Innovating is not dusting the table

Indoor or outdoor Innovation?

One of the most frequently asked questions during my lectures or asked by our clients is: What is better, to innovate from inside or from outside? The question is focused on distinguishing if the best or the most efficient innovation is the one developed by the companies’ own resources or, on the contrary, if contracting out external resources or teams for them is preferable. It is a matter that goes beyond the amount of economic resources available; it is a matter of the system’s efficiency.

To this issue, I shall reply with the following analogy: Innovating is like dusting the table. Let’s imagine we have a fantastic black lacquered table that has not been cleaned for months; if we do the dusting, the duster will end up full of specks of dust. Now let’s imagine the same table the next day, the surface will be clean and gleaming; if we do the dusting again, we won’t find it dusty.

Innovation ‘from inside’ is like dusting for the first time; it needs some time and routine rest and continuous improvement in order to be efficient. We tend to improve our work through an automated learning process; this is the reason why innovation tools like boxes of ideas, the ‘focus group’, the observations on the environment, the user, etc. bear fruit in the first round of the survey. We gather the learning process accumulated by people along time; it is a strategy of continuous improvement more than an innovation strategy and it becomes efficient when we apply it ‘from inside’. Innovating ‘from inside’ is an eminently reactive strategy: I react and act on the basis of the data and results I obtain.

The problem arises when I conduct the second round of the survey or when I have the proactive need of innovating; when I have to respond to the need for the company’s strategic plan, to react before a competitors’ movement or to increase the exploitation amount of a free falling product or service. If I turn to the organization, I will hardly find ideas which are adapted to the problem; it’s like dusting for a second time: There is no accumulated dust. (there is not enough accumulated experience).

For these more disruptive processes, the best strategy is innovation ‘from outside’ by means of the relation with knowledge strategic partners (the acquisition of accumulated experience). If we need a radical innovation, it is advisable to contract out a team which specializes in the generation of new business models. There is no radical innovation without a new business model; with this purpose, it is necessary to have a multi disciplinary vision, a transverse vision detached from the company’s daily routine and enriched by the crossed fertilization of carrying out multiple projects in a single space of time.

Due to the transcendence of the topics we are going to develop, we must reconsider the relational model with the suppliers of knowledge, insuring the know-how property, its safe storage and the supplier’s medium-term loyalty. Spanish companies must develop their relation criteria with this type of suppliers. We lack a culture of contracting knowledge which can treat clients and suppliers on equal terms.

Innovating ‘from outside’ through suppliers of knowledge is a proactive strategy. For a specific problem, I find a specific solution.

Today there is great acceptance of the concept of open innovation or ‘open & cross innovation’. I particularly believe that this is an adequate strategy for incremental –but hardly radical- innovations; so it is necessary to create and cultivate an ecosystem of knowledge based on suppliers, associated companies, clients, etc.

Results normally contribute to improve one of the three knowledge focuses of innovation (technology, society or economy). It hardly hits a business model as a result of the origin of the relation, as a previous corporate structure among participants is usually required for this to take place.

Like innovation ‘from inside’, we run the risk of being endogamic despite increasing the consulting area. When the open innovation driving force is a technology supplier there is a risk of it unifying the whole sector it supplies; this particularly happens in sectors of bank services, food and mass consumption, in which suppliers of technology ‘have managed’ to get all brands have their products excessively unified. (formats, packaging, technological services, flavours, functions, etc.). Open innovation can be either a reactive strategy as a result of the environment area or a proactive one as a result of the typology, control and position in the ecosystem we operate in.

Our companies have more and more resources and focuses to innovate; it becomes necessary to increase the inner knowledge we have of each tool, manage and use it on the basis of the company’s need and strategic plan; instead of using it according to the management trend of the moment.

 

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Mª Luisa Vives – Jaime Gross

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