Which Comes First: Invention or Innovation?

Does one attempt innovation, and then one invents something?  Or, does one invent something and innovation on the invention occurs subsequently?  Both perhaps? Surely this question has been discussed in your network of creative professionals at some point in your career.

As founder of the Society of Concurrent Product Development [SCPD], this discussion occurred many times in our collaborative sessions over the years. Opinions were strong and debate was heated.  I have since retired from SCPD’s Board, but the discussion increasingly crosses my path as the importance of intellectual property continues to grow in our society.

The subject has become additionally blurred by the ability to “manufacture patents,” practically at a moment’s notice, these days.  A patent used to define an invention. Today, many patents are the result of a few hours of brainstorming sessions to put protection around a base or primary patent. Little is invented, but much is innovated, in these brainstorming sessions that result in additional bonifed patents.  Corporations, not just patent trolls, are increasingly adopting the practice.  The nuances of these “paper patents” are beyond one’s ability to succinctly capture in a short article.  But, they illustrate the increasing difficulty in our society to discern invention from innovation.

From an R&D or Product Development perspective, versus an intellectual property or legal perspective, the discussion is perhaps a bit easier to codify in a brief article.

Which Comes First: Invention or Innovation? [Machine Design – November 11, 2014] discusses three different product development scenarios that are experienced every day in corporations.  Is the product New-To-The-Company, New-To-The-Industry or Market, or New-To-The-World?  It seems, for two of these cases, that innovation precedes invention.

Podcast: Is ‘Open Innovation’ Just Another Word For Outsourcing?

In this ten minute podcast, Brad Goldense discusses the progress that organizations are making in the area of ‘Open Innovation.’ Lee Teschler, Executive Editor at Design World, leads the conversation.

Discussion Questions:

1.  What is Open Innovation [OI]?

2.  What are the biggest differences between OI and ordinary R&D efforts?

3.  Why should design engineers in the trenches care about OI?

4.  Does it cost more to do OI than ordinary R&D?

The Is ‘Open Innovation’ Just Another Word For Outsourcing? podcast focuses on questions that designers, engineers, and managers may have as open innovation initiatives are introduced to their organization and to their projects.


A Note About The Publisher and Discussion Leader:  Design World is a relatively new trade publication in the field of design and engineering. It is published by WTWH Media, LLC, 6555 Carnegie Avenue, Suite 300, Cleveland, Ohio, USA. Lee Teschler’s experience includes twenty-three years at Machine Design where he was Executive Editor.

What’s The Difference Between Research and Development?

With many more companies allocating a small part of their R&D budget to take on riskier projects, and the growth in corporate infrastructure to manage these riskier activities [Machine Design – July 17, 2014], the lines are starting to blur between two terms that historically were well differentiated. New products are now being launched out of “innovation organizations” and “advanced development organizations,” and not just product development organizations. As of now, research organizations are not yet launching products to market.

Due to a combination of the changing corporate approaches described above, the desires of developers to bring solution to markets and not just a piece of a solution, the globalization of R&D that has decentralized R&D, and naming conventions for product organizations that differ by country, one can no longer just pay attention to product development pipelines to stay abreast of what might be coming to market. The jury is still out as to whether today’s approaches will prove more productive than historical approaches that restricted the scope of projects to reduce uncertainty and improve forecastability of key enabling features and technologies – and then turned these enablers over to product development.

Research and development is a continuum, and highly analog rather than digital in construct (Figure 1). Historically, R&D could generally be segmented into four categories: Basic Research, Applied Research, Advanced Development, and Product Development. “Skunk Works” is perhaps a fifth category, a discussion for another day.

 Figure 1

The Continuum™ of Research and Development

The Continuum of Research and Development

What’s The Difference Between Research and Development? [Machine Design – October 9, 2014] discusses historical approaches and the evolving corporate practices taking place today.

Note:  The URL for the October 9 Machine Design issue will not be active for a few more weeks, but the article is posted.

Making Product Development Processes More Innovative

Applied Research & Advanced Development Come Of Age [Machine Design – July 17, 2014] discusses corporate efforts to beef-up pre-product development processes and management infrastructure.

Making Product Development Processes More Innovative [Machine Design – August 14, 2014] discusses ways that corporations can build more innovative thinking into their product development processes.

Corporate Practices and KPIs In Organic, Open, and IP Innovation – Research Results

The era of corporate innovation began roughly fifteen years ago, started by industry leaders in the mid-1990s with successful targeted disruptive innovations and chasm crossings.  Today, most companies have now tried out many new approaches and at least changed some of their historical innovation practices to lead, compete, or to just keep up.

