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    John Wolpert: Extreme Blue turns true blue

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    true_blueJohn Wolpert is best known for his work as Lab Director of IBM’s incubator for technology and business concept innovation, Extreme Blue. However, his talents span from theatre to Java, project management to the Spanish language. He is a successful business founder and start-up entrepreneur, and he is now in Australia to launch a pilot program to ‘bridge corporate innovation’ on behalf of the Australian Industry InnovationXchange Network.

    Wolpert’s ‘trusted intermediary’ business model, (Harvard Business Review, August 2002), suggests a way to find connections between R&D in different organisations without exposing confidential information or risking intellectual property contamination. Extending the ‘open innovation’ model, Wolpert advocates sharing information through the use of ‘trusted intermediaries’, who facilitate the exchange of sensitive information among companies and help find sources of external resources, insights and support for new ideas and directions.

    James C. Tuckerman: You were invited to Australia as an InnovationXchange Network Visiting International Fellow because of your thinking on innovation, what’s your view and how did it evolve?

    John Wolpert: Well, I’ve been thinking about how companies stay innovative since the late 1980s.

    When I was running my first company in Berkeley, California, it struck me that there was a real tug-of-war between building necessary efficiencies and capturing the benefits of change.

    It’s hard to do both, and usually, a ‘well-run’ firm will err on the side of the former, which creates an interesting economic problem for companies that want to stay innovative.

    Later, working for a number of big companies in the US, including IBM, I noticed that internal programs to foster innovation tended to get shut down (or gamed into irrelevance) within just a few years.

    Then, in 1997, I found myself working for IBM’s alphaWorks team – another ‘collection point’ for emerging technology and innovation. alphaWorks had something unique.

    It was connected through a new interactive website to a community of innovators, entrepreneurs, and technologists outside IBM . . . about 100 to 300 thousand in a given month.

    And a funny thing happened. Instead of this group getting shut down, it grew. More and more people began to use it to gain exposure – and hopefully external support – for their emerging technology projects.

    Then marketing folks realised that it was an amazing way of getting quantitative information on the size and nature of the early adopter community that would form around a new technology. Those figures turn out to be very valuable when making investment decisions and deciding which projects should become products.

    The epiphany came when alphaWorks not only survived the departure of its first manager, but also two divisional reorganisations (usually the kiss of death for these sorts of groups).

    Whether people who were making the funding decision to keep alphaWorks understood ‘innovation’ or not, they understood that they had a deep channel into the hearts and minds of hundreds of thousands of people on the outside, many of whom could influence big company purchase decisions. Cutting that off would be like cutting off your own arm.

    What economic effect did alphaWorks have in the IBM context and how ‘driveable’ was it?

    Very driveable. alphaWorks data was instrumental in setting major IBM strategic directions and investment plans.

    Tapping the feedback loop created by alphaWorks is a good way to see trends – and that’s when executives and strategy folks started to get involved. In one case I was involved in, a billion dollar investment in a new technology direction was partly informed by alphaWorks data.

    What’s important to note here is that just a few years before, alphaWorks was a nothing little program with just one young manager and a couple of co-op students. Today, some 10 years later, alphaWorks is possibly the longest running innovation initiative of its kind in the world.

    What really got me thinking was that while alphaWorks is great for patented software technology (stuff you can download and build a developer community around) it doesn’t really work for what is becoming the real focus of corporate innovation – the connection between business concept innovation and technical invention.

    Patents can protect inventions, but we aren’t – I don’t think – going to see strong protection for business ideas. And what about really early, pre-patent stuff, where getting connected to those external sources of insight, support, capabilities and resources would really make a difference?

    So, how do you go from alphaWorks to a view of innovation that can apply to business broadly?

    That’s the real trick, and it puzzled me for a long time.

    Around 1999, I went to work for IBM’s Extreme Blue team. Here, instead of a web-delivery model, we were building small teams of people – both business and technical talent – who would be working together for a specific period on an emerging business opportunity.

    These people were often University students – PhDs, MBAs, computer science masters and undergraduates, and sometimes Law students and English majors. These were outsiders with radically different perspectives.

