The best ideas are often conceived of by trial and error, or even just by accident. Open source innovation can be the best path to discovery -- if you aren’t afraid to take the plunge.

Open source or distributed innovation is all the rage at the moment, but the hype glosses over one important fact -- most open source projects are total failures. But this fact is precisely why the open source innovation movement is so important.

Within traditional innovation models, the cost of failure is very high. As a result, stage gates, red lights, and funnels are introduced to control the number of new ideas that are developed and introduced in to the market. And that's the problem.

Nobody can ever know for sure what will work and what won't, until an individual makes a leap of faith and a surge of innovation is unleashed. Moreover, nobody can tell what’s silly and what isn’t without the benefit of hindsight. But with open innovation, researching and worrying about whether something will work or not is unnecessary because of the low cost of trying. Just do it and you’ll find out.

My own experience of open innovation within large organizations is relatively modest. The reason for this is that the idea is too new and unproven. Organizations like the sound of it in theory, but in practice relinquishing control to scores of unknown individuals scares the pants off them. Business, after all, is about order and control. But if they’re right then why do only 40% of major technical innovations come from large corporations?

Anyway, I’ve been playing with the idea myself of late. My first experiment was a little online trends newsletter called What’s Next. This isn’t openly created, because I create all the content myself, but I do receive a tremendous amount of user feedback so the business model is openly filtered. As a result the idea has been revamped several times, and while the current version isn’t perfect, it’s one hundred times better than when it started.

The key learning here is that the innovation process has been inverted. Previously, I would have worked up a handful of promising ideas and put them into focus groups to establish which concept was 'right.' I would have then polished up the winning concept and put it on the market. In other words, I would have created something, edited it, and then ‘published’ it. But these days you can also do it the other way around. You can create, then publish, and then let your customers edit the concept for you, especially if your product is digital or if it’s a service innovation.

My latest collaborative experiment in home-brewed innovation is something called Homepage Daily, which is an online newspaper. Will this work? I have no idea but the users will undoubtedly let me know. The point here (and most large organizations outside of the US at least really don’t get this) is that there is no lasting humiliation in giving it a go. You can fail like crazy and still keep going until you eventually stumble on success. Of course this presents big organizations with something of a problem. How can they fail like crazy without looking like idiots? The answer, in open innovation terms, is to facilitate and empower every employee, customer and stakeholder to become part of the innovation team and to then encourage them to perform small experiments.

For example, Mozilla Corp is the company behind Firefox, the wildly successful Internet browser. The company has 70 employees and almost 200,000 volunteer helpers. Moreover, Firefox 1.0 was developed, not on purpose, but by two renegade young programmers that went off in the wrong direction just because it felt right.

The idea of open or distributed innovation obviously links with other ideas like the wisdom of crowds, but the link I like the most is with James G. March’s idea of foolishness in organizations. March is a professor emeritus at Stanford Business School and one of his key insights is that companies need to mess around more.

What I think he means by this is that people should try more things out even if rationally they seem like silly ideas. For example, people should incorporate more ideas from outside their domain, or even make mistakes on purpose just to see where this takes them. It’s a bit like going on holiday. You can follow the guidebooks but often the most interesting and useful experiences come when you put the guidebook down and walk down an unknown street for no particular reason.

Of course, the idea of setting up an innovation process focused on making deliberate mistakes is itself a silly idea. At the moment, most organizational innovation strategies and processes are too sequential and too rigid. But moving to some kind of ‘anything goes’ system would be equally disastrous.

What’s needed is a balance -- a combination of tight and loose, where 85-90% of internal resources are spent on internal innovation that is tightly planned and controlled. The remaining 10-15% of time and money should then be spent on unplanned ideas that are developed by simply releasing them into the wild and seeing what happens.

(FYI - As my colleagues can attest to, I don't know how to make coffee or fix the printers. And I plan to keep it that way!)

Meet David Teece, renowned expert on lots of things and pioneer of a lucrative consulting niche that has transformed business litigation. The University of California, Berkeley, business-school professor is one of America's busiest expert witnesses, billing corporate clients as much as $850 an hour for his insights. He has built a publicly traded 1,300-person research shop, LECG Inc., that does much of the legwork for him and other economists, so they can zoom through more assignments.

For high-profile economists like the 58-year-old Prof. Teece, expert testimony has become a way to earn $2 million or more a year. Their rise has its roots in the Reagan era of the 1980s, when a free-market view of the law inspired by University of Chicago scholars gained ground. Courts now rely far more on economic analysis, with its apparent precision, to reach decisions. As a result, big companies in legal disputes race to enlist top economists on their side, paying top dollar in an arms race for talent.

