Innovation

From Stanford Social Innovation Review's Spring issue

Spring_2014_Cover-small_170_223 For today's post, here are a few articles from the Spring issue of Stanford Social Innovation Review that caught my attention.

The Re-Emerging Art of Funding Innovation discusses grantmakers' (lack of) risk-taking in search for breakthrough changes. It is an oustanding read that advocates the re-thinking of risk and describes how innovation can be injected in the five main phases of the philanthropic process: sourcing new ideas, selecting new ideas, supporting innovation, measuring progress and scaling up successes. 

The part that resonated the most with me was about the grant-making process of the Gates Grand Challenges Explorations, where "after initial screening by internal staff for relevance, the foundation uses a champion-based review process that allows an idea to receive initial funding with the strong support of only one reviewer. The foundation selects an external panel of innovators and each member reviews a subset of applications and gives a gold award to the best idea and a silver idea to other promising ideas. The foundation then collects all the gold awards and funds those projects... and views the silver awards in aggregate to decide what additional projects to fund." 

Such a champion-based system sends a much stronger positive message and encourages far more original innovation than the system of stack ranking or average z-score used in certain research-funding federal agencies. Instead of negative comments or ratings pulling a proposal down, positive ones propel it up. Also, it seems that reviewers entrusted with the responsiblity of using their gold star to guarantee funding to one project would think about the proposals in much more depth than the reviewers who have to assign ratings to a whole pile of proposals before they are discussed at the panel. (Of course you can imagine variations of the system, based on the number of proposals and of reviewers and the amount of money available: perhaps two gold stars would have to be necessary to guarantee funding.) Doesn't the champion-based system seem superior to you to the naysayer-based one in every way?

In Growth Force, we are treated to a fascinating behind-the-scenes peek at the model driving the Salesforce.com Foundation. Salesforce had a 1-1-1 eBay-inspired model where its foundation received 1% of the company's founding stock, employees were encouraged to donate 1% of their time to volunteer work and 1% of the company's product was given away to nonprofit and higher-ed organizations. The issue was that, as the company grew, the foundation had to find more and more revenue to help employees find volunteer work and match their donations. The key change came in 2007, when the company decided to allow the Salesforce.com foundation to become a reseller of Salesforce.com products.

This has required the creation of a salesforce team specifically targeting nonprofits (which receive a discount for the product). The foundation has also been able to help serve and expand the company's nonprofit user base. For instance, the foundation's sales team can now better explain to nonprofits how this or that Salesforce product can benefit them as they pursue their mission. For instance, the American Red Cross now uses Salesforce CRM capabilities "to track its communication with major donors." The foundation, working with the Red Cross and others, has also developed nonprofit-specific tools to better serve them, such as a disaster relief portal using a Salesforce app "that allows people around the world to share messages in a closed environment."

My favorite part was the description of the partnership between the Salesforce.com Foundation and Year Up, "a national nonprofit organization [ranked four stars by Charity Navigator] that provides intensive workplace training to people between the ages of 18 and 24." Not only did Salesforce software provide important functionalities that Year Up was seeking, but the Salesforce.com internship program has proved a transformative experience for the young interns seeking to start a career in technology.

The last article I'll mention for today is a review of Scaling Up Excellence by Robert Sutton and Huggy Rao, both of Stanford Business School. The book is a "compendium of lessons and practical tools that will help leaders... including in-depth interviews and case studies that cover both successful and disastrous scaling efforts at organizations such as the Girl Scouts, Facebook, Jet Blue, Stanford University, the US Navy SEALS and Wyeth Pharmaceuticals." The reviewer, a co-founder of Standord's d.light, has a lot of praise for the book while remaining honest about its weaknesses (the book doesn't go into a lot of depth for each issue, the case studies have a US bias, it is a quick read), but the overall positive words carry quite a bit of weight, coming from a successful entrepreneur attempting to scale up his own business. 

And happy birthday to my blog, which will be seven years old tomorrow!


