By CYRIL TUOHY, managing editor of Risk & Insurance®
At FM Global, the Johnston, R.I.-based property insurer, engineers take innovation seriously, so seriously in fact, that they are willing to give away company secrets--almost.
With the goal of promoting and disseminating new technology thoroughly tested in the lab, FM Global is happy to share its secrets with manufacturers and let them make a better product.
Why? Because in the end, everyone is likely to benefit: clients, vendor-partners and FM Global itself, which will benefit by paying out less in claims.
"The goal is to promote top quality, cost-effective product choices that our clients can use to reduce risk and, even more broadly, that leading companies worldwide can use to reduce risk," said Lou Gritzo, FM Global's vice president of research.
Enter the skipping resistance sprinkler, a new kind of sprinkler designed to put out fires using less water than standard sprinklers. The technology represents a modification of standard sprinkler design, but with minimal impact on its cost.
Engineers at the company came up with the idea more than two years ago, according to FM Global.
After studying the new sprinkler technology for about 18 months, the carrier released the technology to manufacturers at the end of last year. Since then, at least two companies have shown interest in making the technology, said Gritzo.
FM Global has applied for patents, but the company doesn't stand to make a dime off the invention, said Gritzo, even though the company could if it wanted to.
Fires are a big and expensive business. On average, there were 31,000 fires reported annually between 2003 and 2006 in vacant or idle buildings, according to the National Fire Protection Association. For these fires, the average direct property loss exceeded $640 million annually.
If new sprinkler technology can help reduce that $640 million by, say, 10 percent (assuming these are insured losses), that's $64 million less in claims that has to be paid out every year by carriers like FM Global. You get the picture.
NEW APPROACH TO INNOVATION
Nonexclusive, royalty-free licensing isn't new. Some of the nation's largest companies engage in such actions. Southern California Edison, one of the country's biggest utility companies, has acquiesced to royalty-free licensing arrangements in the past.
Such licensing arrangements are also common in the music industry, but for FM Global, an engineering-heavy carrier that underwrites property risks for the largest companies all over the world, the approach is relatively new.
Gritzo said the company's is pleased to have launched the licensing arrangements with its partners as it signals a different approach to innovation--one that is modern, open and broad-based.
Instead of hunkering down in research labs in secret locations, and then protecting the technology with a phalanx of patents, legalese, lockboxes or even armed guards after a technology is announced, the company's doing exactly the opposite. Gritzo & co. are sprinkling the intellectual wealth.
Better yet, it bringing manufacturers into the game and having them show an interest, FM Global assures the marketplace that it has developed innovations that are useful to the marketplace.
"Our goal is to get usable risk reduction in leading companies worldwide, and the more manufacturers embrace technologies that we develop, the more effective we are at reducing risk," he said.
Gritzo has a point. Corporate and academic science labs around the country are littered with inventions that nobody wanted to mass produce, let alone use. What's so innovative about products that sit on shelves, or services that no one wants to buy?
"The real barrier to innovation is the development of that idea to something that is a useful reality rather than the idea itself," said Gritzo.
THE SKIPPING SPRINKLER AND MORE
The development of the skipping sprinkler program at FM Global came out of a strategic research initiative started back in mid-2006, when senior managers called on FM Global employees around the world to submit ideas.
Another idea that has been pursued by the carrier includes an open-source approach to developing its computer model for simulation of fire physics. A third initiative includes releasing a technical report on the influence of risk factors on sustainable development.
"The first is a product," said Gritzo. "The second is a way of analyzing risk, and the third is a concept that looks at where sustainable development is going, where the whole green movement is going and where risk management fits into that."
Gritzo is well aware that just because an idea or a process or a concept is out in the open doesn't make it innovative. In fact, many may get shot down, but that's the chance that leaders who want to innovate have to take.
"Leaders that inspire, encourage and mentor innovation have to be willing to lead people on a new quest that may not yield results," he said.
September 15, 2009
Copyright 2009© LRP Publications