[...]

By 1988, Prof. Teece was being offered more expert-consulting work than he could handle, even though he works until 2 a.m. most nights. So was Berkeley law professor Tom Jorde. They decided to set up Law & Economics Consulting Group, an off-campus research shop in nearby Emeryville, Calif. There, they and some similarly busy Berkeley professors built a staff full of newly minted Ph.D.s to help pull together their testimony.

This arrangement not only saved time but also pumped up economic experts' incomes. Besides billing hundreds of dollars an hour for their own work, these experts also collected a markup on their aides' time, much as partners in a law firm do for associates' work. On big projects, with dozens of aides working round the clock, the markup could be worth $100,000 or more to the scholar in charge.

"I won't get many thank-you notes for this, but we've given economists the chance to earn investment bankers' incomes," Prof. Teece says. "If you're successful with us, it isn't hard to make half a million dollars a year." He estimates that 60 LECG experts topped the $500,000 mark last year.

It’s reality for anyone doing anything in this day and age: no matter how strongly you intend for your product to be used in a certain way, your users can decide how it will actually be used. Viagra was created to treat heart problems. MySpace came about as a way of promoting bands. But eBay was not created to sell Pez dispensers, no matter what their PR department says.

With the growth of YouTube and other collective media sites, and the decreasing cost of good quality photo, sound, and video editing software, users and critics can now also take presentations and use them for other things. Here’s a great example, from the E3 conference in 2006: A horrible presentation from Sony on the PlayStation 3 was reedited and distributed online to mock the Sony producer who gave it.

Here’s the video:

And here’s a little background from YTMND:

Giant Enemy Crab

YTMNDs on this subject vary greatly in scope, but usually have some manner of Enemy Crab appearing in unusual places. Sometimes a Giant Enemy Crab is photoshopped into ancient Japanese tapestries or onto the blackboard in Japanese history classrooms. There was also a spate of vandalism on the Wikipedia entry for crabs, with people inserting references to certain large, malicious, ancient Japanese varieties.

The lesson here isn’t to step out of the limelight. A great presentation can make you just as easily as a bad presentation can break you. (For example, check out this post on the best presentations ever, most of which are available on video sharing sites like YouTube and Google Video.) But if you’re stepping out and making presentations, or moving your company into new territory, realize that you will be mocked and criticized, and it’s not always a bad thing. In this case, the old cliché “there’s no news but good news” is true – you’re getting exposure and publicity and name recognition. And you’re also getting market feedback that 10 years ago you would have had to pay a ton for.

There’s also a chance you’ll get ideas to move in a direction you didn’t consider – a new market, a new product, or a new service. And at the very least, you’re also learning to avoid the giant enemy crabs…

The video is here.

In one of the highest profile innovative marketing schemes to go astray, blinking, electronic advertisements in Boston for Aqua Teen Hunger Force were thought to be explosive devices. Roads and subway trains were closed down, the bomb squad was called out in force, and merchants are claiming losses more and more each day.

The Cartoon Network might have thought they were finding a cute way to get market share, but for most Bostonians, the advertisements seemed to be saying something quite different:

Today, two weeks after the incident, the general manager and executive vice president of the Cartoon Network has resigned in an internal memo to staff, and the parent company, Turner Broadcasting, is paying Boston nearly $2 million to cover costs related to the scare.

In his memo to staff, Jim Samples wrote that, ''It's my hope that my decision allows us to put this chapter behind us and get back to our mission of delivering unrivaled original animated entertainment for consumers of all ages,''

He said he regretted what had happened and felt ''compelled to step down, effective immediately, in recognition of the gravity of the situation that occurred under my watch.''

This is a prime example of a Type 1 error in innovation, when a company fails because of an action it took, as opposed to failing because it didn't take action at all (a Type 2 error).

(Eric Mankin at Babson's Innovation and Corporate Entrepreneurship research center, has a good overview of Type 1 and Type 2 errors, framed around television and movies. Check it out here.)

This situation is also a prime example of why you should be humble and contrite in the face of failure, and not arrogant and argumentative. As CNN reported on 01 February 2007:

Peter Berdovsky and Sean Stevens were released on $2,500 bail, said Mike Rich, their attorney. The next pretrial hearing is scheduled for March 7.

