Explorative Innovation

Breaking into new markets through innovation The Bio to BiT experiment at STMicroelectronics by Enrico Scaroni

Breaking into existing markets through innovative technologies and solutions: is it a straightforward question of "migrating" skills and technologies from a more to a less advanced market? Or is there more to it than that? How can an outsider break into and succeed in unknown territory? What learning routes and initiatives for generating new knowledge must be embarked upon? What are the necessary conditions for launching and sustaining them? And how are the processes of "innovative exploration" governed? The story of STMicroelectronics’ Bio to Bit programme can help us answer these questions and identify and specify some of the central questions connected with the processes of innovation. The article is divided into seven chapters: 1. The main objectives and results of Bio to Bit. From an experimental programme to the formation of a new Division. 2. The context. The factors that led to the conception and launch of the programme. 3. The gestation of Bio to Bit. How it was defined in practical terms and how the necessary conditions for launching it were created. 4. Its conception and launch. The design of the programme model, the acquisition of the necessary primary resources, its first steps. 5. Its development. The process of evolution/transformation of ideas, work groups, skills networks and the programme design. 6. What did we learn? The main learning contributions relating to innovation processes triggered by the development of the programme. 7. The key components, main critical factors and limitations of the experiment. Strategic/organisational issues, critical phases and primary practical suggestions for organisations interested in trying to replicate an initiative of this type.

The main objectives and results of Bio to Bit. Conducted between May 2007 and April 2008, the STMicroelectronics experimental Bio to Bit programme gave rise to a wider project (ST TLAB project) aimed at building business innovation skills and capabilities and developing new application solutions for existing but as yet unserved markets. The programme focused on the Health Care and Wellness markets, in which ST has no more than a marginal, indirect presence. The main objectives of the programme were: • To construct the basis of a system (organisational instruments, contexts, processes and models) capable of continuously promoting, generating and sustaining initiatives of innovative exploration, even in fields other than those to which the programme relates; • To construct an initial ecosystem of useful relationships, skills and capabilities for business development in the Health Care/Wellness sector; • To produce a limited number of concepts capable of opening up tangible business opportunities in the medium term. Bio to Bit was a pilot programme aimed, in the first instance, at verifying three working hypotheses: • It is possible, within a sufficiently short and defined timeframe, to build several robust "new business" proposals, which can act as an initiator and subsequent driver of more ambitious and determined initiatives for breaking into new markets; • These results can be achieved with modest commitment of resources, thanks to the simultaneous development of a varied and extensive range of exploratory micro-missions; • For this to happen, however, it is first necessary to create several empowering organisational conditions: o It is necessary to set up an exploration team with a wide variety of skills, made up of highly motivated people given the freedom to work autonomously; the teams must be capable of learning quickly; to do so, they must be allowed to experiment and "make mistakes", and they must also integrate with external figures; o The teams are not able to “go it alone”; they need to be supported and facilitated, both internally (removal/overcoming of organisational obstacles and barriers), and externally (access to a variety of information and skills). Generally speaking, the results achieved were gratifyingly positive. From a "business" point of view: • A variety of initial maps of particular sub-areas of the Health Care/Wellness field were constructed; • For each of these, at least one innovation platform was defined and one or more robust innovative concepts were built; • An initial network of "domain skills and capabilities" was launched and consolidated. This in turn appeared to be potentially capable of generating new proposals and business opportunities; • These results contributed to accelerating the decision to set up a new Business Unit at ST focusing on the domain; • The new Business Unit decided to launch several development projects which refer expressly to the concepts generated by the programme; • In the near future, these projects will involve various external entities (university research centres and partner companies). From an "organisational" point of view, the results obtained broadly confirm the robustness of the initial hypotheses, and the initial goal (of creating favourable contexts within ST, with low commitment of resources, for exploring and generating innovation in new areas) can be considered to have been achieved.

The context of the programme A brief overview of STMicroelectronics

STMicroelectronics is one of the world’s largest manufacturers of semiconductors, occupying fifth place in the global ranking. It has over 45,000 employees and numerous production sites and research centres spread across three continents: Europe, North America and Asia. Its turnover (approximately 10 billion US$ in 2007) is divided between five key market sectors/segments of this industry: Communications (37%), Consumer (17%), Computers (16%), Automotive (15%) and Industrial (15%). The core of its organisational structure consists of the five SBUs (defined as Group Products) relating to these markets. ST can chiefly be considered as a componentry supplier; in other words it supplies elementary microelectronic components, or at most sub-systems, which are then integrated into systems/products conceived, designed and developed by its customers. Its distinguishing characteristics include the possession of a broad portfolio of products, the majority of which are protected and supported by conspicuous and varied portfolios of proprietary patents and by equally broad and consolidated foundations of knowledge and technological know-how. ST has always invested in R&D and continues to channel substantial resources into it. From an organisational point of view, the R&D undertaken by the company can be divided into three types: divisional R&D (within the previously mentioned SBUs) aimed at developing effective solutions for the new requirements emerging from the markets and customers served; technological R&D focused on innovation relating to internal production processes; and R&D focused on pioneering technologies, which operates with considerable freedom and with no particular bonds/links with current businesses. Exploring new sales markets

