I had to write an abstract last week for a talk I’m giving in June, and it pretty well sums up the unsolvable problem to which I have – for better or worse – dedicated my career.  It’s slightly too long for Twitter, but it is still “me in a nutshell.”

Shared Secrets:

Managing Collaborative Business Innovation

Today’s dual imperatives for business model change and external collaboration have leaders seeking better ways to share their business intentions without tipping their hand.

The speaker, John Wolpert, has conducted extensive research and fieldwork in the US, Australia, and Europe to address the problem of finding capabilities, resources, and know-how bound-up inside legally separate entities (corporations, universities, government research institutes) that can lead to important innovations if combined, while avoiding the exposure of information that should not be shared openly with outside parties.

Most leaders today, particularly since the beginning of the current global economic crisis, expect that changing conditions will force them to develop fundamentally new business models.  Further, they believe that working collaboratively on business model innovation with outside entities will be crucial to their success.  However, this presents several problems:

1. The most powerful combinations may be between two or more companies who have no knowledge of each other or who have no reason to suspect that they should be working together.
2. Identifying opportunities for collaboration requires knowledge on both sides about the others’ capabilities, resources and know-how.  But unlike with straightforward supply chain or joint venture development – where the subject domain is well-known and contracts can be written to isolate what information is to be shared – collaborative innovation requires a more fluid, exploratory approach.  This can present a significant risk of exposing information that should have remained secret.
3. If the only information required in finding promising connections between companies were inventions (which the speaker calls the “nouns” of innovation), then the patent system presents one way to share.  However, fieldwork in Australia between 2003 and 2007 conclusively showed that the most crucial information was not inventions but rather the respective parties’ intentions.  (The speaker elaborates a detailed framework for finding and analyzing intentions, the “action-verbs” of innovation.) In fact, business model innovation is entirely constructed of human intentions rather than technical inventions.  But intentions can’t typically be protected.  They are extremely sensitive, and once shared, they are ‘free game’ for outside parties to exploit.

These issues become acute when trying to find collaborative innovation opportunities between parties in different countries, such as government institutes in the US and potential partners in Asia.

None of these issues can be solved entirely, but there are methods for addressing them and increasing the chances for connection and collaborative development that results in favorable outcomes for all parties.

The speaker will present three methods explored over the past twelve years of research at companies including IBM, Strategos, Best Buy, and a consortium of life science firms and institutes:

1. Trusted Intermediation and Arbiters of Trust
2. Joint talent development programs
3. Recent trends in micro-investment

Research methods to study these kinds of issues must focus mainly on fieldwork and business model experimentation.  A series of business experiments described in the presentation were conducted at IBM from 1996 through the present, in Australia and the UK from 2003 through 2007, and at companies such as Best Buy since early 2008.

Findings from these experiments suggest that game theory approaches such as the Byzantine General’s Problem provide a reasonable framework for addressing these problems, but that nuanced management of the resulting innovation programs is critical.  In all cases, specific methods of indirection prove to be crucial for overcoming organizational resistance and trust issues, especially in the earliest phases of discovery, where there is no obvious connection between entities based on external knowledge.

Most ThreePercenters know this, and they crave good counsel to the point of telling everyone they meet about their hopes and dreams. I would argue that this can be disastrous, or at least counterproductive, two out of every three times. The reason is in what Warren Bennis calls “People Judgment” (Judgment, 2007). ThreePercenters are often not equipped to distinguish between several types of go-betweens.

I’ve mentioned in previous posts that innovation is more about constructing a new pattern of intentions rather than simply inventing inventions, but intentions can not be patented. They are fragile and can not be protected from predation or dilution when exposed. Nevertheless, the innovator can not hope to develop strong intentions by working entirely in his own head. The growing intention needs the oxygen of others’ experience and the nutrients that come from mentorship and connection with other peoples’ insights and knowhow.

So in whom do you confide? “People I trust,” you might say. But this is not a sufficient distinction to avoid disaster. You can trust someone to be a friend, to be a good parent or partner, to be an honest person. But even the honest person can be a poor instrument for certain jobs. You can trust someone with your life but not expect them to be able to climb a mountain to save you, if they happen to be a quadruple amputee! Likewise, you may trust a friend implicitly, but if they are incapable of keeping their mouth shut, best to leave them unburdened of your most fragile intentions.

There are three types of ‘go-betweens’ out there: gadflys, gossips and intermediaries. The innovator needs to connect with other people, and on the surface, gadflys and gossips seem to fit the bill. They “know everyone,” and have a reputation for spreading ideas around. They are the pollinators. Many bloggers fill this role. The problem with gadflys and gossips is that their often sizable egos are fed mainly by the satisfaction they get from being in-the-know. And the only way for them to cash-in on that satisfaction is to tell others liberally what they hear. At minimum, a gadfly or gossip will keep a secret but still prance about signaling the adult equivalent of the classic schoolkid’s line, “I’ve got a secret, I’ve got a secret!”

The difference between a gadfly and a gossip is that the gadfly’s ego is stroked most by whom they can claim to know. The gossip’s ego feeds more on what they can claim to know. The gadfly is so universally annoying that they are often easy to spot and can be avoided. The gossip can be harder to identify. Both types, however, can be very useful when you are ready to trumpet your innovation to the world. But beware of them when your intentions are not yet ripe.

What early-stage innovators need most are intermediaries: Intermediaries are go-betweens who are well trained or naturally good at keeping secrets, only making connections with others at the right times and with great discretion. A true intermediary has learned to manage his ego. He derives no personal satisfaction from being the person who knows something or someone. She derives satisfaction by honoring the confidence you have placed in her by providing only the information necessary to make quality connections. An intermediary typically will not tell anyone else about your idea at all. Rather, they will simply make an introduction where safe and appropriate. “Joe, I have a friend you should meet.” A trusted intermediary will require no other prompt to get “Joe” to take action. Joe will know that the intermediary only brings him worthwhile connections. He will know from her example that he must also be a good intermediary himself, not a gossip or gadfly. And he will also know that inappropriately taking advantage of the intermediary’s trust will get him excommunicated from that community. So a good intermediary becomes an arbiter of trust, ensuring that ideas can circulate among the right people who implicitly agree not to do violence to each others’ intentions.

It is crucial for ThreePercenters to know how to spot these different kinds of go-betweens in your search for good connections. I have seen other innovators go completely in the other direction, choosing to make no connections and “skunk works” their projects, disconnecting themselves from everything. This is perhaps as certain to cause disaster as being “outed” too soon by a gossip. With blinders on and no help from others with other vantage points showing you where the landmines are, you will inevitably step on one. Or you may never discover that one insight that completes your idea and makes it really work.

Being open about things is a good policy if you know what you are doing, but ironically it seems that the more closed some innovators are about their ideas, the more they make the mistake of choosing a gadfly or gossip, not an intermediary, as their confidant when they do finally open up to someone.