Their attorney said the two were putting on a "performance," and noted that he had told them not to discuss the case.

That could have been handled better. Would it have solved the problem? Would Jim Samples still have a job, and Turner still have $2m? I don't know. But when you innovate--in marketing, in product development, in sales or service--you risk failure. And people are always more accepting of someone who says "I tried, I failed, I'm sorry" rather than appearing like they are trying to skirt admitting failure.

Some personal favorite quotes:

Homer Simpson: "When someone tells you your butt is on fire, you should take them at their word."

Jack Bauer: "If I say "dammit," either something bad just happened, something bad is about to happen, or I'm going to do something drastic."

Dan Rather: "I saw a quote recently that I believe in: "News is what somebody somewhere doesn't want you to know. All the rest is advertising."

Tommy Franks: "My grandchildren call me Pooh."

Roy (of Siegried and Roy): "Wear the cape; never let the cape wear you."

Burt Reynolds: "I was number one five years in a row at the box office. But what's really stunning is that no one until me had ever gone from number one to number thirty-eight in one year."

Don't miss the Hunter Clemons one, it's great. He's just some random 11 year old from North Carolina. "Once a teacher tried to force me to do something I didn't want to do and then walked away. I got angry, and the teacher turned around just as I was doing a movement that showed I was angry. You never think they're gonna turn around just at that moment." So true...

Doctors are smart people. They save lives, improve the general wellbeing of a population, and even get to wear cool white lab coats.

Washing hands is common sense. You get rid of germs and dirt. When you were little, your mother probably told you to do it a dozen times a day. It’s an easy way to avoid passing germs around.

It wasn’t until 1850 that people realized that germs caused infections and illness. A Hungarian doctor, Ignaz Semmelweis, was working in a Viennese hospital with two maternity wards. In one, midwives delivered babies. In the other, doctors did. The doctors had a mortality rate three times higher than the midwives. It turns out that the doctors would deliver babies immediately after working on cadavers, and didn’t wash their hands between medical acts. They were transferring the germs from the dead bodies to the mother and the newborn child. When the doctors started washing their hands, the mortality rate plummeted.

So how come so many doctors—smart people in cool white lab coats—don’t wash their hands between seeing patients? Do they not understand the benefits? Have they never seen an episode of ER or Chicago Hope, and never learned that it’s what you’re supposed to do? Did they not teach this in medical school?

Amazingly, even today, some doctors don’t do it enough.

According to “To Err Is Human,” the Institute of Medicine reports that each year, between 44,000 and 98,000 American die because of hospital errors, and one of the leading errors is bacterial infections.

Researchers at Johns Hopkins Medical School took this a step farther. From the Baltimore Sun:

A study by Johns Hopkins researchers offers strong evidence that careful adherence to a few simple and cheap procedures - as basic as hand-washing - can drastically reduce the spread of infection in hospitals.

The Hopkins researchers tracked infection rates in Michigan hospitals that had agreed to institute strict safety practices for catheters, which are small tubes inserted into patients' veins. Used to administer medication and nutrients to some patients, the tubes can also be the source of life-threatening infections.

“The results are pretty breathtaking,” said Dr. Peter Pronovost, the lead author and a professor of anesthesiology and critical care medicine at the Johns Hopkins University's School of Medicine. “The numbers of infections went down quickly and they stayed down.”

(The report, “An Intervention to Decrease Catheter-Related Bloodstream Infections in the ICU,” was published in the New England Journal of Medicine.” The abstract is available here, and the full report here.)

Do doctors realize they’re not washing their hands? Yes and no. According to “Selling Soap: How do you get doctors to wash their hands?” a September 2006 article in the New York Times by Steven Levitt and Stephen Duber, “in one Australian medical study, doctors self-reported their hand-washing rate at 73 percent, whereas when these same doctors were observed, their actual rate was a paltry 9 percent.”

Now that we know they’re not doing it enough, how can we get them to change their behavior?

In “Selling Soap,” the authors demonstrated two attempts to improve hand washing rates at Cedars-Sinai hospital:

For the next six weeks, Silka and roughly a dozen other senior personnel manned the parking-lot entrance, handing out bottles of Purell to the arriving doctors. They started a Hand Hygiene Safety Posse that roamed the wards and let it be known that this posse preferred using carrots to sticks: rather than searching for doctors who weren’t compliant, they’d try to “catch” a doctor who was washing up, giving him a $10 Starbucks card as reward. You might think that the highest earners in a hospital wouldn’t much care about a $10 incentive — “but none of them turned down the card,” Silka says.

