How one company reinvented the way it invents, creating a culture of innovation that sells.

By Andrea Meyer
OPEN Magazine, Fall 2011

Can you imagine a world without Post-it Notes? Do you even want to?

When 3M researcher Spencer Silver first discovered a repositionable adhesive in 1968, he didn’t know what to do with it—he had found a solution without a problem, the company says. Six years later, his colleague Art Fry wished for a movable bookmark and remembered Silver’s discovery. And in 1980, the sticky yellow squares of paper finally made their way to store shelves.

Post-It Notes became a huge commercial success for 3M. But if not for Fry’s epiphany, they may never have existed, depriving the company of billions in sales and office workers of a valuable product.

The struggle to translate new technology into a viable product is one many companies are all too familiar with.

“Engineers love to make new stuff, but unfortunately we can’t always sell the new stuff,” says Hege Kverneland, the chief technology officer at National Oilwell Varco (NOV), a $12 billion oilfield equipment and services company.

NOV wanted to address that issue by establishing a social network of innovators within the company. The company partnered with the McCombs School to give employees specific skills designed to bring new technologies to market.

The Visionary

Trey Mebane, the director of business development at NOV, is an engineer by training. Varco (which merged with National Oilwell in 2005) hired him in 1997 to revitalizenew product development. Mebane’s marquee project for Varco was the development of V-ICIS, a “Star Trek” chair for drillers. V-ICIS provided drillers with a touch screen command center that replaced more than 3,200 knobs, dials and buttons that drillers previously had to scan and monitor. It gives the driller control of critical systems while automating routine operations.

After the success of the Star Trek chair, Mebane was encouraged to get an MBA.

“I thought, ‘This is great,’ but I’ve never really thought of myself as an MBA type of person because I’ve always been focused on how to create and execute growth strategies in an organization with new technologies, as opposed to handling business administration and sustaining existing product lines,” Mebane says.

He looked for a graduate degree that played to the strengths of new value creation and, through an ad in Texas Monthly magazine, learned of the university’s master of science in technology commercialization (MSTC), a one-year master’s degree program that teaches participants very specifically how to bring new technologies to market.

“Students learn to assess technologies for market potential, create business plans for them, obtain funding and develop operational plans,” explains MSTC director Gary Cadenhead.

MSTC students generally fall into one of two categories: entrepreneurs and internal product developers (often engineers looking to gain the business skills to advance their innovations). Created in 1996, the program is one of the few technology commercialization degree programs in the country.

Enrolling in the 2008 MSTC program, Mebane realized it provided answers to challenges NOV was facing as a result of growth through acquisition. New units added products and IP to NOV’s portfolio of offerings, in turn creating new opportunities for innovative cross-NOV products. But because of the company’s rapid expansion—NOV has more than 45,000 employees in 60 countries—existing and acquired business units weren’t always seamlessly integrated, and Mebane saw missed opportunities.

NOV had another common challenge: engineers were coming up with new product ideas but weren’t always focused on their commercial viability. Joe Blanc, commercialization director at NOV, explains, “We were very good at designing new products, but finding the path to get them to market quickly was lacking.”

Mebane could see how the concepts taught in the MSTC program could help NOV address those issues, and he encouraged the company to send other engineers and teams through the program.

Frank Springett, vice president of pressure control engineering, who attended the MSTC program after Mebane, says it was valuable because of its niche focus.

“MSTC is not a master in business administration, it’s a master in business creation,” Springett says. The difference, Springett explains, is the program’s focus on “how to get a new technology off the ground successfully.”

Clayton Hargis, product development engineer and another MSTC alumnus, agrees.

“You figure out what people need—the pain in your marketplace—and assess the risk and reward of commercializing various solutions,” he says.

But it became clear that training a handful of pioneers in technology commercialization wasn’t enough. If NOV wanted to truly transform the business, it needed a critical mass of leaders who could accelerate strategic creativity and establish a culture of innovation.

The Birth of NOV Ventures

“If we could get cross-divisional teams going through the program, we could start commercializing products within the program, products only NOV could build,” Mebane says. He proposed a technology commercialization program taught by University of Texas faculty and tailored specifically to NOV employees, who could apply that knowledge across business units and geographic borders.

The solution was a customized program, based largely on the MSTC degree, that would enable 50 or more people to go through at once. Educating more employees in the MSTC methodology would provide a solid base—an innovation ecosystem within NOV for new value creation.