Between 2005 and 2006, ST’s Corporate Strategy decided to ramp up the substance and continuity of initiatives aimed at exploring "new" emerging sales markets/sectors (e.g. Energy, Domotics, Health Care, Mobility). These are markets which have already been pervasively although largely indirectly penetrated by microelectronics, through the supply of components for generic systems (IT solutions, TLC and process automation). Few microelectronics companies offer specific solutions for these markets, and those that do are generally hyper-specialised players operating in very particular niche markets. The evolution of general conditions and the more recent developments in technological research, however, appear to be opening opportunities on two fronts: not only are extensive, new and as yet relatively unexplored application areas emerging, but these also offer the possibility (which is now almost non-existent in historic markets) of making the leap from component supplier to system supplier and thus recovering significant scope for adding value and enhancing profitability. Corporate Strategy is currently launching various exploratory initiatives in parallel but with only a limited degree of coordination. between each other. These can be divided into four main categories: sector analyses and surveys of a strategic nature; the building of a solid network of scientific and sector-specific experts in order to provide access to the specific know-how of those markets; sampling conducted chiefly on small but advanced and innovative companies; and lastly, the harnessing of internal resources by means of a bottom-up approach (for developing innovative proposals). This last category encompassed the design, in the spring of 2006, of the I-LAB project, which spawned and generated the Bio to Bit programme. The I-LAB project

The aim of the I-LAB project was to construct and develop a system within ST capable of generating business innovation (new business) know-how and proposals, continuously and from the bottom up. This project focused particularly on sales markets which were new to ST. The development of these capabilities/proposals was then to be linked and integrated with the parallel top-down activities undertaken directly by Corporate Strategy. The I-LAB project was based on six fundamental considerations: 1. ST has an extremely varied and extensive portfolio of technologies and equally varied and extensive know-how and capabilities; a large number of these technologies, if used in an integrated manner, have considerable potential for use in new emerging 9 markets; 3. ST’s SBU-based structure, although highly effective in other respects, restricts and under-uses these assets, as a result of focusing them on its own spheres of business; 4. The R&D structures have solid skills, but of a strictly technological nature; 5. Exploring and innovating in new territories, however, requires a variety of skills and capabilities to act and interact with these; 6. It is therefore necessary to create a "space" where this is made possible and facilitated; an organisational place where the unexpressed value of ST can unfold and increase, by integrating with external know-how. The design of the I-LAB project was deliberately kept general in nature, with a view to making it more specific over the course of its development. Its main features can be defined as follows: • It must be an organisational context/place in which transversal innovative exploration groups, open to external parties, can form and aggregate; • To facilitate the formation and growth of these groups, specific programmes must be defined and launched; • Exploration groups and programmes are to be assisted by a small support and facilitation nucleus, known as the Catalyst Team; • The various programmes must find several sponsors from among ST’s Management Teams, which shall be required to

co-finance them and provide the core participants necessary for launching them.

The "I-LAB context" must meet several essential conditions: • Ambiguity. By promoting divergence/non-conformity, this aids the development of exploratory missions in several different directions; • Variety of skills. The exploration of unknown territories makes it necessary to maximise learning opportunities. These can be significantly increased by setting up work groups involving a varied range of skills, interests and perspectives. But that’s not all: mixed work groups also facilitate cross-fertilisation and the re-deployment of new combinations of skills in pursuit of new solutions; • Redundancy of resources. An implicit and integral part of exploration is error. Error is the central source of learning and a driving force behind new knowledge. But in order to be able to "make mistakes" (and thus learn) it is vital to have the necessary resources first to survive the error and thereafter to evolve as a result of it; • Autonomy. In order to be able to operate in unknown territories, the work groups must be capable of taking decisions and acting according to what the contextual conditions require on a time-by-time basis. Their capacity to adapt and operate cannot therefore be rigidly constrained or pre-determined; • Instability. Stable contexts obstruct the production of innovative solutions and promote conformist behaviour. By keeping the context ambiguous and reducing the consolidated institutional and organisational anchors the work groups are forced into a state of considerable instability. They therefore make concerted efforts to find and/or build new solutions, capable of ensuring greater solidity and hence higher probability of survival and evolution; • Voluntary involvement/Self commitment. To operate in conditions of high ambiguity and instability, it is essential to be highly motivated and highly proactive. A programme is defined as an "activated context" and a "generator, activator and integrator of several exploratory missions with low commitment of resources" all of which pursue a specific domain (market to be explored, defined broadly and ambiguously). The exploratory missions must be made by small groups of "volunteers", recruited from the various organisational units of ST. Each programme must have limited objectives and duration. Approximately nine months to: Build the initial fundamental knowledge and a network of the necessary skills and capabilities to tackle the markets in question; • Formulate an initial, limited set of innovative proposals (business concepts) to submit/"sell" to the Divisional Managements interested in developing them. The “programme model” is based on two fundamental assumptions. The first is that the resources initially at the disposal of the various exploratory missions cannot be sufficient to achieve the objectives set; at least the know-how specific to the "domain" (i.e. the territories to be explored) is absent. The possibilities for the exploratory groups to fill these gaps internally, chiefly through the acquisition of information, are very limited. To succeed, they must therefore: • Develop learning synergies; in other words, systematically share the results in progress obtained by the various missions; • Be capable of attracting and integrating new skills from within the company and more particularly from outside sources (parties already operating in the territories to be explored). The second is that error (and hence experimentation) must be considered as a vital resource for developing learning and hence "new knowledge". The ability continuously to design/implement experiments and

