The Wall Street Journal (link via Pittsburgh Post-Gazette) recently profiled the efforts of Peter Kim, the new head of Merck Research Laboratories, to shake up the company’s traditional R&D operations. In the process, Peter is drawing fire from long-time company employees for opening up the company’s vaunted R&D labs to outsiders. In 1999, Merck entered into only 10 outside alliances with pharmaceutical researchers. In the three years since Peter Kim has taken over, Merck Research Labs has signed 141 deals. In 2005, the company reviewed more than 5,000 potential partnership opportunities, and it looks like Merck is slowly but surely opening its kimono to the outside world:

“For decades, Merck & Co.’s research laboratories pioneered many of the world’s best-selling drugs, ranging from lifesaving vaccines to treatments for blood pressure, high cholesterol and AIDS. The company’s scientists considered themselves the best in the industry — a pride that often came across as arrogance.

These days, Merck’s scientists swallow their pride under research chief Peter Kim, who spent most of his career in academia. Dr. Kim took over amid a string of drug-development failures at Merck and has made it clear he thinks the company’s own labs aren’t sufficient to replenish its pipeline. He says Merck needs to turn to other companies, both for new drugs and new means of discovering them. “Merck has outstanding science and scientists — and it did when I came,” says Dr. Kim. But, “in some areas, I knew that there were some scientists on the outside who were better.”

Dr. Kim has hired other outsiders for top posts. Staffers have undergone training to improve their interpersonal skills when dealing with outside scientists. Some have reacted with anger to the initiatives and jumped ship… Whether Dr. Kim succeeds will not only sway the fate of an American corporate icon but also serve as a barometer of the pharmaceutical industry’s struggle to stay relevant in medical research. Merck’s strategy is common in the industry: Many big companies with aging blockbusters have turned to biotech firms and smaller drug makers to refill their pipelines.”

Tags: Merck R&D innovation

[image: Peter Kim]

In its never-ending battle for market share with Fed Ex, it looks like UPS is borrowing a page from the design & innovation playbook. While its immensely popular What Can Brown Do For You? marketing campaign has been successful in reminding customers of the company’s world-class logistics and supply chain, the fact remains that most people think of someone like Doug Heffernan from the long-running comedy The King of Queens when they think of the UPS deliveryperson. You know, brown shorts, brown shirt, and a bit of a bulge around the midsection.

That’s all about to change. As Amy Chozick points out in today’s Wall Street Journal, UPS is among a handful of companies that are using sponsorship of Olympus Fashion Week in New York to remind customers of its focus on design and innovation. (In addition to UPS, Olympus, Hershey and Kohler are sponsoring the event.) UPS now sponsors a UPS Hub at the Fashion Week show in Bryant Park, where top designers show off their innovative wares. Last year, for example, ten designers were selected to participate in UPS Delivers Fashion’s Future, a platform created exclusively for up-and-coming designers, where they displayed their wares under a UPS-branded brown tent. What the designers came up with - lots of browns and neutrals in edgy fashions - looks like a real step-up from the traditional UPS uniform. If you check out the print version of today’s Wall Street Journal, there are color photos of models walking the runway in super-cool UPS uniforms (knee-high boots and short shorts for the ladies, macho work boots and sleeveless shirts for the guys). A spokesperson for UPS explains why the company is sponsoring the event: “You wouldn’t put UPS and fashion together. We wanted to put ourselves in a more modern light.” Indeed. When you think about UPS, it’s time to forget about freight forwarding, customs clearance, and all the nitty-gritty details of delivering packages on time.

What can Brown do for you? Well, if it involves supermodels and fashion shows, hey, there’s probably a lot that UPS could do for me.

Tags: UPS brown design fashion

[images: The King of Queens and Olympus Fashion Week]

Computerworld has a great feature on how companies like IBM and Pitney Bowes are generating unique insights about the needs and wants of their users by tapping into the expertise of anthropologists. As the article points out, technologists often bring biases and assumptions to the design process, blinding them to the true needs of users. Sometimes what’s needed is an outside perspective:

“Enter anthropologists, who are trained to ask questions about how people work, how they relate to others, which tools they use and which ones they don’t. That kind of research allows anthropologists to see the world from users’ perspectives. Although IT anthropologists are far from common, some companies and IT shops are hiring them to provide that insight, which in turn helps technologists develop applications and systems that best meet users’ needs. IBM computer scientist Eser Kandogan sums up the relationship like this: A technologist can make a tool usable; an anthropologist can make sure it’s used.”

In one example cited by Computerworld, Pitney Bowes has hired two anthropologists to spot problems and solutions that more tradtional employees might have otherwise missed. In other words, if a client is experiencing a problem with managing the flow of its mail, documents and packages, in steps an anthropologist. In one case, a team led by anthropologist Alexendra Mack studied how small businesses handle bulk mailing. As a result of that research, Pitney Bowes is developing a software application that will help them be more efficient in that process. The innovation efforts are being led by Jim Euchner, vice president of advanced technology and chief e-business officer, who helped pioneer the use of anthropologists back in 1999. (Jim was also a speaker at the recent FORTUNE Innovation Forum in New York)

This focus on anthropology and ethnography is generating interest across Corporate America. According to the former president of the American Anthropological Association, there’s a growing demand for practicing anthropologists. However, as Euchner points out, IT departments need to create the kind of environment that is welcoming to an anthropologist: “An IT initiative that starts with the presumption that work is essentially something that needs to be processed, mapped, rationalized and systematized and that the people need to conform with that — that’s really not a place where an anthropologist will have a voice.”

