Thursday, November 13, 2008

Innovation is the only Sustainable Advantage

I work with all types of companies. Some of them are trying to sell products based on leading edge technology, some are trying to sell solutions built on sometime very good, and other times mediocre, technology and others are trying to sell concepts that can be cobbled together using existing technology.

What I see as overwhelming common among all of these is that whatever advantage they perceive to have in the market will be short lived. Technology, solutions, concepts and ideas can all be copied and improved upon. No company, whether they sell hardware components, software programs or services can maintain a leadership role without constantly striving to improve their offering. They not only have to invest in the improvements require to just keep their offering viable in the short term; they have to invest in finding the next "game changer". This is time, money and resource intensive.

Common sense and urban legend tells us that every company must reinvent itself three to five years. This is not a disruptive shift in the direction of the company; it is a constant morphing of product offerings, markets served, and corporate culture. Here is what I think is the real "game changer". It is the way that companies innovate, changing the not-invented-here mentality to a proudly-found-here mentality. Rather than protecting intellectual property as a means of providing a unique selling proposition embracing openness and collaboration to accelerate time to market.

To sustain a position as a leading edge innovator in the market a company must build a collaboration mentality embracing customer ideas, employee ideas, supplier ideas, competitor ideas, government ideas and ideas from our financial stakeholders. The concept of throwing a need out in the open and allowing all the stakeholders to add input and suggestions, not only to potential approaches to meeting the need, but the very nature of the need itself.

Look at the concept of XPrize Foundation. They provide an incentive for collaboration. The problems are unique and complex. The intent is to harness intelligence from all over the world to bring creative solutions to market. A pragmatic application for the Xprize concept would be to post a need on your website. Provide an incentive to the party that comes up with the most creative solution. The incentive should mirror the internal cost of ideation. Don't just get the R&D folks involved, get all the employees involved, get your suppliers involved (they'll see a potential new market for their products), get clients involved (after all the need is most likely one of their problems), talk to your neighbors, challenge trade associations, expand your team with free intelligence.

If we think that we have little time to respond to market changes now, think forward ten years. How fast do you think you will have to react to stay current, not to mention get a head. You are going to have to implement a want – find – get- manage model to stay viable in future markets. Why wait? Start expanding your teams internally and work toward total worldwide collaboration somewhere down the road.

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