By Hao Dinh
Fuels and Services Innovation Leader
and Growth Hacker
What is innovation agility and why should organizations care? From my experience, driving innovation through agility involves experimenting in numerous areas while quickly prototyping to learn which of the ideas are viable to not only solve your customer’s issues but also, generate profitable business models. I’ve found that outsourcing certain innovation initiatives enables firms to move ideas quicker to market.
Successful innovation is a numbers game. Think of a funnel where a lot of new ideas come in, and only a small percentage make it through as viable solutions. A 2003 Harvard Business Review estimates the innovation failure rate can be around 90% (Andrew and Sirkin, 2003). With limited resources, e.g. personnel, funds and time, companies need methods to improve their innovation successes. One option is to outsource a portion of your innovation initiatives. Keep in-house new offerings focused on existing intellectual properties or core competencies. However, for emerging technologies, consider leveraging outside capabilities to de-risk these innovations.
Let’s take the example of the blockchain, an emerging, distributed ledger technology that promises to enable exchanges between trading partners without the oversight or intermediation of a third party, actively reducing or even eliminating counterparty risk. For financial transactions and legal processes, blockchain could replace banks and law firms. According to UK research firm, Juniper Research, more than half of the world’s large corporations are looking into blockchain. However, discussions within my network of innovation leaders indicate piloting a distributed ledger prototype is challenging. Since blockchain is a nascent technology, experts in the field are limited and are either unwilling to work for corporations or are requesting exorbitant salaries. Additionally, organizations need to assess if they should invest in hiring blockchain teams since the business case for the technology has not been validated. Thus, outsourcing blockchain innovation is a viable option.
There are incubators, startups, software companies, and universities focused on developing and validating blockchain solutions that firms can outsource. I’m part of a consortium of nine Fortune 100 organizations that have come together to co-innovate with emerging technologies such as blockchain, AI, IoT and AR/VR. The consortium is called coLab and is led by IDEO, a global innovation and design leader, renowned for helping organizations think differently and to quickly prototype ideas to market. The coLab members come together to complete prototypes, which are developed in 3 – 5 days, utilizing the emerging technologies for various use cases. Additionally, the IDEO brand has attracted experts in the emerging technologies to come work at the coLab. We’ve developed 10+ blockchain prototypes, which the coLab members use to assess if the results of the experiments generate business cases to warrant further investments in the technology. For the annual cost of the coLab membership, members receive the opportunity to “try out” new technologies and business models and selectively determine which ones they should brought back to their organizations to develop further.
Now replace blockchain from the above outsourcing innovation example with any new technology or idea your organization wants to assess. If the new idea is not part of your core business, you don’t have related intellectual property, or you have challenges finding experts in that area, consider outsourcing the innovation.
Hao Dinh is a continuous learner passionate about using Design Thinking/LEAN Startup, Technologies & Change Management principles to solve “big” issues. At GE Power, he has been transforming a $1B Fortune 10 conservative organization into an innovation powerhouse by nurturing an entrepreneurial culture that fosters collaboration, a fail forward mentality and a fun work environment.
In September 2016, Hao was honored to be selected by IDEO and the University of Pennsylvania to partner with 20 designers, entrepreneurs and change agents from around the world to use Design Thinking to drive social innovation. Hao is also Co-Founder and Chief Ideator for Grow by Design, a nonprofit that firmly believes it takes a community to educate the next generation of leaders and innovators.