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/wp-content/uploads/2014/01/274933_h_srgb_s_gl_371928.jpgWe are in the era when innovation is more likely to come from the outside in. And it will be collaborative. No more cloistered Ph.Ds. in R&D; ideas will stream in from outside corporate walls, across geographic borders, and even from customers. And innovation will be marked by continuous input and improvement.

The Constraints Have Gone Away
In the past, an individual entrepreneur with a great idea for a new product was constrained by capital, requirements for economies of scale, and physical production requirements. In the innovation economy, where the idea rules, the individual could sell his great idea for a car part to GM or Ford, who could then use it to 3-D print their new car model.

Anyone can innovate today. That means companies need to take three steps to keep up with the everyman, according to research by my colleague Stephanie Overby:

  1. Bring supply chain partners into the innovation process. Innovation will be a collaborative process not just among individuals, but across companies. Subcontractors and supply chain partners will be integral in the ideation process. Boeing or Airbus used to outsource the manufacturing of an airplane wing. Going forward, they’ll also challenge their subcontractors to come up with their best ideas for the design of that part, while maintaining control over the overall design and engineering of the aircraft.
  2. Stop the one-way flow. The gap between the developed world and the developing world is closing, no more so than in the area of innovation. Whereas companies in developed economies historically came up with ideas for products that would eventually make their way to developing countries, now innovation is emerging from developing countries. Coined “reverse innovation”http://en.wikipedia.org/wiki/Reverse_innovation by Vijay Govindarajan and Chris Trimble of the Tuck School of Business at Dartmouth, products developed to meet the needs of developing nations, like battery-operated medical instruments in rural India, end up having desirable features for the developed world as well.
  3. Bring customers into the process. The passive customer is no more. In the innovation economy, ideas will flow from customer to company and back again. The idea of co-creation – that business value will be increasingly delivered by company and customer together – is increasingly relevant as new technologies enable customers to not only co-innovate, but co-design, co-market, and even co-produce.

The market leaders in the innovation economy will use the best idea coming from any direction – customer or supplier, emerging market or individual entrepreneur.

What do you think?

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2 Comments

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  1. Debra Curtis-Magley

    Terrific post Christopher. I couldn’t agree more. Business networks and web platforms that support collaboration are leading a fast-paced evolution in business. Sites like Kickstarter and CircleUp offer a dynamic alternative to launching new ideas by enabling collaborative funding.

    I’m glad to see supply chains featured at the top of your list. For businesses, there is tremendous value and innovation they can unleash from their supply chains through collaboration with their suppliers. I’m always learning something new from our customers at Ariba about the advantages they’ve gained through supply chain collaboration.

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    1. Christopher Koch Post author

      Hi Debra,

      Great point about Kickstarter and CircleUp. It’s not just about selling your idea to GM or Ford anymore because you don’t have enough resources to do it yourself. There’s a grassroots support network now that can help individuals take their ideas from inception all the way through to production without having to “sell out.” Thanks for the great comment!

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