learn from mistakes must be built quickly by the exploration groups. The Catalyst Team is the only permanent structure of the project. Its main functions are as follows: • To formulate the macro-design of the programmes; • To attract internal sponsors and build the necessary resources for their launch and initial development; • To support the exploration groups involved in the programmes by: o Transferring methodological and process know-how; o Providing opportunities and instruments for sharing experiences; o Constructing and activating skills networks capable of facilitating the development of ideas and proposals; o Identifying domains for experimentation and setting them in motion; o Building a "protection network" for safeguarding the volunteers in the event of errors or failures; o Taking appropriate action to prevent possible conflict with commitments deriving from ordinary duties; o Promoting continuously among the Management of ST the results in progress obtained by the work groups. • If necessary, re-orienting the work of the groups in the directions that appear to be most coherent with the strategic assets of ST; • Attracting and involving the Divisional Management with the results in progress of the programmes, with a view to ensuring their acceptance of the final proposals.

The criteria that a Business Concept must meet

The services of the Catalyst Team

The gestation of Bio to Bit I-LAB Catalyst Team formed

The first nucleus (three people) of the I-LAB Catalyst Team was formed in the spring of 2006. In the months that followed, the Catalyst Team worked in parallel on three fronts: constructing the "programme model" more precisely, promoting it with the ST Management teams potentially interested in sponsoring it, and identifying the area of interest on which to focus the pilot programme. Defining the first programme model The task of defining the first programme model took the Catalyst Team approximately five months. The initial proposal was presented to the various Management Teams of ST and reviewed several times in order to take account of their specific indications. In July 2006, a hypothesis was reached which met with the agreement of the Management of Technological R&D and the Management of ST Italia. The proposal involved four main phases: 1. 2. 3. 4.

Generating a broad portfolio of ideas and grouping them into different "exploratory missions"; Exploring the domain extensively, developing ideas into Business Concepts, and initial selection thereof; Strengthening the business concepts and subjecting them to a second selection process; Further development of the remaining Business Concepts and their "sale" or release to the Management Teams interested; • A group of "voluntary" explorers, with a wide variety of skills, totalling 30-50 members; • The willingness of the Management to authorise each “explorer” to dedicate at least 5-10% of his/her work time to taking part in the programme;

• Four Innovation Labs, i.e. intensive work sessions lasting three days and constituting structural elements of the programme, which must open and close each phase; • The intervals between the Innovation Labs are dedicated to developing the various "exploratory missions", managed autonomously and on a self-organising basis by small, dedicated groups, assisted by the Catalyst Team according to an agreed support plan. This model included three elements which were subsequently reviewed: • The development from the original idea to the final business concept was still seen as a linear process; the hypothesis was that this would take place through gradual fine-tuning and enhancement, without evolutionary transformations; • The "exploratory missions" were considered as clusters, making it possible to keep several innovative ideas together, making them work together and thus forming exploration groups; • The design was still highly structured and permeated by a directive approach (selection of participants, work methodologies, agreed work plans, assessment and selection of business concepts). Before subscribing to the proposal, the two Management Teams asked to verify by experimentation two of its pivotal elements: the possibility of recruiting volunteers, the effectiveness of the Innovation Labs. This gave rise to the idea of performing a lab test, denominated Design Lab. The Design Lab

The Design Lab was held in October 2006; its results were vitally important to the subsequent development of Bio to BiT. The Catalyst Team succeeded in obtaining the permission of the two Management Teams to launch the programme.

The programme model

In the Lab, two methodological pillars took shape: the principle of "attracting and integrating skills" and the approach by "iterative/recursive cycles". Thirty-five technicians and executives of high potential and diverse origin took part in the Design Lab. The Lab was divided into three modules. The first was dedicated to identifying key elements and phases in the innovative/exploratory processes. The aim of the second was to formulate proposals for possible "exploration domains". The third took the form of an "Innovation Fair": within the framework of the Lab, the participants, in small groups, set up various "display stands" from which they presented their proposed "domains" and programme model. About twenty high-level managers of ST were invited to the fair. As in a real trade fair, the "public" was free to move among the various stands and ask for explanations and information. The fair was a big success and this had a highly motivating impact on the participants. The Lab closed with a debriefing. The Catalyst Team and groups analysed the results achieved and the overall experience of the Design Lab. Out of the eight domains presented at the fair, it was decided to pursue two of them. The programme models formulated by the groups were then examined, and the strengths common to the various proposals were identified. The model drawn up by the Catalyst Team was then presented and its macro-design was re-shaped. Lastly, assessments were made of the Lab and the methodologies used: almost all the participants expressed

a very positive opinion and a strong interest in taking part in any innovative exploration programmes.

The launch and take-off of the Bio to BiT programme The Catalyst Team and Management Sponsors dedicated the winter of 2006-2007 to selecting and qualifying the domain, defining the model and programme design in further detail and attending to all the organisational groundwork to enable it to take off. The choice of domain focused on the Health Care/Wellness area, which had already been identified as significant during the Design Lab. The vision of the Health Care/Wellness domain

The Design Lab summed up its vision of the future of these markets in the pay-off "From centralized Health to distributed Wellness". This was based on the notion of simultaneous convergence of six key trends: • An increase in average age and life expectancy; • A growing need to contain the explosive dynamics of health spending; • The gradual re-definition of the Health Care system as a broad concept of Health & Wellness, in which cure, treatment and wellness are discrete but interconnected elements of a single system; • The polarisation, in two main directions, of the places of production/use of services: on the one hand, few centralised, highly specialised facilities for handling highly critical cases; on the other, gradual and widespread decentralisation of more routine activities to peripheral points of care and/or individuals; • The development of solutions, services and products capable of acting in an increasingly precise, targeted manner; • Moving beyond the general/specialist model and developing new systemic/holistic approaches, capable of “reconstituting” specialised operations and skills into integrated services and instruments. The new release of the programme model

