This is a bit scary. The academic world is losing it’s place as a center of innovation.
Linda Sanford gave a presentation at the MIT-IBM Innovation lecture series this fall. (Sanford is the Senior VP Enterprise On Demand Transformation and Information Technology.) It was an impressive performance. Sanford supplied a "big picture" treatment of the changing tectonics of the corporate world, noting especially:
- the shift away from cost-cutting as the chief preoccupation of senior managers
- the new interest in top line growth
- the creation of a less silo-ed, less hierarchical, less boundaried, less self sufficient, less top-down corporation in a newly horizontal, collaborative, open world
- the new commitment to innovation as a first order of business
This raised the question of where innovation comes from, and Sanford reported the result of an IBM survey of corporate CEOs. (I am not sure of the timing or the dimensions of this study.)
Sanford pointed out that the 20th century CEOs would likely have identified the university world as an important source of innovation, even as they gave pride of place to their own internal research and development departments. This has changed. Now both come in at the bottom of the array.
I would be surprised if there was a journalist at this presentation, but, hey, this looks like a story to me. The annual investment made in the academic world is very large. And now it looks as if the R-O-I (return on investment) is beginning to disappoint.
How do we fix the university?
Tomorrow: b-schools, d-schools, e-schools and innovation
Reference
Sanford, Linda. 2006. Building an Innovation Company for the 21st Century. MIT-IBM Innovation Lecture Series. October 17, 2006. here.
Acknowledgment
The graphic above is take from Ms. Sanford’s IBM-MIT presentation. It is used without permission. I am hoping IBM’s commitment to collaboration and openness extends far enough to allow me to reuse this graphic here.
How do we fix the university?
First the university has to want to change …
Why is it scary that the academic world may no longer be the center of innovation?
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I heard this same IBM speech at a conference. It was equivocal on a number of levels. For example, aren’t internal R&D people employees? And if “innovative ideas” includes marketing concepts (e.g. repurposing existing technologies and products into new markets), I’d expect there to be lots of these coming from employees and few from internal R&D or academia. The same would be true if “innovative ideas” includes changes to internal procedures that improve quality or responsiveness or reduce costs.
And I also wonder how some of these ideas get scored? Employee at XYZ corporation reads about competitor’s idea, developed by competitor’s internal R&D lab or borrowed by competitor from university research, and puts idea into circulation at XYZ. Consultants work on idea, and it’s run by customers for further tweaking. CEO hears about it later as “our employee came up with this” or “the consultants developed this.” Well, yes, in a sense, but not in the sense Grant intends.
I suspect the big change, if there really is one, is not in the universities or the internal R&D departments but rather the market positions of corporations. When you had highly concentrated market structures with little foreign competition, corporations could internalize more of the gains of fundamental research, since rivals would find it difficult to replicate the research-complementary production and sales organizations of the big boys. So it made sense for big companies to put money into fairly basic R&D. Today, any new technological idea can be applied more easily by a range of competitors around the world, so the free-rider problem for basic R&D is more severe. The benefits of borrowing and copying relative to inventing have gone up.
Grant – Two thoughts. One, basic research is conducted in universities. Those ideas are typically commercialized elsewhere. Second, I encourage you to grab a copy of Schramm’s book, “The Entrepreneurial Imperative.” He provides a nice frisking of universities generally, and business schools specifically. RK
Hi Grant,
Why is it so surprising that academia is no longer the centre of innovation? Heck, it left innovative thinking back at the cleaners a few years ago.
Business needs drive innovation. and more often than not a good idea is an outcome of a frontline constraint. Academics don’t really feel any of this because of their ivory wall insulation.
In my work as a consultant, fresh thought and action are EXPECTED of me. I dont get paid for anything less. In India, academics, save for a few exceptions, were always at the bottom of the ideas barrel.
Great post Grant. I’ve uploaded the IBM study for you perusal:
http://www.sandboxwisdom.com/IBMInnovationCEO.pdf
Let’s define “innovation” — does that mean the iPod is now a color instead of white? In that case listening to employees or customers will yield best results. If we raise the bar to make “innovation” more demanding, we might focus on fewer, more seminal developments, such as the creation of the Mosaic browser, a university project that brought the WWW into our lives. I didn’t mean to be persnickety. I actually came here to thank Grant for adding my personal blog, MiniMediaGuy,to his blogroll. Then I noticed this discussion and given as how my day is covering innovation as a business reporter for the SF Chronicle, I had to read this. My perhaps-jaded reporter’s sense is that, as the buzz words of the moment, “innovation” has been cheapened to mean “that which drives sales.” Using that definition, clever marketing becomes the most important form of innovation in a fad-driven consumer economy in which product cycles grow ever shorter. But real innovation — say take human embryonic stem cell research. That comes from the real scientists. So I think rumors of the death of the university as the center of (properly-defined) innovation is greatly exaggerated. I’ll email myself a copy of the report and give it another read when I get back to the office. But that is my initial reaction. Tom Abate
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In response to last comment: So, it all depends on your perspective. If you are from a public company, with (primarily) shareholder interests in mind, it is compulsory for you to equate innovation to “that which drives sales”.
But an enterprise that manages the interests of the consumer (users), shareholders, employees, and the planet equally is much better suited to introduce product/service platforms that can create a positive difference in the world.
Tom, it sounds, from your examples of embryonic stem cell research, and Mosaic, that you consider “real” innovation to be a technology that propels humanity forward. To be honest, I agree with you, but to say that this sort of work can only be done in an academic setting or by “real scientists” is a little discouraging for those of us in Generation Y– who, for the most part, I think, still believe there is overlap between idealism and capitalism. As I discuss frequently with many of my peers, business is the most powerful agent of social change in our time. Academia is certainly important and has to work with industry, but we can’t come to solely depend on the university and research funding to make progress.