for a Laugh

Resonating again with my fascination for inventions and intellectual property (and my perpetual quest for a great laugh) is the IP Funny Blog.

Innovation Wow

Yesterday, I learned about NeuroLife Noninvasive Solutions, a start-up out of Carnegie Mellon University that won the McCombs' Moot Corp Competition.

The team has invented the world's first noninvasive intracranial pressure diagnostic device. Since intracranial pressure can kill patients within five minutes, rapid diagnosis is crucial. Furthermore, since measuring intracranial pressure by traditional techniques is VERY invasive (drilling a hole in the skull!), a noninvasive diagnostic device can be, quite literally, a lifesaver.

Mind Your Time

If you are an entrepreneur waiting to hear back from investors (or if you think you might find yourself in this position), Mike Hirschland blogs about the difficulties of saying no to entrepreneurs.

Wild - Peer Review of Patents!

The USPTO is launching a pilot project to allow for peer review of patent applications and citations, including a ranking system for relevance of prior art.

Whoa. This is collaboration and social networking harnessed for the purpose of driving innovation. The way of the future.

The Innovation Trend

This morning, I was captivated by Mike Klein's contribution to the Wisconsin Technology Network.

Mike discusses the missing link in "innovation," which is a trend and buzzword of the moment. Want proof? Check out the "innovate" or some play on the word used as a slogan used by HP, 3M, and IBM, for instance.

Anyway, with the proliferation of innovation, there has been a rise in the number of innovation gurus. While a fascinating concept, I can't help but wonder how one becomes an innovation guru (there is no certification process - yet).

Mike distinguishes between invention and innovation as the difference between an idea and a process and I think that he is right on the ball. I do believe that innovation is the way to productivity and the solution to many of the world's problems. I do not, however, believe that teaching teams how to brainstorm solutions is going to be the saving grace.

No.

Instead, companies must embrace a more holistic process of innovation, looking at it not just as a slogan for marketing purposes or to drive brainstorming, but training talent to foster the movement of ideas to market. This includes the movement of revolutionary, risky ideas to market, which may be a difficult task for established corporations (then again, they may be the only ones who can afford to move such innovations to market).

Proliferation of Cleantech

I used to work for Cleantech Ventures. Recently, I met the judging chair of the California Clean Tech Open. Then, I found a blog by VC Rob Day about cleantech investing.

The support networks for cleantech growth are very exciting. Since some clean technologies are yet unproven, they may find challenges in traditional avenues for raising capital. Competitions and venture fairs can help to aggregate the many technologies in one area and thus help investors to review the diverse offerings in the space.

And even if cleantech is not a primary focus area of VCs, the investors may still find components of nanotechnology, IT, or health sciences that encourages them to invest. When I approached one VCat a conference for clean technologies, he said that he didn't think that the clean technology field existed as a stand alone field (at least not yet), but that he was at the event because cleantech encompasses so many different areas of potential investment.

Publish, Patent, or Perish?

As some of you may know, one of my original interests in innovation was spawned by the intellectual property system and its effectiveness as an incentive mechanism for inventors.

Of particular interest to me is a recent paper by Margo Bagley of Emory Law School, "Academic Disclosure and Patent Rights." The academic adage of publish or perish might become publish and perish as far as any patent rights are concerned.

Since intellectual property is a valuable asset both to the inventor and the institution, academic researchers may find themselves with a catch-22 dilemma: to publish or to patent? And if patent, then to perish?

New Business Creation

As part of my preparation for graduate school this fall, one of my future advisors suggested that I read The Origin and Evolution of New Businesses by Amar V. Bhide.

I have been absorbed in the book on my long train ride from Pittsburgh to Boston (I took the train to catch up on work and reading) and I find that I cannot put the book down. I think it may be the most insightful book that I have yet read about entrepreneurship.

It is not a prescription for becoming a successful entrepreneur. Instead, it is an analysis of how entrepreneurs can be studied.

In the opening pages of the book, the author compares the study of entrepreneurs to Heisenberg's Uncertainty Principle, pointing to the challenges of understanding this diverse population.

The focus of the book is on primarily on entrepreneurs who do not run traditional small businesses (e.g. laundromats, restaurants, etc.), but businesses with unproven models and technologies. The author also discusses intrapreneurship (innovation in large corporation) and follows up on Schumpeter's theory of creative distruction (there are elements of truth to Schumpeter's theory, but his assumption that big businesses will dominate the economy may not be one of the elements of truth).

As the basis for his theory, Bhide uses a study of several years of Inc. 500 companies. Although the book was published in 2000, its analysis has not lost much of its relevance.