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Saturday, October 08, 2005

Managing Innovation Across The Extended Enterprise

In this age of outsourcing and partnering, the leaders of many companies have been asking themselves, “Should we outsource our innovation?” According to Tony Davila, Marc Epstein and Robert Shelton, writing in their excellent book, Making Innovation Work: How to Manage It, Measure It and Profit From It, that’s the wrong question. The questions to ask are, “In which parts of our innovation should we partner? How much should we rely on partners, and how much should we take on ourselves?” Clerly, partnering is a smart innovation strategy. Gone are the days when large companies can rely entirely on their internal R&D labs to generate all of their innovations. Today, outside partners – including customers, universities, channel partners and others – are an essential part of the innovation-savvy organization’s portfolio, according to the authors:
Partnering is a standard and potentially valuable part of the innovation toolbox. Reaching outside for additional resources, ideas, expertise and different perspectives can be highly valuable when combined with the internal ability to understand and use what your partners bring.”
They cite a number of successful examples of open innovation partnering structures. Bringing a new product to market is such a complex process today that it inevitably requires collaboration with many organizations, and that each partnership requires special care and handling to ensure that it operates effectively. We had been regular on this theme like as in here wherein we covered Von Hippel's view as in Democratizing Innovation wherein he argues that manufacturers should redesign their innovation processes and that they should systematically seek out innovations developed by users. He points to businesses - the custom semiconductor industry is one example- that have learned to assist user-innovators by providing them with toolkits for developing new products. User innovation has a positive impact on social welfare, and von Hippel proposes that government policies, including R&D subsidies and tax credits, should be realigned to eliminate biases against it.
We also covered in respect of the tech industry that names like HTC, Flextronics, Cellon, Quanta Computer, Premier Imaging, Wipro Technologies,and Compal Electronics, are fast emerging as hidden powers of the technology industry & that they are the vanguard of the next step in outsourcing - of innovation itself. When Western corporations began selling their factories and farming out manufacturing in the '80s and '90s to boost efficiency and focus their energies, most insisted all the important research and development would remain in-house.
Daniel H. Pink, author of the new book A Whole New Mind, argues that the "left brain" intellectual tasks that "are routine, computer-like, and can be boiled down to a spec sheet are migrating to where it is cheaper, thanks to Asia's rising economies and the miracle of cyberspace." The U.S. will remain strong in "right brain" work that entails "artistry, creativity, and empathy with the customer that requires being physically close to the market." A richer perspective on innovation and outsourcing is available as part of the noteAsian Century Of Innovation.
Too often organizations are confronted with the question - how do you manage innovation and most importantly how do you to plan for it. Answers to these are at the core of the book outlined through set of methods and processes for managing and benefiting from innovation. The key element to have this ecosystem would be the soft culture that lay within the enterprise – this can force managing innovation as a planning process which operations can adhere to. A little would lead to more – both in spread and depth – that’s the key to build on innovative culture within enterprises. Supplementing and complementing core, support processes across the extended enterprise with shared values is the key to sustaining innovation and reap success.

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