John Stark, noted author on the subjects of Product Data Management and Product Lifecycle Management and Director of John Stark Associates which is a research and consulting firm based in Switzerland, has collaborated with GGI on various projects for the better part of the past thirty years.  John Stark Associates publishes a bi-monthly newsletter entitled the “2PLM e-zine” that focuses on the subjects and issues of importance to product development and lifecycle management professionals.  Each time GGI publishes the results of our primary research studies, John Stark runs a six-part series in the 2PLM e-zine.

The first article of the six is a general announcement to the 2PLM readership that alerts them to the upcoming five content pieces.  This first 2PLM article was published yesterday July 7, 2014.  The remaining articles will occur over the next two and one-half months as each bi-monthly issue is published.

The GGI study, entitled the “2014 Product Development Metrics Survey”, was conducted by sending questionnaires to a wide range of companies developing products throughout North America. Participating companies had headquarters throughout the Americas, Europe, and Asia, but their response was for North American R&D-Product Development operations. Complete data sets were received from 200 companies. Consumer, industrial, medical, chemical, and automotive/vehicular products were the top respondent industries. Participants completed 31 questions detailing their demographic information and practices in the following five research areas: R&D Operating Environment, Organic Innovation, Open Innovation, Intellectual Property, and the Top Corporate Metrics used to measure R&D and Product Development. The research period was September 2012 to October 2013. The results were published March 3, 2014. This research is statistically valid and provides a Margin Of Error for each research question.

The pages at which 2PLM is published are:

Current Issue

Main 2PLM Portal

12th R&D-Product Development Innovation Summit – April 7-9, 2015

This Summit will provide participants with a comprehensive look at the Innovation Body of Knowledge for product strategy, marketing, R&D, development, and commercialization functions.  There will be an emphasis on top management enablers and techniques to create and embed systematic corporate innovation.  Primary and secondary industry research on innovation and measurement tools, techniques, and metrics are used throughout the Summit.

Our first goal will be to codify the current management science of innovation in corporations for our participants.  The Summit will synthesize both what is known and what actually works in companies.  Our approach will be as factual and quantitative as possible for the subject matter.  We constantly refresh the Summit and its Coursebook.  There will be four interactive exercises so everyone samples some key techniques they might some day oversee that will be lead by GGI staff and several guest speakers.

Our second goal will be to take a look at the likely corporate innovation knowledge, capabilities, and changes in the coming decade.  Organizations will evolve to accommodate IP, as they did with globalization and supply-chain.  Business processes will change as early-stage inventions are increasingly transacted in dedicated markets before they are commercialized.  Functions that define and create products will have a “make vs. sell” decision at every step of the way, a change analogous to the introduction of simulation tools to their practices.

Our third goal will be to alert you to categories of tools and systems that will enter the work place.  When “industry demanded better innovation” back around 2004 it created a market for it.  Suppliers to this new product category got busy.  Thought leaders saw it coming in the late 1990s, so some had a running start.  Well, after ten years now, a number of tools, techniques and technologies are withstanding the test of time.  Constantly improving research exists on the ones to think more seriously about.  Little is mainstream yet, but what to do or try and and what not to do or try is becoming clearer.

At the conclusion of the Summit, participants will be current with industry management science and will have a glimpse of the future. Professionals wishing to put themselves and their fellow company leaders in a better position to lead, nurture, stimulate, and drive innovation and invention should consider this venue.  Numerous participants have said, “GGI’s Summit is an Executive MBA on the subject of Innovation.”

Finally, and this is not true of all GGI Metrics Summits, GGI published our 6th North American study of R&D and Product Development practices in the areas of R&D Operating Environments, Organic Innovation, Open Innovation, Intellectual Property, and the Top Corporate R&D Metrics In Use on March 3, 2014. Two-hundred companies from the USA, Canada, and Mexico participated in numbers that represent the relative R&D spending of the North American countries. It will be difficult to find information that is more current to augment the practical nature and usable outcomes of this 12th Innovation Summit.

Please visit our Summit web site for additional content and registration information.

Trade Secret Practices Changing Due To First-To-File Legislation

Organic Innovation, Open Innovation, Intellectual Property, & CXO Corporate Metrics Practices, July 23, 2013, described primary research that GGI conducted in 2013. The results were announced March 13, 2014 in a Business Wire press release. Here we address a piece of what we found on the subject of Trade Secrets.

The emerging OI and IP marketplaces, corporate enablers to monetize soft assets, continued to grow. Scouting and innovation intermediary firms achieved 15% penetration. Joint innovation ventures are reported by more than a third of respondents.  These collective data indicate the ability to monetize IP is growing.

