Innovation Networks : The New Phenomenon

In this age of contribution economy – a phenomenon that we are seeing ever since the Internet started to connect everyone to everyone else all the time, people from around the world can more easily contribute leading to exploding results - caused by the coming together of energy, ideas, and knowledge. Some of the more familiar examples of these collaborative efforts include blogs, open-source software, podcasts, and even the nonprofit online encyclopedia Wikipedia. We are also seeing customers leading the charge of innovation and the economist article on user led innovation exemplifies a new form of collaboration. The rise of online communities, together with the development of powerful and easy-to-use design tools, seems to be boosting the phenomenon, as well as bringing it to the attention of a wider audience, says Eric Von Hippel of MIT, author of the well known book Democratizing innovation. The current issue of HBR has an excellent article on P&G’s new model off innovation.

From a tested & proven approach of continually innovating within, P&G moved to a model of “connect & develop” model of innovation. In 2000 P&G realized that their invent-it-ourselves model couldn’t support the growth they needed. Their R&D productivity had levelled off and their innovation success rate had stalled at 35%. P&Gs stock price fell by more than 50%.P&G realized that their best innovations came from connecting ideas across internal businesses. Betting that external connections could yield profitable innovations P&G made it a goal to “acquire 50% of innovations from outside the company”. The approach has now matured to the extent that today, it collaborates with suppliers, competitors, scientists, entrepreneurs, and others (that's the connect part), systematically scouring the world for proven technologies, packages, and products that P&G can improve, scale up, and market (in other words, develop), either on its own or in partnership with other companies. The article says that though this shift in approach, the R&D productivity is said to have increased by 60%. While most companies in the world are confining research to their fortified labs, this approach from P&G demonstrates the success of the new model and is a standing testimony to the fact that innovation landscape has changed. This is innovation in action encompassing all forms of traditional innovation & realized through execution – all the more important to study & embrace.