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©2008 Satish Nambisan Page 1 The Global Brain: Creating a Roadmap for Innovation Satish Nambisan Lally School of Management Rensselaer Polytechnic Institute Troy, NY Web: Exploring Innovation in Community Development Week Federal Reserve Bank of St. Louis, Little Rock April 16, 2008
©2008 Satish Nambisan Page 2
©2008 Satish Nambisan Page 3 Outline Tapping the Global Brain: Key challenges Approaches to Network-Centric Innovation Implications for innovation in the Public Sector Q&A
©2008 Satish Nambisan Page 4 The Emerging Innovation Agenda … We will acquire 50% of our innovations from outside. We expect a significant part of our offerings to be based on innovation occurring within the open source community. We expect our external innovation initiative to evolve from technology acquisition to the sourcing of more complete product concepts in the next few years. We have set an internal target of sourcing 30% of our product concepts from outside.
©2008 Satish Nambisan Page 5 Looking Outside …. The Global Brain! We will fight our battles not on the low road to commoditization, but on the high road of innovation. – Howard Stringer, Chairman, Sony The imperatives: Flat R&D productivity & increasing innovation costs Industry clock speed & the Red Queen effect GLOBAL BRAIN: the vast creative network that lies beyond the boundaries of the firm and which includes customers, suppliers, independent inventors, academic researchers, scientists as well as different types of innovation intermediaries Firm-Centric Network-Centric Innovation
©2008 Satish Nambisan Page 6 Innovation in the Public Sector ….The Global Brain! The imperatives: Complex problems, often ill-defined or emergent in nature Crosses organizational and geographical boundaries Involves diverse sets of stakeholders GLOBAL BRAIN: the vast creative network that lies beyond the boundaries of the government agency and which includes other government agencies (federal/sate/local), nonprofits, private companies, citizens, universities as well as different types of innovation intermediaries Agency-Centric Network-Centric Innovation
©2008 Satish Nambisan Page 7 So what is stopping us? … 73% of CEOs strongly agree that: we could dramatically boost innovation by collaborating with outsiders, even competitors. However, the same set of CEOs express: deep dissatisfaction with our knowledge about appropriate strategies, practices, and tools for such network-centric innovation. - Bain & Co CEO survey 2006 Mindset Challenges (Are we okay with this?) Contextualization Challenges (What is the best approach for us?) Execution Challenges (Are we prepared for this?)
©2008 Satish Nambisan Page 8 The Concept of Network-Centricity network centricity : network as the focal point and the associated opportunity to extend, optimize, and/or enhance the value of a stand-alone entity or activity
©2008 Satish Nambisan Page 9 Network-Centric Innovation Applying the concept of Network-Centricity to Innovation: An externally-focused approach to innovation that relies on harnessing the power of networks and communities to amplify innovation reach, accelerate innovation speed, and improve the quality of innovation outcomes. Historical roots: -Open Source Movement -Business Ecosystems
©2008 Satish Nambisan Page 10 Fundamental Principles
©2008 Satish Nambisan Page 11 Understanding the landscape..… Diffused Community led More informal structures/linkages Etherarchical Centralized Dominant player led More formal structures/linkages Hierarchical Defined Clearly defined/structured problem space Exploitation, efficiency Emphasis on known connections in knowledge-base Network Leadership Emergent Less defined / unstructured problem space Exploration, novelty Emphasis on unknown connections in knowledge-base Innovation Space
©2008 Satish Nambisan Page 12 The Four Models of Network-Centric Innovation Creative Bazaar Jam Central OrchestraMOD Station CentralizedDiffused Defined Emergent Network Leadership Innovation Space
©2008 Satish Nambisan Page 13 Predefined script Conductor or lead entity Defined roles based on expertise Hierarchical (formal) relationships
©2008 Satish Nambisan Page 14 The Orchestra Model Characteristics Focused on exploiting the market opportunities based on an explicit innovation architecture that is defined and shaped by a dominant firm Role as the Innovation Integrator Found in markets where a proprietary dominant design has emerged Emphasize modularity and innovation efficiency Highly organized and coordinated innovation processes & support infrastructure Innovation MOD Station Orchestra Jam Central Creative Bazaar EMERGENT Network CENTRALIZEDDIFFUSED DEFINED
©2008 Satish Nambisan Page 15
©2008 Satish Nambisan Page 16 Boeing 787 Design & Development
©2008 Satish Nambisan Page : Key Themes … From Build to Print to Design & Build to Performance Shared risk/reward ($4 billion partner commitment) Boeing as the Orchestrator High situational awareness (Virtual Global Collaboration Centers)
©2008 Satish Nambisan Page 18 Government as the Innovation Integrator Typical areas: Defense, Homeland Security, Nuclear Energy, etc. Key responsibilities of the lead agency: Envision and define the problem Collaboratively envision the solution Ensure partner commitment (shared risks/rewards) Establish collaborative environment
©2008 Satish Nambisan Page 19 Diverse market offerings – raw to finished products Different types of hawkers & market intermediaries Customer as the decision maker (based on needs)
