Innovating at the Intersections
The most valuable
innovation is often found at the intersection of firms’ capabilities.
Exploiting these opportunities requires a new approach to collaboration.
Innovation in large
organisations is traditionally nurtured and deployed internally. As a result,
solutions are often inward-looking, missing the chance to seize opportunities
and address chronic and systemic problems found at the ecosystem level.
These ground-breaking
ideas are more likely to be found at the intersection of organisations’
capabilities and can only be captured through collaborative innovation which
cuts across firms’ – and even industries’ – abilities. The quandary is how to
bring together companies (which may see one another as competitors or belonging
to a different industry) to share their diverse ideas, skills and resources
with a view to solving ecosystem problems and identifying new ways to grow
profits.
Tackling ideas that
intersect industries
To
this end, Cisco has developed a new model of “speed innovation” bringing
together established organisations with mutual goals to create and deploy
innovation through the cross-pollination of ideas and resources.
Cisco Hyperinnovation
Living Labs (CHILL) focus on the fast and agile commercialisation of ideas,
congregating multiple partners at a very early stage to address new
opportunities that they – and their industry – might not be able to capture
alone. As Cisco CEO Chuck Robbins noted “no one company can deliver the full breadth
of technology solutions that customers need at the pace the market requires.”
Four or five partner
companies are invited to join each lab, their selection based on mutually
symbiotic traits. For example, the Berlin Living Lab, including talent from Airbus,
DHL, Caterpillar and Cisco, tackled the pressing challenges of supply chain
digitalisation. In September 2015, a Living Lab in San Francisco brought
together the University of California, San Francisco, Community Healthcare
Network, Walgreens and Vocera (a provider of healthcare communications systems)
to focus on improving patient experiences in cancer care. Another lab involving
Nike, Lowe’s and Costco sought to create a frictionless shopping experience. As
well as the partner companies, each team includes a dozen Cisco engineers,
business units and, most importantly, the end user.
Intellectual property
agreements are set at the beginning of the process (with IP rights equally
split or if a spin-off company is created, the IP is transferred to that
company) leaving teams free to work together, knowing that any breakthrough
ideas can be implemented or invested in by those participating.
Although not all
projects survive to fruition and it is still too early to put a dollar value on
many of the projects, there have been some impressive results. The Berlin
Living Lab, for example, produced internal projects, spinouts and joint
ventures to digitalise supply chains, factories and warehouses that will
generate an estimated US$6 billion in new revenue and save US$3.4 billion in
costs over the next decade.
To avoid the pitfalls
of multiparty collaboration, the CHILL team leads the innovation process,
coordinating the ecosystem and the application of tools and methods drawn from
design thinking, lean start-up and business model innovation methodologies. The
Labs then follow a unique four-phase process over several months.
1. Identifying the
focus
The first step is to
identify the areas of opportunity that are important to growth. Potential
partners are then assessed and selected on their innovation capabilities and
experience; alignment of goals, market power and resources. The partner
companies may seem diverse but each should have a connection with the host or
one another. The CHILL team also looks for partners that are prepared to
commit. Participants are usually senior executives with experience in
innovation and the authority to make to make on-the-spot commitments to fund
the launch of new technologies or platforms which may come out of the project.
This will ensure that the bureaucracy endemic in many large firms doesn’t
destroy a project’s momentum.
2. Finding and
defining the problem
In the second step,
CHILL team members may spend months talking to experts, customers and end users
to understand the real problems customers face in a specific area and to
determine the biggest opportunities. Once the root cause of the problem is
understood, the team identifies a series of specific challenges.
3. Assembling the
participants to prototype solutions
This step is the most
visible part of the CHILL process and usually involves a two-day event of
intense workshopping that embraces the lean start-up approach. Teams are broken
down into groups of four or five members and tasked with conducting five
rapid-cycle building prototypes to test “leap of faith” assumptions. No idea is
considered too “way-out”. Cisco’s CTO David Ward refers to this as “speed
innovating” – a process built around what people don’t know, rather than
commonly known factors – a characteristic which differentiates Cisco’s
Hyperinnovation from traditional R&D techniques.
The CHILL model
strives to create an environment and atmosphere that will elicit creativity and
cooperation; a process which may include elaborate stage setting, mindfulness
exercises or inspirational speeches from successful innovators.
4. Commitment and
follow-up
Halfway through the
second day of the Living Lab, teams prepare their presentations for business
analysts who are brought in to help think through what Cisco refers to as the
“value at stake” – the value that could be created, or costs saved, due to the
innovation. After the presentation, executives who want to invest must commit
on the spot to ensure the innovation cycle maintains the momentum that is vital
to the project’s future success.
Once commitments are
made, the CHILL team assembles a “build archetype” which includes the content,
feedback and insights generated during the session, the prototype itself, a
business model and an agreed plan of action for the next six months.
It is then up to the
participants to take the next step: this might involve the entire Living Lab
group, a subset or a separate start-up company overseen by the member
companies.
By this stage,
parties will have worked together and know if, and how, they can create value.
Innovation value
It is too early to
measure the success of ecosystem innovation in terms of revenue alone as many
projects are yet to be commercialised. About 75 percent of CHILL innovations
have been funded so far and the potential launch value from commercialisation
is substantial. But the benefits go further.
Strategic
value is derived from the connection participants make with one another; the
new opportunities they may have identified to work with partners they had not
previously considered. A third type of value, the exit value, comes from the knowledge,
components or solutions that are not immediately commercialised but can be
tapped into by participants at a later date. For example, Cisco used the Berlin
Labs experience to create a network of innovation catalysts inside its own
supply chain organisation.
Just participating in
the Living Labs is helping large operations to become more agile and ready to
embrace greater risk. While not every project succeeds, the process helps
companies build on their own innovation capabilities and collaboration skills.
They become more agile and primed to embrace greater risk and tackle the
valuable ideas at the intersection of their industries.
A version of this article first
appeared in The Harvard Business Review.
Nathan Furr, INSEAD Assistant Professor of Strategy, Jeffrey H. Dyer, BYU Marriott School Professor of Strategy, and Kate O’Keeffe, Managing Director, Cisco Hyperinnovation Living Labs
Read more at
http://knowledge.insead.edu/blog/insead-blog/innovating-at-the-intersections-5200?utm_source=INSEAD+Knowledge&utm_campaign=287a129a2a-EMAIL_CAMPAIGN_2017_02_16&utm_medium=email&utm_term=0_e079141ebb-287a129a2a-249840429#eRyHBvXZiXAfjqIU.99
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