Innovation: Getting beyond the breakthrough

Corporations need to stop looking for the silver bullet –and to start listening to outsiders.
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http://brainstormtech.blogs.fortune.cnn.com/2009/08/31/innovation-getting-beyond-the-breakthrough/
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Hagel: U.S. executives may need to shift their mindsets. Photo: Deloitte

New research by the Deloitte Center for the Edge, part of tax and consulting firm Deloitte, paints an ominous picture: The return on assets for U.S. firms has fallen to almost a quarter of 1965 levels despite continued improvements in labor productivity.

And according to John Hagel III, co-chair of the center and one of the study's authors, the declines are taking place in all sectors of business — not just in maturing corporations. "The bottom line," he tells Fortune, "is that in every industry there has been erosion of return on assets."

Hagel and his fellow researchers are in the process of writing a follow-up study that will offer some detailed prescriptions for reversing the trend, but he shared some early insights with us. Two of his observations in particular stood out: 1) He says corporations need to move away from the idea of breakthrough innovation and 2) companies need to find a way to harness new kinds of information flows.

Hagel contends that U.S. companies' innovation efforts tend to focus on home runs — big, honking inventions that can, out of the gate, produce hundreds of millions of dollars in revenue and transform entire industries. In other words, products such as Apple's iPod.

But Hagel is fond of pointing out that even the iPod wasn't exactly an overnight breakthrough for Apple. Rather, he notes, the device has its roots in a company called PortalPlayer, which had been developing an operating system for digital music players for several years before it ultimately teamed with Apple on the iPod.

He offers one explanation for the home-run oriented mindset: 20th century corporations have operating and cost structures that need their products and innovations to succeed at a large scale, and so there's great pressure to produce big breakthroughs.

But Hagel feels a shift to high-velocity but smaller breakthroughs may ultimately produce the same result: "We tend to underestimate the value of rapid, incremental innovations, which actually begin to look like breakthroughs over time," he suggests.

New source of information

Hagel's other prescription — culling information from new and different sources –also calls for a shift in corporate thinking.

Deloitte's study, "The 2009 Shift Index," is actually a look at three different indices that help measure business change. The "flow index" is an effort to capture the value of so-called knowledge flows – information flowing into and out of the organization.

Hagel maintains that companies tend to be focused on internal and adjacent flows: information from within their organization, and knowledge gleaned from those closest to the company, such as suppliers and customers.

But to stay competitive, U.S. companies are going to have to adopt new ways of gathering information – a big shift that will itself require companies to innovate. For example, companies are simply going to have to figure out what information is valuable to track, and which flows are not helpful, Hagel says.

Hagel has done extensive work with Indian and Chinese organizations, and he believes U.S. executives can learn from the way companies in these emerging markets operate. He points to Chinese conglomerate Li & Fung Group as an example of a company that effectively tracks and applies knowledge from a variety of sources.

One of Li & Fung's businesses is garment manufacturing. Rather than act as an integrated one-stop-shop for its retail customers, Li & Fung uses multiple contractors who come together for certain projects, then disband after the task is completed.

By tapping into its various contractors – including those who aren't currently employed on a job – the company is able to get perhaps a more complete view of the world than competitors who only listen to direct suppliers.

When Li & Fung launched in the 70s, Hagel says, it gleaned knowledge from, say, materials manufacturers, and passed that information on to its apparel designer customers.

Today, Hagel says, companies have to rethink the way they gather information – and from where – in order to tap all the most important direct and indirect sources of information.

But they probably don't need a breakthrough innovation to do it.

Do women have the brains to be great scientists?

http://www.more.com/2050/8887-women-and-science/2

Hopkins, an MIT professor, walked out when the president of Harvard implied that women scientists were innately less talented than male ones. Now, the Nobel Prizes give her the last laugh.

It’s been a spectacular week for women in science, and a bad week for “the Larry Summers hypothesis." In 2005, while president of Harvard, he suggested that women are inherently worse than men at math, science and engineering, particularly at the highest levels. This week three women won Nobel prizes in science: two in medicine and one in chemistry. That achievement should put the nail in the coffin of the question Summers raised: Can many women really be great scientists? 

When I was a graduate student in biology at Harvard 40 years ago, my colleagues used to sit around discussing whether girls were capable of being great scientists. Could a woman really win a Nobel Prize in molecular biology? Men I knew wondered if women’s brains were so different from men's that they couldn’t make the creative breakthroughs that lead to the greatest discoveries. That’s what I wondered too. Sure, there was Madame Curie--but there were too few Madame Curies to convince us she was anything but an exception.

It turns out that back then, in the dark ages for women in science, we were asking the wrong question. Instead of asking if women's brains were inferior, we should have asked why there were so few women at the major research universities and laboratories that breed future Nobel laureates.

In the late 1960s there were essentially no women on the science faculties of places like Harvard, Cal Tech and MIT (where I now work as a professor of molecular biology). Things began to change dramatically in the early 1970s, thanks to affirmative action measures taken under Richard Nixon. Those included the “Shultz regs” (George Shultz was Nixon's Secretary of Labor), which required universities to hire women onto their faculties or risk losing their federal funding. The Nobel prizes in medicine this week are the end result of those laws. Nobelist Elizabeth Blackburn joined the Berkeley faculty in 1978 and Nobelist Carol Greider was her star graduate student. (The third new laureate is Ada Yonath, an Israeli.)

Until about 10 years ago, women still comprised only five percent of the science faculty at Harvard and eight percent at MIT, with similar numbers at other high-powered research universities. (Today 17 percent of the MIT science faculty are women, as a result of specific efforts by the MIT administration in collaboration with senior women faculty.) But even those paltry numbers from 10 years ago have been enough to start yielding female Nobelists. In fact, if we assume that female faculty win these prizes at the same rate as male faculty, then only in the past couple of years have there been enough women employed at MIT to begin producing Nobel laureates.

Meanwhile, women faculty at MIT are now elected to the National Academy of Sciences at the same rate as men, and they have finally begun to win some of the most prestigious science awards. For example, yesterday a woman from MIT–the great chemist JoAnne Stubbe–received the National Medal of Science from President Obama, in part for developing a cancer-treating drug now in clinical trials. She has also worked to make science more welcoming for the young women who will come after her. Her accomplishments are off the charts.

Every time a female scientist wins one of these major awards, it is very emotional for me, reducing me to tears. Most are tears of joy at seeing these amazing pioneers recognized for their achievements after the decades-long struggle for women’s equality in science. But I am also sad, thinking of all the great discoveries that were lost when half the population was kept out.

My emotions may even include a trace of I-told-you-so. It’s shocking that as recently as 2005 Larry Summers could propose that women’s genetic inferiority might explain their small numbers at the pinnacle of scientific achievement. I walked out in protest. You'd expect Harvard to know better!

Maybe 2009 will be remembered as a watershed for women in science. At the very least it should mark the end of the nonsensical, outdated and damaging idea that women lack the interest or genetic ability to do great math and science.

Nancy Hopkins is professor of molecular biology at MIT and a founding member of The New Agenda.