If registered IP is increasing in value, and the ability to monetize it can have no other outcome, it stands to reason that unregistered IP is also increasing in value.  And, the value of a company’s Trade Secrets increases at a rate that is related to the growth rate in the ability to monetize IP, and the growth rate in value.  Now there is a deep subject, and we will certainly leave that for another day.

So what happens in the next few years?  GGI research shows that over a third indicate they have formalized processes for monetizing IP already.  Three quarters indicate that the financial impact of IP is positive, none indicated negative.   Seventy percent indicate that IP will be more or much important in the next five years. It perhaps is too casual a way to describe the landscape ahead, but it appears that a critical mass of companies currently exists and the next third of industry is about to get on board.  This is reinforced by our findings on the emerging marketplace of Open Innovation.

It is no wonder why thirty percent are changing their Trade Secret practices, now that First-To-File has become law in the United States.  Why not focus on the seventy-percent that are not changing, the clear majority?  In our global world, foreign companies have been practicing First-To-File patent processes for years – and now do in the U.S. too.  Implied by our findings is that there is a great deal of change for companies that do not have global roots or have not yet achieved a certain size, small and medium businesses.  Certainly some of the big corporations replied they are tightening as well, wishing to protect their appreciating asset.

Trade Secret Practices Changing Due To First-To-File Legislation? [Machine Design – April 10, 2014], summarizes selected GGI research findings in the area of Trade Secrets; and offers nine steps that companies may take to further protect and secure their Trade Secret assets.  [The article was posted March 18.  The URL for the magazine issue will be available April 10.]

Corporate Innovation Practices Align With Business Results

NEEDHAM, Mass. — (BUSINESS WIRE) — March 13, 2014 — Goldense Group, Inc. [GGI] announced the completion of its sixth primary research initiative on the strategies, processes, practices, and metrics used in North American R&D and Product Development Innovation. This study focused on R&D Operations, Organic Innovation, Open Innovation [OI], Intellectual Property [IP], and the Top 100 Productivity & Performance Metrics used by corporations.

Two hundred companies from the US, Canada, and Mexico participated in equal proportion to the relative R&D Spending of these three countries, representative of North America. The response rate was 6.5%. A typical respondent company had US$ 4-5B in revenues.

While the relative corporate activity in Basic Research, Applied Research, Advanced Development, and Product Development remained largely constant for the past five years, the infrastructure in these areas experienced significant growth. Growth will continue. Two-thirds indicated innovation will be more important in the next five years than in the past five. Half indicated the same for OI.

The emerging OI and IP marketplaces, corporate enablers to monetize soft assets, continued to grow. Scouting and innovation intermediary firms achieved 15% penetration. Joint innovation ventures are reported by more than a third of respondents. Corporate abilities to track revenues and profits lag abilities to track costs, this is especially true for OI.

Seventy percent indicate that IP will be more or much important in the next five years. Three quarters indicate that the financial impact of IP is positive, none indicated negative. Over a third indicated they have formalized processes for monetizing IP. Thirty percent are changing their Trade Secret practices, now that First-To-File has become law in the United States.

After fifteen years of little change in corporate metrics for R&D and Product Development, there has been a sea change in the use of metrics to focus on business results in the past five years. The “R&D sand box” is almost gone. Twenty-three of the Top 25 metrics now measure pipeline attributes, productivity, and results.

These findings are excerpts from two available reports on GGI’s 2014 Product Development Metrics Survey. Findings are also located in Driving Product Development™ and Tangible Innovation!™, and will be discussed at the 17th R&D-Product Development Metrics Summit being held April 15-17, 2014 in Norwood, Massachusetts.

R U an Open Innovator?

Organic Innovation, Open Innovation, Intellectual Property, & CXO Corporate Metrics Practices, July 23, 2013, describes primary research that GGI was conducting in 2013.  We have now concluded the research period and are currently analyzing the results.  Here we address a piece of what we found on the subject of Open Innovation [OI].

Product developers have been practicing “make vs. buy” analysis for decades.   Typically, the focus is on  whether to outsource the manufacture of components or subassemblies that have already been designed and developed in-house.  Since the early 2000s and the publishing of “Open Business Models:  How to Thrive in the New Innovation Economy” by Henry Chesborough, the make vs. buy considerations have been moving upstream into design and development activities.  This is what industry now refers to as “Open Innovation [OI].”  Should our company invent a needed new product feature or capability, or has another company already done it?  Can we acquire it or license it if something already exists that meets our needs?  Is partnering or allying with the company our best alternative if what they have is close but does not exactly (yet) meet our needs?  Or, should we put the investment in and incur the likely time-to-market penalty for doing it all ourselves from scratch?  What is the best way to achieve our design intent?