Jacqueline Novogratz at SECON2013

If you care about social entrepreneurship and impact investing, or simply would benefit from inspiring words of advice by a woman innovator/humanitarian with an incredible life story, you will enjoy this keynote speech by Jacqueline Novogratz - the founder and CEO of Acumen Fund, "a nonprofit global venture capital fund that uses entrepreneurial approaches to solve the problems of global poverty" (from her Wikipedia page), and the wife of TED curator Chris Anderson. Her achievements are amazing, and her insights simply remarkable. If you need some reading material after watching the video (her keynote itself is about 40min lomg, followed by Q&A), Novogratz is the author of The Blue Sweater: Bridging the Gap between Rich and Poor in an Interconnected World.

Jacqueline Novogratz, Founder and CEO, Acumen Fund - Social Enterprise Conference 2013 from Social Enterprise Conference on Vimeo.

Other useful resources include a Forbes article that was the magazine's cover story in December 2011 ("Can venture capital save the world?") and a May 2009 Economist profile ("The patient capitalist"). She gave the 2012 Commencement speech at Gettysburg College.

I also recommend the two TED talks she gave: "Tackling poverty with 'patient capital' " (TEDGlobal 2007) and "Inspiring a life of immersion" (TEDWomen 2010).


"The Launch Pad: Inside Y Combinator"

YCombinatorIf you care about startups, entrepreneurship and innovation, you have to read "The Launch Pad: Inside the Y Combinator" by Randall Stross. The book follows (some of) the startups selected in the Summer 2011 batch of Y Combinator, Paul Graham's Silicon-Valley-based startup accelerator. (And if you care about startups, entrepreneurship and innovation, you don't need me to tell you who Paul Graham is. But if you have arrived at this page because of some other post I wrote, say in healthcare, you might want to know that Graham is an English computer programmer and venture capitalist who co-founded Viaweb, later sold to Yahoo! Y Combinator is said to be the best, or the second best if you ask its main competitor TechStars, startup accelerator in the country. Graham is also an essayist, majored in philosophy at Cornell, studied painting after college and got a doctorate in applied sciences from Harvard, concentrating in computer science.)

What I loved about the book is that it is strongly story-driven with compelling characters - Stross explains well what the various startups are about, but he doesn't get bogged down in technical details (although he could have, given the strong focus of Y Combinator on "hackers"). Instead, he is more interested in showing the dynamics between teams or with Y Combinator's partners, and the reader gets as close as a book can bring to experiencing the summer leading to Demo Day, and to benefitting from Graham's insights. In particular, I felt the book would be particularly relevant to would-be entrepreneurs who not only want a taste of what to expect in startup accelerators, which have been sprouting all over the nation, but also are curious about Graham's thought process, because in that business what matters most for the mentors is to be asking the right questions.

Great read, highly recommended.


Sketchfab

I was thrilled to hear last week that Sketchfab, which aims at becoming YouTube for 3D design ("the world is in 3D. the web is in 2D. we bring 3D to the web," with obvious, enormous implications for retailers and anyone who is trying to sell a product online or display a 3D online portfolio, among others), had raised $2 million in its latest round of funding. This brings its total funding to $2.62 million. I like the company not only because it offers a unique service that could change the way objects are displayed on the Internet, but also because it was co-founded by the husband of my visiting doctoral student, both French expats like me.

In only 1 1/2 year of operations (it all started in May 2012 in Paris), Sketchfab has won several business plan competitions and was selected to be part of the Spring 2013 batch of the TechStars NYC startup accelerator program. It is also an alumnus of the Le Camping and WebFWD accelerators. Because the product is web-based, it requires no special plugin. It now has almost 100,000 users and is said to generate more than 3 million page views a month.

You can watch Alban Denoyel - Victoire's husband and Sketchfab's CEO - discuss his company in the YouTube video below, which also displays some stunning examples of what Sketchfab can do. (The two other founders are Cedric Pinson, Sketchfab's CTO and Pierre-Antoine Passet, Sketchfab's CPO [Chief Product Officer].)

You can also read his blog post to Sketchfab users - not only videogame designers but architects, engineers, archeologists and artists - after the company raised its latest new round of funding. (It even has a 3D picture of an Amazon Prime Air drone, uploaded to Sketchfab by user Mestaty.) In Denoyel's words: "We are now a vibrant community of fantastic talents from widespread industries. The models you uploaded have travelled the web, showing it was possible to bring 3D content to a new audience, and establish it as a legitimate media format next to photos and videos."

Watch more Sketchfab videos here. Follow Sketchfab on Twitter at @Sketchfab. Better yet, use the product.