When the nurse spies reported back the latest data, it was clear that the hospital’s efforts were working — but not nearly enough. Compliance had risen to about 80 percent from 65 percent, but the Joint Commission required 90 percent compliance.

That got them part of the way there, but it wasn’t enough.

These results were delivered to the hospital’s leadership by Rekha Murthy, the hospital’s epidemiologist, during a meeting of the Chief of Staff Advisory Committee. The committee’s roughly 20 members, mostly top doctors, were openly discouraged by Murthy’s report. Then, after they finished their lunch, Murthy handed each of them an agar plate — a sterile petri dish loaded with a spongy layer of agar. “I would love to culture your hand,” she told them.

The administration then decided to harness the power of such a disgusting image. One photograph was made into a screen saver that haunted every computer in Cedars-Sinai. Whatever reasons the doctors may have had for not complying in the past, they vanished in the face of such vivid evidence. “With people who have been in practice 25 or 30 or 40 years, it’s hard to change their behavior,” Leon Bender says. “But when you present them with good data, they change their behavior very rapidly.” Some forms of data, of course, are more compelling than others, and in this case an image was worth 1,000 statistical tables. Hand-hygiene compliance shot up to nearly 100 percent and, according to the hospital, it has pretty much remained there ever since.

Interesting problems call for interesting solutions.

Bringing about change in an organization is never easy, and certainly harder in places like hospitals with highly-educated, highly-driven Type-A performers. The problem with not washing hands was clear: increased medical issues for patients. Rekha Murthy at Cedars-Sinai knew that, in addition to proving the problem, she had to show absolute proof that the doctors were the cause.

She did. There should be little doubt that she proved to the doctors that success or failure was… in their hands.

How not to rob a liquor store.

It’s the holiday season: Spending time with family. Eating a flightless bird. And, if you’re like so many others, watching football on TV. In the 86 years since the first NFL game was played between the Dayton Triangles and the Columbus Panhandles, a lot of innovation has taken place in professional sports (not the least of which is the creation of much, much cooler team names).

Two recent articles, one from MSN and the other from FOX Sports, provide a great overview of the changes that have taken place, and the impact they’ve had on the game.

MSN took a look at the “Five Ways Technology Changed Football,” noting that:

“Instant replay. Sky cams. Radios transmitters in the quarterback’s helmet. Statistical analyses by the screenful. All are now taken for granted as an indispensable part of today’s sports scene. But it wasn’t always so.

Pat Summerall, who began his pro football career in the 1950s as a kicker with the New York Giants, and later became a broadcasting legend with CBS, Fox and ESPN, remembers the “low-tech” pre-replay days.

“I was actually in a room underneath Yankee Stadium [where the Giants used to play] with a Polaroid camera taking pictures of the television sets that were available,” Summerall recalls. “They would isolate on one individual and I would take a Polaroid photograph of that picture and take it back to the director in the control truck. That was the beginning of instant replay, the isolated camera and the replays that we have today.””

Their five picks for the most impactful technological innovations?

1. Instant Replay
2. Statistics
3. High-Tech Medicine
4. High-Tech Coaching
5. Technology for Fans

Check out their full explanations for their decisions here.

FOX Sports also reminds us that in professional sports, like most everywhere else, innovation doesn’t always occur smoothly:

“In the summer of 1994, when the NFL introduced a helmet-radio system that enabled coaches to send plays directly to the quarterback, Los Angeles Rams' QB Chris Miller stood in the huddle during an afternoon practice session in training camp and heard in his ear-piece not the gruff voice of head coach Chuck Knox, but an order from the drive-thru window at a nearby fast-food joint.”

Oops.

In their article “Techno-sport: Big changes for players, viewers,” FOX looks at changes across a number of sports, and how they impact not only the quarterbacks, but the Monday morning quarterbacks, too.

”Unlike the inventions of the 19th Century, today's changes occur at DSL speed. In the age of Google and YouTube, computers lead the way. Baseball players like Jeter analyze their at-bats — and scout the next day's starting pitcher — from DVD compilations they play on their lap-top computers. Then, they download their favorite tunes to iPods for their workouts.

During NFL games, technicians photograph and then download images of the opposition's defense so that their team's offensive unit can better identify and attack those schemes.

