Working with external partners to bring better products and services to market faster and/or develop better intellectual property has never been more popular in the world of business than what we see today. In this guide, we’ll look at the “why, who, and how” of working with external collaborators.
The term open innovation is often used to describe external collaboration, but this is more like an umbrella term that can be used to cover many different ways of working with external partners, including crowdsourcing, challenge-driven innovation, platform innovation, or user-driven innovation.
…as well as my favorite terms: external collaboration, networked business structures, or networked innovation.
When I am asked to define open or networked innovation, I say that it’s much more important that the company or organization develop their own common language and understanding in a way that fits their specific context and situation. This must work both internally and externally.
When I am pressed harder for my take, I say that open innovation is a philosophy or a mindset that must be embraced throughout the organization. This mindset should enable one’s organization to work with external input and resources just as naturally as it does with internal input and resources.
The Key is Philosophy and Mindset—Not a Process or Tool
When I work with executives and their teams on how to further develop their external collaboration capabilities, we look into a triple approach like this one:
- Identify business units or corporate functions with pains or opportunities that can benefit from working with external partners
- Identify the key reasons why you want to pursue external partnerships for the chosen units or functions
- Identify the proper stakeholders for exploiting or exploring pains or opportunities, and the channels and approaches for working with them
Let’s look at a longer list of examples related to the why, who and how for working with external partners.
Why Work with External Partners?
What is your motivation for working with external partners? Some examples:
- Develop better products and services together with others
- Speed up your time to market
- Find and develop new technologies and approaches that we can’t do by ourselves
- Partner with companies to bring new products and services to market
- Solve problems, pursue opportunities, and have more options for collaboration
- Develop platform-based businesses
- Better work the two sides of disruption—offense and defense
- Become competitively unpredictable
- Create new marketing vehicles (such as crowdsourcing)
- Experiment with and develop towards future organizational paradigms
- Change the corporate culture
- Develop better experimental capabilities
- Access new knowledge pools
- Explore new technologies, trends, and markets
- Identify new business opportunities
- Establish new partnerships
- Share / mitigate risk of innovation projects
- Reduce R&D and innovation costs
- Outsource chunks of R&D
- License / sell internal ideas, technologies, and/or IP to others
- Prove the technical and/or commercial viability of projects quickly
Who are Your External Collaborators?
What types of stakeholder groups can you work with to achieve your objectives? Some examples:
- Customers / users
- Suppliers
- Startups
- SMEs
- Corporations (even competitors)
- Accelerators
- Venture capitalists
- Service or process partners
- Platforms and communities
- Universities / institutions
- Government / regulatory affairs
- Inventors
You can also work with the term internal open innovation. Here you tear down the silos and make your business units and functions work better together. This is only focused on the inside, but it can be a good way to develop the capabilities needed to work with the outside later on.
How do You Engage External Stakeholders and Collaborators?
Is the corporate communication team up for this? Not always, as they may not know enough about innovation management. How can you work with your stakeholder groups? Some examples:
- 1-1 partnerships
- 1-many partnerships
- Many-many partnerships
- Alliances, joint ventures and consortia
- Hackathons
- Supplier days / startup days
- Intermediaries
- Competitions and challenges
- Crowdsourcing
- Platforms and communities
- Corporate labs / accelerators
- Just how we do business
The Impact on Corporate Business Units and Functions
Communication is a key element for external collaboration as you build ecosystems with the best impact on your industry—today and in the future. Is the corporate communication team up for this? Not always, as they may not know enough about innovation management.
Innovation—if not business in general—is all about people, right? Everyone seems to agree on this, but the HR function is almost totally absent when it comes to the strategic development of a company even though they are (supposedly) in charge of developing some of the key capabilities (people) for this. I believe we need a triangle of the CEO and other chosen top executives, the corporate transformation and innovation team itself, and HR in order to transform and build strong companies today. The latter needs to wake up and get into the game.
Procurement and supply chain. One of the hot terms right now is SEI—supplier enabled innovation—and this looks into how you can co-create value together with your suppliers rather than just bringing down the costs. This requires a whole new mindset and approach for procurement and supply chain executives and their teams.
One of the most important stakeholder groups for external collaboration is customers / users. The front line here is based on the sales and marketing functions in charge of the commercial activities. At most companies, these functions are heavily involved in these interactions.
R&D is the function that can benefit the most from working with external partners if this is done properly and if the R&D function is not stuck in the past with a not-invented-here, secretive mindset. Some companies are much better than others here. It is also important to have an internal discussion on the differences between R&D and innovation, and who should control what.
How can you work with external partners to develop better production and manufacturing processes and capabilities? Some companies are actually looking into this today. It is not easy and there is not much experience to draw upon, but there are potential benefits for many types of companies here.
Legal teams need to decide what role they want to play here. If they come with a defensive mindset, they will slow down the entire company and stall the transformation processes. If they come with an offensive mindset (seeing opportunities before risks), they become an important player, as they help create a strong support system with regards to collaboration frameworks.
As organizations transform themselves and require different capabilities, a new breed of executives will rule the game. The top executive team either gets up to speed fast or they will soon be out their jobs.
Closing Remark
I often talk about a new generation of executives that are about to enter the business world. They know how to deal with digitalization and disruption and their understanding of stakeholder management, networking capabilities and platform orchestration are key for this. In short, you need to be a great facilitator in order to become a great executive—or manager—today.
Go external!
About the Author
Stefan Lindegaard is a Copenhagen-based author, speaker and strategic advisor. His focus on corporate transformation and innovation management based on leadership, the work force and organizational structures has propelled him into being a trusted source of inspiration to many large corporations, government organizations and smaller companies. He believes business today requires an open and global perspective and he has given talks and worked with companies in Europe, North America, South America, the Middle East, Africa and Asia.
In his role as a strategic advisor and coach, Stefan Lindegaard provides external perspectives and practical advice for executives and corporate transformation and innovation teams. He is a widely respected writer and he has written several books including The Open Innovation Revolution published globally.
A version of this article was published in 2010 by Stefan Lindegaard on InnovationManagement—this updated and expanded version is available only to InnovationManagement members.