Curt Carlson
SRI’s Curt Carlson Wrote the Book on Innovation
August / September 2010
Volume 8 Number 4
Curt Carlson is the president and chief executive of SRI International, the research institute in Silicon Valley. He literally wrote the book on innovation, called Innovation, where he describes the processes that companies should go through to stay on the leading edge of technology. SRI’s researchers invented everything from the computer mouse to Siri, an intelligent virtual assistant for your iPhone.
SRI was conceived by Stanford University to commercialize research. First named Stanford Research Institute and later renamed SRI International, it became independent from the university in 1970 and now has more than 2,200 researchers working on things such as the cool artificial intelligence, speech recognition, natural language processing, location information and agent technology that are part of Siri. Carlson was interviewed by Innovation’s Dean Takahashi about the process of innovation.
Tell us about your background.
I’ve been the CEO here for 11 years. I came from our Sarnoff Center in Princeton, New Jersey. I came out here and felt like I’d gone to heaven. I’m a serious technical person and to be here in the epicenter of innovation for the world is a dream come true.
What do you do at SRI?
In addition to being chairman and ceo, I do other things around the world. I am the co-chair of the science advisory board for Singapore. I get to see what they are doing. SRI was spun out by Stanford University 60 years ago when this was all farm fields. It was very prescient of the leadership of Stanford. They knew by themselves that the university was not going to be as successful as it could be if it were not surrounded by a vibrant ecosystem. We were one of the first major steps, in addition to the industrial park that was built near Stanford. Bit by bit, we fulfilled our mission of doing research and working with the university and corporate folks to create value in the marketplace. Over our history, we have created lots of things. Every day, you use something from SRI, whether it is the computer mouse, hypertext, high definition television, electronic banking, spreadsheets, the dotcom addresses you type, the numbers at the bottom of the checks you sign that led to modern banking, when you talk to the computer, if you have robotic virtual surgery—it just goes on and on like that. These innovations have created hundreds of billions of dollars in value. We have played a very important role in the development of Silicon Valley and we are continuing to do that. The things we are doing today are just as exciting.
Like what?
Eighteen months ago we spun out a company from SRI called Siri. It was bought by Apple before it had any revenue for a very nice premium, thank you very much. It’s an assistant for you. You can use it to find things. You could say, “I am in Menlo Park. I have my wife with me. I’d like to find a restaurant. What do you have?” It will ask you if you want it near your hotel and if you want Italian as you have liked before. It makes a recommendation and then you confirm the reservation.
So we can guess what will be in the next iPhone.
You can guess what will be in the next iPhone. I think this interface will be as ubiquitous as the PC mouse that was developed by Doug Engelbart 40 years ago. Doug transformed every PC with the mouse he did. This Siri has the potential to be the next big revolution in personal computing, 10 or 15 years from now.
How did Siri originate?
We have a very serious artificial intelligence group. Doug and his team were seminal. That has continued. Our team realized it was possible to put all these technologies together and we co-invented a solution with DARPA. We put together the best team from Harvard, Stanford, Caltech and others. We managed it. It was very successful.
How long did it take?
This was going on for five years. It had 25 partners and several hundred million dollars. We started incubating possible ideas for the government and the commercial world. It is being used by the government in the Command Post of the Future, producing amazing results, helping make decisions about how to fight skirmishes or wars. It pulls out the right kind of information. We worked on that and the commercialization of it four years ago. We have a formal process to incubate with SRI Ventures, run by Norman Winarski. We figure out what do with a technology and hire an entrepreneur in residence, who will incubate it some more. We figure out an opportunity and get a world class team and form a company.
Do you often license it broadly?
Sometimes we do. This year we had a big success with a new drug that was approved by the FDA for T-cell lymphoma, a terrible cancer for which there was no therapeutic. We work with our partners to take it to the next level. Our key word is innovation. It isn’t an innovation until it is commercial. We take the process of innovation more seriously than anyone. I wrote a book about this called Innovation with Bill Wilmot. We teach the fundamentals to everybody here. If you can innovate, you will be one of the most valuable people in the world for as long as you want to work. My dream for everybody at SRI is to work on a big, important problem, to make an impact.
Your book came out in 2006. The ideas brewed for a long time. How do you distill the ideas you developed over decades?
Most of the ideas in the book are things most serious professionals do. We get to see it all. We have been involved in forming lots of companies. We have partnered with hundreds of companies. We meet with governments, prime ministers. Everybody comes to SRI. The thing I keep coming back to is the importance of sticking to the fundamentals of innovation. Very few people realize where the bar is. When you do something today, you are in the olympics, and the olympics are global. If you can’t make a case for how you will be successful with the best talent and the best value proposition and the best business model, then you will have a hard time. That lesson has been reinforced over and over again. Being the best in your backyard isn’t good enough anymore.
How do you define innovation? Does it equal creativity?
