US Policy Changes Vol.33 (Miscellaneous Vol.3 – corporate interaction on innovation)

Here is an academic article on corporate interaction on innovation: The Benefits and Liabilities of Interacting for Innovation: a Quantitative Model (9/21/2014) | Levine, S. S., Gorman, T., & Prietula, M. J. [In K. Pugh (Ed.), Smarter Innovation: using interactive processes to drive better business results (pp. 111-119)] @ArkGroup @SSRN. This could be a hint for considering policy changes on deregulation, R&D, et al. Excerpt is on our own.

@SSRN
Abstract:
… Combining qualitative fieldwork – interviews, observation, and document analysis – with mathematical modeling, they show that sharing can benefit performance, matter little, or even harm it. The effect of sharing on performance depends on a least three variables (and likely more): the learning capacity of individuals in the organization, the state of organizational memory, and turbulence in the competitive environment. …

PDF
pIX Executive summary
… Only recently have innovation researchers begun to look at the rich microprocesses that operate within the interactions of individuals and groups. And few of those researchers have focused on the knowledge-related microprocesses. (In this context, “knowledge-related” refers to knowledge sharing, knowledge integration, sense making, and filtering – all of which play a role in catalyzing connections, testing innovation candidates for potential, and participating in myriad decisions about markets, capabilities, and industries.)
Smarter Innovation
…Peter Drucker, Eric Von Hippel, Clayton Christensen, Andy Hargedon, and Boynton, Fischer, and Bole…
…knowledge processes and microprocesses for innovation…

pX This report looks at innovation through the prism of five innovation “dimensions”, which reflect various knowledge-related interactions in the path to market (or operations) innovation. …
1. Bridging …a meeting or crowd-sourcing process integrating ideas across contexts, as AirBNB merges auctions and regional inventory, and Craig’s list merges social and for-sale listings.
2. Social and operational integration …a company discussing a product innovation on a social network, a community of practice debating an idea, or a town hall deliberating a process improvement.
3. Capabilities validation …UPS’s introspection as it assessed its readiness to go from shipper to logistician.
4. Market and industry exploration …an eCommerce firm using decision heuristics and clickstream data to identify unmet site-visitor needs. …
5. Commercialization …a family restaurant realizing when it’s better to reprice, rather than trim menu items, when the restaurant’s reputation as the “one stop shop” is at stake.

pXI We visit manufacturing, telecom, professional services, and computer hardware industries, to name a few. This extraordinary collaboration brings to mind a prescient quote by philosopher John Stuart Mill (1806–1873): “It is hardly possible to overrate the value… of placing human beings in contact with persons dissimilar to themselves, and with modes of thought and action unlike those with which they are familiar… Such communication has always been, and is peculiarly in the present age, one of the primary sources of progress.” …

Chapter 14: The benefits and liabilities of interacting for innovation: A quantitative model
p111 … For instance, when the management of Yahoo canceled its work-from-home scheme, they justified the decision by reasoning that “some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings”. When leading General Electric, former CEO Jack Welch often spoke of “getting every brain in the game” as a means to generate ideas and spread practices. …

p112 …yet we rarely hear about the potential downsides of sharing. Few of the examples account for the costs of sharing. These costs can be direct: organizations invest to support knowledge sharing. … Even fewer of the anecdotes account for the indirect costs, including opportunity costs, which we begin to quantify here. Whether you are the one seeking to discover new information, or the one invited to share your expertise, whether in a momentary encounter by the water cooler or on a scheduled offsite retreat, you must forgo other activities to participate in sharing. …
…the effect of sharing on innovation. We systematically compare what employees could achieve on their own, without sharing, to what they can achieve when sharing. … Depending on specific characteristics and circumstances, sharing can enhance innovation, matter little, or even harm it. …
…the benefits of sharing are lower in organizations that operate in a turbulent or disruptive environment, that provide better support for employee learning, or that have stronger organizational memory (such as a knowledge management system).
… those that operate in a stable business environment, that provide little support for employee learning, or those whose organizational memory is weak. …

