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Step-Change: Collaborating To Innovate

Open Innovation is all about breaking down the barriers internally within an organization, but most importantly between an organization and its partners. Most organizations do this very poorly – they talk about “partnering” and “ecosystems” and “win-win” but at the end of the day, they treat their partners with contempt, purely as a vehicle for revenue.

This must change. As globalization and selling into adjacent markets become more and more relevant, the establishment of truly meaningful partnerships becomes essential and not a desirable nicety.

A recent study confirms exactly this. It has been undertaken by Logica in conjunction with the London School of Economics. I quote the key findings here because I passionately believe they are absolutely valid, and that we must all take them to heart if we are to success in a globalized economy.

1. Innovation is even more important in economic recessions. Innovations can be changes in IT operations, business processes or in products and services offered or in the business model of how the firm competes. To survive and thrive through a recession requires sustainable change. A focus on cost-cutting alone, or even cost-efficiency solves short-term problems, at the expense of building the future business.

2. Innovation using the external services market is increasingly realistic as both clients and suppliers are maturing their ability to go beyond traditional
outsourcing relationships and build the collaborative arrangements necessary for innovating. This means clients can move from contract administration and
outsourcing management to a new phase of collaborative leadership. They can also develop a new performance agenda.

3. Innovation with large-scale, long term impact requires deep collaboration within clients, and with and across their external suppliers. Without this, innovation, and the consequent high performance, cannot be delivered.

4. Collaborating to innovate requires a step-change in objectives pursued, relationships with suppliers, and how work and innovation is conducted. Our
study of effective practitioners suggests distinctive practices for success. These can be classified into a fourfold framework – Leading, Contracting, Organizing and Behaving.

5. Leadership shapes the context for collaboration, innovation and high performance and is primary. Leadership deals with adaptive challenges, and must be at all levels in each of the collaborating parties. Leadership also changes the approach to risk in order to share and manage down risk and manage in opportunity.

6. New forms of contracting are required for collaborative innovation to succeed. Such contracts share risk and reward in ways that incent innovation, collaboration and high performance to achieve common goals.

7. Organizing for innovation requires more co-managed governance structures and greater multi-functional teaming across those organizations and people
responsible for delivering results. Teaming now requires the ability to collaborate within a client organisation, between client and supplier and between suppliers in multi-vendor environments.

8. Leading, contracting, and organising in these ways incents behaviour and enables collective delivery of superior business performance. Collaborative innovation is most effective when it generates high personal, competence-based and motivational trust amongst the parties. High trust is a key component and shaper of the collaborative, open, learning, adaptive, flexible and interdependent behaviours required.

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