"Equalise early and often"- the key to making transformational advances with open innovation

Interview image MW

One of the great things about the internet is that it is relatively easy to meet and to get to know people you otherwise would never meet. This interview proves that point.

I met Matthew Wahlrab through Linked In. We had a brief chat and I thought we have to do an interview. He is the CEO and founder of Innovative Foundations and he has a lot of expertise and insight on intellectual property and open innovation.

The full transcript of the interview is below and you can listen to the podcast here. In this first part I want to highlight a few of the most interesting points that came out in the interview.

Best consortium

When I ask Wahlrab about the best consortium he has seen, he immediately mentioned the WiFI consortium:

So when you look at the Wi-Fi consortium and I think one of the current incarnations is the Wi-Fi Alliance, you end up having a standard and the reason why this was so successful and you saw a lot of the early adopters of this consortia say, we do not want to see all the brilliant people in all of these different companies develop 100 different standards and protocols that software developers, hardware developers, end up having to go in and now can develop solutions around.

Combatting fragmentation

It is clear to me that combatting fragmentation and aligning around standards is one of the most impactful aspects of consortium based approaches to science and innovation. I think that if every medical researcher did only research that was being done in the context of a highly integrated consortium the gain in research productivity from the use of common standards and protocols we would be at least a 2x increase in research productivity and a consequent series of transformational changes in medicine. Wahlrab puts it best:

When you have a lot of brilliant people that are looking to solve the same type of problem, having standards is a fantastic thing

Accelerating innovation

Like in many fields of endeavour the pace of innovation and in particular technology development can be frightfully slow. It takes an average of 17 years to go from medical research finding to clinical implementation. Wahlrab points out that people from different industries are trying to tackle the same problems but for different specific applications. This means that there is a large pool of talent available and:

It is in part due to this large pool of talent, a willingness to share, and convergence we expect to the development of technology accelerate.

It is also important to take in different perspectives:

And then you constantly see, for example on LinkedIn, these instances of someone developing a product, raising capital, bringing the product to market, and then subject matter experts in industry say “you can't actually implement this thing.” You must have perspective and input from the market, especially input that conflicts with your assumptions. Otherwise you end up wasting effort and capital. And why? Basically hubris.

Wahlrab rightfully points out that its human behaviour that matters the most. When I asked him when teams should reach out to external stakeholders he had this to say:

From the very beginning and throughout. I taught scuba diving for a long time and when you're scuba diving, they give you this nice kind of a little sound bite. “You should equalize your ears when you're descending early and often.” And we like to think that same principle of engaging early and often applies when it comes to being innovative, validating ideas. At the end of the day, for any initiative, we as a team of innovators are going to be spending time on the project. If you value efficiency, from the beginning of the project you need to look outside of your organization and ask “Does the solution already exist? Are we on track? How does our solution compare to known products? What do our partners think of our work?” Unfortunately, we see very little of that across the value chain.

Enthusiasm

When we got into how long a team that makes a discovery should be engaged in the process of bringing it to market he said this:

So, what I really like about a lot of these discovery teams, and why I like to see them involved as much as possible in whatever capacity they can, is because of the enthusiasm. It's infectious. You get into a room with somebody that's very passionate about what it is that they're doing. Then you see that people are, especially in the medical space, really suffering. This combination of perspective, enthusiasm, and purpose is vital, because inevitably when you're working on these projects, you're going to have a moment and say, “man, is all this worthwhile?” So to have those cheerleaders in there, guiding and coaxing it, “this is why I'm here, this is what I'm doing, all of you have a role to help solve this problem and I think that we've developed the right type of solution.” Being able to have that context and keeping it on your team, it’s incredibly valuable from our perspective.

I really think this point is important. What you often see is that the suggested process is the research finding or technological development is handed over to a different team that knows about business. As Wahlrab points out this is not optimal. I think keeping the discovery team and other stakeholders engaged throughout the process is a force multiplier. This is likely the reason for the unusually rapid success of the 3 academic, industry, and disease foundation consortia described in this New England Journal of Medicine perspective article.

The entire interview transcript is below and you can listen to the podcast here. Please share this, and put you thoughts in the comments below. I would love to see a dialogue develop around these topics. You can connect with Matthew like I did on Linked In.

Matthew Wahlrab

Interview transcript

You can listen to the interview podcast here.

