Where will your next great idea, product or service originate from?
For many organizations, the answer is increasingly coming from customers, outside partners, academic institutions, competitors and even the general public. To accomplish this, though, companies need to carefully choose their innovation model, desired deliverable and collaborative technology.
The good news is the forces of globalization, virtualization and new technologies like SMAC (i.e., social, mobile, analytics and cloud) are facilitating "open innovation." When it comes to harvesting ideas, increasing buy-in and getting noticed in a commoditized marketplace, here's what you need to know.
The Innovation Model
Before identifying the source of your next great idea, you'll need to understand the different ways of tapping it. This will largely happen after deciding on one of three innovation models: Internal, external or a little bit of both (aka, "hybrid").
For example, some companies take the latter approach when developing new products or services, using social media to obtain customer feedback. Others start with an internal approach for initial ideation, using idea management platforms to encourage brainstorming, steer discussions and prioritize ideas. These same platforms can also be extended to external stakeholders, so long as controls and governance policies are in place.
Additionally, you'll need to decide what kind of deliverable you're after. For some companies, products and services might be the most logical start. For others, operational improvements or finding new market opportunities might be.
Whatever you decide, you are not alone in the decisions you'll be required to make. In a survey conducted by Forbes and Cognizant, almost three-quarters of respondents felt increased pressure to innovate. But respondents were also encouraged by what's available to help, namely internal collaboration systems, customer input, social media, inter-company idea exchanges and crowdsourcing.
Whether you're a hotel considering mobile check-in, a bank offering personalized credit apps or an underwriter of pay-as-you drive insurance policies, finding your next great idea will most likely come from one of the four most common "crops," as follows.
Best Places to Start
Customer service. Because of its focus on customers, customer service innovation tends to involve an externally focused innovation model. Mining social media for customer data and then using advanced analytics to assess customer sentiment and feedback is one example. Some companies create this capability in-house, while others rely on third-party providers. Hyatt Hotels, for instance, designated eight "lab hotels" throughout the world as places where it can test and gain feedback on new concepts such as mobile check-in1. The company also holds ideation sessions with business colleagues, hotel guests and outside experts to generate more than 1,000 ideas for new guest experiences.
Marketing and sales. Like customer service innovation, marketing and sales innovation largely relies on external partners to define new target markets and means of communication. For example, companies might turn to social media to generate feedback on a new product or service and then incorporate that knowledge into their marketing and sales strategies. Starbucks, for example, has generated tens of thousands of ideas through its customer-facing My Starbucks Idea Web site, turning 200 of them into formal offerings.2
Production and supply chain. These innovations tend to focus on cost savings, reaching new locations, better response times and customer needs. To accomplish this, businesses are increasingly disaggregating their supply chains to outside experts. W. W. Grainger, for example, inserts itself into the transaction process through a partner-developed mobile app. This time- and cost-saving app enables customers to view inventory levels, manage purchasing workflows, receive shipping notifications and automate their reorders.3
Product development. To combat fickle demand driven largely by consumer tastes, many companies have successfully supplied better products and services by accepting expertise from beyond the walls of their own enterprise. Companies such as CapitalOne and Johnson & Johnson, for instance, have each set up innovation centers to accelerate the generation of new ideas spearheaded by entrepreneurs, start-ups and other experts4. Such hubs are often embedded in innovation hotspots, such as Boston, Silicon Valley, London, New York and China, with the goal of deepening relationships and becoming an active part of the innovation community.
After understanding innovation models and popular entry points, there are several other factors to consider before determining the best technology to employ.
Your strategic alignment is one. For instance, if you want to be a "first mover" of products and services, you would likely choose a hybrid innovation model that is rich in external interactions such as focus groups. Appetite for risk, partner due diligence and managing cultural change are others. And you'll need to consider how your innovation model will affect your operational processes and organizational structure.
Once you've done that, you'll need to decide on the best technology to enable your desired innovation. That largely begins and ends with a highly collaborative SMAC Stack. Since one size does not fit all, however, some companies will see great success in turning to social media for crowdsourcing ideas, while others will be better off applying advanced analytics to unveil new customer insights. But the choice of technology must go hand-in-hand with the value chain function and desired deliverable.
Without bold levels of innovation organizations will not thrive in the digital economy. As the adoption and proliferation of virtual tools and social technologies expand, businesses can better integrate customers, partners and outside influencers into their organizational structure and ultimate success.
1Julia King, "The 2013 Computerworld Premier 100 IT Leaders: On the Fast Track," Computerworld, Feb. 25, 2013, http://www.computerworld.com/s/article/9236825/The_2013_Computerworld_Premier_100_ IT_Leaders_On_the_fast_track?taxonomyId=14&pageNumber=1.
2"My Starbucks Idea," http://ebm.e.starbucks.com/c/tag/hBRXxguAJvkyvB8xyiSCDI2dwJt/doc. html?t_params=EMAILfirstname.lastname@example.org&utm_source=buffer&utm_medium=twitter&utm_ campaign=Buffer%3A%20%40adamson%20on%20twitter&buffer_share=cb89a.
3"Grainger Launches Mobile App," PR Web, Aug. 23, 2012, http://www.inddist.com/news/2012/08/grainger-launches-mobile-app
4"Johnson & Johnson Announces Plans to Establish Innovation Centers," Johnson & Johnson, Sept. 18, 2012, http://www.jnj.com/connect/news/all/johnson-and-johnson-announces-plans-to-establish-innovation-centers.