External Collaboration: Going “Too Far” as a Business Model

tseliotThe following is a guest post by Estel Maskagna. Estel is a freelance and creative writer whose work has been featured on PreScouter. She writes on subjects covering innovation, green tech, and environmental topics. She is passionate about self-learning and intellectual exploration.

Integrating customers and lead users in a company’s innovation process is a revolutionary trend that has been picked up by many companies in recent years. Famous examples include personal financial software company Intuit and the custom-designed t-shirt eCommerce company Threadless. Both companies ask their customers for input regarding their innovation and product development. Radical as that may be, some companies venture even further in the quest for valuable information. Not only do they take the innovation process beyond the company lab and to customers, they even collaborate with partners outside their direct market. Is external collaboration in the interest of innovation actually innovating too far?

‘Too far’ means going beyond ordinary collaboration schemes such as interdepartmental partnerships and customer/supplier integration. It means extensive networking involving all kinds of groups in society that are normally out of range of usual business operations. A paint company would normally have homeowners, builders, and designers as its primary customers. But the city anti-air pollution task force would not be on its list of leading prospective partners. However, partnering with the city officials might lead the company to develop a special brand of paint which absorbs specific toxins from motor vehicle emissions and neutralizes them, thereby contributing to the city’s anti-air pollution efforts. Such a scenario highlights the potential of unlikely external collaboration in innovation.

In a recent article featured in the PreScouter Journal, Kande Kazadi uses the real life example of DHL Solutions and Innovations to point out the advantages of external collaboration and secondary stakeholder sensing. In order to develop their current concept for urban logistics, DHL reached out past its typical primary stakeholders (customers and suppliers) and towards secondary stakeholders far removed from the company’s direct market.

“DHL invites academics, politicians, citizens, and public authorities to help to tackle the challenge of decreasing urban traffic and embrace a greener economy. With the right capabilities in place, firms can become a nexus of value creation with multiple types of stakeholders actively co-creating new products and services with the firm.”

If the DHL innovation collaboration makes sense, why doesn’t every company do it? In reality, there are some possible risks external collaboration presents to companies. Relevance is one cause for concern. It is difficult enough to keep track of a customer base’s mercurial moods. Companies employ an army of strategies to stay updated and if possible one step ahead of customers’ demands. Firms pour money on survey campaigns, customer feedback, and eCommerce site metrics tracking among others. Shifting attention and resources for external collaboration might distort a firm’s market sensing strategy and relevance to its target audience. Primary stakeholders might present a straightforward demand to a company, but its secondary stakeholders might signal a need for a different course of action.

Another risk is the very real possibility of getting zero leads or results for a company’s pains. An open innovation platform might receive a thousand ideas, a hundred of which is borderline plausible. Out of these, a company might seriously consider ten, test six or seven… and get one major idea that eventually meets with mixed reviews. While big firms like DHL can handle such scenarios, many companies might not be willing to gamble so much time and resources to innovate that far.

Yet in spite of such concerns, external collaboration continues to attract companies hungry for information regarding the interests of a wide range of stakeholders. One argument is that one company’s seemingly invaluable piece of information might present a breakthrough opportunity for another. To facilitate this, researchers recommend exchange programs between the firm and their external collaborators for effective transfer of knowledge. By stepping into another’s shoes, a firm gains intimate knowledge of the inner workings of their collaborator through firsthand experience.

Then there is the chance of establishing a beneficial, perhaps even profitable, connection. A telephony and communications conglomerate may find it has use for a solar powered charging station a solar power startup is developing. A food packaging company may suddenly see an entomologist’s life work as the solution to its expensive printing problem. Connections like these have been made and it is to actively seek these connections that firms choose to innovate ‘too far’ and collaborate with external stakeholders.

To innovate too far in the context of external collaboration is to draw on the vast resources of a diverse community of minds. Just as intentionally-designed innovation spaces mixes the mailman with the CEO to allow for the opportunity of a random encounter (and hopefully innovation), external collaboration offers an opportunity for meaningful connections across the span of society.

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