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Bridge
Over the River Why
Is There a Robot in Your Future? Helen Greiner Thinks So
Bridge Over the River Why
Wharton Professor David Hsu Investigates Corporate Creativity.
For nearly 25 years,
engineers at Massachusetts-based Bose Corp., a famed maker of stereo
speakers and other audio equipment, quietly toyed with a problem —
improving automobile suspensions — that had nothing to do with their
core
business, sound.
Bose's founder, Amar Bose, suspected that his company's knowledge of the physics of acoustics could also help drivers defeat bumps and potholes. So in 2004, Bose introduced a startling new product — an automobile suspension that abandoned traditional liquid-filled shock absorbers in favor of high-voltage electrical coils and magnets. The suspension is ready for the mass market, and Bose is negotiating with carmakers about making it commercially available.
Bose's breakthrough exemplifies a technique known as "knowledge bridging" — taking expertise from one field, applying it to a completely different one and thus creating an unprecedented product or service.
A new study by David Hsu, a Wharton management professor, suggests that knowledge bridging can help companies bring products to market faster and raise money more quickly. And according to Hsu's study, "Knowledge Bridging by Biotechnology Startups," all a firm has to do to become a knowledge bridger is hire the right people and give them the freedom to follow their curiosity and make mistakes. Granted, that's far easier to say than to implement.
Hsu, an expert in entrepreneurship, has long been fascinated with the history of invention and the tension within companies between making big leaps forward and taking care of everyday business. How, he wondered, could firms position themselves to make revolutionary advances when they needed to focus on tasks like tweaking existing products and driving down costs? His pondering led him to one of his alma maters, Stanford University.
Recombinant DNA technology, the foundation of the modern biotechnology business, had been invented there. The university owned the patent underpinning it. Any firm could license the patent, and many did.
These companies provided a unique laboratory for Hsu. They were, by necessity, technology-intensive enterprises that had filed subsequent patents of their own. And their patents were genealogies of their technological roots, showing where they found their inspirations. Hsu and his co-author, Kwanghui Lim at the National University of Singapore, figured that the knowledge bridgers among Stanford's licensees would cite a broader array of patents in their own patents than other companies. And since patents also list inventors and their affiliations, they would show scientists' movements among firms.
Knowledge bridgers, the professors figured, would hire researchers with diverse backgrounds, which would spur intellectual cross-fertilization. They'd also sniff out external smarts by entering into corporate alliances or working with venture capitalists. Besides wielding wallets stuffed with cash, venture investors carry Palm Pilots brimming with contacts. "Reputable venture capitalists connect their portfolio companies to external resources, such as the capital and labor markets, and they act as a source of valuable knowledge, facilitating the entrepreneurial firm's development," the authors write. Two databases gave Hsu and Lim information on corporate alliances and venture investments.
Identifying creative firms and understanding how they acquired their smarts was only the first step. Hsu and Lim then needed to figure out whether knowledge bridging gave firms a performance or financial edge. After all, in the corporate world, wide-ranging curiosity does little good if it doesn't eventually yield cash.
After collecting and crunching their numbers, Hsu and Lim concluded that knowledge bridging does pay. The knowledge bridgers whom they identified were more likely to have a drug approved by the U.S. Food and Drug Administration and more likely to raise money in an initial public offering than companies that didn't bridge.
Not all of Hsu and Lim's hypotheses about how firms bridge fields of learning panned out. Neither the number of alliances that a firm entered into nor the amount of venture capital it received pointed to whether it would be a knowledge bridger. Only hiring a diverse group of researchers seemed to matter.
Though the study didn't delve into human resource practices, Hsu suspects that knowledge bridging companies do more than just recruit brainy folks from a variety of fields. Once these workers arrive, firms have to pay them well and, just as important, offer a stimulating environment. "Maybe creative people don't work somewhere just to get the most money," Hsu says. "Maybe they want a long leash or a budget to go to cool conferences or a lack of restrictions on who they can work with."
Other ways that companies can try to spur knowledge bridging include setting up information clearinghouses, where researchers can share ideas and solicit advice on projects, and hosting brown-bag lunches and outside speakers on technology topics.
Maybe the most promising, but also riskiest, step is giving researchers unstructured time to work on projects that pique their curiosity. "It's like trying to replicate the academic environment," Hsu explains. "3M and Google have done that. The danger is that people play Tetris with that 20 percent of their time, and there's no accountability."
Even if employees don't play video games during unstructured stints, their intellectual wanderings may not yield products. "You've to be prepared for some failure," Hsu points out. "Sometimes, employees will try things that won't work."
Even so, Hsu and Lim are "bullish on the payoffs of knowledge bridging," Hsu says. Simply put, in their sample of biotechnology firms, the creative companies performed better.
Still, Hsu isn't ready to tell managers to overhaul their internal policies and procedures. Hiring smart folks and giving them lots of liberty would seem to make sense in many fields, but Hsu and Lim studied only biotech, and it's possible this process works differently in, say, software or telecommunications.
More important, the two scholars only studied half the corporate equation, that is, the potential to improve performance and, in theory, revenues through greater creativity and productivity. Their study gave them no insights into how much it costs for a company to be a knowledge bridger.
"We can only see the successful patents, not the ones that were turned down," he explains. "And we don't observe the internal policies that companies put in the place, and the formal costs and management costs of putting those in place. Those costs could be significant, so that's why we hesitate to make cost-benefit statements."
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