Innovation, R&D, Future, Facebook: Interview With Stephen Hoover, CEO Of Xerox PARC

[By Sudarshana Banerjee]

“There is a problem with the Internet,” says Dr. Stephen Hoover, the CEO of PARC. “It is not scaling well.” PARC is working on fixing it, of course.

What about the Internet of Things? “It will not be sweepers with Wi-Fi chips, and microprocessors,” says Dr. Hoover, “but printed electronics.” 3D printed objects with embedded computing, perhaps.

I catch up with Dr. Hoover at a PARC Forum, celebrating the ten-year anniversary of its practicing open innovation as an independent company.

Before we jump into open innovation and lean startup principles, and hear what Dr. Hoover thinks about Apple, Facebook, and IBM; for those of us who may need it, here is a quick backgrounder on PARC. You will also find a brief case study of a successful innovation from the PARC stable that can change the health-care industry, following Dr. Hoover’s insights.

Part one: What a long, strange trip it’s been 

PARC is an institution that is as much a part of myth and technology folklore, as it is a company. It is a place where ‘conoisseurs of talent’ meet in ‘workscapes of the future’. The company is located at the beautiful Coyote Hill Road campus in Palo Alto, California, a place where closely-guarded secrets meet open innovation, in the ‘Business of Breakthrough’, which, incidentally, is officially the business the company is in.

PARC has been the most successful failure in the technology of innovation. The Palo Alto Research Center, as it was known back then, was founded in 1971 as a research wing of Xerox, with the aim of designing the office of the future, a paperless utopia.  In the process, PARC employees and engineers had developed the world’s first laser printer, ethernet protocol, a graphical user interface, and the concept of distributed personal computing, among other things.

All these beautiful things were used by companies other than Xerox (Apple, Microsoft, Adobe, just to drop a few names) to build bigger and greater things; atoms, culture, and shareholder value included. In 2002, PARC was spun off as a wholly-owned subsidiary of Xerox, doing research both for the parent company, and for clients, including the government.

In 2011, Stephen Hoover was named chief executive officer, following the company’s previous CEO Mark Bernstein’s retirement. Dr. Hoover had joined Xerox in 1994. He had a Ph.D. and M.S. in Mechanical Engineering from Carnegie Mellon, a B.S. from Cornell. He had won one of ten national fellowships at AT&T Bell Labs, and had seven patents of his own. Within Xerox, he had held a variety of research, development, and engineering positions; including the post of vice president of the Xerox Research Center of Webster (NY), where he was responsible for research and development in services, imaging, cross-media, and hardware technologies.

As vice president of the company’s software and electronics development group, Dr. Hoover was responsible for directing more than $175 million of research and development investments, as PARC CEO he is responsible for changing the world.

Incidentally, Xerox has four other research centers – Xerox Research Center of Canada, Xerox Research Center Webster, Xerox Research Center Europe, and Xerox Research Center India.

Part two: Face-to-face with Dr. Hoover

What is the most innovative thing PARC is currently working on?

I can talk about a couple of things- 3D printing/printed electronics and content-centric networking (CCN) architecture.

PARC is working with a startup from Norway called Thinfilm, in the printed electronics space. Thinfilm is strong in printed memory, we are good with printed logic and sensors.

What if medicine bottles came with a tag that could tell you its temperature history? What if you knew exactly how old a particular fish fillet was, before buying it? PARC is working on innovative printed electronic solutions for the packaging industry.

My Swiffer sweeper is going to be connected to the Internet not because I put a Wi-Fi chip in it and a microprocessor. For the Internet of Things to truly take off, we require to enable these kind of technologies at a really low cost. 3D printing is just taking off; what if we were able to embed computing as an inherent, integral part of these printed objects?

The Internet has a problem; its not scaling well. See, the Internet was designed as a communications network, not a media distribution network. We are working on rearchitecting the Internet using content centric networking (CCN). CCN can run alongside or independent of TCP/IP, and will not disrupt existing networks.

How much money  do you spend annually on R&D? 

We spend 20 per cent of our own money on open-ended research, you know, R&D as a percentage of sales.

Governments and companies fund a part of our early research, because they want us to help solve their problems. Sometimes we will have a proof-of-concept, and a commercial partner will join in, and we will take the IP further.

Commercialization is 75% of my business.

On innovation in practice: Learning from social sciences

Innovation, in practice, is the intersection of three key things – human behavior and context, new models for business, and technology expertise. Radical disruptive innovation involves solving problems that people often did not know needed solving, or were solving them in a radically different way.

PARC has a successful history of applying ethnographic and social science techniques to understand how people integrate and use technology in their lives. If we are trying to solve a problem, we ask, how are people achieving their goals today? What are the sequence of steps they are using? What are the problems they are running into? What are some of the things a solution needs to do to integrate with their lives?

Observing and understanding human context has been core to many of the innovations that has come out of PARC.

I want to be clear about what I don’t mean. Co-designing a solution is not as simple as asking your customers what they want. I love this quote from Henry Ford, “If I had asked people what they wanted, they would have said faster horses.” Customers can not do your job as innovators.

Often times as technologists we focus on solving the problem right – the right technology, the stack that I chose…  and they are really important things to get right. But when thinking about solving a problem in the right way, we also have to think if we are solving the right problem, a problem that has stickiness with the customer, a solution they can use and integrate into their lives. Its like a seesaw – a fine balance between solving the right problem and solving the problem right.