On the basis of the contributions collected from the Design Lab, the model was reviewed again. This time, its actual conception was changed. • We then make the transition from a linear/sequential model (the four phases) to one based on several iterative/recursive cycles of "knowledge creation"; • A "knowledge creation cycle" is divided into different steps: o First divergence: a large number of ideas is generated; o First convergence: the ideas are grouped into clusters, and an innovation platform is then formulated for each cluster; o Second divergence: the platform is sorted/divided into particular Business Concepts, by reviewing/integrating the original ideas contained in them; the first exploratory missions are developed and the Business Concepts are tested by means of an initial cycle of tests; o Second convergence: the results of the explorations and the any particular "discoveries" are reported; the starting platform is verified, including the data and discoveries that emerged from the explorations; o Third divergence: the platform is reviewed and one or more hypotheses for "new platforms" are generated; o Third convergence: a new meta-model capable of including the new hypothetical platform is built; o Fourth divergence: the platforms are divided into their component parts, the Business Concepts are reviewed; and the new Business Concepts are tested by launching new exploratory missions. The process continues through its new iterations until the construction of the Business Concepts is “robust” (i.e. they look capable of meeting the validation criteria set out in Chart 6)

Flow chart of a "Knowledge creation cycle"

• The concept of "exploratory mission" is transformed and takes on strategic importance. The original "exploratory mission" grouped several ideas together in order to facilitate the formation of groups and the creation of exploration and learning synergies. It is replaced by the "innovation platform", which now means a meta-concept of a new nature. This always originates from the grouping of several similar ideas, but offers a different and broader perspective (of a higher order of logic), capable of bringing about a significant improvement in the quality of innovative proposals included in it and in turn becoming a generator of more new business concepts (division into several variants and specific features of the platform, modified at the end of each knowledge creation cycle); • By the end of each cycle, two specific directions for action are highlighted: the alternation of opportunities for divergence (search for variety) and convergence (consolidation of new models and their collective validation and legitimisation); the continuous and recursive transition between macro level (meta-concept/platform) and micro level (the idea, the concept), which dictates the need for continuous and reciprocal re-definition of the two levels; • Each cycle opens and closes with Innovation Labs. These provide an opportunity for collective elaboration of the platforms, re-generation of ideas and business concepts, and the drawing up of lines of experimentation; the intervals between Labs, meanwhile, are dedicated entirely to the development of tests and checks. • The configuration of the programme was open and flexible. For the participants: no attendance requirements, total freedom to come in and go out. For the work groups: possibility of co-opting both internal and external new elements and freedom to self-organise. The overall work plan was now defined as a "macro design", which proposed only a schedule of Labs and a few guidelines and patterns of development; • An evolutionary type of model was adopted. All externally directed procedures for assessing and selecting ideas were eliminated. Only those business concepts/platforms/work groups capable of surviving and evolving on their own merit would proceed through the programme; • The activities of the Catalyst Team were brought into focus. The primary focus of these activities must be on the construction/launch of networks of skills and fields for verification/experimentation; their secondary aim is to ensure progressive involvement of the Divisional Management (the final customers of the programme).

Chart 6

Source: assessment questionnaire given to the programme participants

The recruitment of volunteers

The process of recruiting participants started in March 2007. By agreement with the Management Sponsors, a list of about 400 candidates was drawn up. The list was compiled according to very simple criteria: age (between 30 and 50), length of service with the company (at least 3 years), high potential. Each candidate was sent the programme notice by the Management Sponsor, together with an invitation (without obligation) to apply. Candidates were asked to apply by completing a "personal profile" form, and, where applicable, an "idea form". The recruitment phase closed at the beginning of April 2007, with 40 candidates and 15 innovative ideas. The candidates came predominantly from the R&D and technical/production units of various sites in Italy. No selection procedure was held: all the candidates were admitted and invited to the Programme Opening Event. Programme Kick-off: the "Health Care 2015" Conference The programme got under way at the beginning of May 2007. To support the launch, the Catalyst Team held a conference entitled "Health Care 2015". The main objectives of the conference were to: • Provide participants with an initial set of information and expert opinions aimed at guiding and steering the work of the programme; • Form an initial network of relationships with experts outside ST and with the major Italian medical/scientific research centres; • Attract the interest of ST’s Management in the potential future business opportunities presented by the Health Care/Wellness sector; • Reinforce the participants’ perception of being the key players at the heart of an initiative of strategic interest to the company (with all the opportunities for career development that this brings with it). About a dozen of the most authoritative experts from Italy’s major medical/scientific research centres were invited to contribute, together with several academics specialising in health care economics. The audience consisted entirely of ST personnel: a large number of corporate and divisional managers, heads of unit already involved in the Health Care market, several of the leading internal R&D managers and experts and lastly the group of programme participants. First of all, each speaker was asked to outline, for their own specific discipline, the key trends and biggest challenges that will shape the medium to long-term profile of the world of Health Care, and consequently the role that new technologies, with particular reference to microelectronics, might play in such a future. The conference alternated the contributions of speakers with round-tables within the framework of which experts and ST’s management were able to talk to the speakers and examine possible emerging areas of cooperation in greater depth. The final overall outcome of the conference was highly positive, especially in terms of the motivating effect it had on the programme’s participants.

