The use of innovation for creating new products, services and business models is still in its infancy for many B2B companies. Of those companies that do have an established approach to innovation, many rely on an internal process contained within the company environment.
Closed, or inside, innovation involves an internal R&D team as the primary source for inventions. It’s the oldest, most established, innovation approach out there, and these companies tend to spend their entire innovation budget on internal research and product development. They manage their own projects from insight to implementation.
Today, more and more B2B innovation managers use open innovation to help reach established goals based on a variety of criteria. Open innovation expands the process beyond the confines of the company to include customers, suppliers, experts, business partners and academia in order to increase insights and understanding, perspectives and creativity – ultimately delivering fresh new ideas, technologies, processes and business models that inform new innovations.
Open innovation provides many rich resources to leverage for a more productive development process. Within the framework of open innovation, there are subsets of approaches utilized based on a number of different criteria such as: project objectives, industry/sector, culture, project timeframe, budget and anticipated results.
Here are four open innovation methods all B2B innovation managers should consider:
1. Mutual Innovation.
This approach brings together two distinct parties typically within the same industry or supply chain where both entities have a shared goal and both will benefit from the end result. An example of mutual innovation is when a manufacturer and a distributor collaborate to create details for a new distributor sales incentive program, a process improvement plan, or to develop ways both parties can better serve one another.
Mutual innovation works best when a leader is assigned from each participating company to co-lead and oversee the effort. Each may take on specific tasks or delegate responsibilities to other team members following the workshop to keep the initiative moving forward. In many cases, these programs may not be resolved in a single workshop; instead monthly or quarterly workshop sessions are scheduled – and they can even be held in different geographic regions to get additional input from other parties. This approach does not need to lead to a formal partnership between the collaborating parties; rather, each group can benefit from the insights, direction or ideas in its own way.
2. Cross-Industry Innovation.
This methodology is used to draw inspiration beyond your own industry, vertical, category or area of expertise – essentially getting new innovations from existing solutions in other businesses or industries. Tapping analogous approaches and cross-functional expertise, cross-industry innovation can inspire anything from products and services to processes and business models – even company culture and leadership.
Snap-on Inc., a leading tool manufacturer, utilized cross-industry innovation to better reach young auto technicians who were not wearing safety equipment because the technicians felt the products were unfashionable. Leveraging these insights, Snap-on’s next generation of safety equipment borrowed designs and materials from the extreme sports sector to make an entire line of motocross-inspired gloves, eye protection, respirators and knee protectors. The brand created a new product category of extreme safety equipment and became a relevant player in this arena.
When companies create cross-industry workshops, including multidisciplinary project teams, stimuli from different sectors helps teams stretch their perspectives. Cross-industry innovation increases speed-to-market, as concepts have been proven by other companies and need only to be adapted to the new company and sector – minimizing risk and increasing potential success.
3. Lead-User Innovation
This methodology is similar to cross-industry innovation in that breakthrough new products and services can be innovated by identifying trends, behaviors and use occasions in analogous categories. The key difference? With this approach, innovators seek out lead users – individuals or companies who are employing similar products, services or experiences in different industries, sometimes in extreme situations, that will help define the future of a new product, service or technique.
An example of lead-user innovation might be an electric vehicle manufacturer that could be a lead user for a battery company. Another example could be an emergency medical services professional who is the lead user for new triage products or procedures.
Through interviews, in-context observational research, and inclusion of lead user participation in workshops, innovators can uncover the users’ unmet and unarticulated needs. Innovators can then better understand how to improve or adapt the product or service for different uses and applications.
4. Idea-Incubation Contests
Innovation is driven by having a multitude of relevant ideas. Employees, customers and even suppliers are some of the most important sources of new ideas. In order to leverage this creative potential, a positive culture around innovation is necessary.
Creating an idea incubation contest helps support this type of culture, as it perpetuates communication and interaction, and encourages friendly creative competition that can lead increased innovation success. Adding a gamification component with a reward for the winner at the end of the contest adds another level of interactivity and fun. Contests are an effective way of continuing to fill the innovation pipeline with real and relevant ideas and concepts.
Innovation managers require a larger portfolio of techniques and processes in order to meet the demands of our ever-changing business landscape, and to ultimately deliver more insightful and relevant innovation solutions.
Each of the above processes is distinct and can be used to address different goals, but they are not mutually exclusive. There are opportunities to mix these techniques to optimize output. The greatest opportunity for innovation managers lies in leveraging different methodologies – even using several processes – for fresh, dynamic and relevant results.
About the Author:
John Edelmann – Executive Director of Innovation
John is the Executive Director of Innovation and Client Development at Elevation Marketing. His industry expertise is deep and varied. Before joining Elevation, John operated his own strategic marketing agency for 14 years which focused on innovating and renovating new brands, products, and services.