There are many kinds of innovation - some involve extremely long time frames and exceedingly high risks. Think Google X - https://x.company/. Others might have less risk of failure (innovation failure, not fiscal failure), such that the task is not to completely reinvent an industry. An example here might be America's JSF program - https://en.wikipedia.org/wiki/Joint_Strike_Fighter_program. Building planes is understood, building a single airframe which can be configured in multiple ways, be stealthy, have vertical take-off and landing, integrate with warfare information systems, and more, represents a significant amount of innovation. There are still other places to think about innovation - research with universities, any number of consortiums advancing industries, and startups funded by Angel investors and early VC capital.

Many companies acquire innovation from these latter sources. Small M&A or licensing deals which are integrated in to larger offerings. In my experience, this is exceedingly common in technology companies. Find the right technology, developed in the right manner, add in decent timing. With those three items you have a ready source of innovation without having to source from your own R&D group. If you are in a mid-sized company, you might have very little pure R&D/Innovation funding and do a lot of acquisition. At a larger organization, you will likely employ both. Sometimes acquisitions can serve multiple needs. Be a source of not only innovation, but customers, business functions, cash flow.

In this broad mix of innovation sources, there is one I find people often overlook. I call it Experience Based Innovation, and in a nutshell it is essentially the process of approaching customers and partners with the opportunity to share in the innovation process. That interaction can mean a number of things, typically working with customers:

  • As you are are getting ready to release a product. Typically in the Alpha and Beta stages. This is exceedingly common.
  • In the middle of the product development phase, such as trying out prototypes under NDA.
  • Building a product jointly and/or for the customer, usually under a contract.
  • Working during ideation and strategy phases of the product.

In my experience, the value of the interaction and quality of the innovation works its way from bottom to top in the above list. If you can work with a partner or customer from ideation all the way to a production release, your innovation will be released with a significant likelihood of repeat sales. These positives come with some significant risks, as well as a number of downsides. Later entries in this series will cover both the positives and negatives of this innovation model.