Programme development The first Innovation Lab

The first Innovation Lab was held on the day after the conference. The opening day was dedicated entirely to generating new ideas. By making repeated use of a variety of techniques, about 120 ideas were produced and outlined. They were not assessed, analysed or discussed. The next day was dedicated to building the platforms and work groups. The participants were divided into small groups. Each group was given the entire portfolio of ideas generated the previous day and was tasked with identifying a moderate number of groups or clusters of ideas. No instructions were given regarding the grouping criteria to adopt; the groups worked in parallel. The various hypotheses were then discussed in a plenary session. At the end of a long and arduous session, sufficient consensus was reached on five platforms: • In vivo. Systems and devices to be implanted, introduced or positioned in or on the human body; • In vitro. Systems and devices for laboratory diagnostics; • Easy Lab. Systems and devices (chiefly diagnostic) which can be worn, carried around, or integrated into commonly used objects; • WeFit. Systems and devices for monitoring the physical fitness of healthy, active people; • Demetra. Environmental monitoring systems (water, air, light, food). After defining and describing the platforms and re-clustering the ideas (20 to 35 ideas per platform), work started on building the groups. Each participant was left free to choose his/her own reference platform.

The Lab closed with the "platform groups" planning their "first knowledge creation cycle". First of all, each group described the distinguishing features of each idea/product taken into consideration. The outcome is a chart, in which a first major transition is made: from "product idea" to "business concept". At this stage, however, the description of the concept is still primitive and incomplete, and is not backed up by any objective evidence. Starting from an analysis of the individual "concept charts", each group defines its own general research/experimentation plan, and similarly, by integrating the various platform plans, draws up an overall work plan for the first cycle (up to the second Innovation Lab). The Catalyst Team draws upon this to define its own assistance and support programme. This stage reveals the first evidence of the effectiveness of the platform and domain concepts; many of the activities/needs envisaged at individual concept level are common to or at least broadly overlap those expressed by others; the same applies when we go up by one level of logic and consider the different platforms. Not only do we obtain major synergies and operational economies but, perhaps more importantly, we are able to maintain and expand the scope for variety and transferability, which later prove to play an essential role in the evolution/transformation of the concepts and platforms. The first Innovation Lab marked the start of the operational activities of the programme. From this moment on, Bio to Bit, while remaining a cohesive unit, gradually diverged into different "stories", each linked with the evolution of the various innovation platforms and respective work groups. While taking into account the individual peculiarities expressed by each group, it was still possible, after the fact, to trace the emergence of a common general model of development. The first cycle (May- July 2007)

The first cycle was characterised by an almost exclusively "technological" approach. Main activities. The main activities were divided into three successive steps. The first was geared towards building an initial set of basic knowledge regarding the various scientific disciplines that pursue the "health question" (medicine, biology, biochemistry, nutrition, etc.). The second was aimed at making contact with the health specialists, in the shape of specialist physicians and/or scientific researchers, for the purpose of verifying the working hypotheses and gaining a clearer understanding of future requirements. The third was aimed at examining the portfolio of products/technologies already existing or under development at ST, to ascertain whether any useful technology and/or know-how was available internally. How the concepts, platforms and groups evolved. At the beginning of the first cycle, the groups autonomously structured themselves into an initial form of organisation (generally flat, with no hierarchy or form of specialisation), with minimal forms of coordination (conference calls/weekly or fortnightly meetings), and internal communication (e-mail and blogs). They then started by making an initial review of the portfolio of ideas. All the groups, over the course of just a few weeks, focused their attention on a limited set of concepts (5 to 10 per group), the majority of which were already very different from the original concepts (development of new concepts through the integration and development of various original ideas). With a few exceptions, the main characteristics of these first phases were the "functional specialisation" of the proposed concepts (devices which meet a very specific need), the still strictly technological nature of their focus, and their as yet individual dimension (proposals were made by individuals, which then gained the consensus of the group or part of the group). How the Catalyst Team and networks evolved. During this phase, the Catalyst Team was reinforced and expanded, to include three experts: two ST managers from the R&D areas (for technological support), and one external consultant with general knowledge of the field of Health Care and more specific knowledge of diagnostics. The know-how network then gradually expanded further to include medical/scientific research institutes and hence various types of specialist and general physicians. The second cycle (July-November 2007)

The second cycle can be broadly defined as "market-driven" . Main activities. The second cycle focused on three different directions: market analysis (with particular reference to final customers/end-users and their models of purchasing/consumption), analysis of the supply (solutions currently available), analysis of regulatory systems (legislation). The introduction of these new perspectives of analysis triggered a substantial "transformation/evolution" in the platforms and business concepts. This is due to three key factors: 1. The "end-user perspective" introduced the concept of multi-functionality. It soon became apparent that the concept of “health/physical performance” is linked with the parallel monitoring of various parameters (and hence requires the integration of various measuring instruments/devices). Secondly, issues and problems connected with purchasing behaviour and, above all, patterns of use came to the fore. In particular, the need to integrate ancillary/secondary functions into the solutions proposed (e.g. music/entertainment for fitness, portability and interoperability for personal diagnostic systems). Thirdly, the complexity of the purchasing system and the variety of players involved in it became apparent (e.g. end-users, general practitioners, specialists, diagnostic centres, pharmacies, the health system and policies/rules of payment and reimbursement); 2. The competitive perspective highlighted the fact that a large proportion of the original proposals put forward by the work groups were already on the market and/or covered by patents.

