Innovation is crucial for the survival of companies. Still, the traditional R&D model doesn’t serve its purpose in today’s fast-paced business environment. That’s why businesses are trying a different, more open way of innovation through collaboration and co-creation. However, this approach has its challenges too. In this article, we will share how we overcome them with the help of Design Thinking.
Open innovation is a model which allows organizations to utilize external technology, knowledge, and resources early in their innovation processes. It includes sharing markets, clients, and information related to business models. In this way, companies can speed up the innovation process and create market-fit solutions.
The model isn’t new, but lately, more and more companies are opting for this approach over the traditional R&D model, as PwC found in a study where they surveyed over 1200 executives from over 44 countries. Open Innovation and Design Thinking outscored all other methods of innovation.
But why is this collaborative approach so practical?
This major shift in philosophy leads to a cultural evolution toward co-innovation, unrestricted ideation, sharing of technologies and information.
Our society is built on collaboration. Although sharing knowledge and resources with external partners hasn’t been a dominant practice throughout history, things are starting to change. This major shift in philosophy leads to a cultural evolution toward co-innovation, unrestricted ideation, sharing of technologies and information.
The benefits to this approach are numerous, and more progressive companies that have implemented this approach a long time ago are now reaping its benefits. In our own experience, regardless of its size or industry, any company can benefit from this model if implemented correctly.
Let’s have a deeper insight into the way we deliver innovation. Why companies get involved, their struggles through the process, the importance of facilitation in fixing the common problems, and why we use Design Thinking to drive innovation.
Why do both sides engage?
Nowadays, all companies are aware of the urgency of implementing future proof innovations in their strategies.
Rapidly changing environments and disrupted markets force companies to seek new and more efficient ways to boost their pace of innovation and stay ahead of the competitors. Often, enterprises are stuck in their safe and successful routine. Still, new strategies are necessary to keep the competitive advantage in a given time. Fresh ideas offer new possibilities for creativity and innovation within large companies. The most significant source of new ideas is outside the large organizations, in the communities, their partners and customers, and finally, small startups.
The main reason for startups implementing open innovation is improving their strategic position and introducing new products or services. Due to the lack of resources for the development process, they rely on external collaborations. If they want to move forward, startups have to open up to the more prominent partners and share knowledge, skills, technology, and reconsider different business models.
In other words, that is what open innovation is all about: sharing ideas and resources with external collaborators to broaden the company limits.
When established corporations work with innovative startups and their target users, unique opportunities arise. A combination of entrepreneurial activity with corporate ability can be very potent. Both sides generate fresh ideas and test the ideas before spending money on building the product.
Corporate-startup collaboration seems like a match made in heaven. But often, in reality, bridging the gap between the two worlds can be very challenging.
Big organizations have in-house research and development. They have all the resources, knowledge, and experience but happen to be bureaucratic and inert. At the cost of it, they put a massive amount of pressure on their employees. And not always they’re able to have the most brilliant minds on their side.
Bill Joy, one of the founders of Sun Microsystems, famously said: “No matter who you are, most of the smartest people work for someone else.” Later the postulate became known as Joy’s Law.
On the other hand, startups are creative, brave, and passionate about disruption. Coming in all shapes and sizes, they aim to become firms of the future. What they lack, however, is capital, know-how, and access to a bigger market. Often they aren’t able to dedicate a full-time team on this matter, and the CEO cannot run everything efficiently on his own.
Only companies capable of collaborating and co-creating effectively are likely to survive the industry’s disruption and sustain competitive advantage.
Understandably, it is quite a gamble for established companies to leap into the unknown.
For the complete process to go evenly and efficiently, it requires facilitation.
The purpose of innovation intermediaries
Henry Chesbrough used the term open innovation intermediaries in his 2006 book as “companies that help other companies implement various facets of open innovation.”
The innovation intermediary’s job is to follow the freshest trends on the market and integrate them into the existing business models. They hold a range of skills and play several roles. The most relevant is matching and coordination and between the participants.
“Companies have to work in a complex ecosystem. That’s why the role of the intermediaries is increasing. With the increase of complexity, their role will become more and more important.” – Wim Vanhaverbeke.
Here’s an example of how we carried out an open innovation project:
How Design Thinking provides a safe space for trial and error?
Innovation is all about changes, and it’s pretty natural for us humans to feel anxious about the outcome. Undertaking calculated risks is essential for success.
That is why Design Thinking is highly beneficial. This methodology allows prototyping and testing the ideas in the early stages of development. The iterative and non-linear steps offer hands-on learning from the mistakes, adjusting, and trying again until the ultimate solution. It’s pretty much like a classroom where failure is considered a gift allowing the students to develop a better solution.
It reduces the uncertainty associated with launching new products or services, making sure they are technically feasible, economically viable, and desirable for the user.
It’s perfect for collaborative work because it allows room for error without significant risk. It also helps bridge the gap between the two worlds. It enables more effortless, more relaxed communication, promoting transparency and knowledge sharing. But perhaps the biggest reason why it works so well is that it was developed specifically for collaborative design and innovation. It helped develop many era-defining innovations (like the Computer mouse, for example).
Our experience in helping companies implement the Design Thinking approach spans over five years. Through that time, we’ve successfully facilitated innovation within companies from all over the world.
If you want to learn more about the methodology in practice, check out How can Design Thinking Boost Your Business and Bring the Future Of Work — Today!