Inside Beats Outside in External Innovation

Monday, 17 November 2014 22:30
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Consider the types of externally developed opportunties that get adopted by corporations that practice open innovation...and those that don't. Do you think that most of the "winners" come from among individuals who submit them via innovation portals? Think again...

Curious to learn more? Read on, dear friends...

Inside Beats Outside in External Innovation

In my experience, these are the two most viable paths to corporate acceptance of an external technology candidate:

(1) Found By Us: the customer scouts the solutions themselves and also selects the winner (usually from among smaller companies or supplier partners),

(2) Intrapraneurial Sell-in : a savvy internal innovation champion identifies a new opportunity that wasn't already on the "shopping list" and successfully sells it in to decision makers within the organization.

In both of these scenarios, inside beats outside. Technology submitted by individuals or even small companies through a company's innovation portal almost never adopted, if ever.

Why is this so? It has little to do with the portals themselves, which are very effective vehicles for managing and sharing these inputs. Rather, it is almost always due to the inadequacy of the submissions themselves given the company's exceedingly high standards. The likelihood that a small, external provider will have developed something that meets a sophisticated customer's needs with the degree of precision, excellence and completeness that these customer require is exceptionally low. The best that can realistically be expected is something pretty close to the desired need. Unfortunately, pretty close and pretty good are virtually never good enough for companies with (understandably) very high standards and very low risk tolerances.

So, if these aren't the answer, what is? The first of these more successful approaches is what I would refer to as Found By Us or FBU. That is, the company itself (or with the assistance of a trusted scout) does the scouting and selection, usually from among a set of more sophisticated and more highly resourced (yet still relatively small) companies and suppliers. FBU works better for one simple reason: the persons doing the searching and finding also get to identify the prospects and also decide what is acceptable. This is especially important if the project champion is part of the team leading the scouting activity. Importantly, if you visit corporate websites that tout their open innovation successes, you will find that these types of partners are the ones most often cited.

The second of these involves an opportunistic and "insider" approach wherein a highly regarded external party and or someone respected within the company sells in to key corporate influencers and decision makers an exciting new opportunity that wasn't previously being sought. While these opportunities do get screened technically, the mindset in these instances is often more to seek to validate the technology so that it can be approved. It is not about trying to find the crack in the armor to allow it to be screened out.

I expect this discussion will prompt some strong reactions from submitters as well as corporate customers. And importantly, this is only my opinion. I invite you to share yours, especially if you have any reliable data that you are willing to introduce into the discussion.

Since 2005, BFS Innovations has helped its Fortune 500 clients with technology scouting, new business creation and development services. Contact Michael today at This email address is being protected from spambots. You need JavaScript enabled to view it. or at 614 937-2408 to discuss your company's needs.

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