January 2008 -- Corporate R&D Leadership

[Sue Klein Lebeck]

January 2008

Corporate R&D Leadership:
Perspectives from Peter E. Hart,
Chairman, Founder and President of Ricoh Innovations, Inc.


Join us as our feature presenter, Peter E. Hart, shares with us his evolving perspectives on the corporate R&D research and innovation model. Throughout his career, Peter has designed and managed numerous research and innovation organizations. We look forward to hearing his reflections, observations, and current perspectives on the field.

Together, we will also explore how these perspectives effect and can be applied to the management of innovation in other contexts. Please join us for the conversation. See you there!

[Sue Klein Lebeck]

Notes and Gems....

January 2008

Corporate R&D Leadership:
Perspectives from Peter E. Hart, Chairman, Founder and President of Ricoh Innovations, Inc.

During our Feature Presentation, I noted these important Innovation Management wisdoms. Thank you, Peter!

- Planned innovation requires a space where really smart people have no schedule of deliverables

- If innovation is purely “curiosity-driven”, there will be no commercial relevance.
The “corporate covenant” is that R&D is trusted to focus on research themes that are commercially meaningful.

- Innovation metrics are difficult to pin down. Very few inventions lead to breakthrough value, quality, or financial returns.
“I’ll know it when I see it” is about right.

- Some portable, conceptual tools help with managing innovation:
Key: Who… works on what?
Key: Viewing R&D as an investment portfolio.
Designing the portfolio requires framing the choices around these factors:
Technology Risk/Reward
Market Risk/Reward
Corporate Risk/Reward

- Technology Risk/Reward:
Distinguish between short-term risk vs. long-term risk. Taking on long term risk requires there be lots of space, or “technology headroom”,
before the technology matures

- Market Risk/Reward:
Requires customer-facing research, and an understanding of “can my company exploit this?”

- Corporate Risk/Reward:
The business plan.

- Sustaining investment contributes to current business;
Radical investment contributes to new business opportunities.
Rule of thumb: invest in 80% sustaining / 20% radical

- Sustaining innovation: can innovate along business adjacencies, without great risk:
e.g. new customer sets, new distribution channels

- Radical innovation, or innovating far from core business is more risky;
radical innovators can spend 75% of their time developing relationships and exploring new business concepts;
take only one or a few of such risks at a time

- When evaluating/managing investment:
Look for potential for incremental rewards over time. Limit your investment, until this ability is demonstrated.

- To have a mature innovation project, need a balance between technology maturity (proven technology)
and business maturity (ability to take action at the market and corporate levels)

- On looking outside the organization:
“Open Innovation”, or looking outside for technology, is key when you have a great business concept, but do not have the needed technology
“Ethnographers in Industry” (see EPIC2007 conference) is a great outside source for understanding market/customer needs

- Innovation is among CEO’s top three priorities (after “growth” and “global talent management”) according to recent McKinsey study

- Corporate research is one of many sources of innovation (along with “business divisions”, “lead customers”, “business partners”, “suppliers”)

- Inhibitors to Innovation:
CEOs believe it’s: “not enough of the right people”
Innovation professionals believe it’s: “the right people, but the wrong culture”

- Big change proposed in Intellectual Property management:
To receive a patent, an invention must be “useful” and “non-obvious”. (Whether it can be monetized or not does not matter at the patent level.)
There is a proposed change in the “non-obvious” test. TSM test: If it is Taught/Suggested/Motivated by the prior art, it is “obvious”;
the prior art must be specifically referenced [by the prosecution];
this constitutes a sea change.

- Huge patent portfolios are now owned by non-operating companies; there is thus liquidity for intellectual assets in secondary markets.

- Innovation and meaning: personal passion aligned with the corporate mission

- Closing Question:
How do you help innovative people to be successful?

Answer:
First – give them a space to work with no scheduled deliverables.
Then – Ask three key questions:
1. “What is your dream?” (if no dream, no innovation.)
2. “What will you do next Monday?” (if can’t say, then can’t execute)
3. “Do you have what you need to be successful?” (supply what is needed, or change the dream)
If these three questions cannot be satisfied, it is a setup for failure;
If these three questions CAN be satisfied, then say “It’s up to you” and get out of the way!

Thank you, Peter!