    So that was another piece of the puzzle – how do we inject outsiders in a high-touch, high-value, low-scale way on an ‘on demand’ basis?

    I got the idea that researchers and other innovators in companies (large and small) really needed some way of getting outside sources of support, insights, resources, and capabilities early. And there was something about creating an economic basis for supporting full-time people who did nothing except provide this on-demand insight, articulation and connection service.

    And from internship to ‘trusted intermediaries’?

    I got a notion that we could create a third-party service that made this connection between internal projects and external opportunities without exposing these projects to outsiders who would steal the ideas, or contaminating the companies with external intellectual property.

    The problem there is that big and small companies have a hard time talking to each other, even when they are aware of each other and know there is a reason to share ideas, because the small firm is scared of the big firm walking off with their ideas and getting away with it, thanks to their high-power lawyers.

    On the other hand, the big firm is afraid that if it signs a non-disclosure agreement to learn what the small firm has, they might contaminate themselves and learn that there is someone else in their own firm working on the same solution. It’s a Catch 22. We need to share. We can’t share. It takes three to 18 months to negotiate on these things

    Of course, the negotiation only happens when we know we should be talking. Which leads to another interesting problem – we often ‘don’t know what we don’t know’.

    For example, a researcher in one company working on plasma physics may have stumbled on a major breakthrough for genetic engineering, but he’s focused on physics and isn’t even aware of a problem being worked on – maybe just across the street – at another company in a different industry. If he knew the problem, he would see that his technology could solve it. Instead, he toils on in his narrow box and believes he hasn’t really come up with ‘the answer’ to anything. Worse, his boss and the company aren’t sure what the value of his project is for them either.

    His project gets shut down eventually, and that’s the end of it. How many ships pass in the night this way, and what would our world be like today if these near-miss breakthroughs had been able to connect?

    At some point, this came together in my idea for a Trusted Intermediary service.

    I proposed that we add human go-betweens that could broker connections securely without exposing any IP to anyone – like creating executive headhunters for innovation.
    What kind of skill-set are we talking about here?

    To begin with, intermediaries are people who can get under the fingernails of an emerging technology, understand its capabilities and limitations, and at the same time look for unexpected connections with other technologies and ideas from other companies and sources.

    But they also have to be good at negotiation, business diplomacy… and ethics. Ethics is key. They need to maintain the trust of the companies that use them.

    So why choose Australia for this pilot?

    You need companies who really believe that they need to work together to survive.

    In a world where new technologies can become commodities in a blink of an eye, we need to constantly be changing the game, introducing new combinations of products, services and delivery models. The only way to do this is to look outside one’s own firm.

    Last year, I was pondering where to try out this idea of Trusted Intermediaries when I was invited to Australia as a Visiting International Fellow by the Australian Industry InnovationXchange Network. After meeting a lot of government and industry leaders, I came to the conclusion that Australia has exactly the right culture and legal structures to incubate this idea.

    What I see is a country with all the fundamentals to lead the world in innovation. It is a complete economy with important research happening, and yet it is a market you can get your hands around and target. It is an ideal test market for products and services that need to start somewhere before going global. And importantly, firms here must work together to survive.

    And then there was the InnovationXchange – a government-backed, non-profit entity that is also well-run and guided by a strong sense of ethics. (As an IBMer, I’m very sensitive to the ethics of an organisation… IBM being one of the most ethically driven companies I have ever worked for.)

    This really put the last piece of the puzzle in place for me. One thing led to another, and we worked out an arrangement for me to come to Australia and explore these questions of corporate innovation and business development through the InnovationXchange.

    It occurs to me that something like BRIDGE might really unlock Australia’s innovative potential the way Total Quality Management unlocked Japan’s potential to lead the world in quality. So maybe in the end Australia will show the world how to stay innovative.

    The Bridge services pilot, incorporating the ‘trusted intermediaries’ concept, will be shortly be announced by the Victorian Minister for Innovation, the Hon John Brumby MP.

    For further information, please visit: www.innovationxchange.com.au

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