People who have known me for a while know that I am a big fan of co-innovating with an ecosystem. I have worked in a number of co-innovation projects in my career with varying degrees of success. And now I am in India for 3 weeks, working with a number of ecosystem partners to explore co-innovation ideas.
Why should anyone co-innovate in the first place?
To begin with – innovation is a misused and overhyped word. I am of the firm opinion that a vendor should not claim innovation on any product or service – only a customer should. I am in two minds these days on whether analysts and bloggers are good judges of innovation. But till I get some clarity of thought, I am going to stick with customers as the sole judge.
But Vendors have to constantly try to innovate – otherwise they will not stay relevant to their customers. Relevance comes in two parts – protecting the investments customers made already, and coming up with new things that solve the ever changing needs of customers in a global economy. It is a hard balance to strike, to say the least.
One reason for this balance being hard to strike is because vendor solutions are not always outcome based. Almost every customer has budget to make more money – be it revenue increases or cost reductions. But not all vendors and customers can articulate IT solutions in the context of a business solution. It is an in-exact science to begin with – since some assumptions have to be made . And in a dynamic business world – you can never guess all the factors that affect an outcome. So vendors are naturally hesitant to tie their sales to an outcome that they don’t have control over. Not just vendors – I have also seen several customers who are hesitant to tie their purchases to a risk/reward model. I guess it will be a while before outcome based contracts become mainstream if at all.
Yet another reason is that no one vendor can provide all the solutions to a customer , although many vendors apparently want to do so. Customers also typically like a “one throat to choke” model – which these days seem to be called a more politically correct “one hand to shake”. A happy medium is where co-innovation comes in. It can have many flavors – with multiple vendors joining in , and some times (sadly not often enough) with customers directly playing a part.
This is a scalable model – since for a given budget constraint, every vendor can get more bang out of their buck, and the customers get a comprehensive solution. But it takes a lot to make it successful. More than the legal, IP, cost etc type of issues – it is the personality of the people that actually work on these projects that make a difference. Co-innovation projects need people who work for different employers to trust each other a lot. This is easier said than done .
There is another conflict of interest in such solutions. Vendors will need a solution that they can lift and shift to other customers . That will typically mean – some features specific to the given customer they are working with might not fit a “framework” ,model. Customers on the other hand will want an out of the box solution that they don’t need to customize any more. I am sympathetic to both sides – and whether this gets resolved or not depends on the trust the people on all sides have with each other, and very seldom does it depend on the contracts that are in place. In fact if contracts have to be referred to every step of the way – I won’t hold my breath on co-innovation projects succeeding ever.
Then there are co-innovation (allegedly?) projects which have little to no customer participation. This is the beginning of the “solution looking for a problem” type scenes we have all seen. In my opinion, such projects should not be done – just scratch them off. They may succeed on occasion – but they are not scalable.
And then there are the “influencers” – analysts, bloggers, friends and family etc. They provide extremely valuable information on co-innovation projects. The hard part is to negate their bias. Every influencer has a bias – some might want you to maximize short term revenue (hi mom) , others might claim they are “buy side”, except they make vast majority of their income from vendors, yet others might only know one geography or market where you sell and so on. So unless you balance it out – there is a good chance that you might end up with a skewed solution. But all things said – I would rather have influencer input than not have it.
I have a lot of battle scars from co-innovation projects – and some of them have not ended well. But I have learned something valuable from each, and I will still be quick to say “I am in” if there is a co-innovation project I can work on . The only ones I say no to are the ones with low or no customer participation.
5 thoughts on “Co-innovation – It Takes Two To Tango”
Great blog Vijay.
totally agree to stay away from (co) innovation projects without a customer involvement.
One comment i am not sure about though “… Customers on the other hand will want an out of the box solution that they don’t need to customize any more…” – i understand why, however such ‘out of the box’ solutions may limit them to differentiate themselves from potentially their competitors and therefore might not support their desires to innovate on their business model to gain a competitive advantage thru growth or operational effeiciency.
what are your thoughts on that?
It is a classic “short term vs long term” problem – would you rather save few $$ now, or would you invest now for future differentiation? Unfortunately – most people choose short term goals.
I sympathize with customers on this – when they go into co-innovation project, they usually dont have a reason to think about anyone else other than them. So they tend to look at their part of the investment as a full price to get a tailor made solution. However, as I can attest first hand – most people are reasonable, and will compromise at the end for a middle ground solution.
Valuable information Sir. You are right and innovation is only the way to find out new generation customers.
Multiple Partners/Vendors to manage require different skill perhaps, but then as you rightly mentioned it’s the “personality of the people” which matters and this certainly cannot be claimed by any one Company alone.
Since I have worked with Product Company as well as Vendor Organizations I can very well relate to “solution that they can lift and shift to other customers”. They call it “Harvesting the Crop” and making a profit out of it.
Finally, respect and salute to the soldier who has scars from the battle.