What does it mean to out innovate the competition? In today’s fast paced economy, sometimes it is hard to even figure out who the competition is! Our perspective is that competition today is defined as one firm’s innovation ecosystem competing against another firm’s innovation ecosystem to develop products and services that bring value to customers.
The following figure shows a generic innovation ecosystem. It is comprised of the firm’s employees, suppliers, retirees, customers and other groups the firm employs to innovate new products and services. In addition, to the firm’s existing networks, there is another “ring” that is the global innovation community. This ring is made up of groups outside the firm’s existing networks and is comprised of large and small companies, universities, laboratories and individuals around the world.
Firms today need to identify and actively manage this ecosystem. By identifying and actively managing the firm’s innovation ecosystem the firm can innovate faster and at less risk. In addition, firms can use this innovation ecosystem to “sense” changes that may impact the competitive landscape of an industry.
There are many models available to firms that want to manage their innovation ecosystem. Some firms employ a centralized model with either open innovation or external innovation groups at the corporate level to coordinate and provide interface points between the firm’s strategic business units and the innovation ecosystem. Other firms employ a decentralized model and other a hybrid of the two.
Where is your firm at in terms of identifying and actively managing its ecosystem? Are there processes in place to easily tap internal IP across business units? Have you identified retirees as a source of innovation that you can easily tap into when needed? Do you know who the key universities are that you are doing work with? Do you rank and evaluate them year over year? How easy is it for your employees to reach out broadly across industries and geographies to connect to new sources of innovation?
If you are struggling to answer these questions or you see your competitors leveraging new technologies and innovations found outside your industry, you should begin to define your ecosystem and put in place the people and processes to leverage it.