On the NASCAR circuit, computerized electronic devices probe every facet of engine and tire performance during training laps in an effort to boost performance and speed. Pro golfers use computer-enhanced club design — along with sleek graphite shafts and titanium faces — that enables even the Fred Funks on the Tour to blast the ball 300 yards down the fairway.

No surprise, then, that sports are now played in modern-day engineering wonders. The NFL's newest facility, the Arizona Cardinals' University of Phoenix Stadium, debuted this September in Glendale, Az.

The venue boasts a retractable roof, but that's not what makes this state-of-the-art stadium so special. The all-grass field is North America's first retractable playing surface; it is contained within a 17-million pound tray that, powered by electronic motors, can be rolled in and out of the stadium within 45-60 minutes. (The $355 million stadium will host the annual Tostitos Fiesta Bowl, the first-ever Bowl Championship Series title game in January of 2007, and Super Bowl XLII in February of 2008.)”

The article has an interesting ending, worth reading even if you don’t like sports that much:

What's certain is that technology will continue to influence and change sports in every imaginable way — and, frankly, in ways that are unimaginable to us today.

The 10-year-old kid who endlessly plays "Madden" will concoct the next generation of video games (except that the term "video game" will no longer exist). The assistant manager of the high-school track team will invent a sneaker with interchangeable soles for every imaginable running surface. Skateboards of the future will use recycled compounds that enable riders to jump incredibly vast distances. NASCAR vehicles will be powered by electricity. TV networks will cover sporting events with cameras in space (and maybe even cover events in space)

It’s a good reminder of a few things: (1) The people who use your product today are the people most likely to come up with a better use for your product tomorrow. (2) Nothing stays in the silo it started in. Football started on a grass field, moved to a TV screen, and then to a video game box. Innovation in any one of those places will likely impact the others. (3) Change, for both good and bad, is inevitable. (4) We’re likely to be disappointed and feel shortchanged by changes that occur in the short term. And we’re likely to be blown away by the changes that occur over the distant future. It’s the nature of innovation.

The Mayo Clinic in Rochester, Minnesota is known for a number of things: With regard to performance, it is consistently ranked second among best hospitals in the United States. It’s operations make it one of the largest non-profits in the United States, if not the world. And the number of people it services each year is stunning: In 2004, the hospital handled:

- 513,377 unique patients
- 2,271,484 total outpatient visits
- 130,093 hospital admissions
- 599,002 hospital days of patient care.

It is also becoming one of the hotbeds of medical innovation, starting with the brand new SPARC lab, a “clinical innovation lab that operates like a design shop and that specializes in the ‘patient experience.’” From Fast Company magazine:

Doctors, nurses, and other staffers do what designers do: They interview, shadow, and observe customers (in this case, patients) to uncover their needs, brainstorm with abandon, and engage in rapid prototyping--hence, the paper kiosk.

Despite its status as one of the best known and most respected medical facilities in the world, Mayo is wrestling with the same issues that designers routinely tackle: In an increasingly competitive field, how do you differentiate yourself? How do you generate fresh ideas and implement them in a timely fashion? And how do you make sure those ideas actually benefit customers?

Mayo's program is "definitely unique, and it has enormous implications," says Dr. Samantha Collier, vice president of medical affairs at HealthGrades, which rates the quality of the nation's hospitals. "Medicine has long been embedded in tradition. But just because this is what we've done since the days of Marcus Welby doesn't mean it's still the best way. [Mayo] could find disruptive ways of practicing medicine better. This isn't just about customer service but about quality."

SPARC is not simply a research lab or a medical clinic. It's both. Real patients see real doctors and, in doing so, participate in experiments (they're briefed and asked for permission). Instead of being shunted off-site, the program is based in the Mayo Building like any other clinic; it occupies a corridor that used to house urology. The acronym, which stands for "see, plan, act, refine, and communicate," is meant to remind participants of the design-oriented methodology so they'll continue to employ it when they return to their departments.

The idea grew out of the realization that outpatient care is overdue for fresh ideas. "Medicine has changed, people have changed, technology has changed, but the exam room isn't so different than it was in the 1800s," says Dr. Michael Brennan, an associate chair in the department of medicine, where the program originated. Mayo wants its doctors to apply the same experimental approach to clinical innovation that they apply to scientific innovation.

It’s a great idea: Use your strengths in one area (scientific innovation) to another areas (clinical innovation). Host the facility right in the midst of the operating environment (the former urology department). Create an open environment, both in the facility itself (with the Steelcase materials) and with the lines of communication between patient, doctor, and administrator.

What lessons can be taken from this and used in your company?