There are many inputs to innovation. Creativity, intellectual property, entrepreneurship, research, business skills. Those are all inputs. Innovation is the creation and delivery of new customer value in the marketplace with sufficient value for those who are producing it. All of those ideas are part of it for us. It has to be new customer value or it’s not an innovation. If you can’t find someone to pay for it, it won’t last. The tricky phrase in there is customer value. We teach everyone what that means.
So you think innovation can be taught?
Do you think of yourself as an innovator?
Not necessarily. I write about them.
Let’s go back to the definition I gave. Do you create things? Yes. Do you deliver them to the market? Yes. Do you hope your writings will have new value for your customers? Yes. So I believe that reporters are innovators. It may be a small innovation. If you deliver value in the marketplace, you are an innovator. It may not be the same magnitude as inventing the computer mouse, which is a gigantic innovation. But if you are a successful reporter like Thomas Friedman, you can influence millions of people, as he did with The World is Flat.
Back to our point. It can be taught. How does this stand out?
Creativity is an input. People like Doug Engelbart and Steve Jobs are very creative. Their raw material happens to be at a very high level. If you study the work of Doug Engelbart, he was an incredibly disciplined innovator. He had a process for innovation that leverages a lot of fundamental concepts that we wrote about in our book. For instance, one of them is focus on a big, important need. Doug was trying to transform how productivity could be accomplished with personal computers. Everyone now uses Doug’s innovation. He formed a talented team. He focused on continuous iteration. That’s important because when you start, you don’t understand the need, the competition, or what really works. Doug understood that and put in place a process where people refined their ideas at a rate which was impressive. It was unprecedented in the history of science and engineering. They talked about and actually built the things they invented. He did these things with a passion and conviction that hasn’t been replicated since. From everything you read about Steve Jobs, he believes exactly the same things: big important problems, assemble the best teams, iteration rates that are ferocious and thinking about all of the dimensions of customer value. All of these ideas can be taught to people.
If an organization gets a mission to be more innovative, how can it do so?
We have thousands of executives come to SRI. We teach them about five disciplines of innovation. Focus on customer market needs. Focus on value creation. Get your answers fast and efficiently. Find innovation champions, the people who are passionate. We teach people the skills they need. We talk about assembling innovation teams. Steve Jobs would have no success if he didn’t hire the best people in the world. We also focus on organizational alignment where you continuously improve how you can focus on innovation. We help create innovation architectures for each company that visits us.
So this works at any company?
They work at any organization, from newspapers and media companies to chip companies. They are fundamental learnings. Most people don’t do them with enough passion and conviction to be continuously successful. Very few companies apply them with a rigor that we think is needed. At the turn of the century, the top 500 companies in America lasted 100 years before they completely went away. Today, the lifetime of the companies on the Fortune 500 list is less than 20 years. The time on the list is going down. These companies are just not keeping up. Technology is growing fast in most fields. The world is global and there is a lot more competition. If you don’t apply rigor, you put your employees and companies at risk.
Do you see eye to eye with other innovation authors out there like Clayton Christensen?
There are 100 great books out there. They all have something to offer. We read them and pass them around. Our approach is really based on the fundamentals. It’s the nuts and bolts. Take the example of Crossing the Chasm by Geoffrey Moore. It’s a great book. We find most people don’t do the right things in continuously developing their value propositions. If you are not doing the fundamentals, it becomes irrelevant whether you understand crossing the chasm or open innovation.
So the teams don’t step back and assess what they’re doing?
This idea of getting teams to iterate is harder than what most people believe. You need things like integrity and respect. You have to work so closely with your partners that you have to be able to trust them. So values matter. You have to focus on the compelling need. The right approach to it. You have to assess the customer value of that approach, and then judge the competition. You have to come up with a superior value to costs with respect to the competition. If you can’t answer these questions, you don’t know what you are doing. Answering these questions is really hard. Every part of SRI thinks this way. Terms like value proposition get tossed around ten times a day. But does everybody on the team understand it in the same way? If you don’t have common understanding about the language of innovation, it slows you down. And if you slow down in today’s world, you get wiped out.
So there is a lot of lip service given to the term innovation. How do you make sure the organization is not just paying lip service?
You walk into any organization and ask any staff member. You ask them to describe their innovation system. If they can’t describe it, they don’t have one, no matter what the CEO says.
How do you keep these ideas fresh at SRI?
We do everything we can. Every all-hands talk touches on the process on innovation. All new employees—including janitors, assistants and CEOs—go through our workshops. We include everybody at some level. We have structures in the enterprise where we bring people together in value creation forums. We fund these. People can go to them. We have a ventures group, using the same principles. Venture capitalists visit us on a regular basis. Every now and then they fund one of our ventures.
How do you decide what to invest in here? How big should each program be?
We have a continuous discussion about important customer needs. Here, it means that it has to be worth hundreds of millions of dollars or the best venture capitalists are not interested in it. In other places, people are happy to build $2 million companies. In research, we look for areas that will last a long time. Infectious disease. Millions of people die from it every year. We don’t have good solutions. Cancer. Cyber security. There is no good cyber security here.
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