Collaborative Innovation Is Better For Business
Bigger challenges mean working together more
Corporate innovation teams tend to have one of two backgrounds:
The first is well-established R&D teams that have been rebranded as innovation teams. These usually excel at science but struggle to create standalone products that succeed in the market.
The second is marketing-led innovation teams. They usually have an excellent track record of creating compelling propositions that excel the market, but they often struggle to make unique products with a clear technological differentiation.
Both teams create value in different ways, but they usually share a desire to control the innovation process from start to finish. They often have somewhat rigid processes and structures, in part because they have to defend their value in the larger organisation. Frequently they keep innovation sealed off from the rest of business, a defensive posturing that creates black box innovation processes.
A third approach, Open Innovation, has become popular in recent years and offers an alternative to the black box. With Open Innovation, a company will crowdsource solutions to key challenges, seeking solutions from anywhere from startups to the general public. The term “open innovation” is a bit of a misnomer, though: the challenge is determined by a single person, the outcome controlled by them, and the value is usually owned by them too. This has been quite popular recently, but I am not sure that it truly captures the benefits of different parties coming together. Open innovation largely replicates the usual function of an innovation team, but using a cast of non-employees to crack a challenge rather than an in-house team. There can be value in opening the challenge up; serendipity can arise and the Grand Challenges of the past and today’s X-Prize awards are testament to the scale of challenge that can be addressed in this way, but it is in innovation terms an incrementally different approach rather than a radically different approach.
There is a fourth model that is uncommon in corporate innovation but has thrived in academic institutions: collaboration. Collaborative innovation is the process of two or more organisations pooling their assets and capabilities to create new value for all parties. Many corporate innovators are protective of their work, but, having thought about this long and hard in a recent strategic project at work, I believe collaboration is the best innovation strategy for businesses to pursue in order to tackle the complex challenges and interrelated systems of the physical and digital world.
In collaborative innovation, a group of organisations come together to solve challenges that require a broad perspective of the value web, different types of expertise and multiple different technologies. So if you really wanted to shape the future of the retail industry, you might gather together a payment processor, a telecommunications provider, a logistics company and a major retailer. Multiple ways of creating value for each company would emerge that they would have struggled to deliver on their own. When projects are commercialised, a revenue share model could be used to reflect the contributions of each part of the collaboration, or the technology could be licensed to one member of the collaboration and licensed to the others. Any issues around ownership that might arise would be an example of a high quality problem for a great many innovation teams.
Through collaborative innovation, organisations can create vastly more impact than they could alone. Because it requires openness and clarity, it takes innovation out of the black box and out into the world. This is a terrifying prospect for many innovators — particularly the R&D old guard — who shield their IP with their lives, but it is the best way to lift the success rates of corporate innovation teams and maximize their impact.
Many open-source projects (such as Linux and Bitcoin) have been developed with collaboration at their core, and scientific breakthroughs (The Human Genome project, or the work at CERN) are usually the product of collaboration among myriad teams, but in the corporate world, partnerships and collaborations are more often than not sales channel partnerships rather than true product partnerships, or in other cases a polite way to explain the licensing of another company’s technology.
There are a number of practical, common-sense reasons for embracing a collaborative approach. It can help unearth new innovation potential. It helps organisations be more responsive to customer and market needs, and it allows organisations to identify adjacent growth opportunities and to gain a broad and deep understanding of technologies under development.
It has operational benefits too: accelerating the speed of innovation, allowing possible solutions to be tested and scaled among a broader base of potential customers, and above all, reducing the cost and risk associated with innovation.
If we broaden our focus beyond the needs of corporate innovation efforts, collaborative innovation can help us address the big social challenges that will define the business needs of the future. Solving these is the only way to really drive macro-economic growth — something we are all in desperate need of today.
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