The research: From field observations to a quantitative model
… However, when in need, a member can access knowledge that resides somewhere else; in books and reports, in standard operating procedures and presentations – and in the minds of other members of the firm. …
They self-teach

p113 by accessing inanimate (asocial) knowledge, for example by reading a report; they consult close associates or friends; they barter or trade for knowledge, inside or outside the organization; or they search broadly for peers who are willing to share their knowledge.
… Such broad sharing means not only that “every brain is in the game” – that one can seek help from any other member of the organization – but also that help has no strings attached, no expectations of direct reciprocity now or in the future. …our analysis is most cautious: liabilities we find here are likely amplified when sharing is less extensive. In other words, if extensive sharing can become a liability, it is certainly true for less extensive forms, such as sharing in teams or when reciprocity is expected.
… This method was honed in the natural sciences and engineering, where performance – whether the survival of a pride of lions, the speed of an airplane, or the stability of a building – may be affected, jointly and simultaneously, by a multitude of variables. …
The model portrays an organization composed of employees. The organization faces a large innovation project, such as developing a new product, entering a new market, or resolving a manufacturing problem. As is done in organizations, the project is broken into tasks that are assigned to individuals, teams, and organizational units: somebody has to model the cash flow or a marketing team is tasked with producing advertising materials. To complete the tasks, the employees need knowledge. And if they do not have all the knowledge necessary, they supplement either by self-teaching or by seeking help from others.
The relative values of the two paths to knowledge, “self-learning” and “extensive sharing”, could be affected by various conditions, so the model features three:
1. The average capability of individual employees to learn: People differ in their learning capability, and we are interested in how differences in the capability of individuals, averaged across the organization (or unit), affect the benefits of sharing.
2. The scope of organizational memory: Organizational memory is the “stored

p114 information from an organization’s history that can be brought to bear on present decisions. …
3. … In the firm, no two projects were identical, leaving members struggling to determine how applicable knowledge obtained elsewhere – in a different region or industry, or at an earlier time – was to a current task. …
…how differences in turbulence (or stability) of the competitive environment, which may depreciate knowledge, affects the benefits of sharing.

… We intentionally chose variables at the individual, organizational, and industry levels. This wider lens enables us to account not only for individual behavior, as has been done elsewhere, but also for the interplay of industry dynamics on performance.
…organizational members are in one of three modes: working on their own tasks (which could include teamwork, attending meetings, etc.), searching for others who may be willing (and able) to share, or replying to an incoming sharing request from another. …
Ultimately, we want to understand how sharing affects performance; and performance can be defined in various ways. …

p115 The findings: When sharing benefits innovation; when it doesn’t
…the effect of sharing on innovation is highly contingent: the exact effect of sharing on innovation depends on at least three conditions… Depending on the circumstances, sharing can benefit innovation, play no role, or even harm innovation. …Table 1.

Individual implications
…when individual learning capability increases, the value of peer sharing decreases. The more people can teach themselves, the lesser is the value of others’ knowledge…

p116 Secondly, sharing benefits least when the company has invested in the other, asocial elements of organizational memory: libraries, databases, reports, and other inanimate source of knowledge. …
Finally, if the company operates in a turbulent environment, one in which knowledge depreciates quickly, employees should rarely seek peer advice.

p117 …seeking an expert takes time and taxes the expert, but if the environment has changed since the expert acquired her knowledge, the effort may be wasteful, even risky. …

Team implications
…teams often undermine the performance of individual members, and larger teams are worse. …
…first, teams solving innovative problems may benefit from recruiting members to maximize disparities in knowledge. …
… If members have similar knowledge, experience, or views, there is little to be gained from sharing: it will likely just entrench existing views, a risky tendency in teams. Members should also recognize that turbulent environment depreciates knowledge…

p118 … Finally, they should explicitly discuss the costs of peer-to-peer knowledge sharing …

Organizational implications
…investments in asocial knowledge sources, such as standard operating procedures or organizational depositories, are seldom compared explicitly with investments in peer-to-peer sharing, such as water cooler conversations. …
…companies should equally value the skills of self-learning, especially where the environment is turbulent.

To share, or not to share?
…the greatest benefit from sharing may be in low-tech organizations, such as capital-intensive manufacturing and established service organizations, not in knowledge-intensive ones. …
… In situations where customer preferences are rapidly changing, new players are entering, technology is evolving, or the regulatory environment is in flux, innovation is valuable…