The scarcest resource is not money or oil but instead gaining "respect, approval and the opportunity to pursue ideas in a culture that tries to solve big problems", according to the head of one of the world’s few successful idea incubators.
This, therefore, is what oil major Royal Dutch Shell has tried to provide over nearly 15 years through its GameChanger programmethat incubates an idea to a proof of concept and then potentially on to a business or technology that can be used by the group.
That a 103-year-old established company set up GameChanger and made it work when most incubators fail was down to the "genius" of its originator, Tim Warren, a former head of research and development at Shell.
Both Russell Conser, current head of GameChanger, and its previous manager, Leo Roodhart, in separate interviews described now-retired Warren as a genius for his innovation.
Conser said: "He realised the pressing business of today causes a focus on short-term research and development but at the loss of a long-term option. The solution was to put long-term projects into a separate place and manage them differently and with a separate budget."
Roodhart said: "GameChanger was set up with $15m to $20m per year and five people, so that anyone with anidea that was new or radical, not just a new drill bit but a new form of energy or a laser to drill a hole, could come to us."
To create "space that would free minds for innovation", GameChanger was designed as a "proof-of-concept" process to work with an idea, not just analyse it, so that experience, rather than assumptions grounded in orthodoxy, drives later decisions as to whether to support or kill the project.
GameChanger is an autonomous team of 10 who invest about 5% to 10% of the R&D budget in testing the ideas that pass its initial and extended panels. Successful projects, which cost GameChanger on average about $500,000 in being tested andrefined over two years, graduate for further development under the separate R&D programme, a licence to another firm or a new venture company.
There have been relatively few spin-outs of new companies, although there are some notable successes, such as Swellfix, last year absorbed into Tendeka.
Shell sold a majority share in its separate Technology Ventures group, which was designed to back larger businesses, to form an independent firm, Kenda Capital.
Between half and 60% of all ideas submitted to GameChanger come from Shell’s employees, but the process is open to all and all are judged by the same process.
GameChanger’s unique longevity and scale has also shown up a quirk of innovation – that idea generation is often limited to a relatively small number of people in any group and they tend repeatedly to develop good ideas, although there is nothing noticeably different in terms of their background, education or intelligence, according to Shell employees who had been through the process.
More than 200 projects, out of more than 3,000 ideas submitted, have graduated through GameChanger and until two years ago up to 40% of the main R&D workload was in refining projects submitted by Conser’s team.
This 40% represents about a tenth of projects passing through GameChanger and half of those that graduate to R&D end up as technologies used by Shell.
This relatively high success rate for an ideas incubator was due to GameChanger often taking ideas from the R&D community that had been worked on in secret, and then coaching people internally about how to position the plan and providing other support, Roodhart said.
Conser said the important reasons for GameChanger’s success has have been the consistent level of top executive support, having a separate fund and dedicated team and autonomous authority.
Autonomy in making investment decisions and steering projects exists within a culture of transparency about the reasons for those decisions and the subsequent methodology.
However, Conser said more recently there had been a push to reduce the proportion of projects taken up by R&D as GameChanger was setting its sights on passing more innovative, and hence risky, ideas.
He said: "The pace of inflow of ideas to GameChanger has increased, so the bar is higher in the technological risk we can take, as we still have only 50 active projects and 50 maturing from the initial screen.
"There is also a greater interest in finding an extra business line, although we have had some success with biofuels, and so we are increasing the clean-tech or future energy projects in our portfolio from less than 10%, to 25% to 30%."
These projects can take a long time to be developed. Roodhart, who worked at Shell for 30 years, said: "It has already been eight years since biofuels were accepted through GameChanger and it can still take at least another decade for ideas to come to fruition.
"Shell is tolerant of this as it has a culture of looking far ahead. As a company, Shell has people who work to the long term. Every three years, people model what the world will look like in 25 years and GameChanger then translates these themes back to technology."
The structured process (see explanation below) provides the framework to allow decisions to be made, but Conser said the greatest challenges came from the "human dimensions of radical innovation".
GameChanger is a people-focused social process, forming a group around an idea and creating a network. "It is critical to avoid overanalysing radical ideas and instead allow participants to understand an idea through experience, not assumptions," said Roodhart.
But in a large, established, successful culture, making transformative change is difficult and so GameChanger has added "step-change sustaining innovation" to its existing business units to build credibility in the organisation to open more space for "disruptive" innovation, such as renewable rather than fossil fuel.
As Conser said: "The genius of GameChanger is it is a little mechanism to create the right conversation, not to pin the tail on the donkey but to bring soft knowledge to bear on an idea. Innovation is down to a paradigm – how to look at a problem."