Welcome everyone to this edition of the Assembled Chaos podcast, which is BioSci Consulting's podcast on innovating through consortia in the life sciences.

Today, it's going to be a bit different. I have the honor of interviewing Matthew Wahlrab, who I simply just met by connecting through LinkedIn and we had a very interesting conversation. So I thought it would be nice to bring him here, to have some discussions.

Matthew has started his own company. He is the CEO and founder of Innovative Foundations and he'll get into a bit more about what he does, but the key thing is, it's about looking at intellectual property strategies in companies. And one of the interesting things I wanted to bring him here for is that his focus is not just on medical stuff, it is somewhat medical, but also other industries. So, I think that is a different perspective. He has some very interesting insights on open innovation and what that is.

And one thing that I found out in doing some research for this, he is an IM 300 two-time award winner, which looking into that, that is sort of a network of people in the IP and patent field, but it's very heavily vetted, that award. So, I think he knows something about intellectual property and when you come down to it, any kind of innovation, any kind of research and as we all know, intellectual property is a major issue. It can be both an enhancer and a barrier to innovation. So with that background and that context, welcome Matthew.

Thank you, Scott. I appreciate the introduction and hope to live up to the hype.

I always begin with one very first question and that sort of gives a context to this and that is, why do you do what you do?

So fundamentally, from the very beginning of my career, I realized that there's brilliant people that come up with fantastic ideas and some of them end up executing on those concepts. And what I found over and over again is that it's very difficult to find that one individual who's the master of every skillset needed in business to commercialize their a great idea, let alone startup and operate a company.

We've always been very passionate about filling in the blanks. If you're a technologist and not great at fundraising, we can help support you with that. If you're not great at finding gatekeepers who will actually have an appreciation for your invention, will ultimately buy your product, or co-investment/co-develop the final missing pieces, or negotiate transactions, we aim to fill in those gaps to help achieve commercial success.

And there's nothing better than seeing someone who struggled for so long, who constantly has the refrain and I'm sure you see it too, "I have this fantastic idea, all the numbers work out, but people for whatever reason don't have the imagination. They can't see it themselves, they won't buy in, they won't invest, I can't even get the time of day.” And just the look on people's face, when you help them break through. And all of a sudden, they have a conversation with a gatekeeper that right out of the gate, the person says “I know exactly what you're talking about, what can we do to partner up?” It's huge. Years of struggle, washed away, finally.

And that's very interesting because I think in the medical field, that's even a bigger problem, because people sometimes in the foundational phase, the discovery phase of research, don't even realize the potential or even how to frame what they've done. So I think that's a very interesting aspect.

What's the best example of a consortium that was successful that you know of and why was it successful?

Obviously, there's a ton of a consortia that are out there and I know that there's quite a handful of consortia in the health space. I notice you've been instrumental in several of them, but just to give your audience a different context, I really liked what happened with Wi-Fi, in building the consortia around Wi-Fi. It's something that impacts us on a daily basis and it fostered the consumer's appetite for how they want to be able to interact and engage. And it really led this mobile, digital world that we live in, that was fundamentally enabled.

So when you look at the Wi-Fi consortium and I think one of the current incarnations is the Wi-Fi Alliance, you end up having a standard and the reason why this was so successful and you saw a lot of the early adopters of this consortia say, we do not want to see all the brilliant people in all of these different companies develop 100 different standards and protocols that software developers, hardware developers, end up having to go in and now can develop solutions around. We want to build like a freeway for traffic and I feel like it was very successful, because you had this rallying point. You had some sharing of information through the standard but by and large you had something that software developers could build around, the hardware guys knew how information was going to be shared on the platform and it helped create a market, where a market didn't really exist.

Nowadays, we see some of the benefits of that and what is currently available on Wi-Fi. I feel like if the Wi-Fi Alliance hadn't gotten up and off the ground, we wouldn't see technologies like Bluetooth, for example. That paved the way and I think that's a fantastic way of looking at adoption.

And I guess a question for you, if you know, at the beginning of the Wi-Fi consortium or alliance that built up, did people have a sense of what was possible or did people think this was a crazy idea?

They’re visionaries. I mean if you look back at the time and you look at some of the articles, there are definitely visionaries and some of these early adopters that were saying, look, Wi-Fi is going to be everywhere. This is going to be the future.

