The Long Tail in Voluntary Collaborationscaledinnovation.com/innovation/conferences/2010-09-open_pharma.pdfWikipedia: Wilkinson, Hewlett-Packard labs; other, this work What percent

Rob Spencer, Pharma External and Open Innovation, Philadelphia, September 2010 1

Rob SpencerPharma External and Open InnovationPhiladelphia, September 2010

The Long Tail in Voluntary Collaboration


Many Thanks

contact informationDr. Robin W. SpencerDirector of Research

Imaginatik [email protected]

scaledinnovation.com

Tim Woods, Mark Turrell

Steve Street

John Dila, Gabriel Eichler

Anne Rogers, Kurt Detloff

Jon Bidwell

Howard Smith

Mike Hatrick, Dave Wootten

mailto:[email protected]

mailto:[email protected]

Rob Spencer, Pharma External and Open Innovation, Philadelphia, September 2010

Take Home

• The behavior of voluntary contributors is very different from traditional teams.

• All such systems are “long tailed”; half the input (and value) comes from people who contribute only once.

• Internal challenges are an excellent prelude to external approaches.


Outline

3

• Why do things differently?

• The Challenge Model

• The Long Tail in Collaborative Innovation

• Risk-Management Tactics


Bonafides and Context

44

• World’s largest pharmaceutical company

• $7 billion annual R&D

• Tightly focused, managed research teams

• Scientist & manager, 29 years in R&D

• Past 5 years leading innovation initiative

• Retired, 2nd career developing collaborative intelligence systems at Imaginatik

me


Outline

5

Why do things differently?


You must master things...

6

In Science Business, Gary Pisano notes that biopharma survival depends on mastery of the

• complexity

• uncertainty

• speed of change

of the underlying science.

Gary Pisano (2006) Science Business


...that you don’t know inside your company

77

Pfizer spent more on research in 2007 than any other company in the world.

JAMA, September 21, 2005—Vol 294, No. 11 1333http://www.nsf.gov/statistics/seind00/access/c2/c2h.htm

Pfizermedical device

firms

foundations & charities

rest of world

other government

biotechnology firms

other pharmaceutical

firms

National Institutes of

Health

USABut that represents only

1.7% of the world’s biomedical R+D spending,

1.4% of the world’s biomedical scientists


Outline

8

The Challenge Model


The “Idea Farm” is an all-company collaborative innovation and problem-solving system.

We ran 30-50 campaigns every year.

This approach is known to be effective and sustainable.

Scaling up open collaboration inside is a perfect prelude to Open Innovation.

Pfizer experience


??

Diverge-Converge

The diverge-converge model is centuries old, proven effective, and scales perfectly with electronic media.

The classic example is the Longitude Act of 1714; see Dava Sobel’s book Longitude


Case Studies by Scale and Type

social problem-solving

meeting and decision support

Continuous Improvement

outside supplier & partner challenges

portfolios & priorities : Speed Dates

portfolios & priorities : large challenges

difficult scientific challenges

interactive communications


Outline

12

The Long Tail


The Long Tail

13

There is a Long Tail of large scale collaboration behavior.

Chris Anderson’s book tells the story for retail books and music. His observations, conclusions, and advice apply directly to collaborative innovation.

It matters because the results are non-obvious, universal, and now predictable.


Classic vs Long Tail Statistics

14

What’s the average height of people?

What’s the average number of ideas from

our employees?

ideas per person

how

ofte

n it

occu

rs• It’s nothing like a bell curve.

• “Average” makes no sense.

• Some people enter no ideas, some enter hundreds. The range is huge.

inches of height per person

how

ofte

n it

occu

rs

• It’s a bell curve.

• “Average” is a useful description.

• The range of values is only a factor of 2.


Log-log graphs reveal the tail

15

linear graph

Log-log plots show the tail clearly.

A straight line on a log-log graph has the form y = Cx-b , a power law.

I graph these like Zipf, with the axes are flipped vs the Pareto convention. Slopes here = b = 1/(α-1)

log-log

Pfizer Idea Farm 2006-200920,000 entries from 4000 authors in >200 campaigns


Long Tails are everywhere

16

• book and music sales

• word usage

• internet hits

• salaries

• avalanches

• wildfires

M. E. J. Newman (2006) Power laws, Pareto distributions and Zipf’s law, http://arxiv.org/abs/cond-mat/0412004v3


Many Companies, One Phenomenon

17

Each dataset is a single campaign at a different company.

Lines all have α=3.0


These are huge datasets over multiple years and thousands of people each.

These very different businesses show identical behavior patterns.

Cargill, Innocentive, and Pfizer


Voluntary External Contributions

19

An external letter-box system shows exactly the same pattern of contributions.