©2008 Satish Nambisan Page 20 The Creative Bazaar Model Characteristics Focused on seeking out and bringing to fruition new innovation opportunities that meet the broad market and innovation agenda of the dominant firm Role as the Innovation Seeker Emergence of new types of innovation intermediaries (e.g. Innovation Capitalist) Found in markets that are diverse in terms of customer choices (e.g. consumer products) or technology application contexts (e.g. enterprise computing) Innovation MOD Station Orchestra Jam Central Creative Bazaar EMERGENT Network DIFFUSED DEFINED CENTRALIZED
©2008 Satish Nambisan Page 21 Source: Nambisan & Sawhney, Harvard Business Review, June 2007
©2008 Satish Nambisan Page 22
©2008 Satish Nambisan Page 23 Inventor Client Firm Seek & Evaluate New Product / Technology Concept Develop & Refine New Product / Technology Concept Market New Product / Technology Concept Raw Idea Market-Ready Idea - Evaluate market risk - Identify critical market needs - Establish transparent review processes - Assess & manage IC portfolio risk - Build & maintain inventor networks - Establish trust in inventor community -Communicate client & market needs -Integrate diverse domain knowledge - Identify critical market success factors - Manage innovation risk - Project coordination skills - Build and manage partner network - Understand client firms brand portfolio priorities - IP and patent management skills - Understand client firms innovation processes and metrics - Relationship with large client firms -Structure value appropriation deals -Communicate market potential of new idea or concept Value Chain of an Innovation Capitalist
©2008 Satish Nambisan Page 24 Government as the Innovation Seeker Typical areas: Public transit services, community banking, public schools, etc. Key objective: Engage citizens, nonprofits in service innovation Key responsibilities of the lead agency: Communicate reform agenda Seek out and evaluate innovative ideas Transform ideas into new services/programs
©2008 Satish Nambisan Page 25
©2008 Satish Nambisan Page 26 Improvisation Emergent; Call & Response Shared leadership & responsibility
©2008 Satish Nambisan Page 27 The Jam Central Model Characteristics Focus on exploring novel market/ technological problems Role as the Innovation Champion Members of the community together frame the broad parameters of the problem space Found in markets where complex and a diverse set of knowledge elements have to be brought to bear to solve novel & ill-defined problems Innovation MOD Station Orchestra Jam Central Creative Bazaar EMERGENT Network CENTRALIZEDDIFFUSED DEFINED
©2008 Satish Nambisan Page 28 Finding cures by Jammin together … The Tropical Disease Initiative
©2008 Satish Nambisan Page 29 Government as the Innovation Champion Typical areas: Health care, Environment, Emergency Mgmt, Energy, etc. Key objective: Engage private, nonprofits in complex problem solving Key responsibilities of the lead agency: Facilitate coalition building Establish mechanisms to support member dialog Refrain from controlling the process
©2008 Satish Nambisan Page 30
©2008 Satish Nambisan Page 31 Modifying existing products/services Community-based activities Shared rewards Shared governance
©2008 Satish Nambisan Page 32 The MOD Station Model Characteristics Focus on exploiting the knowledge of a community of experts to address market/technological issues within a predefined problem space Role as the Innovation Catalyst Community of innovators come together to create new offerings by modifying existing innovations in ways that benefit everybody (including the creator of the innovation) Value appropriation and governance mechanisms defined by the community (includes social mechanisms) Innovation MOD Station Orchestra Jam Central Creative Bazaar EMERGENT Leadership CENTRALIZEDDIFFUSED DEFINED
©2008 Satish Nambisan Page 33 UltraSPARC T1 under GNU GPLv2 Community advisory board Benefits to Sun, benefits to community IP rights management
©2008 Satish Nambisan Page 34 Government as the Innovation Catalyst Typical areas: Local law enforcement, community development, etc. Key objective: Engage citizens, nonprofits in complementary problem solving Key responsibilities of the lead agency: Identify problem-solving opportunities Establish processes for knowledge sharing with community Facilitate implementation of community-owned solutions
©2008 Satish Nambisan Page 35
©2008 Satish Nambisan Page 36 Defined Emergent DiffusedCentralized OrchestraMOD Station Jam Central Creative Bazaar Where do you see your organization on this landscape?
©2008 Satish Nambisan Page 37 How do you prepare your organization to pursue those opportunities? …. The Capability Platform will depend on the specific model of network-centric innovation and the role your organization plays in it The elements of the capability platform: Cultivate a culture of openness Create the right organizational structure Develop appropriate leadership/relational skills Adopt a portfolio of success metrics
©2008 Satish Nambisan Page 38 Some Concluding Thoughts …. Collaborative innovation & problem-solving: The Way of the Future! Engage diverse sets of stakeholders: Citizens, nonprofits, private companies, universities, etc. Pursue the right network-centric innovation approach Experiment! Experiment! Learn from the private sector!
©2008 Satish Nambisan Page 39 Thank you! More information about my research available at: Also look out for my upcoming research report: Transforming Government through Collaborative Innovation Questions …?
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