Encouraging Scientific Creativity and Innovation
in the Digital Age: owning knowledge and open source
Potsdam, Germany
2 - 8 December 2007

The title of our conference brings to mind a remark by Potter Stewart, a former US Supreme Court justice: “I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it....”

The judge was not contemplating science and technology when he made this observation: he was ruling in an obscenity trial and “I know it when I see it” was his commonsense definition of pornography. Though it may seem a little strange to connect them, his definition is equally applicable to slippery terms like “creativity” and “innovation”. We know them when see them: the sharp intake of breath when the first email popped in your inbox; the tiny frisson when you first drag your finger across an iPhone; the sigh of relief when a loved one’s seemingly intractable illness responds to experimental treatment.

In the coming week, we’re going to move beyond the sighs and gasps (more Justice Potter’s territory) to explore the nature of innovation in 21^st century science and technology. Innovation is more than just invention or discovery: it’s the diffusion, integration, and exploitation of knowledge that leads to economic and social gain. It’s easier said than done, however. Two examples, from biotechnology and information technology, illustrate some of the features, and challenges.

Sirtris Pharmaceuticals is an American start-up which recently listed on NASDAQ. The firm is creating novel therapies both to treat the most formidable diseases of old age – including heart disease, type-2 diabetes, Alzheimer’s, and many types of cancer – and, potentially, to extend the human life span, too. Sirtris’s therapies derive from the research of David Sinclair, a 38-year-old Harvard University Professor of Pathology, who claims to have discovered a fountain of youth. He found that a compound called resveratrol, a chemical found in red wine, extends life span in mice by up to 24% and in other animals, including flies and worms, by as much as 59%.

Sinclair’s extraordinary discovery was suggested, in turn, by the work of his mentor, MIT microbiologist and gerontologist Lenny Guarente, who discovered a class of genes in humans and animals called the sirtuins. Guarente thinks resveratrol works by activating SIRT1, a gene that he believes plays a fundamental role in regulating life span in animals. Today, Sirtris has a number of “sirtuin activators” in clinical trials, and hopes to have its first therapy, for the treatment of diabetes, on the market in 2008.

All of the startup’s work is protected by the full armature of intellectual property law, including patents and trade secrets. More than that, it is closely associated with the work of two scientists, representing almost two decades of discovery, and could not be easily or quickly replicated. While some large biopharmaceutical companies, including Genentech and GlaxoSmithKline, have begun work to “reverse engineer” Sirtris’s sirtuin activators, “big pharma” companies will probably end up licensing the drugs from Sirtris. For all its novel science, Sirtis represents a traditional model of innovation: academic research translating into corporate development, concentrated in an established, geographical cluster and a closed network of participants tightly protected by intellectual property rights.

Compare this to the rough-and-tumble of the world wide web, and the case of Mark Zuckerberg, founder and chief executive of Facebook, the fast-growing social networking web site. He is being sued by Cameron and Tyler Winklevoss, twin brothers who were founders of ConnectU, another social network.

Today, Facebook enjoys much of the glamour that Google enjoyed when it was new. As of July, more than 50 million people, mostly young and college-educated, had registered on the site. Facebook’s users share information about themselves with friends, send private messages to one another, and hang out in groups formed around different interests and hobbies, where they can swap web links and files like photographs and videos.

This activity has real value. In October, Microsoft secured a deal to buy 1.6% of Facebook for $240 million – a move that valued the entire social networking site at $15 billion and which could create a new model of online advertising based on “conversations” between marketers and consumers.

The Winklevoss brothers and their co-founder, Divya Narendra, say that Facebook stole the idea from them. In a suit filed in 2004, the ConnectU founders accused Zuckerberg of lifting their site’s source code and business plan when he worked for ConnectU as an unpaid programmer. They are asking that Facebook’s assets be transferred to them.

