3 Steps For Joining The Innovation Economy

bob-elliottWe are in an era when innovation is more likely to come from the outside in. And it will be collaborative. No more cloistered Ph.Ds. in R&D; ideas will stream in from outside corporate walls, across geographic borders, and even from customers. And innovation will be marked by continuous input and improvement.

The constraints have gone away

In the past, an individual entrepreneur with a great idea for a new product was constrained by capital, requirements for economies of scale, and physical production requirements. In the innovation economy, where the idea rules, the individual could sell their great idea for a car part to GM or Ford, who could then use it to 3-D print their new car model.

Anyone can innovate today. Typically, there are about three necessary steps to take to keep up with today’s economy:

1.       Bring supply chain partners into the innovation process. Innovation will be a collaborative process not just among individuals, but across companies. Subcontractors and supply chain partners will be integral in the ideation process. For example, Boeing or Airbus used to outsource the manufacturing of an airplane wing. Going forward, they’ll also challenge their subcontractors to come up with their best ideas for the design of that part, while maintaining control of the overall design and engineering of the aircraft.

2.       Stop the one-way flow. The gap between the developed world and the developing world is closing, no more so than in the area of innovation. Whereas companies in developed economies historically came up with ideas for products that would eventually make their way to developing countries, now innovation is emerging from developing countries. Coined “reverse innovation” by Vijay Govindarajan and Chris Trimble of the Tuck School of Business at Dartmouth, products developed to meet the needs of developing nations, like battery-operated medical instruments in rural India, end up having desirable features for the developed world as well.

3.       Bring customers into the process. The passive customer is no more. In the innovation economy, ideas will flow from customer to company and back again. The idea of co-creation – that business value will be increasingly delivered by company and customer together – is increasingly relevant as new technologies enable customers to not only co-innovate, but co-design, co-market, and even co-produce.

The market leaders in the innovation economy will use the best idea coming from any direction – customer or supplier, emerging market or individual entrepreneur.

About the author:

Bob Elliott is Managing Director for SAP Canada. He is responsible for the business operations in Canada and driving growth for SAP’s industry-leading cloud, mobile, and database and technology solutions that help 9,000 Canadian customers in 25 industries become best-run businesses.

Check out SAP.com for more information

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