But you still had, in order for Wi-Fi to reach what it did, you had to have people that were managing and hedging risk that recognized Wi-Fi as “it won't cost us much, because this is a consortium and we can spread risk if this fails. It won't take us much for us to participate and help usher in these developments.” This certainly isn’t to say that the fear of missing out wasn’t also a motivation for some.

And so the risk versus reward ended up making a ton of sense. That's just another reason why that particular consortia ended up working very well.

Was there any questions about intellectual property in that situation?

Huge and I mean even up to this day we see fallout from that. There's standards bodies that have been wrapped around the consortia or the impetus for forming the consortium. Every day, everybody that decided to participate had the ability to submit aspects that they researched and developed, filed patents on and then had the ability to become a part of the Standard. And we call these standard essential patents and there's a lot of activity around standard essential patents, a lot of change with respect to how U.S. law treats standard essential patents. And there's still an open question on given the current intellectual property market, how much it makes sense to be a part of a standards body and have standards, what we call SEP patents, standard essential patents.

That's a whole other deep area we can go into and standards is something, particularly in the life sciences that sometimes are quite underappreciated. And I think there's also quite an interest. I know for example, there is a consortium called CDS, that is for clinical data standards. As far as I know, they don't operate under a patent, per se, but then you do have to be able to use and implement the standards. There is a fee, so I guess in a way that is probably under protection.

Do you think that limits or enables the use of standards?

It's certainly a benefit in the early development of internet and digital-based technologies, this also holds for other industries. While it stifles creativity in certain aspects, it does create this platform that everybody can work on and some confidence that you're going to have a successful and integrated technology. When you have a lot of brilliant people that are looking to solve the same type of problem, having standards is a fantastic thing. Nowadays, people are looking at creating and crafting standards for codecs, this is a huge area. Like you look at some of the old codec standards, a ton of IP around it and so you have a handful of practitioners now with standards like AV1, that are being developed to help reduce the amount of, in their minds, reduce the amount of IP that people would have to take a license too.

And so being creative on how you develop a standard, implement a standard, this also gives the ability to think very proactively about what your approach is going to be to IP within this standard body.

I want to shift the focus a bit because I'm really following some of your LinkedIn articles and if people are interested, they should go look those up. For the companies you work with, whoever you work with, what is the most important metrics for innovation? Because I think sometimes that is a vague thing for people to understand, how do you measure that?

A lot of this really comes around where you're at with adopting open innovation principles, but I think at the end of the day, what most people are looking to do is to manage risk and differentiate products. And so one of the easiest ways of measuring that is actually speed. How quickly can you go from an idea to product? And that is one of the metrics that we hold ourselves accountable to. If we can't find partnerships quickly for a concept and help expedite research and development and the productization of a technology, where is the incentive to not go at it alone?

If it's going to take 24 months for you to develop a product and it takes 24 months to build a relationship, how is that benefiting the business overall? And so looping back to the concept of “Where you are at with adopting innovation principles,” you really need a long-term view and more often than not “low hanging fruit” to explore partnership activities. Low-hanging fruit in that the risk of failure in Open Innovation is recoverable and maybe the benefits aren’t critical. A big part of OI is letting the world know you are open for business and doing repeat deals with partners. If you are new to this, your first deal is going to shock you with how long it takes. That’s why the best Open Innovation, Corp Dev. and Licensing Teams find ways of partnering up for the long-term to remove the inefficiencies around the transaction (like who owns what, what royalties will be paid, negotiating brand new legal agreements).

Repeat business and an organization fluency with OI is one of the reasons why companies like Caterpillar, Proctor & Gamble, and Electrolux are so well respected and successful.

It's interesting that you bring up the speed, because there's been a couple of papers that have actually, for the life sciences, for the biomedical field shown that the time from scientific finding to clinical implementation is on average 17 years. How does someone like you, when you're talking about months to years, how do you deal with that, I mean how do you view that from your standpoint?

What I expect to see, and this is a growing trend, we see more and more people with the titles of open innovation and we're seeing it more and more in world class organizations. When you look at pharma and some of the big entities out there, like Johnson&Johnson they will tell you that a lot of the pharmaceuticals they have, they're actually brought in. They've been leveraging mergers and acquisitions and this fundamental concept of open innovation. Bring it in when you're not inventing it yourself.

