Innovation is an over-used, misunderstood concept, despite being talked about by most companies in most markets. Today, it has often come to mean creativity or invention and is often strongly associated with technological developments or research.
The other challenge is that is you ask 100 companies for their definition of innovation, you are likely to get 100 different answers. At Logica, I use a definition that provides consistency across the business and ensures we focus on taking the benefits of innovation to our clients. The definition is
‘The successful exploitation of ideas, that are new to you, leading to a positive economic, environmental of social benefit.’
Today, many companies are looking to embrace collaborative innovation as a way to affordably solve their complex business problems, reduce their costs, expand their revenue or enter new markets without the need to invest heavily in R&D or as a way reducing their time to market or time to solve a problem. Alternatively other organisations embrace it as a way of solving complex problems that they are not capable of solving themselves or to just give themselves a different perspective that can only be gained from people involved in different activities across the eco-system, including end users / consumers. This often leads to a broad range of more successful innovations, due to the different ways of solving a problem and ways of implementing the innovation, often more effective when end users are involved in all stages of the process.
Collaborative innovation does not need to be the sole right of consumer or public facing organisations, it can also be beneficial for highly sensitive projects – it just means that the community being accessed is one in which you trust and that has the necessary safe guards in place.
So given the it is clear that there is a need to collaborate, and more companies are also adopting Open Innovation – simplistically publicising your needs for other companies to help you solve them – why do so many companies struggle to collaborate effectively.
Research completed by INSEAD and Logica at the end of 2009 showed that 59% of people who responded said that innovation project that included significant collaboration were more difficult to execute than those without, although 64% of people stated that they did collaborate for their innovation projects. Another result of the research was that 41% of people stated that innovation projects fail in their organisations due to conflicts with short term deliverables. If you combine this with a UK spend on innovation of £133 billion (as calculated by a recent NESTA study) then the cost to the country of failed projects through a combination of poor collaboration or conflicts with short term deliverables could be in the region of £55 to £85 billion per year – a staggering number.
So, how could this be improved? Well, there are three things that tend to get in the way of good collaboration across an eco-system; different business goals, a lack of understand of each party’s role in the eco-system and different cultures
My experience has shown that it is always surprising how often companies forget to understand the business goals of the organisations they are collaborating with, always assuming that each company has the same goals as they do. This is often a big issue in eco-systems that include a combination of start-up and large organisations, where the importance of a particular collaboration is often at different levels between the organisations. The other area where this is often an issue is in outsourced services, where clients want innovation but also want a 100% reliable service and suppliers are contracted to provide innovation at their own risk and expense, a situation where it is clear that both parties do not have the same goals in terms of innovation, service and risk.
The second problematic area is each organisations role in the eco-system. Now this seems blindingly obvious that this would be understood, e.g. supplier, client, channel to market etc. However, this people often take such a simplistic view of this, it often comes back to bite the collaboration when the innovation is being delivered and optimised to generated the expected benefits. Take an example of a three-way collaboration between a technology provider, a service company and a channel to market – on the face of it each role would be obvious, but who provides support, who bug-fixes in real time, who provides sales support, who generates sales leads. Again, obvious, but when you look deeper and combine this with the various business goals for each organisation as above and the issue outlined regarding innovation projects vs. short term deliverables, is there a real commitment from each party to play their role in the eco-system.
Finally we come to culture. Ideally, organisations will always try and collaborate with other organisations that have a similar culture, where communication, processes and style are similar, however often this is not possible. I believe the key thing in collaborative innovation is to understand the culture of the business rather than to make sure they are aligned. The simplest example of this is that organisations who have different appetites for risk can often work together very effectively if each party understand the other’s profile, if they don’t, this can become a very frustrating relationship very quickly
So, do you have to have the three elements identified above full aligned – well no, but you do need to have people within the collaboration team who understand these issues and be able to ‘interpret and translate’ each of these areas between the different parties. This is not a common skill and often only exists in people who have spent time in different types of organisation, start-up, corporate, private sector and public sector, therefore understand how each organisation works. Organisations who are successful in collaborative innovation and who are able to reap the business benefits from those projects are the people that recognise and employ people with those skills.