The outsourcing of innovation — the increasingly ubiquitous practice where companies enlist the help of outsiders to transform the altitude and impact of their innovation process, innovation programs and innovation excellence — is ready for a breakthrough transformation of its own.
Over the past decade, most chief execs have come to the realization that breakthrough innovation strategies and disruptive ideas born outside their companies are as valuable to driving revenue growth and increasing profits for their shareholders as ideas born within.
They are tapping an expanding roster of external innovation consultants and innovation partners to uncover new opportunities to grow revenues and increase profits they can’t readily see themselves, to tease out customer needs, latent market opportunities, and to answer them with breakthrough new products, innovation strategies for their brands, driving R&D success for breakthrough innovative technologies and growing their businesses more quickly, more effectively, and often with better ROI than they can on their own.
But as the innovation outsourcing movement is catalyzing change and sparking new growth or profits and growth of market share, it is also sowing seeds of its own reinvention. The key lessons learned by our study of this market transformation can be applied to nearly any business.
Because for all the lateral thinking, talent, good intentions and seemingly promising innovation methodologies in circulation, one ingredient remains glaringly rare: innovation accountability.
This is a surprising thing. Competition is intensifying in every conceivable field of commercial endeavor.
‘Innovate or die’ is an increasingly common mantra for CEOs and growth strategists alike. It seems implausible that innovation’s rising tide of urgency won’t seep over time into every capillary in the innovation ecosystem, caffeinating everyone it touches with a new edgy intensity and a ‘deliver or go home’ mindset.
It’s coming, but it’s not there yet. It’s as if the innovator’s need to embrace the omnipresent risk of failure has morphed into a sort of psychological bubble wrap—insulating external innovation partners from losing sleep over whether their grand visions of better products, businesses and human experiences ever come to anything more than a pile of Post-it notes and a few fleeting goose bumps in a conference room. The shareholders bankrolling the prevailing innovation failure rates will tell you there’s a big difference between accepting failure as a possibility, and accepting it as a normal, consequence- free thing to be shrugged off.
For innovation outsourcing to fulfill its great promise and migrate from a new tool in the arsenal to a permanent best practice, its leading players need to drink the Kool-Aid of new accountability. It’s time to draw sharp lines between bona fide value creation and ethereal prognostication that comes to little more than interesting presentations. And to separate the relatively easy business of tabling an intriguing idea from the only endgame shareholders care about—a viable, compelling product, a winning value proposition and a great business.
Before we go deeper on how to unlock the movement’s bright-but-different future, there’s important context to be drawn from its past and present.
What sparked the rush?
What sparked the rush of companies throwing open the windows in search of transformational ideas from the outside? The roots run broad and deep, back to the days of disco. In the seventies, the so-called modern corporation was blinded by the era’s fashionable fixation with diversification. It was a time of head-scratcher moves like soft drink companies buying movie studios and booze makers buying bakeries —delivering near-term spikes to the top line, but headaches and inefficiencies in equal measure. This period of over-reaching ambition set in motion a long, painful return to growing core business around core competencies. The timing of it all gave the plot an interesting twist. The prodigal return came at a point in history when close-in product proliferation had already run amok.
Across industries, the proverbial shelves were, by the early nineties, buckling under the weight of an unprecedented profusion of marginally differentiated new products and services. The consequences were profound for business leaders and consumers alike.
Consumers who were once easily impressed with a tweak of a fender line, the barely new and the marginally improved, were now yawning. This left core competency evangelists in an uncomfortable quandary: they were betting their future on driving core business at a time when the low-hanging fruit had already been plucked.