And so for us, what we expect is, is that as you see more and more convergence from really, when you look at it, superficially odd types of partners, out of these relationships we expect that some of these timelines will absolutely condense. In that, it's going to be fundamentally important to be able to go in and discover things faster, to have some type of vehicle, multiple vehicles of being able to discover new things that are out there, being able to form partnerships early. And then allowing some of these really big companies/multinationals bring economies of scale, marketing, productization investment, and some other business roles that you don't see, nor should you, out of for example, an academic institution. They're not going to have the marketing power of a Procter & Gamble, for example or a Novartis, for example.

So, we're expecting to see a lot of change, but fundamentally it isn't corporations and businesses that are doing transactions, it's people. And we're starting to see new blood and new leadership giving a vehicle for these brand-new types of open innovation concepts.

It's a little rough, but at the end of the day we're looking for a very specific type of personality for us to partner with. We don't mind sharing information and helping to educate the market, but we're not looking to do transactions where there is kind of a real heavy lift, “Let me sell you on open innovation.” That’s really not where we're at.

That's really interesting and it's interesting what you mentioned, the convergence of technologies. An interesting fact is that the Human Genome Project, it began with a convergence, because it was the U.S. Department of Energy that was one of the major sponsors of it. So it had nothing to do with medical stuff. Of course, that still took 4 years of discussions and then 13 years to get it done. But I think that was interesting, this convergence is something that's been going on for a time and it's happening in medicine as well.

What is open innovation? What's your definition of open innovation?

It's really maximizing any particular type of technology. And one of the ways that we see it manifest itself in open innovation is the sharing and communicating of ideas, these actual business transactions that you've seen wrap around what it takes to really maximize a technology. A transfer being a fantastic example in application of open innovation, where you have somebody that came up with a fantastic idea, but in order to maximize it, you have to implement these, what we call today, open innovation principles.

So that's a one of the fundamental attributes I think that we see in open innovation and the human behaviours behind that. “Maybe I'm not the best person to take something from start all the way to product and run that company all on the way.” With technical convergence we see a much larger pool of talent able to meaningfully contribute to a technical challenge. You will continue to have specialization, but it will not be uncommon to have physicists, doctors, and machinists from aerospace, medical, and heavy manufacturing tackling the same problems but in different industry-specific applications. It is in part due to this large pool of talent, a willingness to share, and convergence we expect to the development of technology accelerate.

I think that's a very interesting point of view and also, you see a lot of startups, they have their ideas and their technology and it reverts to working with other people with similar technology. Do you think that things that are combined, in other words, combining two or three different types of IP or technology or advancements, are more robust, more likely to succeed than ones that stay single technologies?

I mean fundamentally the reason for that comes down to a very basic principle, perspective. If you stare at one thing for a very long time and you're not out there engaging with other experts to learn from them, you only have your own perspective. And then you constantly see, for example on LinkedIn, these instances of someone developing a product, raising capital, bringing the product to market, and then subject matter experts in industry say “You can't actually implement this thing.” You must have perspective and input from the market, especially input that conflicts with your assumptions. Otherwise you end up wasting effort and capital. And why? Basically hubris.

Perspective is very difficult to quantify, how do you know or go about learning what it is that you don't know? And for that reason we love to see people actually collaborating, so they can start getting an inkling of what it is that they don't know and then build business relationships, to be able to fill in those gaps.

I want to bring in here an interesting psychology concept I've heard recently called the Dunning-Kruger effect. And what that is, is the tendency that when you don't really know much you think you know a lot more than you do and the vice versa is when you really know a lot and think you don't know anything. And I think that plays a lot here, in these kind of situations.

The next question is really when you run into that kind of mentality or that I would say the not invented here syndrome, what's your experience, how do you deal with that?

Hurdles like not invented here, or NIH, come down to addressing pain points. So when you see people that are saying “It wasn't invented here, it's not going to be any good,” you really have to dig deep, build a relationship and understand, not invented here is a manifestation of something else that's going on in that organization. Generally, it would be something like fear of losing your role or your job, your influence, or the negative implications to your team.