Many companies are beginning to wade into the waters of OI.  Clearly there are mixed results across industries in this early market.  Only Procter & Gamble has publically touted their financial successes via more open approaches.  As of now, the infrastructure within companies enabling scientists and engineers to quickly locate appropriate alliances or find ready to go plug and play solutions is still in the nascent stages. The train is on the tracks however.

Like any new market opportunity, demand has to reach a certain level before suppliers invest to develop a solution.  And, like any new market, different suppliers will offer different solutions.  For OI, the evolving offerings range from making it easier to access university-based research and prototyping to bartering intermediaries to outright brokers who attempt to put buyers and sellers of solutions together.

The OI categories that our research focused on are:

  • Crowdcasting/Crowdsourcing
  • Scouting Firms
  • Venture Capital and Entrepreneur Forums
  • Innovation Intermediary Firms
  • Private Industry Consortia Groups
  • Private Industry Business Portals
  • Targeted Proprietary Networks
  • University Contract Agreements
  • Supplier Co-Development
  • Non-Competitor Joint Ventures
  • Competitor Joint Ventures
  • Intellectual Property Auctions
  • Focused IP Search/Purchase/License

Certainly the number of different OI approaches will grow over time.  As well, some of the current categories will become more refined and be described as similar but differentiable approaches in the future.  For instance, “Innovation Intermediary Firms” will likely evolve to those that specialize in identifying companies with components that already have part numbers versus identifying companies that just have intellectual property rights but have not yet developed part numbered components.  Boutique intermediaries may specialize in one area and full service intermediaries will eventually provide one stop shopping.

What is for sure is that the demand for OI has achieved critical mass over the past decade and a new industry to service this demand is actively developing.  The advent of social media was not without resistance.  It had to overcome inculturated values dating back to the Pony Express in the 1800s.  NIH also has deeply seated values, but these too will be overcome in the years ahead.

R U an Open Innovator [Machine Design – March 6, 2014], summarizes selected findings in the area of Open Innovation from GGI’s 2013 primary research initiative.  GGi’s final report containing our complete findings is soon to be available.

Lead Users Generate Innovative Ideas & Great Returns!

Innovation-Enabling Tools & Software for Individuals and Product Pipelines, August 15, 2013, discusses the decade-long growth of the innovation body of knowledge that has lead to new software and other tools that are achieving penetration across industries in this early market.

There are only a handful of “official” innovation tools and techniques that preceded this boom of the past decade.  Edward DeBono’s “Lateral Thinking” and wearing “Six Hats” techniques have been used by many companies around the globe since the 1960s, and have stood the test of time.  Roger Von Oech’s “Creative Whack Pack,” a mix of analogous and stretch thinking via a deck of cards, has also stood the test of time.  There are at most three or four more oldies but goodies.

Just from the high level description of these techniques in the preceding paragraph, one can intuit that the “thought patterns implicated by the two techniques” might lead to different product ideas.  One tool that has also stood the test of time, “Lead User Analysis [LUA],” is specifically devoted to spurring thinking in the direction of products that no one has yet thought of.  Every company has some level of a risk portion of its portfolio.  This technique helps to identify products that are New-To-The-Industry or New-To-The-World.

Are the chances of “New To” success the same of buying a lottery ticket?  Hardly.  It is therefore harder to understand why a technique that has been around since the 1960s, and was nearly fully documented by the early 1980s, is not more widely and systematically used.  To paraphrase W. Chan Kim’s book Blue Ocean Strategy, Blue Oceans are where products do not yet exist and Red Oceans are where competition is currently taking place. In any given year, only 14% of new products are launched into Blue Oceans. Yet, this 14% generates 38% of all corporate revenues and an unbelievable 61% of all corporate profits.

Bose Corp., for example, can trace its meteoric rise in the stereo equipment industry to a Lead User Analysis that showed in the 1960s there was a large market of high-end audiophiles that would pay thousands of dollars for speakers with accurate sound reproduction. Sony used LUA in developing the WalkMan, a product that kicked off the wearable electronics movement in the early 1980s. MiniMed’s wearable insulin pump in the early 1990s, now a Medtronic product, was also developed in part due to LUA.

LUA has been around for several decades. Yet, companies continue to center on focus groups, data mining, emotional intelligence studies, and the like to identify products that cover the the entire range of the portfolio. That’s probably because these techniques are familiar and do not require something different be done for every portfolio segment; and management readily accepts them. However, they rarely result in New To products that are now tending to be a higher percentage of many corporate portfolio goals.

Lead Users Generate Innovative Ideas & Great Returns [Machine Design – February 13, 2014], summarizes Eric von Hippel’s key role in bringing LUA to a level of practice and gives the reader a feel for the basic tenants of the Lead User Analysis approach.  [Please note that these two URLs may not be active until February 13, 2014 when the MD issue is published.]