Knowledge Trading

The goal of knowledge trading is to dramatically increase the amount of knowledge usable for our internal blockbuster+ pursuits. This increase comes from skillfully trading knowledge with competitors and external parties. We trade fascinating but disconnected knowledge for subtle but commercially-exploitable knowledge.

Not all knowledge is created equal. We explore this with a discussion of Knowledge Layers.

Discipline knowledge is academic knowledge. It's necessary, but not sufficient for blockbuster products. Cross-disciplinary knowledge allows us to find and exploit me-too+ or add-on products. We have all our ducks-in-a-row, but not the capability for innovative R&D pursuits. In-depth domain knowledge is that which we are able to leverage to find innovative R&D products:

… a legitimate hallmark [of creative endeavors] is unexpected behavior that leads to deeper understanding of the system or relationships to other phenomena not heretofore considered relevant to the system. Foote, Richard (2007). Mathematics and Complex Systems

The development and nurturing of in-depth Domain knowledge is a key goal for World Class R&D.

Knowledge across Commercial Efforts refers to procedural or technical knowledge that contributes to more effective R&D across multiple Investible Units+. This is mostly new Discipline Knowledge, protected as trade secrets, and provided for the exclusive use of our franchise members. It gives us an edge in the hunt, but does not in itself contribute to effectiveness in the hunt. For example we might optimize the design of monoclonal antibodies, or better understand how to manipulate the Original Antigenic Sin for use across various vaccines or pathogen research programs.

Working in R&D, whether in an Investible Unit or not, is generally enough to allow us to develop and absorb disciplinary knowledge. This is generalized knowledge, academic knowledge, with lots of spillover across firms. This knowledge is easily transportable (or hirable as the case may be). This is where vast amounts of fascinating but commercially-irrelevant science is developed and stored. We often give away this knowledge as part of our knowledge trading expertise.

Cross-disciplinary knowledge is at the start of R&D commercial success. You are able to quickly develop a skinny path from the initial research concept through to commercial application. This involves coordination across many technical disciplines.

it is incumbent on us all to work toward enhancing the understanding of ‘big picture' issues within our own disciplines and beyond; each of our disciplines must itself exhibit the inherent facets of a complex system, or our research is surely nugatory. Foote, Richard (2007). Mathematics and Complex Systems

This is the layer where spillover protection becomes important. We manage how this knowledge is shared with our competitors. We document and track knowledge that is applicable across several scientific disciplines. Many times knowing how the pieces fit together rather than being the absolute best in any individual piece is what gives rise to a competitive edge. Even if we had instantaneous access to all the knowledge in the world, not too far from today's internet reality, we still have no guarantee of finding successful R&D products. You can safely trade the individual pieces of information. Commercial success comes from an understanding of how that knowledge integrates across many dozens of technical disciplines.

In-depth domain knowledge dramatically increases the absorptive capacity of the firm for new knowledge, accelerating the discovery and development of new and innovative products. The key ingredient for absorptive capacity is termed prior-related work. Our goal is to be productively working in a scientific area in order to be able to quickly identify and commercially exploit the next breakthrough in that area.

Scientific research, as with physical systems, evolves over time through generally incremental changes punctuated by breakthroughs, culminations, and unforeseen outcomes. Foote, Richard (2007). Mathematics and Complex Systems

Insights are many times implicit or tacit. They are not always obvious. You know this approach works even if you can't exactly explain why. You recognize this finding as significant because you've been wrestling with a related issue for the last several months. In-depth domain knowledge goes beyond cross-disciplinary knowledge. All team members understand the entire chain of research. It's intangible, implicit, and immeasurable, but in-depth domain knowledge is precisely where our competitive edge resides. It allows us to take external knowledge and to quickly place it within a context of our ongoing research: our prior-related work.

In World Class R&D we intend to develop sophistication in knowledge trading. We have a ranking system that tells us which internal knowledge is safe to trade (or conversely which is critical to protect). We measure how well we do in executing the actual trades. We have an active program for the management of knowledge spillovers. We actively promote our scientific competitive edge+, thereby adding cache to the value of any knowledge we trade. We maintain an inventory of superficially fascinating but commercially-irrelevant knowledge to trade. Knowledge trading is a billion-dollar game and we intend to win.

Merck's blockbuster drug Januvia™ purportedly harvested insights from an under-performing acquisition: a phoenix rising from the ashes, so-to-speak. Expertise in knowledge trading makes all our acquisition and in-licensing activities more productive. There's a cubbyhole for all the knowledge gathered during the due diligence of external sciences and products; we always get a good return from our evaluations of external opportunities.

Inventors of blockbuster drugs 'recall their obsessive tracking of published chemical structures, patent filings by rival companies, and clinical trials of comparable drugs – even those that fail – as signposts helping point the way to their blockbuster. – Couzin'  We leverage prior related work in R&D to uncover that next breakthrough in its infancy. The general lack of sophistication in knowledge trading means much external knowledge of value will be inadequately protected, as in the above example, and can be readily expropriated for our own internal blockbuster needs.

Further Reading