Here are the facts that are not disputed: in 2002, when the Winklevoss brothers were juniors at Harvard, they conceived what was initially called the HarvardConnection, which was to be a social network for the college. In November 2003, they asked Zuckerberg, then a first year student at Harvard with a side-line as a computer programmer, to develop the site’s software and database, promising to compensate him later if the venture prospered. Zuckerberg abandoned the project in February 2004, a month after registering the domain name thefacebook.com. By the end of that February, his new site, also a social network for Harvard, had registered half the college’s undergraduates. By April 2004, it had spread to other Ivy League schools. Very quickly, thefacebook expanded to serve other universities, then high schools, then organizations as varied as McDonald’s and the Marine Corps, and finally the general public.

By contrast, ConnectU never really got started: it didn’t open until May 2004, and, overshadowed by what became, simply, Facebook today has no more than 70,000 registered users. In their suit and in public statements, the Winklevoss brothers contend that Zuckerberg promised to finish coding before the brothers left college in June 2004 and that he procrastinated to gain a competitive advantage. Zuckerberg and Facebook’s lawyers say that there was no binding contract between the two parties.

Judge Douglas P. Woodlock of United States District Court in Boston, who is considering a motion by Facebook to dismiss ConnectU’s suit, seems to agree with Zuckerberg: “Dorm-room chitchat does not make a contract.” This summer, he gave ConnectU two weeks to prepare a better case – which it was unable to do. Since then, the case has languished in a kind of legal hinterland: it’s not exactly dead, but it’s unlikely to amount to anything.

In all likelihood, Facebook would not exist had it not been for ConnectU. It appears that the Winklevoss brothers did indeed conceive the initial idea and create a useful, private, social network of college-educated computer users. But that’s not much of an innovation, and it was easily replicated by Zuckerberg and the founders of Facebook, who were more ambitious and harder-working – they dropped out of Harvard to pursue their vision of social networking – and simply better at executing a really modern, elegantly functional web site.

The lesson is that innovation can be profoundly profitable in computer hardware, software, networks, and upon the web. But it’s also a lot less certain than in even the life sciences and biotechnology, where the nature of the beast, quite literally, makes innovation a long-shot anyway.

How should organisations successfully commercialize innovations in computer hardware, software, networks and upon the web? Sure, some ideas can be patented or otherwise protected by copyright. By and large, however, a genuinely novel, patentable discovery in computer science, like the PageRank algorithm that is the founding technology of Google, is as rare as a phoenix. Instead, the IT sector is subject to continuous disruption, which is hard to navigate, and from which it is harder to extract value. Historically, two strategies have proven successful.

The first was invented by IBM for its mainframe business, exploited by Microsoft’s operating systems division, and is used today by Google’s advertising networks. It seeks to preserve the value of an IT innovation in an industry-wide, proprietary standard that creates a monopoly. With successful proprietary standards, because the “source code” of the platform is a closely-guarded secret, every one in the industry must work with the standard whether they like it or not. This strategy works just fine, until a new platform supplants the older one, which happens today at an increasingly rapid pace.

Alternatively, and more radically, an organisation can endorse open innovation, where it looks outside its own walls for bright ideas. IBM, when it saw its mainframe business supplanted by PCs running Windows, turned to this strategy when it embraced Linux, the open-source operating system, as a platform for its computer hardware. IBM now talks about being part of an “open-innovation community” where it yields patents to the creative commons, rather than registering them for itself. Because tens of thousands of hackers work on Linux for free, IBM now has an extremely robust and technically sophisticated operating system at no cost, upon which it has built other, innovative businesses and services from which it can make money.

Innovation is sometimes described as “fresh thinking that creates value”. In an age of information-sharing and globalisation, though, even this pithy description needs careful examination. What exactly do we mean by “fresh” – new, yes, but unprecedented? Who exactly is doing this thinking and where in the world are they? And how do we judge value, when there are few universal standards?

These are just some of the questions we’ve gathered to discuss. Traditional notions of how to organise, finance, measure, regulate and reward innovation are changing. So if it’s a matter of fresh thinking and creating value, then let’s do some innovating of our own.