John Seely Brown Sees Economic Silver Lining and Lots of Clouds

The innovation whiz and USC scholar talks about dropping old assumptions, finding silver linings and living on the edge during a financial crisis.

John Seely Brown is a visiting scholar at the Annenberg School of Communication at the University of Southern California and a co-chairman of the Deloitte Center for Edge Innovation. He was previously the chief scientist at Xerox Corp. and director of the Xerox Palo Alto Research Center. His research interests include digital culture, ubiquitous computing, Web services architectures, and organizational and individual learning.

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Are there any silver linings to the financial cloud we're under? Every board I'm on is terrified of the financial crisis we are in. Everybody is battening down the hatches. But I ask them, "What are the new opportunities this might provide?" Maybe it's realignments of the industry that we could help accelerate. Let's look at the opportunities on the opposite side of this.

How can you help them do that? The value lies in the questions you ask, not necessarily the problems you solve. Asking a question in a useful and productive way often gets people to discover things themselves. You get stopped by the question, and you think, "Wow, here we have stuck our heads in the sand, paying very close attention to our knitting, and we have not looked at this from the other side." There is almost always a silver lining if you ask the right question at the right time in a nonthreatening way.

What's your advice for CIOs right now? Look around and ask, "What are the big structural changes in the IT industry? How do we use utility computing? What are the new ways to save energy? How do we start to use internal cloud computing and external cloud computing?" For example, if I'm in a start-up today, I'd not want to invest precious money in more servers. I'd be looking at how I could use the Amazon cloud in order to just pay for what I use and at the same time get a whole new kind of agility and scalability.

What is "internal" cloud computing? Shouldn't we be looking at these same ideas for dynamic reprovisioning and monitoring as a way to provide our own services? So, basically the CIO meters out pay-as-you-go, on-demand services to internal divisions. And if you do the internal utility computing right, you ought to be able to seamlessly bring in external resources on demand.

What do you mean by "edge" innovation? Edges are where the action is. There's the generational edge, where kids come up with all kinds of new ideas. They have very different work practices. How can your company leverage those practices rather than just assume they should accept your work practices? Then, at the industry level, you have edge players, often the start-ups. What are they doing that you haven't thought of? Which ones are growing shockingly fast? So, there are generational edges, the company edge, the industry edge, the market edge. And we have geographic edges, like India, and also intellectual or discipline edges. Many breakthroughs today come between disciplines, where multiple disciplines work together.

These edges are all sources of uncertainty. They are risky because they don't have road maps, and yet that's where most of the action is. You can get early detectors of new ideas by paying attention to the edges.

You say companies often react to technological change rather than proactively shape strategies. How can a big, traditional company like General Motors do that? Take health care, where there is a huge need for innovation. Suppose GM said that immediately, every doctor's office, clinic and hospital had to reveal its success measures, and then [GM] told [its] employees [it] would only reimburse them for going to those [providers] with the highest success rates. And they could say, "We'll only use those with electronic medical records, and we want the records shared among all the players in our network."

What are "innovation networks"? In Asia, these networks are constantly constructing new ideas by having hundreds or thousands of small companies in loosely coupled but long-term relationships. Many products, like the iPod and iPhone, come from original design manufacturers [ODM] in Taiwan. What most people don't realize is that when a company like HP wants a new printer or PC, they design the specs, specify the cost they want to pay and then waltz into an ODM and say, "Can you build this at this price?" The ODM knows that this same guy has been to other ODMs who have their own networks, and so you have two or three networks competing to see who can meet those incredibly aggressive specs. One small company bids on the magnesium casing, another on the RF chip, another on the battery and so on. Apple's iPhone got done that way. Steve [Jobs] had the surface design in mind but no notion of the internals.

People say the world is getting flat. But, in fact, the world is also getting spikier. Innovation networks represent tiny, local spikes of capability, which then get wired together to build a product. If you can be the first to find these rapidly developing spikes, then you can use the fact that the world is flat to connect them all together.

Could this Asian model be employed here? Everyone is talking about how to solve the General Motors problem. No one is talking about how they should work with their suppliers. The suppliers are in a vast network and are capable of tremendous innovation, but that's not how GM uses them. But look at Toyota in the U.S. Toyota keeps outperforming us not because they have better workers, but because they have figured out how to take a vast supply network from being just suppliers to being critical partners in innovation. It becomes a distributed-innovation game.

What lessons did you learn from working at Xerox PARC? First, wisdom is often the biggest obstacle to innovation. In a rapidly changing world, the assumptions that underlie our past learning may now be invalid. So, an idea that didn't work five years ago may work fantastically now.

Second, we tend to hold on to assumptions longer than we should. Often, by letting go of old assumptions, whole new vistas are created.

Third, when I was running PARC, I thought we geeks were the geniuses and people who did the marketing were not so smart. But when you have to make real innovation pay off, you often find that the genius is not in the idea creation but in the realization of that idea in the marketplace.

Dossier

Name: John Seely Brown

Title: Co-chairman

Company: Deloitte Center for Edge Innovation

Favorite technology: The iPhone

In high school he was: A champion cow judger

Ambition: "Making technology disappear by designing it so that it perfectly matches your own practices and you become unaware of its existence."

Favorite nonwork pastime: BMW motorcycles

This story, "John Seely Brown Sees Economic Silver Lining and Lots of Clouds" was originally published by Computerworld.

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