Reimbursement and Pricing Policies for Medical Devices

According to “Evolving Reimbursement and Pricing Policies for Devices in Europe and the United States Should Encourage Greater Value” by Corinna Sorenson, Michael Drummond and Lawton Burns, “Europe more formally and consistently considers value to determine which technology to cover and at what price [compared to the US]”. The article also describes the policies both the United States and Europe have introduced to “provide temporary coverage and reimbursement for promising technologies while additional evidence of value is generated,” and outlines further actions to be taken “to ensure wise value-based reimbursement and pricing policies for all devices.”

While European decision-makers have shifted their focus from cost control to value-based policies over the past decade, the United States has been slower in adopting value-based decision processes and those have tended to focus on pharmaceuticals rather than medical devices.

The European system works as follows.

  • “Market approval of a device in one country [of the European Union] should provide access to other markets through the Conformité Européenne marking process.”
  • But “institutional arrangements for financing differ among countries, which can result in divergent coverage, reimbursement and pricing decisions for a particular device.”
  • “Prior to making coverage decisions, European jurisdictions typically require that high-risk, innovative or costly devices… undergo a health technology assessment” and recommends for or against use, or use for only a subset of the population, based on “clinical trial evidence and cost-effectiveness data”.
  • When the available evidence is insufficient or inconclusive, some European countries “offer restricted coverage for patients enrolled in studies designed to collect better data.”
  • “Once coverage is determined, most European countries use prospective payment systems to determine reimbursement rates,” which may reflect value in some cases or may not, because payment systems are updated infrequently.
  • To address the issue of insufficient payment for new technologies, some countries have introduced “separate or supplementary payments [lasting usually two or three years] to provide partial or total reimbursements for potential beneficial devices until they are fully captured by the payment system.”

The article also describes the American system, and emphasizes that “with limited exceptions, CMS does not currently consider a device’s comparative effectiveness or its cost relative to alternative treatment options in its pricing.” It details the concepts of “add-on payments” (for inpatient care, mostly used for implantable medical devices) or “pass-through payments” (for outpatient care, more common), which were developed to mitigate the high costs of new devices in the US. Devices must be “new and high cost” and must “substantially improve the diagnosis or treatment of beneficiaries.”

It is worth noting that “devices are rarely directly reimbursed by private insurers.” Instead, they reimburse medical procedures or episodes of care “at a specified or negotiated amount that must cover the price of the device along with other items – such as supplies, labor and facility costs – that are part of the procedure or care episode.”

The authors then outline three potential policies to improve value-based reimbursement and device pricing:

  1. Fostering pre- and post-market evidence (“current requirements allow clinical evaluations of most new devices to be based on similar existing (predicate) technologies rather than the actual device in question, and the clinical data submitted to be based on a literature review alone”),
  2. Exploring new approaches for assessing value (“devices have particular characteristics that introduce unique challenges to measuring their value” such as “frequent modifications following initial development” and the “learning curve” of medical professionals),
  3. Linking evidence of value to reimbursement (“this approach sets different reimbursement rates for different levels of clinical effectiveness” and may also entail different copayments).

Debra Dunn on Corporate Social Responsibility

To continue on the Stanford d.school's theme (with recent posts on the d.school itself and Tina Seelig over the past two weeks), today's post focuses on a lecture of Debra Dunn, another professor at the d.school who had a distinguished 22-year long career as an executive at Hewlett Packard before joining the academic world, on corporate social responsibility. (It is also available as a podcast here.)

My favorite two videos of hers are posted on Stanford's e-corner (entrepreneurship corner) website, one on career advice and one on creativity vs control, both with her husband Randy Komisar of Kleiner Perkins Caufield & Byers. Students might find those videos particularly valuable. I'm curious to know what you think!

Creativity vs control

Career advice


Tina Seelig on Creativity

TinaseeligToday's post provides a few resources about Tina Seelig's teachings on creativity in the business world. Seelig, executive director of Stanford's Technology Ventures Program (and a neuroscientist by training), teaches creativity and innovation at the d.school, which I wrote about in last week's post. She is also the author of, most recently, inGenius and served as the director of the National Center for Engineering Pathways to Innovation from 2011 to 2013. I had heard about her book but hadn't read it and had never watched a video of hers until I came across her TEDxStanford talk below.

