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Bull Session

Rethink Innovation

February 11, 2016          

Episode Summary

This week on The Digital Life, we chat about the rapid evolution of design and innovation practice. Chinese companies are increasingly taking an assembly line approach to R&D, which allows them to accelerate the process using multi-functional problem solving teams. By industrializing the process, Chinese companies are looking to make innovative product development quick and inexpensive, using simultaneous, parallel engineering and design. Additionally, IP sharing is commonplace in China: Designs move quickly from one company to the next. For example, the hit toy of the holidays, the hoverboard, was created seemingly simultaneously by several Chinese manufacturers. Join us as we discuss the future of innovation.

Resources
Accelerated Innovation: The New Challenge from China
The Hoverboard Mystery: Where Did The Holidays’ Hot Product Come From?

Jon:
Welcome to episode 142 of The Digital Life, a show about our adventures in the world of design and technology. I’m your host Jon Follett and with me is founder and co-host, Dirk Knemeyer.

Dirk:
Greetings, Jon.

Jon:
Dirk, this week we’re going to chat a little bit about one of my … I don’t know if this is one of my favorite topics overall, but it’s something that really interests me and that is design and innovation. In this case, we’re going to talk about rapid evolution of the processes that make both of those things possible in the context of the knowledge economy. I want to start off with this particularly interesting article that I read in Sloan Review for MIT, talking about how Chinese companies are essentially taking an assembly line approach to RND. What that means is that since they’re dividing up the RND process into smaller chunks and allowing specialized teams, although, not as highly trained as your typical RND team, but specialized teams to take a crack at each one of these chunks. They’re breaking it up and that’s enabling these companies to attack problems in parallel, rather than in serial.

This doesn’t allow for that kind of research plus genius breakthrough that we expect from a small team of experts, trying to find the next big thing, whether it’s in semi-conductors or in chip design or what have you. But it does allow these companies to become very fast followers. If something is right on the cutting edge, they can figure out how to do it and get through the engineering process faster than any Western companies right now. This Slone Review article really digs into those factors and shows how the Chinese are able to industrialize this system of innovation, which, I think, here in the West, we sometimes think of that as being something that can’t be chopped up into pieces and automated. Well, not automated, but systemized in such a way, that you can attack little parts of it. It’s this holy grail of knowledge work where a bunch of smart people take a lot of data and studying the market and understanding of people and then let that all percolate and it sort of happens in a creative way and it takes a while to do.

Dirk:
Yeah.

Jon:
As designers ourselves, I’ve never really considered a parallel design process like that. It’s just such a different way of looking at things, that I found the article not shocking in and of itself, but you’re putting together two things that I thought would never fit together.

Dirk:
Yeah.

Jon:
Frankly, it’s the kind of change in industry that could really [inaudible 00:03:46] things for companies that aren’t able to move as quickly as these Chinese companies are. With that as our foundation, Dirk, what are your initial impressions of this new technique of innovation?

Dirk:
It’s a very logical use of the resources that they have available. There’s a surplus of labor. There’s increasingly a surplus of educated labor as they’ve-

Jon:
Exactly.

Dirk:
-invested tremendously in education in China and a surplus of educated, not particularly experienced labor, which lends itself to being deployed on these teams and processes. One of the other things that article talked about is that often how these things are going in serial. Whereas, in the US … I want to say all, but certainly almost all, if not all of the very innovative companies that we worked with over the years, basically, one set of teams solving each problem. That doesn’t really make a lot of sense, if you think about what’s the quickest and best way to solve difficult problems. But the economic model here, the traditions of creation, certainly as they’ve emerged after the World War 2, lend themselves to that sort of an approach.

China has a different set of resources at its disposal. It has all the incentive in the world in their competition with the Unites States, with Germany, the wonderful engineering in Germany and with other nations that really established, either innovators or executors of technical greatness. They should be leveraging their strengths. This process is a great example of them doing exactly that.

Jon:
You know what this reminds me of a little is, in the early days of the web, there was this brute force information architecture technique where you would just throw lots and lots of young, either library science or design graduates at a problem, like the information architecture of a large website. There were certain agencies that were known for this, where the architecture, it was almost done like a phone book would be, but eventually it got to the right place because you were brute forcing everything.

Dirk:
Yeah.

Jon:
This was in the days when, I don’t know, like Yahoo was riding high on the stock exchange.

Dirk:
That was a long time ago.

Jon:
It was this … There is money to be had everywhere, so you could pay all of these young designers a decent wage, but you could throw quite a few of them at a problem like an IA problem and break apart all of the pieces, whether it was using this … I’ll call it the telephone book technique, where you’re just dumping all of the information in there and hoping it comes out on the other side in some sort of sensible, logical way.

Dirk:
Yeah.

Jon:
But because there was so much demand for website design services that were not in particularly … There wasn’t a lot of trained individuals, who could do that, so you made up for it just with bodies. This approach reminds me of that a little bit, except it’s much more refined, I think, and much more systemized in a way that seems like it’s going to become a competitive advantage soon. I want to raise another example that I noticed over the holidays, the hover boards which were sort of the bane of parents’ existence across the United States.

Dirk:
Mike Tyson as well.

