Improved methods for innovating

A large-company scientist, buried within the research organization, discovers a customer need: Stroke patients don't get to the hospital fast enough for treatment to be effective.

She finds a novel technical solution: an infrared sensor that measures brain oxygen saturation.

She works with university partners to collect data and prove that ischemic brain regions can be detected non-invasively through the skull.

She proposes that the company should build a "stud finder" for stroke that can detect brain attacks like the device at the right detects structural timbers.

How does the story end, and how can it be improved?

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A lot is made of the failure of large companies to innovate.  Analysts worry about pipelines, governments about competitiveness, and workers about the ways processes smother ideas.  Companies from Microsoft to Glaxo fight this perception (ours included), pointing to the magnitude of research investment, number of patents, and percentage revenue from new products.

This misses the question of how directly innovative these companies should be.

Big companies are good at many things: carrying out large clinical trials, manufacturing at high quality and low cost, strong marketing and distribution networks, understanding of the regulatory process, familiar branding.  There are a thousand small companies that are in the business of innovating, creating and testing new ideas for unsuspected market niches.

Surely the value is in the synergy between large and small?

"Open Innovation" has been around as a technical concept for years, but I think it applies equally well to business growth: find the best and work with them to do better.  Be innovative by becoming a champion of innovation, using large-company strengths to supplement small-company creativity. 

Pharmaceutical managers are increasingly growing their business by sending the people who best know their business out into the field with instructions to pick among the thousand flowers.  They invest appropriately to nurture and prove technologies, markets, and solutions, and manage their relationships with customers and innovators to harvest value from their partnerships.

Even so, innovation won't reach users unless it crosses the gap between research and development.  And, too often, large company politics and processes can smother their relationship with promising ideas and startup companies.

Traditionally, the prototype is thrown to development groups, where it dies.  This occurs for many reasons: the idea isn't fully understood, it's not mature, it needs too much work to bring to market, there is no market, there is no enthusiasm, there are no resources, there is no time. I've seen many solutions to bridge this gap. Some transfer the scientist into development, but few researchers make good entrepreneurs.  Some create gateway "Advanced Development" organizations that package innovation for project teams to assimilate.  This addresses the technical gap, but doesn't determine market value.

The new method, which I like a lot, is to form cross-functional 'core teams': essentially small businesses within the business.

These groups, about 10 people each, move the idea from concept definition to business proposal, feasibility demonstration to product prototype, and finally to handoff or introduction, through a stage-gate process that gives autonomy to teams autonomy and oversight to management.  By bringing together all of the business elements early, the understanding of customer needs and the product concept evolve together, the organization builds buy-in and enthusiasm, and both market and technical risk are progressively reduced while overall value builds.

It's "Small in Big", an important organizational principal: Responsibility and accountability should push down to the workgroup and it's leadership, allowing businesses to function quickly, flexibly, and efficiently.