This podcast provides an extended version of that same talk given elsewhere. The only drawback is that the visuals she used aren't provided, but they are shown in the TEDx talk above (you definitely want to have watched the TEDx talk first, though!)

She makes excellent points for beginning to end, and trying to summarize her speech wouldn't do her work justice. (Thumbs up for the quilt-making analogy and the Möbius strip, though.) Let me just say that every moment of her TEDx talk is packed with useful information, and she knows how to tell good stories.

Another good speech of hers was recorded at a @GoogleTalks event.

Enjoy!


Stanford d.school

Dschool logoI've been researching Stanford d.school (the Hasso Plattner Institute of Design at Stanford) for a part of my book on engineering innovation, and it seems clear to me that, in the short time since its inception in 2005, it has established itself as a hub for creativity and innovation open to all Stanford (mostly graduate) students. MIT's Media Lab has its own mystique among the techies, but the d.school has a broader appeal - it aims at teaching everyone to be creative and even holds executive education programs - and it has very quickly become a media darling. I wasn't sure what to make of design thinking at first, but after browsing through some of the resources online (and the school distinguishes itself by its excellent website and its willingness to put free resources available to all) I am becoming more and more convinced that design thinking is an important concept many of us would benefit from using in our line of work. I would be surprised if it doesn't turn into a buzzword, the way "paradigm shift" used to be a few years ago and the way "innovation ecosystem" is now. 

The first resource I'd recommend is the Bootcamp Bootleg, a pdf file gathering many of the ideas behind the design thinking process. The following steps will be relevant to a wide range of people, but in particular consultants (and definitely not just designers):

  1. empathize,
  2. define,
  3. ideate,
  4. prototype,
  5. test.

Empathize is about seeing the world through the end user's eyes to better identify his need (which will be defined in step 2) and understand how he will use the product. I continue to be amazed by the number of engineering consultants who create a product, such as a software system, without being in close contact with the people who will ultimately use it - talking frequently to other people at the company, perhaps, but never bothering to chat with the end users. And then they wonder why their amazing software is left unused. It also seems to me that many college students are rarely trained in engaging with people outside their peer group, especially customers or end users of their work. Defining the need (step 2) and exploring solutions (step 3) are also musts in the consulting world.

I wish prototyping (step 4) were more common. I always tell students to start small when we work on optimization models but I'm not sure if any of them, once in the real world, keeps the same habit - perhaps through no fault of their own, since they will follow the guidelines of the project manager, and not everyone understands why starting small is important. (In addition, if a project is running behind schedule, the temptation to cut short the prototyping part is very strong.) Testing (step 5) is also something I hope is done thoroughly by consultants before they submit their deliverable, but its importance is perhaps more intuitive and obvious than that of step 4 and thus it is less likely to disappear from the actual process.

The d.school offers a free 80-min virtual course online called the d.gift, because it aims at redesigning the gift-giving experience. It is something you want to do with a partner - watching the video will bring you nothing, since the workshop leaders provide only brief instructions and then much of the time on the video will be spent watching a clock count down the time on the screen while participants interview their teammate, sketch a prototype and provide feedback. Here is the video.

I also enjoyed 3 smaller pdf files called "mixtapes":

If I were a graduate student at Stanford, the d.school is where I would spend all my days. But since I'm not, perhaps I can bring design thinking ideas to the world of higher ed. What about you?


Malcolm Gladwell on Elite Institution Cognitive Disorder

Malcolm Gladwell, of Outliers, Blink and The Tipping Point fame, has a new book out this week: David and Goliath. He recently talked about a central concept of his book, applied to the number of students who get STEM (Science, Technology, Engineering and Mathematics) degrees. Once you make it past the first 2 minutes where he comments at length on not being paid by Google to give the speech, his talk - on the counterproductive desire to associate with elite institutions - is downright fascinating.