Jon:
Of course, they’re all shoddily made with batteries that burst into flame, if you’re not careful. These hover boards almost magically appeared on the market right in time for the holidays. As far as anyone can tell, the IP for this new toy was shared across multiple Chinese manufacturers and no one can really figure out who came up with the original designs. That goes to the idea of intellectual property being fluid, malleable in a way that’s … In the past, you might think of a metal that could be shaped however you like it. With our IP rules in the United States, it’s not as easy to share, reuse, leverage other companies’ IP. You can’t just go and take someone’s design and use it to a T.

Whereas in China, those bright lines are not quite so bright and the culture of sharing is a lot more present. What that means is that they have a heck of a lot more leverage and can move that much faster because they’re not worried about whether someone has the patent on that particular design. The hover boards were created by a group of Chinese manufacturing companies all at the same time, in parallel with no one in particular owning the copyright or the patent on it. The end result was a hot product in more than one ways that sold quite a few over the holidays and that also happened to, soon after, fall off the radar because they were unsafe. I think, that points to a future where we need to consider the fact that the material that we’re dealing with as designers, as innovators, as creative class workers. That material that we’re leveraging, that IP, needs to be able to be more fluid, more malleable, more able to be leveraged or we’re going to be left behind, I think. What’s your take on that, Dirk?

Dirk:
I’m not super familiar with the use case or with the business case in China around the hover boards, so I don’t want to draw too many concrete parallels to that, because I just don’t know the legitimacy of it at the end of the day. IP is tricky, because it’s really necessary in capitalism, in a capitalist structure, because people need to be compensated for putting in all the effort in order to be compensated. It’s a sticky wicket, when you have someone developing a cancer drug or an AIDS drug and you have people saying that should be for everyone, it shouldn’t just be for the rich. But the problem is, they’ve developed it to make money. The only way they make money is charging a lot for it.

Jon:
Sure.

Dirk:
If that gets broken down, then they’ll never develop a next great drug, because they know there’s no incentive for them on the back end. Which is just to say that IP is this necessary evil, when you’re in a market based economy like the capitalist structure that we have in the United States and in much of the world. That’s a bit of a straight jacket, in some ways. When everyone’s playing by the same rules, it’s not. But if you have situations where people are side stepping that and again, I don’t know enough about the business case, so I want to be careful. But if people are taking a different approach to it, that is not as locked down, that could certainly provide a risk.

The examples that we can see that validate the different approach being better, really can come out of technology. In the start up community for a long time now, it’s the whole idea of you’ve just got to get it out there, don’t keep it hidden for years until you get it perfect. You need to just get it out, iterate and go, iterate and go, iterate and go. Silicon Valley’s been investing in software and technology using that philosophy for decades now. It’s a given that that’s the correct approach to go from having an idea to ultimately commercializing it in the best and most profitable way. At the same time, our IP structure is based around secrecy, hoarding, the total opposite. There is certainly, likely some logic, some sense in a different, more fluid, more dynamic perspective on intellectual property and how companies treat it and use it.

Jon:
I think, ultimately we’re going to have to find ways that we can be more efficient with sharing our ideas across silos. Whether that’s things as simple as designs or as complicated as these manufacturing techniques that run entire industrial systems.

Dirk:
The sad thing for US companies is we haven’t figured out within the same company, how to work across departments, how to work across silos without horrible inefficiency, human interaction issues. We can’t solve it in a company, so the idea of solving it in some bigger, more holistic way across companies, that’s a way the hell out there.

Jon:
I’m sure it is. I think that IP, whether it’s open or not, really is the material of the 21st century economy. The people who figure out how to best leverage that, whether it’s this, sometimes questionable use with Chinese companies or whether it’s open source projects that we see everywhere around the world or whether it’s somewhere in between the locked down, patented ideas versus the open systems.

Dirk:
But it’s more open. I mean, Wikipedia kicks Encyclopedia Britannica’s ass every day of the week and twice on Sunday.

Jon:
Sure. That’s a perfect example of how the ways that we think about, call it the industrial age thinking versus the digital age thinking, that just shows the clash right there encapsulated. I think, we’ll leave it there for today, but I know I’m going to want to revisit this discussion again, because I find it absolutely fascinating how the creative class is figuring out ways to work together.

Listeners, remember that while you’re listening to the show, you can follow on the things we are mentioning here in real time. Just head over to thedigitalife.com, that’s just one l in thedigitalife and go to the page for this episode. We’ve included links to pretty much everything mentioned by everybody, so it’s a rich information resource to take advantage of while you are listening or afterward, if you’re trying to remember something that you liked.

If you want to follow us outside of the show, you can follow me on Twitter @jonfollett, that’s J-O-N F-O-L-L-E-T-T. Of course, the whole show is brought to you by Involution Studios which you can check out at goinvo.com, that’s G-O-I-N-V-O.com. Dirk?

Dirk:
Follow me on Twitter @dknemeyer, that’s at D-K-N-E-M-E-Y-E-R or you can email me dirk@goinvo.com.

Jon:
That’s it for episode 142, The Digital Life. For Dirk Knemeyer, I’m Jon Follett and we’ll see you next time.

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