Innovation-Speed to Market is Key
I decided to rewrite this post as what it describes is something that has weighed upon my mind for some time. Namely, that the pursuit of disruptive innovation is key for all companies; especially large firms that have enjoyed market dominance and success. There is a need for newer business models which allow larger firms to more easily inject disruptive innovation into its product strategies and that in addition to doing so through traditional R&D or buying into a market through acquisition, there should be ample opportunity to pursue disruptive growth through strategic alliances.
The latest thing to fall into the center of my radar as it relates to co-innovation is how valuable it is in helping to drive innovation quickly into the hands of customers and to the market in general. The SAP Co-innovation Lab in an enablement platform providing the IT resources, access to subject matter expertise, an IP framework and operational management allowing SAP and its ecosystem partners to focus with precision upon project-based co-innovation. Essential core elements are already in place allowing the collaborators to dive directly into understanding customer requirements, problem domains, customer pain points and then pursuing a divergent thought process that can then shift to a convergent process resulting in the ability to implement and execute. We see this succeed in proof of concept projects as well as those focusing upon early enablement of a new solution set. The project teams move at a good pace because the project plan isn’t weighted down on the front end with all of the resource allocation work and creating a framework that would allow two or more partners to do in-depth collaboration work.
Project teams doing a proof of concept complete in 3 months what some lab members tell us can take 6 or more, assuming they even get the project funded and off the ground. The project teams from the very beginning not only get more time to dedicate to innovation, but they spend more time thinking about the business drivers on both sides of the partnership, getting better voice of the customer and figuring out the best way to get the fruits of the co-innovation effort into the market and commercially successful. From our view we see evidence that the COIL as an enablement platform can make a difference but some things I’ve read recently have now helped me to understand why the speed at which innovation happens is so important.
Plenty of research has been done and theories abound attesting to the importance of innovation and the need to uncover disruptive growth opportunities. Still more research has been done suggesting the importance of reducing time to market, but it isn’t always clear how to do this or if a firm has a plan to do it, why so many still fail. What causes the innovation project or initiative to fail? Big companies get the consultant reports, the Cxos read the books and yet traditionally we still let net present value equations keep our firms on the path of sustaining innovation versus disruptive. If co-innovation with partners can accelerate innovation, then there should be an argument for pursuing both types of innovation with partners. Michael George, James Works and Kimberly Watson-Hemphill penned a really great book entitled Fast Innovation, where they dive into some best practices and ideas for how companies can reduce time to market and much of what they advocate makes perfect sense: Top Execs staying engaged in leading innovation efforts, casting the net wider to include process and business model innovation, not ignoring disruptive growth opportunities, looking outside the company for ideas and building a strong infrastructure to drive innovation from start to finish- All important for the firm to bear in mind if it is to execute. Innovation certainly originates organically from within the firm and through acquisition.
This is occurring today but the results we see differ from what we witnessed a decade previously. Superb acquisition targets are simply tougher to find when we consider the billions of dollars of investment from private equity firms- a major competitor to strategic investment by corporations. The authors of Fast Innovation also tell us that the vast majority of even the most successful firms cannot sustain above average shareholder value for more than a decade. The over-dependency upon sustaining innovation alone allows disruption from the edges of the market to impact revenue and growth. I don’t have time for a complete literary review of Fast Innovation or some of the other journal articles covering similar topics, but I wanted to share a particular observation. While I think the guidance offered from these authors is sound and that if a firm were to integrate the learnings offered, it could get on a path of successfully driving innovation more quickly; both sustaining and disruptive. Yet the obstacles identified are non-trivial. Things like not being able to predict the impact of not making faster decisions, poor process communication and leadership needed not just top down, but across the organization, getting access to the right resources at the right time and not allowing projects or the intended solutions to become too complicated all contribute to failure.
Co-Innovation is not failure free; it has challenges too. Yet as we come to accept that a firm cannot always innovate solely from within its own four walls or successfully acquire the innovation needed to enter new markets, seeking to drive disruptive innovation with the right partners could certainly augment a firm’s overall innovation strategy. Innovation through partnership can therefore become a viable way to drive innovation both strategically and tactically to the benefit of both firms choosing to collaborate and co-develop.
The SAP Co-Innovation Lab provides a platform comprised of the core elements that can otherwise often hinder a firm’s ability to innovate quickly on its own. Gaining quick access to the right IT infrastructure, subject matter expertise , project and operations management becomes extraordinarily beneficial to teams that need every advantage possible to stay focused upon the goals of the project itself.
Co-innovation is unlikely to overtake or surpass the more traditional ways companies innovate, but we see it an emerging trend and companies paying much more attention to it as a viable means to get to market quickly with relevant business solutions. It may mean that new innovations stemming from cross-collaboration will require fresh thinking around ownership of IP and perhaps realizing that the value of IP ownership on to itself, is sometimes not a great as the spoils derived from getting a commercially successful innovation to market first.
I’m interested to hear from others on the topic. What do you think slows down or inhibits innovation? Do you see significant opportunity for firms to co-innovate in order to get to market faster and increase competitive advantage? Do collaborating ISVs that find ways to increase interoperability and tighter integration bring greater value to customers extending their own value chains?
My research continues.