Mebane worked with Chantal Delys, assistant dean for Executive Education at McCombs, and MSTC director Cadenhead to select core pieces of the MSTC degree program most relevant to NOV. The result was a four-module, nine-month program called NOV Ventures.

“The goal was to create a critical mass of intrapreneurs— innovation leaders—who could accelerate technology commercialization in the organization,” Delys says.

Creating a personalized course allowed NOV to synchronize training with its product development cycle and focus on what its innovators needed most, such as leadership skills, while bypassing modules already handled by other parts of NOV, namely intellectual property management and internal financing practices.

And unlike the traditional degree program, where students may not be working on their own ideas yet, NOV Ventures students immediately applied concepts they learned to their own projects, with faculty acting as advisors, says Delys.

“We talked via webinars, set up coaching sessions, and provided extensive, immediate feedback,” adds Kate Mackie, senior lecturer in marketing.

Industry partnerships with universities are common—even partnerships rooted in technology commercialization. But while other universities partner with corporations to commercialize technologies that are usually developed within the Ivory Tower, this partnership to create a capacity for technology commercialization is unique. UT faculty were helping NOV employees develop skills to evaluate NOV-generated technology, and faculty signed confidentiality agreements to enable frank, honest discussions of new product ideas.

Breaking down silos—between business units, functions and geographies—is a key goal of the program. Participants are selected by vice presidents of engineering and product line management in all the business units of NOV. Once enrolled, participants are assigned to a team to maximize diversity of age, company experience, business unit and geography. For instance, pairing a person from a downhole solutions group with one from drilling equipment unites two disciplines into one team, enabling new product ideas to emerge from across disciplines.

And to bring far-flung units closer together, the custom program takes study abroad to a whole new level, traveling to four locations around the world. The opening session took place in Austin in August 2010, where students got an academic grounding on the Forty Acres. They moved to NOV headquarters in Houston in November for the second module. The third portion was in the international hub of Amsterdam in February 2011, and the fourth took place in May in Kristiansand, Norway, where an NOV corporate R&D center is located.

“You’ll get to see how a rig group in Norway would analyze a situation versus a rig group in Houston,” engineer Hargis says.

“It’s an extraordinarily good way for people in a big global company to learn about the company,” says John Daly, professor of management who teaches in both the MSTC program and NOV Ventures. “The people in Houston or California came to a much deeper understanding of Norway and other parts of the company because they worked in teams. To be able to come up with a great project, you have to understand more of the company than you would otherwise.”

The Results

For a $12 billion technology company like NOV, increased understanding between business units is undoubtedly beneficial, but what really counts is new product development. So how are they doing?

Of the 11 ideas worked on by the first NOV Ventures team, eight or nine are already being built. The exact figure of NOV’s expected revenue return is confidential, but the company reports that NOV Ventures has already delivered a much greater return than initially expected.

“The primary goal was to develop a new set of disruptive products from new technologies. We’ve got 11 different technologies, all in the process of moving forward to be new products. Some are already being launched. The dollar revenues projected from these 11 technologies is staggering,” MSTC director Cadenhead says.

What’s more, CTO Kverneland sees the funding allocation process improving. “It’s really good to see participants thinking about product development in a new way. What they’ve learned is to focus on the right project.”

Commercialization director Blanc likewise sees the change. In the past, the day-to-day requirements of running the business were a common distraction from new product development, he says. The MSTC program, however, taught the discipline of doing market analyses, financial projections, developing good business plans and getting buy-in to those plans. “That has helped us tremendously in the last 12 months to stay focused on commercialization,” Blanc says.

“There’s a new excitement about commercialization inside the organization,” Blanc continues. “There’s no question in my mind that the skills taught in this program will advance the company. The fact that we’ve got people from all over the world, in different disciplines, being pulled together into teams, it can’t do anything but be good for us.”

NOV engineers now know how to evaluate technology for market potential and develop a business plan and goto- market strategy to persuade top management to fund the new product. A second NOV Ventures class with 39 new participants got underway in August.

“Somebody in this group could become a top leader at NOV one day,” says management professor Daly. “Somebody will be a VP of R&D some day. The added advantage is that they got to know each other globally through this program.”

And it all started because Trey Mebane wanted to be a more productive contributor to his company.

“Trey had the vision to see the value of this,” Blanc says. “It’s been fantastic for a guy to take a vision and not just talk about it but do something with it. He’s changing the company.”

Talk about disruptive.