Data from several years of Pfizer’s open contribution system, courtesy of Doug Phillips

The long tail pattern does not depend on “networks” or “communities.”

one-way only !


Long Tails in Public Forums

20

M. E. J. Newman, Power laws, Pareto distributions and Zipf’s law, 2004

D. Wilkinson, Strong regularities in online peer production, in Proceedings of the 2008 ACM Conference on E-Commerce, Chicago, IL, July 2008

Long tails (power laws) are the norm for large scale voluntary contributions.

Wikipedia and Digg


The Value of a Contribution

21

The value* of an entry from a top contributor is the same as that from a rare contributor.

The huge number of singleton authors puts their value far ahead of the top contributors.

* Value was measured for multiple large internal challenges, assigned by rankings of the sponsoring business unit.


Lesson #1

22

Voluntary external behavior is different from structured internal behavior.

Internal systems are typically push, external are pull: this is a huge mindset change for motivation and management.

John Seely Brown & John Hagel III, Push Pull -- The Next Frontier of Innovation


Lesson #2

23

Most of your contributions and value come from the occasional contributors.

from authors of 1 idea

of 2 ideas

of 3

Internal contribution statistics are gaussian, external are power law.

Do not bias your system by quantity; you may exclude your best contributors.

Use a structured, scalable approach to evaluating the input.


Dirty Secrets of 5 Star Voting

24

• it’s biased

• it’s compressed

• followers drive to extremes

• don’t make it too easy

How public opinion forms, Fang Wu and Bernardo A. Huberman, Social Computing Lab, HP Labs, Palo Alto, CA 94304, http://www.hpl.hp.com/research/scl/papers/howopinions/wine.pdf

Is the crowd’s wisdom biased? A quantitative assessment of three online communities, Vassilis Kostakos, at http://arxiv.org/pdf/0909.0237

“...when people observe previous opinions ... they tend to follow the trend. As a result ... extreme views get reinforced and become increasingly more extreme.

“... where expressing a view is costly, like when writing a book review...people will tend to ... offset the current view by presenting a differing one.”

“This analysis has shown that the wisdom of the crowd is indeed biased.”

Analysis of Amazon:380,000 reviews of 21,000 books by 134,000 people

Amazon average is 4.4 out of 5


Lesson #3

25sources: Twitter: Heil and Piskorski, Harvard Business School October 2009; Digg, Wikipedia: Wilkinson, Hewlett-Packard labs; other, this work

What percent of people put in 80% of the content? 80%

Twitter tweets 5%

Digg votes

9%

comments, star votes

21-28%

Wikipedia edits

46%

corporate ideas

58- 68%

info

rmat

ion

cont

ent

The simpler the task, the less representative the results.Be very suspicious of mass ratings.


Outline

26

Risk Management Tactics in Open

Innovation


Ask Valuable yet Low-Risk Questions

27

• Which of our policies and procedures makes your CRO task onerous?

• What are the bottlenecks in regulatory document preparation?

• Can you make this molecule for under $200/kilo?

• We have a new drug for diabetes in Phase III. What could you do with it in other disease areas?

Ask for help in finding problems, not solutions.

Start with optimization, not new opportunities.

Offer an opportunity you wouldn’t exploit anyway.

examples


Ask Different Questions

28

identify inside “impossible” problems

prepare for a partner face-to-face

feedback system for contractors

project tracking for a new collaboration

large-scale electronic RFI - RFP

brokered system for specific sub-problems

inside

supply chain & partners

Open Innovation


Approach Open Innovation in Stages

2929

A staged approach prepares for, and minimizes, IP risk when going outside

project team

whole company

partners, suppliersrest of world

know

ledg

e

time

risk


Good Reading

30

• John Seely Brown & John Hagel III, Push Pull -- The Next Frontier of Innovation, McKinsey Quarterly 2005 no 3, 82-91.

• John Hagel & John Seely Brown, From Push to Pull - Emerging Models for Mobilizing Resources, working paper, Oct 2005.

• Gary Pisano, Science Business, 2006, HBR Press

• Gary Hamel, The Future of Management, 2007

• Thomas Friedman, The World is Flat, 2006

• Managing Uncertainty, Harvard Business Review

• Strategy Under Uncertainty, HBR OnPoint reprint

• Peter Senge, The Fifth Discipline

Contact information

Robin W. [email protected]

860-326-8077


Questions ?

Documents

The Long Tail in Voluntary Collaborationscaledinnovation.com/innovation/conferences/2010-09-open_pharma.pdfWikipedia: Wilkinson, Hewlett-Packard labs; other, this work What percent