By contrast, abundant opportunities emerged for the development of integrated, multi-purpose solutions; 3. Lastly, the regulatory and legislative aspects opened up several questions. The most important of these were linked with processes of authorisation/certification of new products, the civil and criminal liability of the manufacturer, and the systems of payment and reimbursement associated with the various types of product and their applications (treatment, prevention, wellness). How the concepts, platforms and groups evolved. As previously explained, the acquisition of this new information prompted a comprehensive re-think of the concepts and platforms. In particular: • From specific "product solutions" we moved onto multi-purpose, integrated systems; • The various new solutions gradually distinguished themselves from each other by configuration ("business", "professional" and "consumer" markets); • Lastly, the various configurations connected with each other through systems of communication capable of ensuring interoperability and the transfer of data. As a result, the number of business concepts being developed fell (generally to not more than 3-4 per platform); two platforms (In vitro and Easy Lab) collapsed and merged into one totally new and re-defined platform (I-Care); Demetra, meanwhile shifted its focus towards food quality monitoring applications. The groups were transformed; various participants dropped out (generally those with a more marked technological leaning), and other very specific skills (marketing and project management), were co-opted. How the Catalyst Team and networks evolved. This change of course was assisted and facilitated by the Catalyst Team, both by welcoming two new company experts into its ranks (Patent Department and Legal Affairs), and by bringing into play a new network of skills and experience from outside ST. The focus shifted from medical/scientific specialists towards companies and organisations which have direct contact with consumers and their problems. The number and variety of contacts and meetings with external entities parties was significantly stepped up. The third and final cycle (December 2007-April 2008) The focus of this cycle can be defined as the "search for fields for experimentation and legitimisation". Main activities. At this point, each group focused its attention on the concepts considered to be the most robust and promising: 1 or 2 of these remained for each platform. It soon became apparent that we had reached a limit threshold: for further development and any significant advance in quality, we needed greater depth of knowledge of the domains in question and a practical testing ground for the solutions, which had thus far been defined “on paper” only. The need to bring in external parties and forge development partnerships became clear. But this could happen: the concepts being developed had not yet obtained "internal legitimisation" (a Division which had approved them and appropriated itself of them), the groups had no decision-making power and the choice of partners was a strategic question. The feeling that the process had ground to a halt took a heavy toll on the motivation of the participants and hence on the cohesion of the groups. This was an arduous, highly political phase with no clear direction, which prompted the Catalyst Team to raise its profile and take steps to stimulate the emergence of a "robust internal clientele with concrete intentions". Various conditions then converged and reached maturity, to the point that the Top Management was able to take the decision to form a new Business Unit focused on the Health Care/Wellness domain. The programme thus found its "internal client" and was finally able reach a positive conclusion. How the concepts, platforms and groups evolved. With the start of the third phase, a fresh cycle of transformation/evolution took place. The groups focused on the few business concepts now deemed sufficiently robust. Paradoxically, the adoption of a more focused perspective brought to light a new level of complexity: for each concept under examination there were perceived to be various types of potential consumer and hence various possible product and business model configurations. The groups “discovered” market segmentation. The concepts became "second-level platforms" capable of containing and generating a wide variety of possible solutions. The groups adopted a more planned and structured approach. Participation tended to be divided between three levels: a small core of leaders (2-3 people); a second tier of active participants, generally focusing on specialised tasks; and a third tier of peripheral figures, who in substance had abandoned the programme but kept themselves informed of developments and remained at the disposal of the group. New people joined, bringing with them a high degree of highly focused skills (specialists in particular technologies). How the Catalyst Team and networks evolved. The contributions of the Catalyst Team shifted from an operational plane (support for the development of the business concepts) to a strategic and political one (identifying possible partners and building consensus among the Management of ST around the possible internal organisational solutions capable of accommodating and developing the results of the programme). The development of the external network was now entirely directed towards the search for companies with the potential to become development partners, capable of providing valid fields for experimentation and willing to set up mixed teams tasked with operating within the framework of co-development/co-evolution.

The conclusion of the programme Bio to BiT came to a close at the end of April 2008. The new Business Unit acquired and assessed the results of the programme and took action on four fronts: • The development of prototypes; • The drawing up of agreements with development partners; • The definition of experimentation projects “in the field”; • The consequent formation of a development team. Several of the participants in the programme were integrated into the new organisational unit Programme is "enabler/activator"