Shell: How turn an idea into reality
1 Idea creation: Ideas can be submitted through a website by anyone in or outside Shell at any time.We also stimulate new ideas by holding workshops on subjects and maintaining active relationships with select universities worldwide, such as MIT, Imperial, Trondheim and Texas. Idea originators, called proponents, are the central focus of the process throughout an idea’s life. Each ideais also assigned a GameChanger team member as sponsor. If an idea has come from outside Shell, the sponsor secures an internal co-proponent.
2 Screening panel: The proponent presents his rough idea for questioning by a two-person screening panel chaired by the sponsor.Team members then immediately decide whether to grant minor funding ($15,000 to $25,000) with which the proponent can develop a more robust proposal.
3 Mature idea: The objective of the mature phase is to answer questions necessary to make a material funding proposal to an extended panel. Minor funding may be used to experiment, visit potential collaborators, or engage potential customers about the idea. Sponsors actively work with proponents to sharpen their proposals.
4 Extended panel: In the extended panel – the core functional element of the GameChanger process – a proponent presents his idea and plan to a body of six to 12 people with relevant experience to ask questions and make comments about the merits of funding.
The group is purposefully diverse to help challenge orthodoxies. The group must include at least three GameChanger team members and at least three non-members, one of whom must represent a customer perspective.
GameChanger team members evaluate the idea against the following criteria. Potential value: What is the total long-term value impact on Shell if we assume success?
Why Shell: Why is Shell in a good position to both create and capture value from the idea?
Novelty: How different is the idea? (Those that have never been done before score highest.)
Do-able plan: Can a step-wise plan affordably resolve critical uncertainties quickly and cheaply? The GameChanger team members then decide whether to reject, fund, or modify the plan.
A few key aspects of extended panels are noteworthy: Simple fit-for-purpose criteria: although we consider whether an idea couldwork or not, success probability is not a criterion.
Instead, the novelty criterion inherently favours high-uncertainty ideas, and the do-able plan criterion assesses whether the risk is manageable. Peer review and recognition: the panel comprises a diverse peer group, so there is no hierarchy.
Separation of advice and decisions: panel experts’ advice is weighed heavily, but is not binding for decisions. Sometimes the most interesting ideas are also the most controversial, and the team may choose to invest against advice.
Over time, we have tuned our ears more to issues than to conclusions, and we always seek to ensure that the plan addresses issues.
5 Execute idea: If approved, staged funding is released to the proponent according to the plan. During execution, proponents are like chief executives of their own mini-ventures. Although they may take on a project fulltime, most often they execute their project alongside their current work. Regardless, they are not left to fend for themselves. Most of our proponents are scientists and engineers who may be less skilled or less interested in the business and commercial dimensions of their projects, and so GameChanger sponsors act as multi-skilled consultants.
6 Tollgates: Projects return for a replay of the extended panel process at the tollgates, according to the staged funding plan. Over the years, we have come to learn these tollgates are themselves part of the social journey. In order to build understanding and support in a group of people, we establish a permanent advisory board for each project. Tollgates are primary social events where momentum and understanding are either built or lost. Early participation of future stakeholders in tollgates is thus key for later buy-in.
7 Close-out panel: On completion of a project, a closeout panel is held, whether the project has succeeded or has failed. For projects that failed to reach proof-ofconcept, the focus is on learning lessons. For successful ideas, the focus is on reviewing and validating a forward plan. Successful graduates require the approval of the R&D head to proceed. Authority over the actual forward plan for graduating projects rests with the receiving organisational department.
Fact box
Shell is a global group of energy and petrochemical companies. Its
headquarters are in The Hague, the Netherlands, and the chief executive
is Peter Voser. The parent company of the Shell group is Royal
Dutch Shell, which is incorporated in England and Wales.
Shell by numbers
Operates in 90+ countries
~101,000 employees
Produces 2% of the world’s oil
Produces 3% of the world’s gas
Produces 3.1 million barrels of gas and oil per day
Has 44,000 Shell service stations worldwide
Sells 145 billion litres of fuel
Runs 35+ refineries and chemical plants (figures for 2009)
Ranked 1 by Fortune 500 in 2009
2009
Revenue: $278.2bn
Income: $12.7bn
Capital investment: $31.7bn
Investment in research and development: over $1.2bn
Fast facts for sustainable development
$2bn spent on CO2 and renewable energy technologies over the last
5 years.
In 2009, greenhouse gas emissions from Shell facilities were about
35% below 1990 levels.
$13bn spent in 2009 with locally owned companies in low and middle
income countries.
$132m spent on social investment programmes in 2009.