by Darin Stewart | September 21, 2012 | Comments Off on The Innovation Lessons of Craft Beer
I have a deep and abiding love of craft beer. Fortunately, I live in Portland Oregon, epicenter of the craft brewing movement. Our fair city boasts 55 craft breweries and counting. Where other cities offer siteseeing tours, we have brewery tours. These are not drunken pub crawls. They are educational vehicles for the aspiring beer geek. Every sample is preceded by a lecture and followed by an analysis. In the midst of a recent Brewvana tour, I was struck by how much the technology community could learn from the brewing community.
While listening to a Master Brewer hold forth on the merits of Northwest hops and English malts, three young gentlemen seemed to be paying closer attention than the rest of us. During the tasting break they introduced themselves as aspiring brewers from two new competing microbreweries that were just starting out here in Portland. Rather than expelling them from the room as industrial spies, the brewmaster began offering guidance and advice. As another sample was poured for the group, the discussion turned toward techniques, recipes and increasingly technical brewing arcana. This was not a one way flow of sage advice from the wise master brewer to the precocious newcomers. The new guys were sharing their own innovations, ideas, successes and failures. On the bus to the next tour stop, the three young brewers chatted excitedly about what they had learned, which ideas had been validated and what they wanted to try next. The rest of us were happy to have been flies on the wall.
At the next stop, we were greeted by the owner of a small 10-barrel brewery ready to share his knowledge and promote his product. His t-shirt immediately caught my eye. It sported the logo of a brewery we had previously visited, a direct competitor to this gentleman. When I asked him about it he responded quizzically. “Why wouldn’t I want to promote his beer? We’re all friends. We share recipes. Sometimes we even share facilities and equipment. If we build up the community, we build up the market. Everybody wins.” That was an epiphany for me. I’ve discovered that craft brewing is not a zero-sum game. Technology shouldn’t be either. (His Kolsch was pretty good too).
Sharing, openness and collaboration among competitors is a radical notion to many businesses, but it shouldn’t be. By sharing pre-competitive information, whether it is hop to malt ratios, field experiment results or design patterns, open companies are creating an ecosystem in which they along with their competitors can thrive. Rather than jeopardizing existing revenue streams, opening intellectual property and precompetitive data to external entities can expand and accelerate profits by cultivating new channels of revenue. Jeff Weedman, Proctor and Gamble’s Vice President of external business development and global licensing sums this up nicely, saying: “Competitive advantage used to mean ‘I’ve got it and you don’t.’ Now it can mean, ‘we both have it and can make money off of it.’" IBM’s early investment in open source, which eventually yielded a $2 billion professional services revenue stream, is a prime example of this ethos.
Evidence suggests such open strategies are already stimulating innovation, fostering creativity, creating new business relationships and facilitating multidisciplinary analysis and insight. Industries as competitive as pharmaceuticals and energy are investing in precompetitive forms of information commons, and are developing "collective competencies" to spur innovation and boost the productivity of downstream product development. A prime example of this dynamic is the Pistioa Alliance. Such unique public-private partnerships to rapidly share data and findings are producing innovative results in the treatment of disease.
This does not mean the end of competition, just a change in its character. Portland brewers are extremely competitive, but winning or losing a taste competition rests on the merits of the product and the skill that goes into crafting it, not on the secrecy of the recipes. Most recipes are posted publicly. Amateur brewers are encouraged to experiment on those recipes and share their own innovative variants. We’ve even got a U-Brew facility where ambitious home brewers can use (for a fee) top caliber equipment under the tutelage of more experienced mentors. It has served as an incubator for several new businesses and a lot of interesting beers. The current rage is “collaborative brews” in which two competing breweries team up to create a brew that plays to both of their strengths, but which neither could produce alone.
Technology innovators should take a similar approach. The boundaries of the enterprise need to become more porous. The inflow of external ideas, assets and information should be placed on an equal footing with the outflow of product and licenses. Sharing precompetitive data, facilities and expertise accelerates innovation, reduces costs, improves the final product and can expand the market. I’ve blogged previously about how most intellectual property is not used as actionable innovation. Too often it is simply filed away as a hedge against future litigation or used as a tool to instigate litigation. This protectionist posturing is pointless. Next time you mine your patent portfolio and identify a potential infringer, don’t serve them court papers, invite them out for a beer. Chances are you will discover a collaborative way that both of you can profit from the IP in question and maybe come up with something really cool that neither of you could produce on your own.
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