This article is the fourth of a series about knowledge acceleration and fragmentation, after Knowledge Flood and Change Acceleration, Knowledge creation: Globalization and Exponential Growth and Acceleration of Change.
“The great driver of scientific and technological innovation [in the last 600 years has been] the increase in our ability to reach out and exchange ideas with other people, and to borrow other people’s hunches and turn them into something new.
They’re a straightforward way to interpret the current new situation, in which knowledge is everywhere and is produced by multiple competing sources: knowledge is becoming a commodity. The capacity to produce it the ability to store it in large volume are no longer differentiators of company performance.
1. The old way: innovation in an environment of knowledge scarcity
For major innovation projects conducted half a century ago, companies created most of the adjacent required knowledge in-house. When Bell Labs, around World War II, was working on developing what would become the transistor, the researchers had to create on their own most of the underlying and adjacent knowledge, particularly that related to the purification, growth, and doping of crystalline silicon.
In the first part of the twentieth century, most major inventions originated from large corporate research centers. Competition, if any, was between these large laboratories: Siemens versus Westinghouse Electric, Dunlop Rubber versus Michelin and Firestone Tire and Rubber, or Pilkington versus Saint-Gobain and Pittsburgh Plate Glass (PPG). While they were developing the polymer industries, large players like DuPont, Imperial Chemical (ICI), and Bayer had very little to expect from the open world, because the most significant publications of applied technology were patent applications. There was little to learn that these big research centers could learn from other parties: they were ahead, public research was trailing behind, and no small or medium-sized business or start-up firm was trying to enter the game. The general policy during the course of a research project was secrecy.
The epitome of all large innovation projects driven in a confidential framework in which all necessary knowledge was developed in-house was the famous Manhattan Project1. It was a military project with its own rationale for secrecy, but during that era, strategically important industrial research projects were also enclosed in metaphorical double-stranded barbed-wire fences.
After the industry had demonstrated the great potential for applications of polymers, dedicated public research centers were created. For example, in 1946 the Polymer Research Institute was founded in Brooklyn, New York, and in the same year, the Journal of Polymer Science published its first issue. In Europe, it was only in 1958 that English researchers began holding conferences on a regular basis. It was only in the 1970s, when many academics were wearing Nylon shirts, that the field of polymer science began organizing in Europe. In the postwar era, most large industrial innovation projects, such as radial tires, jetliners, nuclear reactors, antibiotics, and halogen lamps, were still conducted in private research centers.
Except for a few pioneers, it is only in the mid-1970s that the practice of seeking knowledge bricks outside of the company was increasingly used in innovation projects. One of the leading players in this process was the automobile industry, which was experiencing gradual fragmentation of its value chain.
2. Innovation in an environment flooded with knowledge
“We have always been shameless about stealing great ideas”
Steve Jobs in an interview for the 1996 Public Broadcasting Service series “Triumph of the Nerds”
The story of Ernest Lawrence and his Chromatron was rather unique in the environment of the 1950s. Such a story would be common today, probably with younger actors. The general level of knowledge is much higher today than it was in the past, and knowledge is disseminated by a wide diversity of sources, including public research teams, institutes, small university laboratories, start-up firms, and consultants. The shift to seek knowledge from external sources rather than creating it in-house happened gradually. Companies retain control of their core knowledge, but they build innovation projects by complementing their internal strengths with specific elements from external sources, combining them to create new products. They search the world, identifying opportunities, integrating the new knowledge, and combining it with their core knowledge to shape a new product or service.
Today, due to the fantastic growth of knowledge, it is impossible for even a large company to own experience and expertise in every field. If a company contemplates a project involving emerging technology, it is safe to expect that there exist external sources superior to the company’s in-house sources of knowledge about the new technology. This is probably true for nearly all fields, except for the company’s own core knowledge, which, we may reasonably assume, is carefully maintained.
The lesson is to seek non-core knowledge and identify the various knowledge centers that have mastered it. Knowing the best-in-class sources of such knowledge, the company’s next step is to decide how to acquire the knowledge. Self-learning remains an option, and at least the best places to learn from have been identified. Targeted hiring is also an option, and here again, the potential sources of employees have been identified. The fastest approach, however, remains partnering in some fashion with the external knowledge source; there are many potential structures, with the ideal outcome that both parties benefit from the interaction. In any case, the best-in-class source of knowledge should remain on the company’s radar screen as both a source of inspiration and a benchmark of success.
This article was initially published in the book Innovation Intelligence (2015). It is the first section of the fourth chapter.