How to choose a co-innovation partner
It’s a relationship, not a transaction. The first thing an R&D leader should consider when choosing a co-innovation service–be it a consultancy, startup, university or an open innovation platform–is that innovation is a long and winding journey, and it’s easy to get stuck. Poor communication, lack of alignment between business units, and cultural innovation issues are just a few hurdles facing an innovation project.
Real innovation demands a partner, not a vendor. Someone who is totally committed to helping the project over each obstacle to the finish line. Someone who possesses the skills and tools to augment R&D to that end.
It’s a relay, not a sprint. Ferrying a project from concept to completion involves well-articulated handoffs between business units for seamless transitions between project phases. That begins with alignment between everyone who might interact with the project, from approvals to funding, leveraged with buy-in from across the company. Innovation platforms are an excellent tool to that effect–and the platform-enabled innovation network is the way of the future.
As James Staten, VP, Principal Analyst at Forrester, wrote:
“Every enterprise should be using an innovation platform to help track, drive, and evaluate its innovation efforts. However, do not limit this effort to an innovation management software solution. As noted by my colleague, Dan Bieler, you need a continuum of collaboration tools. To help address this, the leading innovation platforms today have added on new capabilities, staffing, and ecosystem empowerment models to take your innovation efforts to the next level. As noted in my blog last October, there’s a growing set of vendors, solutions, and engagement models that have come to market of late to empower your innovation efforts.”
Gathering outside expertise to generate ideas is important, but that’s really just the beginning. Actually, it’s not even the beginning. To get truly transformative ideas, an outside partner should re-examine and define the problem itself. A more expansive view often reveals new insights into the challenge and opens unexpected out-of-the-box solutions.
After problem definition, then they should work with you to figure out how to get aligned with the rest of the company. A good partner will understand the big picture, from your industry and category to your department’s resource constraints and your broader corporate goals and culture. They will know how to help you sell a great idea internally to the business, from key names to core objectives.
A good idea can’t just be technically sound. It must check all the boxes to advance along the path to commercialization. That requires proficiency in every dimension of innovation: legal, technical, commercial, and communication. A one-off fee-for-service vendor won’t cut it.
Types of innovation partners
It isn’t one-size-fits-all. Open innovation describes a collaboration that accelerates an R&D department’s ability to innovate. Different companies have different capabilities and goals best suited to various services. There are pros and cons of each type, but the hope is that each one offers fresh perspectives on hard problems.
It’s important to note that it’s not about how much you spend on a collaboration, but how you spend it, according to Price Waterhouse Cooper’s most recent Innovation Benchmark Report. The report found that while innovation collaborations were valuable, there was no relationship between dollars spent on innovation and value-added by innovation:
“A majority of companies are now focusing more on inclusive operating models that bring a variety of parties into the innovation sandbox. Open innovation (61%), design thinking (59%), and co-creation with customers, partners, and suppliers (55%) are all far more prevalent models today than traditional R&D (34%).”
- Consultancies: A consultant offers specific strategic or technical expertise to solve specific technical challenges on a fee-for-service basis. A consultancy will not build a strategy and then have the capacity to implement it. This form of collaboration leans towards the transactional and is less dynamic and flexible if the problem and solution goes beyond their in-house expertise.
- Universities: Universities offer top research labs and academics skilled in the science of a technology underlying a problem. But they typically lack commercial competencies. Solutions may be conceived in a technical vacuum, wandering out of commercial scope without addressing market feasibility or business goals. Project management may not be tight, and handoffs between phases could be stalled with poor communication and misalignment between technological and business goals.
- Entrepreneurs and startups: Entrepreneurial partnerships offer high technical and commercial expertise, but finding the right match between the right startup with the right technical expertise and a larger company is challenging.
- Crowd-sourced open innovation: If you’re looking purely for more ideas in your pipeline, these services generate loads, typically in response to innovation challenges presented to a crowd on a prize-based system. But with little or no curation or proof-of-concept, the vetting is up to the R&D organization. That involves a lot of leg-work and involves yet more outside expertise. Projects typically stop at the ideation phase.
- Curated network innovation: Pros and cons: Rich diversity, long-term relationships, deep and wide technical and strategic expertise, curated submissions, project transparency, focus on communication, skilled project phase transitions and hand-offs, multiple end-to-end innovation offerings, face-to-face meetings. This is where the best ideas come from the most unexpected places across a curated network of vast expertise and are then tested and proven and ferried along the path for commercialization.
“There’s different flavors of open innovation. Some are better for some companies, but I think every company could benefit from open innovation in some form or another… We at Xinova can help R&D by coming up with new ideas from outside their domain of expertise and evaluating ideas quickly. We can turn around a proof of concept project in a matter of weeks. And we’ve also found that in close partnerships with long-term corporate R&D partners, that they appreciate that we can actually start a project and stop a project if it needs to be stopped, so that you can commit resources nimbly and figure out what works well and what doesn’t work, and then take forward the stuff that’s working while not having to carry the stuff that doesn’t.”