What did we learn? Success does not generate learning, but merely confirms the solidity and robustness of one’s working hypotheses. The Bio to BiT experiment can be defined overall as a "successful case"; it could then be deduced that the experiment was not able to achieve and make learning contributions. In reality, if we compare the initial structure of Bio to BiT with its subsequent course of development, we can conclude that the Programme was the result of continuous revision and transformation of its original design. Many "mistakes" were indeed made during the course of the experiment, and many unforeseeable circumstances had to be dealt with. I believe, however, that the key to the success of Bio to BiT lies in three of its original characteristics: in its experimental nature (and hence in the close attention paid to "error signals"), in the robustness of its fundamental theoretical assumptions (the constructivist approach) and in its adaptive/transformative capacity, which was generated by the fact that it was recognised at an early stage that, on the one hand, the programme design had to be purely a reference framework, while on the other, it had to be capable of evolving by integrating the various "incongruities" that arose on a time-by-time basis. Despite the success of the programme, therefore, it yielded a wide range of learning outcomes. The most important of these are as follows: o Introducing innovative/replacement technologies and know-how into an established market has radical/transformational effects in both directions. The technologies/know-how must evolve to adapt to the new application contexts; the market is re-designed by their introduction. It is therefore highly probable that the original “maps”, both those self-constructed by the incoming company and the established ones adhered to by the market being explored, have to be entirely re-invented; o A genuinely innovative idea, which can actually work, is a result and not a starting point. It does not come into being at the beginning and then develop through subsequent fine-tuning; it is produced by transformations and emerges as new knowledge from experiments and cross-fertilisation, over the course of several different iterative/recursive exploration cycles; o It is possible to develop these cycles if the innovation-generating system becomes "new" itself, i.e. if it is capable of bonding with other contributors of new and different know-how during the course of exploration. The effect of this "mating" is the co-evolution of the parties involved and their know-how; o The linchpin of the exploratory activities is therefore the capacity to recognise, attract, integrate and mobilise the necessary resources (chiefly in the form of external know-how) for continuing along the research path; o Journeys of "innovative exploration" can at most be oriented, but never guided. Setting specific, focused objectives from the outset limits the exploratory and experimental activities and thus restricts the scope for evolution and transformation of the original hypotheses;

o But without objectives it is not possible to define plans, decide in advance on the resources to allocate and assess/monitor progress. The Bio to BiT experiment suggests that it is only possible “to govern” exploratory innovation processes indirectly: by managing the contextual conditions within which the process is instigated and developed; o The parallel launch of various "diverging exploratory missions" can undoubtedly bring about accelerated learning, but on the condition that the missions are pursued according to a network-type logic. It is imperative to maintain a high level of information exchange between the various missions; to achieve this, it is important to identify and build meta-concepts, within the framework of which it is possible to keep the different experiments together and trigger processes of reciprocal cross-fertilisation. • Innovation is a process of generating new knowledge while at the same time gradually legitimising it. The central question, which emerges clearly from the history of the Bio to BiT programme, is that this legitimisation is not (and cannot be) given in advance, but is built by the innovators as they progress. The innovation “legitimises itself”; it is legitimised only after the fact and only if it is successful. It is a question of making “true”, something which, at least at the outset, is not true. This puts the political skills of the innovators at the centre of the innovation process – an aspect which is often overlooked; • Consequently the question of selecting/assessing the innovative ideas is reduced and shifts away from the Management towards the innovation groups. The proposal (and respective teams of explorers) which survive and evolve, are those which are capable of building the consensus of the management around themselves, insofar as this is a pre-requisite for access to the additional resources necessary for making further developments.

The key components, main critical factors and limitations of the experiment In closing, I would like to make some suggestions for the benefit of anyone who might wish to replicate an initiative of this type.

There are four key organisational resources: • The Catalyst Team is undoubtedly the most critical because it is central to the activities of networking and is difficult to modify once the initiative is under way. Its initial composition must be carefully assessed. Its aptitude and capacity for pro-active support (anticipating and solving the needs and critical issues of the work groups) and interpersonal skills (networking) are vital ingredients. The propensity to direct and control is entirely counterproductive, as is its converse, the bureaucratic tendency to answer only the question raised; • Participants and work groups. Strong motivation and a positive attitude towards learning are fundamental requirements. The possession of proven know-how is important but secondary; people equipped with the necessary skills can always be involved at a later stage. The variety of skills, by contrast, is a critical factor. The wider the variety of know-how available within the exploration groups, the higher their capacity to learn and produce innovative ideas; • External skills networks Without the contribution of external skills networks, the exploration processes are destined to come to a premature close with poor results. The more varied

and diverse they are with respect to the skills deployed by the company, the better. Identifying them and mobilising them is a very onerous but critical task. It can only partially be left in the hands of the groups; it needs to be entrusted to the Catalyst Team, which can also make profitable use of it as an instrument for orienting and steering the programme; • Internal Experts. The task of the internal experts is to support the groups and provide advice. They must be managed with extreme care, as they have a natural tendency to guide or pre-empt the work of the groups. This must be avoided at all costs. If well managed, however, they can help motivate the volunteers as well as providing important technical support. The key organisational supports for the success of the programme

Source: assessment questionnaire given to the participants in the programme

Regarding the process:

• Excessive attention should not be paid to defining the domain. The definition must be sufficiently ambiguous to allow explorations to be made in several directions, while at the same time retaining the capacity to attract the potential players in the programme (volunteers, internal and external experts ); • Defining the platforms, by contrast, is critical and strategic. The platforms orient and steer the exploration, formation and work of the groups, and the generation and development of the concepts. For this reason, the platforms must be continuously verified and revised if appropriate; • The emergence of a leadership within the groups is a critical issue. If it happens too soon, the group collapses; if too late, the group does not consolidate. The Catalyst Team can intervene in matters of internal construction of leadership, but it must do so with extreme care and delicacy; • Rapidly achieved successes do not help; in fact they impede more productive, wide-ranging explorations. It is preferable to remove from the programme and deal separately with those concepts that achieve robust validation with effect from the initial cycles; • Share, share, share. Although the groups are oriented towards different exploration routes from the early stages, it is essential to provide opportunities for sharing and comparing the various experiences gained. This facilitates the construction of the general map of the domain and generates connections and cues which are not easily perceived at the detail level. Labs and company ICT tools (sharing platforms, wikis, blogs, dedicated websites) provide invaluable help on this front; • Never direct and never undermine the power of the groups. Groups should be steered by facilitating them or obstructing them, and managing their support. Any directive intervention will send motivation and commitment into freefall; • Manage pace: keep the tension constant and rising, avoid relaxing. The Labs give a powerful boost to motivation and acceleration. Conversely, holidays or long periods of inactivity tend to hinder the work and weaken the cohesion of the groups; • Level of motivation and participation are the most useful parameters by which to monitor the effectiveness of the programme. It is necessary to identify useful parameters for this purpose and mobilise them with effect from the early stages, so as to be able to intervene as soon as any downward trend starts to manifest itself; • The time that the participants need to dedicate to the programme increases as it goes along. In the closing phases, conflicts with ordinary duties can easily arise. These need to be anticipated and carefully managed, so as to avoid unwanted dropping-out; • Keeping a high level of involvement of the company’s top management is important for two reasons. The first is that it provides a significant motivating force for the work groups. The second is connected with the release of the results and the delicate transition to the post-programme phase. The more the Management is involved and informed, the more reasonable it is to expect swift attention to the strategic and organisational decision-making necessary for launching the new phases of development; • Once the initial obstacles have been overcome, the greatest difficulties emerge at the end, with particular reference to the release of the results. In the Bio to BiT study, the assumption that existing Business Units would be the natural receptors of the innovative proposals proved to be weak and ultimately impracticable. Innovation is not just the construction of original solutions, but also of the “new worlds” in which these will be developed, produced and used. Innovation is born small and until it establishes itself, it does not and cannot enjoy the strength of evidence. This puts the spotlight on the processes of legitimisation of the innovation and the political nature of these processes, and on how the innovation is not only obliged to build consensus around itself, but also to create the necessary space, environment and context in which it can first survive, then grow and develop. It is an issue which directly involves the capacities of the work groups, but only up to a point. Once again, the Catalyst Team, its authority and its interpersonal/negotiating skills play a pivotal role.

Level of confidence of the groups towards the expected results

Source: questionnaire given to the participants in the programme

The main limitations of Bio to BiT When venturing into "unknown territory", working exclusively on concepts offers several undoubted advantages: it allows many different micro-explorations, rapid learning and initial construction of possible maps and routes. All with a low commitment of resources and within short timeframes. It also has limits, however. Since it does not involve practical experimentation in the field, it is a bit like overflying a territory without ever setting foot in it. In particular, external know-how can only be integrated to a limited extent. The networks help, but without really setting up mixed work groups, it is not possible to go much beyond the exchange of information. The evolution and transformation of exploration groups and hence their skills and proposals cannot be completed. The "node" of the integration of external know-how is a strategic question, however. This decision can in fact have a fundamental impact both on possible developments (success or failure) of the innovative processes and, more importantly, on the future capacity of the company to take effective control of the proposed innovation (evolutionary dynamics and trajectories). The full involvement of the company’s top management is therefore indispensable. The question can be resolved in four different ways: by hiring managers and experts, through acquisitions, through partnerships or through combinations of the above. None of the alternatives is quick, and all require investments and demanding running-in periods for new internal organisational structures. But that’s not all: choosing between the various alternatives and between the different possible solutions within each alternative, requires strategic vision. This leads us to three distinct conclusions: a. The principal value of the Bio to BiT experiment lies in the fact that it succeeded, with a low commitment of resources and within a contained timeframe, in: • Constructing a dedicated eco-system, thus providing the essential macro-context for activities of innovation; • Instigating processes of exploration/innovation and accelerating the formulation of organisational solutions for their development; • Identifying several robust "innovation platforms"; • Preparing a substantial number of "explorers/innovators"; • Testing new organisational approaches. b. Less strong, by contrast, was its capacity to produce definite, completed business proposals. It is possible to obtain good, robust “semi-finished products”, but further progress requires further experimentation and development, which in turn require decision-making at a strategic level, which cannot be undertaken within the confines of the programme.

c. The transition between the closure of the programme and the subsequent phases is very delicate and must take place within a relatively short time. In particular, it is imperative to act swiftly to overcome any organisational impediments connected with the pursuit of the necessary experimentation in the field. Initiatives like Bio to BiT generate considerable enthusiasm and high expectations in the groups of explorers. This enthusiasm can

rapidly wane, however, to the point of being difficult to restore in the absence of solutions that make it possible to continue beyond the outlined paths. Blocked progress and long periods of inactivity always militate against innovation. Last but not least: a brief note on innovation and "chance".

The search for legitimisation becomes a question of survival from the moment at which the innovation process needs access to a new set of skills and resources in order to be able to evolve. Where survival is in play, adaptive, opportunistic and apparently tortuous and erratic behaviours can develop. This is not always negative: during the course of Bio to BiT, several opportunities emerged which had little or nothing to do with the domain and aims of the programme. It could be said that this happened in an entirely random manner. And that would be true. But it is equally true that any programme of exploration is, by its nature, an activator of chance; all the more so if its scope is defined broadly and ambiguously. Those opportunities existed before the programme took place, but no-one had been able to see them or at least to recognise them as such.

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