Although he gives it the fancy-sounding name of Elite Institution Cognitive Disorder (EICD), this is really the Big Fish in a Small Pond (BFSP) syndrome: apparently, a lot of people are more likely to stick to their career plans - such as getting that STEM degree - if they can compare themselves favorably to the people around them. In other words, they're better off as Big Fish in a Small Pond. Gladwell has some fascinating data regarding the distribution of STEM degrees depending on students' math SAT scores at institutions of varying caliber (top college vs middle-of-the-road). In particular his data suggests the distribution is rather stationary, that is, doesn't depend on the institution, although the students at the top institution are supposed to be "smarter" than the students at the not-so-well-known college. This is why Gladwell argues that people make their decisions by comparing themselves to the people around them, and lose track of the big picture.

Before I make any further comments, I'd like to encourage you to watch his talk, which lasts about 20 minutes.

Gladwell's thesis, at least in this short talk (I haven't read his book), seems to be that most people are better off away from elite institutions. Perhaps there is some truth to what he is saying about academia. I sometimes read papers that make, at best, marginal ("epsilon", as we like to say in my line of work) improvements about the state of knowledge - papers that no one at the university I got my PhD from would have dared consider research papers. And yet their authors submitted them for review, and they got published somewhere. Not in the best journals, but somewhere. They most likely have tenure and while not leaving their mark on their field in the way an academic at a top institution would, they might enjoy a comfortable lifestyle and perhaps a reputation as a good teacher or a valued committee member. Because they might have been the very best students in their program, they may have benefited from the strong support and encouragement of faculty members whose counterparts at a better-ranked institution would not even give such students the time of day. For them, staying away from people who would've diminished their self-esteem definitely paid off.

The bad part of all this, of course, as Gladwell point out, is that not-so-great PhDs from top institutions - who'd be the cream of the crop elsewhere - may decide, judging -- from their more successful peers' examples and their adviser's lack of encouragement (their adviser, after all, is unlikely to know of openings in the second-tier schools that would be a good fit for the student, and even if he did, unlikely to care) -- that they are better off leaving academia altogether. They do not realize that plenty of academics with worse credentials abound and even thrive, having found other strengths to contribute to their workplace. I guess we can call this the false negative of the career path read: some people draw wrong conclusions about their own potential, career-wise, from their immediate environment.

But what about people who rise to the challenge? The 15% of the bottom tier, using Gladwell's numbers, who do hang in there and get their STEM degree, although people with better math abilities (assuming we can judge math abilities by SAT scores, which is highly debatable) drop out of the major? Perhaps they succeed precisely because they were well-aware they didn't have the best SAT scores - because they showed resilience and persevered while the better students, unused to struggling in class, became discouraged and picked another path.

The issue, to me and hopefully to a lot of people, isn't that more people should be advised to "play it safe" and join groups (whether universities or companies or even groups of friends) where they won't feel their self-image so challenged. Pretending employers do not care which school students graduate from, or which company they worked for before, is either naive or disingenuous. The real issue, to me, is that we need to develop long-term resilience and a sense of perspective in students, which they will hopefully take with them when they graduate. But a system where students, worried about their GPA, will take classes with an easy A, and where professors, worried about their evaluations or unwilling to deal with struggling students, allow their course to turn into an "easy A" or "automatic A" course, does not do those things very well. There is also, naturally, a competence issue, where getting a C at Harvard just isn't the same as getting an A at Noname College. Perhaps the rise of MOOCs (Massive Online Open Courses) will allow students unsure of their prospects a different perspective before they change majors. As online education is exploding, it seems more and more doable for universities to adopt a more flexible approach.

Although Gladwell seems to suggest these students should pick a college where they will face less competition to get their prized STEM degree with flying colors, what matters just as much as the degree is the social network - the people students choose to associate with, their goals, their ambitions. If you opt to become a Big Fish in a Small Pond, you might feel very pleased with yourself, but you'll never know what you would have been capable of if you'd pushed yourself to your edge instead of spending your weekends getting drunk in small-town bars.

Being a Small Fish in a Big Pond opens horizons. It is also, of course, immensely unsettling, and it should come as no surprise that many would-be actors, for instance, leave New York City after a few years to pursue other endeavors, whether acting-related or not. (A number of them are now finding work as readers of e-books for the Audible service.) Yet it would not occur to most of them to forgo the obligatory move to New York to give the big leagues a try. The behavior of the students changing paths to succeed in the big leagues (switching majors but remaining at Harvard) makes a lot of sense to me. Now we just have to convince those students that they're still in the big leagues if they struggle to get their degree.