–Matt Ferguson, Xinova Vice President of Network and Technology
“Our network really is great at solving pain points for our clients because it’s versatile and flexible. It’s able to complement teams and provide additional expertise where companies may not have it in-house and wish to look to outside experts who can come in and work with their team in a way that’s flexible and deeply connected to their long-term vision.”
– David Kraft, Xinova Global Head of Innovation Services
Step 1: Establish a culture of trust and alignment
A good partnership is defined by a culture of support. Make sure your co-innovation partner can help you get your whole team on board with the collaboration. It’s not a competition: it’s important your team understands that they are being supported, not replaced. That will help your company move past the misbegotten notion of “not invented here” and embrace the proven value of diversity.
Today there are too many new technologies coming online too quickly for an organization to have comprehensive in-house expertise. There’s no shame in looking outside. It’s a mistake not to. The R&D team owns the project and gets credit for its success. The innovation partner is there to make you look good and be more effective.
Choosing a good partner is in itself, an innovative step. It expands the quantity and quality of ideas while saving time and costs of hiring and training people with new expertise. Open innovation, when done right, is a cheat code, an innovation hack. Some larger companies have external innovation units led by people with titles like, “Director of Open Innovation.”
If your company hasn’t yet institutionalized co-innovation, that’s fine. You can choose a partner that will help reach across all the necessary aisles to get everyone aligned.
Step 2: Get aligned
Co-innovation starts with alignment on goals. From there, it winds along the path to success with a robust and dynamic process grounded in impactful communication practices. Communication is critical to advancing a project, but it isn’t a core skill of most R&D departments. While their goal is to solve a technical problem, the solution might not fit another department’s goals of, say, sustainable practices, and the project will stall. Or R&D doesn’t know who should be notified once a project reaches a critical milestone for advancement. Other times, they discover that there’s a parallel project in place or a solution has been tried by another team already.
Whatever the case, an innovation project’s success depends on more than just the technology’s merits. Find a partner who will give the project all the tools it needs to achieve buy-in across business units and up the executive chain. As R&D leaders know, technology rarely speaks for itself; at least, not so clearly that its market potential is understood as well as its technical merits.
“To make sure that the relationship is valuable, you need to have buy-in across the company, from the people working directly on the innovation project on to other business units, all the way up to executive leadership. Without that alignment, there might not be any resources to take the project beyond the ideation phase. You have to make sure that you have finances available for whoever else may touch the project, and that they’ll be excited about moving the project forward because it fits their objectives.”
–Shivani Ludwig, Innovation Development Manager
“The question is, where is the bottleneck in your innovation process? Where do you feel that you’re not able to make progress? We can help resolve that bottleneck. We can bring in a diverse field of innovators to work on the problem. And we have a robust process that’s repeatedly shown that you can systematize this magic of ideation to increase the quantity, the quality, and the relevancy of your ideas… For some clients, the bottleneck may look slightly different. They may feel that the bottleneck is a human resource issue. They can’t allocate their resources to ideation. They can’t educate their people on what it means to come up with a new idea. And working with Xinova can help get that exposure, can help break a logjam that might be preventing new ideas from coming through from the ground up. We may be able to provide a parallel path to challenge their own innovation systems.”
– Seth Miller, Managing Director of Innovation Programs
“Our network really complements existing R&D programs. We really expand their reach and capability by helping to augment and work on problems that most R&D teams don’t have the time or the energy, or sometimes the expertise to explore in a way that they would like to. So we really want to partner and collaborate with R&D departments so that we can expand their reach.”
– David Kraft
Step 3: Incentives
Install incentives that are understood between you, your partner, and your adjacent business units. For your partner, it’s best they are incentivized to see a project through to commercial success. That is accomplished via a stake in the project’s upside. Someone who puts skin in the game will do their best work while absorbing some of the risk, perhaps through backend licensing agreements or via joint ventures or partnerships. It’s important to be dynamic. A partner whose organizational DNA rejects stopping once the project is merely good enough will be structurally committed to excellence.
And understanding the broader structure of incentives of everyone involved throughout your company will smooth out transitions.
“Different teams are incentivized differently. Some teams are incentivized by the frenzy of the front end, where more ideas in the pipeline are what they’re looking for. Other groups are really about translating, discovery, and product development for putting a product on the shelf. For that, you don’t want to sort through a thousand different ideas if you’re driving speed to market. You want to pick the most promising thing and just go for it. And then there’s a sales and marketing type incentive, which comes down to finding something you can sell. So you’re on different time horizons, you’re on different incentive structures, and you’re navigating different motivations and skillsets.
I boil it down to managing expectations and aligning the stakeholders through that journey. You’re going to be dealing with different departments, or different business groups, or different countries and geographies, and having the right incentives ensures that if you’re successful at one stage that there’s an incentive in place to pick it up and move the project forward. Ultimately, it’s all about people. Having great technology doesn’t matter if you don’t have a team in place incentivized to push it out the other end.”
– David Kraft