November 8, 2006 3:27 pm

Using collaboration to fuel the ideas factory

When we think of great innovations and innovators, we often imagine lone geniuses, such as Thomas Edison or Albert Einstein, working in laboratories or hunched over their desks. In fact, very little innovation happens this way. Most of the great ideas of the past century have been collaborative efforts, created by teams drawn from many different parts of the company. And increasingly, we are seeing these teams drawing members from other businesses, from suppliers and other parts of the value chain, and even from customers.

Collaboration is critical in innovation because it is extremely rare that one individual will have the necessary knowledge and skills to design a new product and take it to market. Above all, innovation requires the sharing of knowledge and ideas and the bringing together of people who have complimentary skills. Robert Noyce is often credited with the invention of the semiconductor, but it was the collaboration with his partner Gordon Moore, that brought this invention to market, first at Fairchild, then at Intel. Basic computer language came out of a collaboration between Bill Gates and Paul Allen. And Sony, one of the most innovative companies of the past 50 years, was founded by a team of researchers led by Masaru Ibuka and Akio Morita, and continues to rely on collaborative research to develop new products.

Japanese companies have a strong tradition of collaborative innovation. A good example is Honda. When embarking on a new innovation project, Honda managers set up teams with members from different departments within the company. This is called the SED system, the initials standing for sales, engineering and development. The input of all three functions is seen as vital to project success. The teams, in turn, collaborate with other members of the business as the project develops.

In their book The Knowledge-Creating Company, management writers Ikujiro Nonaka and Hirotaka Takeuchi quote a Honda team leader as saying: “I am always telling the team members that our work is not a relay race in which my work starts here and yours finishes there. Everyone should run all the way from start to finish. