A couple of years ago, there was an article in Forbes which said, “innovation is often produced over time with a lot of collective sweat equity by many people.” It is hard to put it any better—but there is rarely innovation that hasn’t its origins in collaboration.
Innovation and collaboration aren’t separate. Collaboration drives innovation and value creation, thereby helping businesses create wealth.
Collaboration is important not just because it's a better way to learn. The spirit of collaboration is penetrating every institution and all of our lives. So, learning to collaborate is part of equipping yourself for effectiveness, problem solving, innovation and life-long learning in an ever-changing networked economy.
Identifying new ideas, implementing them, and integrating them into everyday operations require building trust with all stakeholders. To lower costs and create new opportunities, people work collaboratively, recognizing when to collaborate and when to compete.
Unlike coordination and cooperation, collaboration is driven by mutual self-interest. Apart from the high levels of trust this relationship requires, it also needs phenomenal levels of commitment from all involved parties.
In collaboration, most often value is shared after combining specializations to achieve great results. When solo endeavors fail, collaboration is the only way to maximize rewards in enterprises. Members in the collaboration are motivated to perform at the highest possible level to get the best outcomes individually and for the group.
New forms of organizations, or business models, have emerged over the years thanks to the Web. Via open innovation, co-creation, and design thinking organizations are discovering amazing insights from a diverse set of minds and leveraging new technologies to breakdown silos to respond to the mercurial needs of the customers. The way idea management has become integral to companies both big and small is proof of how collaboration is necessary to drive growth.
The scope of stakeholders for innovation is expanding. With better access to data and emerging technologies, traditional business practices are being challenged all the time. Socio-technical barriers are deciding strategy in today’s customer-centric and environmentally conscious world. Different partners add value in different ways.
All this is happening in an extremely competitive environment along with the constant struggle between focusing on incremental/ disruptive innovations and everyday operations for short-term gain.
Distinct advantages of collaboration
- Diverse ideas
- Faster idea generation
- Better quality ideas
- Sharing of costs and risks
- Immense learning opportunities for the “equal players”
- Increased flexibility
- Breaking down silos
- Helps push through expected resistance
- Better employee engagement
- Higher customer satisfaction and retention
- Better competitiveness
- Optimization of innovation portfolio
- Increased innovation efficiency, speed, profitability
“Companies are bringing more parties into the innovation sandbox”
According to PwC’s Innovation Benchmark Report, over 61% of companies are now using the open innovation model and co-creating with suppliers, partners, and customers. Only 34% still depend on traditional R&D. Nearly 59% are using design thinking. The most important partners for innovation are internal employees (60%), tech partners (50%), channel and business model partners (44%), customers, via focus groups, data mining, feedback, (35%), and supply chain partners, vendors and suppliers (29%).
How to choose the right collaboration approach for innovation
Thankfully, more companies today are looking beyond hiring the best talent and creating innovative work environments. They are recognizing the potential of collaborative networks to facilitate sustainable growth. They know that they cannot innovate on their own.
So, what approach might work? One of these, or a combination? Or something else altogether? What trade-offs are acceptable?
- Opening up and sharing the IP with the community
- Partnering with a few chosen
Let’s look at few different models of collaboration. According to Harvard Business School Professors Gary P. Pisano and Roberto Verganti, there are four basic modes of collaboration: a closed and hierarchical network, an open and hierarchical network, an open and flat network, and a closed and flat network.
Naturally, each type comes with its own advantages and disadvantages. For example, in an open model, although you have a wide range of ideas stemming from different levels of expertise, finding the best can take time and money. You can use this model when you don’t know for sure what your customers want, or you have some inexpensive idea evaluation method. In a hierarchical model, the direction and value of the innovation is often controlled by a central figure. The flat approach could work when you have no single person who can drive innovation because of his or her expertise.
Most common approaches companies use include R&D, employee idea programs, new product development, teams with external innovators, outsourcing to develop business/product models, peer-to-peer collaboration, working with suppliers, joint venture between corporates and startups, in house incubators, corporate accelerators, innovation gateways, and corporate venturing.
It is easy enough to spot inspiring examples of the collaborative economy—U-Haul and the U-Haul Investors Club, Coca Cola and the Founders Program, Marks and Spencer’s and the Schwopping program, Patagonia and eBay, BMW and Sixt, P&G and Connect & Develop, RBS Innovation Gateway, Airbnb, and so on.
No one type is better than the other. It varies depending on the company’s business goals. And like everything else it changes when the conditions change.
So how are you connecting people and ideas? Because innovation and collaboration are not mutually exclusive!
Some other useful reads
- How to build collaborative advantage
- Best practices in collaborative innovation
- Collaborative Innovation Campus