An innovation partnership is usually formed in order to share the inherent risks associated with innovation.
The global marketplace that many companies operate in these days has resulted in much fiercer competition.
In response to this competition, companies must attempt to gain competitive advantage by introducing more and more innovative solutions in terms of products, technologies, and practices and they must simultaneously reduce lead time and costs.
In many organizations, the lean practices of the automotive industries are used as an approach to reduce lead times and costs.
Lean focuses on reducing unnecessary waste of resources and materials and on providing just-in-time deliveries.
(Diagram Credit: Dave Gray)
Creating innovative solutions, however, requires much more than simply adopting practices or methodologies of other industries or competitors.
To gain competitive advantage you ideally need to introduce radically new products into the market; sometimes referred to as radical innovation but also referred to as breakthrough, discontinuous or disruptive innovation.
This kind of innovation is inherently risky due to the time and cost to develop, the uncertainty of whether or not it will be adopted by the market and the complexities of the innovation process. The failure rate for new product introductions is very high.
For the above reason companies often form innovation partnerships in order to share both the risk and the competitive advantage that can be gained from a successful radical innovation. They also share the influence over the outcome of the project and any resulting revenue.
Partnerships also enable increased creative capacity – shared resources result in a diversity of opinions and perspectives which create contradictions that can play an important role as a source of change and as a means to bring new development ideas to the table.
OPEN MARKET INNOVATION
You may also want to read about open market innovation which is a form of partnership where you reach beyond your internal organisation for innovation collaboration. This can be achieved via licensing, joint venture, strategic alliances or simply by requesting stakeholders or the public at large for assistance.
Many innovations of today are a result of collaborating with a number of different partners using technologies that are both licensed or freely available within the public domain.
A good example of this is many of the innovative websites and applications that are available today. Many modern websites/web applications plug already proven pieces of technology together so as to create something entirely new.
In fact, there is a special name for the creation of something by combining other things from one or more sources. It’s known as a ‘mashup’.