Tags: PitneyBowes innovation IT anthropology

[image: Computerworld]

In the Secrets of Great Teams feature in the current issue of FORTUNE magazine, there’s an interesting piece by Geoffrey Colvin on why dream teams fail. Colvin examines why so-called “dream teams” comprised of the best talent the world can buy often under-perform expectations. In sports, as in business, there’s more to it than just stacking the deck with superstars. There’s a real need to understand the role of lesser-heralded players and the overarching importance of creating a culture of trust and collaboration:

“If someone tells you you’re being recruited onto a dream team, maybe you should run. In our team-obsessed age, the concept of the dream team has become irresistible. But it’s brutally clear that they often blow up. Why? Because they’re not teams. They’re just bunches of people.

A look at why so many dream teams fail, and why so many of the most successful teams consist of individuals you’ve never heard of, yields insight into the essential nature of winning organizations. As always when the subject is the real-world behavior of human beings, the takeaway includes things we always knew - even though we rarely behave as if we do.

The most important lesson about team performance is that the basic theory of the dream team is wrong. You cannot assemble a group of stars and then sit back to watch them conquer the world. You can’t even count on them to avoid embarrassment. The 2004 U.S. Olympic basketball team consisted entirely of NBA stars; it finished third and lost to Lithuania.”

According to Colvin, there are five basic reasons why dream teams so often disappoint:

(1) Signing too many all-stars instead of role players;

(2) Failing to build a culture of trust;

(3) Tolerating competing agendas;

(4) Letting conflicts fester;

(5) Hiding from the real issues.

Tags: dreamteam collaboration management

[image: The USA Dream Team]

Despite a wave of recent layoffs and a painful financial restructuring program, Sun Microsystems insists that it will continue to focus on innovation at its Sun Labs R&D unit:

“The server and software company opened its doors on Friday to show off dozens of projects in development by researchers here. It focuses on applied research, or the exploration of technologies and concepts that it thinks it can develop into products in a relatively short period of time, said Bob Sproull, director of Sun Labs.

“We want to stay small and be the ‘eyes and ears’ of the company,” Sproull said. Sun Labs is the work place of about 170 people, most of whom are based in California, and has grown fairly slowly by design since the group was founded in 1990. Sun devotes about 2% of its overall R&D budget to Sun Labs, said Greg Papadopoulos, the company’s chief technology officer. That allocation is unlikely to change in the wake of layoffs and a restructuring program announced earlier this week. But the overall amount of money Sun sets aside for research and development is likely to change, he said. Sun’s research and development budget during its 2005 fiscal year was $1.8 billion, down from $1.9 billion in the previous fiscal year.

Anyway, the CNET article has a brief overview of some of the great work being done at Sun, including a next-generation computing system for DARPA, a new media browser for couch potatoes, and a new social networking/video conferencing application. It’s also worth checking out the Sun Labs website for a feature called Contrarian Minds. Apparently, one Sun researcher (Sara Gates) started off with a simple question - “Why Do Cars Have Brakes?” - and ended up with an innovative approach to the problem of identity management.

Tags: Sun innovation SunLabs R&D

[image: New York Times]

The current issue of FORTUNE magazine has a great segment called Secrets of Great Teams - it’s a comprehensive look at a number of great business teams throughout history. In one feature, Adam Lashinsky takes a closer look at the mix of innovative engineering and fashion-forward design that went into the creation of the Motorola RAZR phone. For the project team at Motorola, the task was a daunting one: come up with the thinnest phone ever made that would be as beautifully designed as it was functional. Oh, and do this within 12 months, all while a major competitor (Nokia) is muscling away international market share from you at an unprecedented pace. As Lashinsky explains, the innovative phone was made possible only when the Motorola engineers and designers decided to break all the rules of conventional product development:

“The RAZR - a play on a code name the geeks themselves dreamed up - was hatched in colorless cubicles in exurban Libertyville, an hour’s drive north of Chicago. It was a skunkworks project whose tight-knit team repeatedly flouted Motorola’s own rules for developing new products. They kept the project top-secret, even from their colleagues. They used materials and techniques Motorola had never tried before. After contentious internal battles, they threw out accepted models of what a mobile telephone should look and feel like. In short, the team that created the RAZR broke the mold, and in the process rejuvenated the company.”

There are also two sidebars to the print version of the article - one highlights the eight distinct innovations that went into the making of the RAZR phone (i.e. hiding the antenna in the mouthpiece at the bottom to give the phone a sleeker look) while the other sidebar offers four innovation lessons from Moto:

(1) Secrecy limits distractions. The Motorola team bypassed the wireless companies and even set up elaborate rules to make sure colleagues within the company didn’t know the specifics of the new design. For example, digital pictures of the project were prohibited.

(2) Research isn’t everything. Instead of “mall testing” the phone with consumer focus groups, the design team went with their own gut instincts.

(3) Niche products can have mass appeal. The phone was supposed to be a “high-priced, high-end jewel” to regain market share for Motorola. However, unexpectedly high demand for the product meant that cost of the phone plunged below the $100 mark.

(4) Missing deadlines doesn’t mean failure. Sometimes getting it right takes “a whole lot more time” than expected. The Motorola team finished the project months behind schedule.

Tags: Motorola design innovation

[image: FORTUNE]