Capturing and Codifyng Knowledge is Key to Incremental Innovation – 2 of 2

The practice of innovation in the Philippines is dictated by the reality that the bulk of the market lies at the bottom of a pyramid. Cost reduction is very often the main goal of innovation.

Even when no basic research is conducted, my experience as an innovation practitioner is that the value of learnings from adaptive research – if extended, gathered efficiently in a library and made accessible within the firm as codified global, ‘tacit’ knowledge as defined in Professor Lundvall’s journal (See Post #17), is worth a lot for the firms investing in banking such knowledge. By not extending to codified knowledge many Filipino firms are condemned to repeat trial-and-error artisan activities and not benefit from continuous learning.

Definition. Global knowledge is based on technical and first principles. Tacit knowledge exist when people are not often aware what they have; codified knowledge are tacit knowledge that are documented and stored in accessible form. To bank codified and global knowledge requires the conduct of proper experiments and documentation of the results – in itself a first principle in innovation. This is no magic bullet but a discipline well worth the effort.

A good example where Filipino business can catch up to global standards is in the food industry – and much more because of the size of the Philippine market.

Click image to link to Professor Lundvall’s journal 07-01.

Example. Conceptually, building blended taste is done in two dimensions: the flavor profile itself and flavor delivery.

The profile is built up from three notes: the base, say meaty, the middle, say roast beef, and the top, which is mainly aroma. Typically, the three disparate components are rounded up with an enhancer, say MSG, which sews up the ‘gap’ between the three parts. (Of course, in this example the original and natural process is roasting real beef.)

Other generic components may include the SAS in balance to add a piquant note; SAS stands for salty-acid-sweet represent say by soy sauce, vinegar, and sugar in an adobo recipe.

Flavor delivery takes care of the timing of sensation. Other than the fact that receptors are located in different parts of the mouth for the different tastes – like salty, sweet, bitter, sour and umami, techniques like encapsulation and buffering can deliver sensations in the right sequence.

The different acidulants like tartaric through lactic acids also have different delivery profiles as well as functional parameters. Stabilizers prevent separation and texturants impart body. Colors are added to mimic nature or the customer-preferred shades. Finally, the right preservatives keep colors and keep food safety.

A proven way to reduce the cost of flavor blends is to average down the component cost rather than to import a whole flavor, natural or standardized-natural. This works well in the Philippines.

In volume, the base normally comprises the biggest proportion so finding an inexpensive source helps. The mid-notes are more specific and it helps if you lock in a good flavor lab on this component. The top notes are normally the domain of the ‘flavor houses.’ While these flavors are the most expensive, their dosage is minimal. The key here is to build relationships with many so they support you with (aroma) samples for experiments.

In terms of delivery, the flavors normally are sensed first through the nose. The base including carriers like fats lingers longest.

Enhancers are tricky. For savory flavors, MSG is cheap but imparts a bouillon taste that may not be desirable. There are other ingredients like soy sauce and smoke flavors that can be enhancers if one knows how to use them. There are enhancers for sweetness as well.

In the example above, the technical skill on component knowledge as well as knowledge of global sources is readily available in the Philippines. The key to profitable incremental innovation is extending the results of small ‘trial-and-error’ experiments and capturing them as ‘global, tacit’ knowledge in the firm. I could cite numerous examples here especially in enhancers adaptive research but cannot disclose even the hypothesis raised without disclosing proprietary information. I suspect that, in profits made, this bank of cumulative knowledge has banked a lot of pesos.

The adaptive research lies in the ability to compound flavors through effective project definition and efficient experiments. The ability to create a library of blend components – in as codified global, tacit knowledge – is the key to continuous profit from innovation. When these building blocks accumulate and reside in a firm, they become real sources of firm value.

Western firms take the accumulation of codified global, tacit knowledge for granted. It is part of the industrial DNA of which they have at least 200 years or 10 generations to permeate into their workforce. The Japanese have adapted very fast in 150 years. We, in the Philippines, can catch up, adapt and embed this technique quickly for real value to reside in our firms rather than in the artisan scientists for the whole company to benefit.

I have a good appreciation for codified knowledge because, at 23 years old, I was the IE Manager of a 100-year old manufacturing company, TMX Cebu – the assembler of TIMEX watches. In TMX, Change Control – how TIMEX captured, banked and accessed suchknowledge – was religion to coordinate the quality of components made all over the world and assembled in Cebu. Quality could only be achieved by design and good execution.

If we learn this quickly, Filipinos have a chance to out-perform those who have the funds to buy turn-key factories but not the knowledge of innovation management for learnings to be captured and banked inside the firm.

Click here for Part 1 of 2.