IXC – Still Making Cooperative Innovation a Reality
Check out IXC – short for InnovationXchange. When it comes to promoting cooperative innovation between people in different companies, IXC is on the vanguard of the cause.
They actually employ people inside a government-backed non-profit and then embed them inside research labs in a variety of capacities. Because they work, from a legal perspective, for the non-profit, they are able to share deep, sensitive information about the companies with each other – on the strict condition that they do not share that information with the companies they are serving unless they can find win-win connections.
Many people in other roles working for single firms, consultancies, and law firms say that they are a kind of ‘intermediary,’ and I’m sure that is true. But what is unique and useful about IXC’s intermediaries is that, unlike consultants and lawyers, their sole function is to find connections between different companies in what is called a ‘multi-party fiduciary’ arrangement. In other words, their legal and moral requirement is to act in the best interest of all companies in the group, not just the company they work for. This is anathema to consulting firms, who erect “firewalls” between consultants working in companies that might potentially compete.
Take an example. Say an intermediary working inside a big pharmaceutical discovers that the lab intends to pursue a new approach to clinical trials that could vastly increase the speed of their FDA approval process. Working with his IXC colleague inside another pharmaceutical, the intermediary discovers that the other company intends to take legal action to prevent the new approach. As an intermediary, his legal and moral requirement is to keep his mouth shut. Pharma A must proceed with the new approach without knowledge of Pharma B’s intentions, and vice-versa. Exposing the firms’ information to each other would inappropriately harm the intentions of one company or the other, and because the intermediaries have a fiduciary role to uphold the interests of both, they must stay silent.
Take another example though. This time, the intermediary discovers that there is a big technical problem preventing Pharma A’s cancer drug from working the way it should in some people. Pharma A is baffled by the problem. But Pharma B has a secret project working in a new field of science unknown to Pharma A, and it can be used to eliminate the problem with the cancer drug . But Pharma B has no cancer drug with that kind of problem and is unclear what to do with the new research. Working together across company lines, the intermediaries find a win-win opportunity to solve Pharma A’s cancer drug problem while solving Pharma B’s research commercialization problem. Lives are saved. Both Pharma’s benefit from working together.
There are many interesting problems with this kind of model. But the promise of the up-side, finding world-changing connections between companies that didn’t even know they should talk to each other, is too compelling to let the problems with the model stop the program. Funding for IXC in the UK and Australia has continued since 2004, so they are starting to show some real longevity (contrary to my own recommendation in 2006, I must admit).
One problem I notice with IXC is that they don’t get to report publicly any of the positive results of their work. Their role, by definition, is secret. But I’m told that if people knew some of the connections that IXC is making, and what those connections are leading to, it would be front page news.
Hi John,
My thoughts turn to starting, developing, and keeping these entities going. Enough of the right people need to believe in them and support them.
Though, isn’t the necessary secrecy a real Catch 22 that exists for many groups who help cutting edge development? Especially when the development pipeline or “results” may take years and years – as it is with Aerospace, Energy, and Pharma.
And outside of faith, how can businesses or governments continue to fund groups or agencies when there isn’t the kind of “in your face” trumpeting like there is when dealing with less secret programs?
Is there a difference in how a private entity can resolve this paradox (like consultants who work in this area) versus a government entity?
In your experience, how can these exchanges work around the secrecy problem and still promote their success to marshal and maintain support?
Carl
Hi Carl,
I think it is a terribly difficult problem. My personal solution is to have a better “day job” for this kind of intermediary function. The goal of UpStart, for example, is to have people in many different companies working to find budding entrepreneurs (see Best Buy’s recent work with us in BusinessWeek) and back very-short-term projects to let them prove the business they want to build.
That’s a hard but straightforward task: “Find talent, vet projects, run projects, report results.”
But it is also the perfect role for an intermediary. It doesn’t have a role in direction-setting of the company (which is the one key no-no for an intermediary with access to knowledge from inside other firms), but it puts the intermediary in direct contact with emerging innovative intentions of people inside the client companies.
The dream for UpStart is to see many companies sending three-to-six teams of 3-4 people each season (we run a maximum of two seasons a year), all working here in the incubator in Silicon Valley – 10 weeks of living together, getting to know each other, building relationships across company lines. The projects themselves will remain private and not shared across company lines, but the people will be here building cross-company relationships that hopefully will pay dividends over time.
Imagine, after a few years of this, one day the UpStart manager inside Boeing and the UpStart manager inside Best Buy get together and say, “Hey, here’s a project that would be terrific if Boeing put two interns in and Best Buy put two interns in. We run it for 10 weeks, and if it goes nowhere…well, it was always about talent development to begin with, and it was only 10 weeks…” While this sort of thing would still present all the old problems of “who owns what,” the hope is that the talent mission, short-term framework, and track record of growing trust over years will create a safer environment for companies to engage each other in this way.
So with UpStart, instead of going to the firms and saying “we have found a potential connection with another company”, UpStart managers (note we don’t call them intermediaries) would be able to say, “Hey boss, here’s a 10 week project we should consider doing with Boeing, and here’s the team we should have work on it.”