The end goal of innovation is people adopting and utilizing your innovation in their lives in some ways.

On agility: Would you have invested in the first Facebook?

Agility is a key practice of innovation. Agile innovation coupled with solving the right problem allows this highly iterative process of observation and learning and participatory designs.

All of us are (hopefully) familiar with the loop of learn-build-measure… A lot of times your first idea will not be the right idea. You have to accept you can be wrong. The value lies in how fast you can build and experiment, to test your hypotheses.

There is another aspect of agility, and this can sometimes be counter-intuitive to people – the notion of MVP or minimum viable product. Have a lofty goal in the long term, but set the bar as low as possible. Define the minimum interesting opportunity that still adds value as a bar for success, and raise it iteratively again and again throughout the innovation process.

Would you have invested in the first Facebook? Facebook started as a place where college students could find and rate each other. That’s a pretty low bar! A lot of VCs passed on investing in the start up then; they reasoned, with a total of 30,000 Harvard students and maybe 20,000 students from Princeton, and so on.. the user-base for Facebook would be maybe 3 million total.. there is no market. But that was the right strategy for Facebook – setting the bar low, seeing where the value is, and implementing over time.

On making mistakes: Not perfect grades

I am very lucky to have two teenage daughters who are very self-motivated. Now, one of them gets very upset if she does not do well on a test. My point to her is, its not about getting the perfect grades – but about responding to that. Now you know what to learn.

One of the key aspects of an innovative culture is to recognize, innovation is learning. When you are starting, you don’t know whether you can actually solve the problem you are attempting to solve. There are a lot of questions. Does the tech work? Does the business model work? Do I have the right customers? You don’t even know if people will adapt your solution, even if you do manage to solve the problem.

Learning means you will make mistakes. Its better to think mistakes in terms of experiments. Obviously, later and later in the innovation process there is less and less space for mistakes. And you never have space for mistakes that are predictable; we know certain things are going to fail, let us not run that experiment. Lets make better mistakes (strikethrough) experiments tomorrow.

On innovative cultures: Apple, IBM, and of course, PARC

Companies with innovative cultures can transform themselves.

I give IBM a lot of credit for the way they have changed their business over the last 20 years. They have really transformed themselves into a services and a technology company.

Apple has gone from being in the desktop computing business, to being in all our hips. The company is in the content business as well, with the iTunes store and App store – that’s a massive transformation!

Our own transformation from being a research center to being in the business of innovation, while maintaining our ability to do breakthrough research, is part of an innovative corporate culture.

How can companies change their culture from looking at innovation as a creative process, to thinking of innovation as a business function?

The first step is recognition, you know, like the ten-step process. Recognize I have a problem. I have to realize, if I don’t innovate, I die.  I will age and die in my spot.

The second thing is actually to decide innovation is within your power and grasp. This is important. A lot of people say we are not innovative, we can’t innovate. Yes, you can!

Do the agile thing. Start small. Find a simple problem that has a lot of value, solve that problem, and then build to that kind of vision over the long term. Find a space where you can add value that other people can’t do, set the bar low, deliver, and iterate over time.

The first time we fail, is not an excuse to not continue. Like I said, if you are in the business of innovation, you are making mistakes.

This customer thing, it’s a contact sport. Go out and and interact with your customers.

Case study:  Digital nurse assistant 

An ethnography and technology team PARC has been working on the Digital Nurse Assistant project over the last couple of years, along with a technology partner. The project started from an informatics viewpoint, but has evolved to reaching a solution that can not only address the challenges of electronic medical records (EMR), but can disrupt the way how nurses and medical institutions care for patients.

Currently, there is a tremendous cognitive and coordination load on nurses. Nurses and healthcare professionals spend less than half their time on actual patient care; they have to spend huge chunks of time on documentation and record keeping. Nurses also spend a lot of time prodding and unblocking others to get things done.

Lets look at a typical scenario, and see just how many different interactions are involved in getting something really basic done. Lets say, a patient’s lab results show low levels of potassium, which get inputted in the EMR system. The incoming nurse notices that potassium is low, and nothing has been done about it yet. She sends a note to the doctor. There is no response from the doctor. She escalates, finding the doctor’s number and calling, but the call goes to voice mail, and there is still no response. She happens to meet the doctor in the hallway, and manages to get a medicine order. But now the pharmacist is not at the desk, and the nurse can’t get the order filled. She has to locate the pharmacist. In the meanwhile, the patient has gotten absolutely no help.

PARC’s solution is to build a system that provides contextual information to nurses automatically the moment they visit a patient. A monitor above the patient recognizes the nurse as she enters, and provides a list of open tasks, their status, and ways to track them. The nurse does not have to go up and down screens looking for the relevant information they need that moment anymore.

The nurse can also get a mobile view, and can sort her responsibilities either by task, or by patient. A different view for the supervisor provides an overall snapshot, so she can immediately see if a particular nurse is overloaded, and accordingly realign responsibilities.

A team from PARC donned blue coats and worked with nurses, studying thousands of interactions to come up with the solution. To simulate real-world conditions, the company built a lab in its premises that replicated the hospital environment. Agile innovation included clinical scenarios, observations, and work shops with nurse managers, among other things.

While the solution is still far from being complete, initial results have shown improved clinical decision making, reduced errors, reduce workload, and increased job satisfaction, besides offering healthcare professionals a way to navigate in the information gold rush.

Update: April 24, 2023

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