Too Short for a Blog Post, Too Long for a Tweet LXI

Here's an excerpt from a book I recently read, "Where Good Ideas Come From: The Natural History of Innovation," by Stephen Johnson:

The premise that innovation prospers when ideas can serendipitously connect and recombine with other ideas, when hunches can stumble across other hunches that successfully fill in their blanks, may seem like an obvious truth, but the strange fact is that a great deal of the past two centuries of legal and folk wisdom about innovation has pursued the exact opposite argument, building walls between ideas, keeping them from the kind of random, serendipitous connections that exist in dreams and in the organic compounds of life. Ironically, those walls have been erected with the explicit aim of encouraging innovation. They go by many names: patents, digital rights management, intellectual property, trade secrets, proprietary technology. But they share a founding assumption: that in the long run, innovation will increase if you put restrictions on the spread of new ideas, because those restrictions will allow the creators to collect large financial rewards from their inventions. And those rewards will then attract other innovators to follow in their path.

The problem with these closed environments is that they inhibit serendipity and reduce the overall network of minds that can potentially engage with a problem. This is why a growing number of large organizations—businesses, nonprofits, schools, government agencies—have begun experimenting with work environments that encourage the architecture of serendipity. Traditionally, organizations that have a strong demand for innovation have created a kind of closed playpen for hunches: the research-and-development lab. Ironically, R&D labs have historically functioned as a kind of idea lockbox; the hunches evolving in those labs tended to be the most heavily guarded secrets in the entire organization. Allowing these early product ideas to circulate more widely would allow rival firms to copy or exploit them. Some organizations—including Apple—have gone to great length to keep R&D experiments sequestered from other employees inside the organization. 

But that secrecy, as we have seen, comes with great cost. Protecting ideas from copycats and competitors also protects them from other ideas that might improve them, might transform them from hints and hunches to true innovations. And indeed there is a grow-ing movement in some forward-thinking companies to turn their R&D labs inside out and make them far more transparent than the traditional model. Organizations like IBM and Procter & Gamble, who have a long history of profiting from patented, closed-door innovations, have embraced open innovation platforms over the past decade, sharing their leading-edge research with universities, partners, suppliers, and customers. 

In early 2010, Nike announced a new Web-based marketplace it called the GreenXchange, where it publicly released more than 400 of its patents that involve environmentally friendly materials or technologies. The marketplace was a kind of hybrid of commercial self-interest and civic good. By making its good ideas public, Nike made it possible for outside firms to improve on those innovations, creating new value that Nike itself might ultimately be able to put to use in its own products. In a sense, Nike was widening the network of minds who were actively thinking about how to make its ideas more useful, without putting anyone else on its payroll. But Nike’s organizational values also include a commitment to environmental sustainability, and the company recognized that many of its eco-friendly patents might be useful in different contexts. Nike is a big corporation, with many products in many categories, but there are limits to its reach. Some of its innovations might well turn out to be advantageous to industries or markets where it has no competitive involvement whatsoever. By keeping its eco-friendly ideas behind a veil of secrecy, Nike was holding back—without any real commercial justification—ideas that might, in another context, contribute to a sustainable future. In collaboration with Creative Commons, Nike released its patents under a modified license permitting use in “non-competitive” fields. (They also created a standardized, pre-negotiated contract for the patents, thereby reducing the transaction costs of haggling over each patent license individually.)

The example scenario they invoked at the launch of GreenXchange would have warmed the heart of Stephen Jay Gould: an environmentally sound rubber originally invented for use in running shoes that could be adapted by a mountain bike company to create more sustainable tires. Apparently, Gould’s tires-to-sandals principle works both ways. Sometimes you make footwear by putting tires to new use, sometimes you make tires by putting footwear to new use. Green Xchange is trying to give multinational corporations some of the same freedom to reinvent and recycle that Gould’s sandal-makers enjoy sifting through the Nairobi junkyards.