2. Innovation BEYOND an organisation - through collaborative working
Today, no one organisation can single-handedly conceive, develop and realise innovations. Competition is fierce, product life-times are shorter, and it is much more costly to develop new products. Patents remain important but they do not guarantee success. Innovation involves specialist capabilities which often have to be sourced externally, rather than being built internally. Successful innovation requires collaboration between many organisations - large and small, near and far. Fortunately, at the same time, technology has vastly expanded the ability to access information remotely and to work collaboratively across large distances.
External sourcing is now becoming the rule. ‘Open Innovation’ represents an advanced form of this model. Interestingly, as the possibilities for sourcing external capabilities increase, it becomes ever more critical to demonstrate excellence in managing relationships and networks. Innovation must also be integrated into key business functions rather than being viewed as 'just for R&D'. Our article Innovation by Networking develops this theme.
Looking beyond an organisation, two further chasms need to be crossed:
2.1 Sharing ideas and capabilities with individual external collaborators
Companies sometimes access the capabilities of smaller firms through acquisitions; but they commonly fail to integrate those capabilities into their existing organisation and underestimate the huge cultural challenges which arise in merging different groups of people.
Accessing the capabilities through collaboration rather than acquisition has major attractions, but brings its own challenges. Chasms can still exist between the people, structures, processes and measures of the collaborating parties. The chasms may be widened by differences in the size, scope and culture of the organisations. For example, a global company with tens of thousands of employees may be working with a recently-established small firm which is providing new technology or highly-specialist services. The key to success here is developing the skills and tools for effective collaboration.
2.2 Sharing ideas and capabilities with a network of external organisations
Many firms engage with innovation networks and clusters. Organisations and individuals alike need to possess the necessary mindset, skills, and tools, if these networked approaches are to be effective.