Thursday, May 22, 2008

Cambridge Open Innovation Workshop - Session 1

The following are notes from the first session of the Open Innovation Workshop at Cambridge University in the UK May 22nd and 23rd of 2008.

The first speaker of the workshop was Carlos Sato, a PhD researcher at the University of Sussex in their Science and Technology Policy Research group, which is called SPRU. Carlos talked about British Telecom and how they are working to be more innovative.

One very interesting point Carlos made is that BT is both a services and an infrastructure company. Currently, these two are inseparable in the existing architecture, but BT is working to separate these to make innovation easier. That is, every new services project is intrinsically requires an infrastructure project as well. BT is trying to change this by the decoupling this. They would like their infrastructure to be a platform that services can be built off of. This platform consists of standards, architecture, middleware and the data pipes that are needed for standard services platform. This decoupling if executed successfully would make the services project portfolio far more cost-effective. Additionally, this would make it easier for outside partners to develop services on top of BT’s pipes. Overall, this all helps BT move towards being an integrated solutions provider for multi-national type firms.

Carlos also mentioned BT is using Web21C principles for distributed innovation. Definitely something to google.

Three interesting questions Carlos asked but we did not get to discussing: Will BT become a pipe only provide? Could BT possibly become a content provider? Lastly, is Google a competitor of BT?

Valerie Sabatier presented next about Protein eXpert, a company that has an interesting strategy with regards to open innovation. Essentially, they contract out their employees as experts to drug researchers. In doing so, they work closely with clients to create the innovations necessary to manufacture a drug. PX does not patent everything, nor does a client get a patent. Beyond payment, PX considers a key part of the value the ability to re-use information, processes and technologies developed. In a way, PX is similar to any other consulting firm. Their key assets are their knowledge, people, and internal processes to leverage those two.

“Innovation is a contact sport like wrestling.” – Nick Wainwright, HP

HP has been a real success story, and it was interesting to hear Nick Wainwright, Director of Open Innovation in Europe talk about the role of HP Labs in that. Nick has a new blueprint for research, especially on the open innovation front. They have specifically named five areas of high impact research themes and are actively seeking proposals. By announcing these areas, they are directly signaling that they are interested in collaborative research in these areas. These five areas HP Labs mentions specifically are:

  • Information Explosion
  • Dynamic Cloud Services
  • Content Transformation
  • Intelligent Infrastructure
  • Sustainability

Nick’s talk was interesting in contrast to some recent talks I have. Recently, I interviewed Rupin Mohan and Mikko Uusitalo, both R&D directors at HP. From these interviews, I learned about HP’s stage gate process for business projects. It is very focused on delivering incremental innovation with measureable business results. It is very hard to quantify the ROI from open innovation, and Nick said as much. That doesn’t mean there is not business value however. In fact, we learned from Mikko that although HP isn’t a software company (only 2% of HP’s revenue), software, be it proprietary or externally developed, is important because it forms many of the platforms that make HP’s products useful (and profitable). Think Linux, for instance. Given the nature of HP’s clients, this software must have open standards that can be customized to suit the needs of complex enterprises.

Tim Mercer from Thomson Reuters was the last speaker in the session. He had a good description of what the Web 2.0 to the Web 3.0 transition might look like. It will be a shift from broadcasting and distributing information to information that finds individuals that it is relevant to. Thomson Reuters is a very interesting company (especially the old Reuters) in that it’s an information giant that wasn’t really all that innovative in the new information age. Reuters ran into trouble as early as 2000, and basically escaped through a ton of mergers and acquisitions, diluting the original equity of the company.

So where did Reuters go wrong? Tim said that Reuters need to be more innovative as a company, but it is not that easy. For one thing, the financial information space has been extremely turbulent over the last 10 years. Think of the types of change:

Financial Industry – A shift from traditional asset management to the proliferation of hedge funds
Media Industry – Rapid change from print to media, and traditional to web
Market – Bubble, sub-prime, 9/11, Enron
Regulatory – Sarbanes-Oxley, other fallout from Enron, SEC

Mercer mentioned one major mistake was treating their customers as just customers. In retrospect, Reuters had clients of every type, up and down the value chain. From hardware providers to banks to finance websites, Reuters sold data to everyone, but didn’t treat those relationships as an ecosystem to do innovation on their own. One of Mercer’s stated goals is to shift to use this ecosystem to collaborate with clients to create new products and services before others do. Tim strikes me as a smart leader who gets it, so look for Thomson Reuters to be more innovative than their predecessors.

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