For example, gatekeepers and the thought process of NIH can come down to a “If we outsource this concept that I've been saying forever is difficult to build, and someone outside the org brings the solution, will the org be motivated to get rid of me?” In other instances, when a new idea comes in, people feel like denigrating an outside idea and pointing out the pitfalls of the idea will make others recognize their brilliance. The critique is less about the idea, and more about their approach to surviving in the corporate culture. This notion is very prevalent in NIH organizations. In a healthy organization, the focus is more about how to overcome obstacles and managing risk.

So much of the success of a business comes down to the organizational culture, so in terms of a best practice, it's really engaging and saying are you struggling with anything? What is the biggest problem that you have? If you could solve one problem that you've been facing, what would it be, what would that look like? How would the company benefit? How would you benefit. You MUST talk to people in the trenches. Culture isn’t something you can throw money at and fix. You must engage, plan, selectively implement, then codify the mandate. Then the real work begins on communicating the objectives, earning buy-in, positively reinforcing productive behaviour, and immediately correcting negative behaviour.

It's very interesting, one thing I've noticed, of course it's across organization, but in consortia, you also have to balance individual partner aspirations and needs, along with the bigger picture. And that's the same kind of thing you're mentioning there. I think that's very interesting.

We always say corporations aren't doing these transactions, it's individuals. It's always individuals, at the end of the day, that are around these tables structuring the deals. And they're looking for a way to maximize their benefits, but you have a unique personality around these tables often, where they can actually, if they're benefiting and they see the benefit, it aligns with their core values and what their job responsibilities are, they don't mind that someone else is benefiting.

And that's surprisingly for all that is touted on the internet and social networks, at conferences, there are very few people that actually practice that principle of “I am benefiting, and it is okay that you are as well.” And it's been a big challenge for us. But one that we knew we were going to see when we got started. Addressing these human behaviours and solving for transformation through the development of personal relationships. That's your silver bullet, personal relationships, accountability, and empathy. That's how you're going to make breakthroughs.

Very interesting, so in spite of all the technology, it comes down to human behaviour, basically. 

The innovation value chain is long. Where in the change should organizations engage with external stakeholders?

From the very beginning and throughout. I taught scuba diving for a long time and when you're scuba diving, they give you this nice kind of a little sound bite. “You should equalize your ears when you're descending early and often.” And we like to think that same principle of engaging early and often applies when it comes to being innovative, validating ideas. At the end of the day, for any initiative, we as a team of innovators are going to be spending time on the project. If you value efficiency, from the beginning of the project you need to look outside of your organization and ask “Does the solution already exist? Are we on track? How does our solution compare to known products? What do our partners think of our work?” Unfortunately, we see very little of that across the value chain.

I think it's interesting in the medical field as well, because that often means bringing patients in early, in your research process.

And that is fraught with challenges, fraught with challenges, in a major way, regulatory ways. Often you have the legal and ethical challenges with anything that could be related to in vivo types of testing or engagement.

The flip side of this is that as you go through and get closer to the endgame, when you're getting the product launch or whatever you're doing, is there a role for the discovery teams throughout the whole value chain or do they need to kind of step out at one point?

So, what I really like about a lot of these discovery teams, and why I like to see them involved as much as possible in whatever capacity they can, is because of the enthusiasm. It's infectious. You get into a room with somebody that's very passionate about what it is that they're doing. Then you see that people are, especially in the medical space, really suffering. This combination of perspective, enthusiasm, and purpose is vital, because inevitably when you're working on these projects, you're going to have a moment and say, “Man, is all this worthwhile?” So to have those cheerleaders in there, guiding and coaxing it, “This is why I'm here, this is what I'm doing, all of you have a role to help solve this problem and I think that we've developed the right type of solution.” Being able to have that context and keeping it on your team, it’s incredibly valuable from our perspective.

That's interesting because going back again to the patient involved, patient stakeholder involvement, I've seen that same kind of enthusiasm or passion to help motivate teams through the difficult times. And so that's a very similar thing, I think, it's very interesting.

And then I guess we touched base earlier about convergence. There's multiple industries in healthcare or technology across industries and domains. I know the one thing we've talked about before, there's intellectual property that can be used across different domains. How should one look at the opportunities to repurpose their intellectual property?

Absolutely, so one of the fantastic things about IP is that it has the ability to be purchased and sold multiple times. When you're working with one of these R&D teams, that kicks off something, that they're trying to solve a problem, they'll know quite a bit about it. And what you're hoping to do at the very outset, when you're contemplating: “Do we want to do this project?” And you say “Yes” and usually it's because you're solving a problem, in an industry that you're actually engaged in, you know the market. But to the extent that you have the ability to bring a new perspective and say fundamentally the problem that we're solving is this, this is the fundamental problem. Where else does this fundamental problem exist?

And being able to go and leverage your IP, if you happen to have a team, that can explore and exploit these other types of verticals, you have the ability to do things like field of use (FoU) licensing, where you have multiple people from multiple different industries converging on this technology and you can actually, through strategic licensing, give people incentives and control the quality of the results delivered in other industries. If you have a technology, which is oil and gas, which has applications to pharma, which has applications to medical devices and say transportation, you don't normally see these types of players working together. To the extent, they're solving the same problem, as IP is being generated, you can carve out the IP to give people exclusive rights within their core industry. These IP rights can help incentivize knowledge transfer and align interests.

The alignment of interests can wind up being the basis for a long-term partnership or seeds of consortia. And now you start de-risking the investment, because you're pooling in new resources and very importantly, many new perspectives. To the extent that you have that ability to collaborate, this really helps. It's a pie, and how do you carve up that piece of pie, so that everybody can enjoy?

The example of that comes to my mind is Amazon and its data services, that's used extensively now in the medical field. It was just really made because they had so much inventory they had to track. And information on people, their customers, so then that's really where it kind of went lateral.

I want to give you a chance, anything else, any topic you'd like to bring in or discuss?

I know we've spoken a lot just about human behaviour and open innovation and I think one of the things that's missing quite a bit in these dialogues, you go to a conference and you think that people are just falling out of the trees, hopping on the innovation bandwagon to be able to get transactions done. And nobody's really talking about how painful it can be to actually build consortia, to do open innovation.

One of the most common refrains and something that we see quite a bit, even working with some of the best pioneers in open innovation is how do you build momentum within your organization to get a transaction done? Because it is difficult.

I think people greatly underestimate open innovation and the challenges of it, because everybody thinks that people in my organization, they're very reasonable. I'm going to be able to show them some statistics and they're going to immediately see the value of open innovation and they're going to be falling all over themselves to be able to run open innovation programs. Logic and reason will win the day.

And that is not the case. And I wish people would speak about it more often, because you see new people getting in the field, because they're very excited about the impact it can have on a company and society, but they have no clue on how to manage internal politics, which is a shame. And I really wish there was a little bit more candidness with the challenges of open innovation.

And you always have the great questions, what are best practices for the not-invented-here? Open Innovation teams, well they talk about “We're going outside, we're going to be open minded” and then you look at their actual practices and it's like, well, “We're going to build our own website. We can do it better than someone else,” rather than joining a platform built by experts, like innoget.com.

As an industry, we can do a better job there. Stepping up and saying, “Wait a second, it already exists out there. What are your metrics again? What is it that you're trying to do?” Are our own practices aligned with what we are going to be communicating out to the world? Maybe you have got to find out the hard way that people that have been doing open innovation for a very long time can immediately see through some of these inconsistent behaviours. And they'll be very cautious about doing transactions with you.

And it's also about understanding your own focus. If you know what you're good at, then you should focus on that and maybe let others do the other parts, as much as you can.

It's been great having this discussion with you and I've learned a lot, particularly since it is coming from a different perspective than what I would typically see. before we leave, I just wanted to give you a chance, if people want to connect with you, want to find out more about what you do, what's the best way to be connected to you?

We love it when people reach out to us on social networks. We spend quite a bit of time posting content on LinkedIn. I'd be very happy for people to send out a connection request. And one of the things that we want to get out of the way real quick is, how do we build a relationship, what are your pain points right now, what is it that you want to solve? And are there any challenges within your organization that we can help you out with? as oftentimes we are working a change agent within your organization. No doubt that even after two decades of working with game changing inventions and brilliant minds, there are many aspects we can use help with… AND PERSPECTIVE.

 

 

Scott Wagers

"The Consortium Whisperer" Physician and researcher who has spent the last 12 years engaged in developing biomedical R&D consortia, as well as designing and supporting the delivery of consortium based projects.

No matter who you are, you can, and you should innovate through consortia. They are the only way to make a big difference to the future of medicine. Want to find out how? Get in touch.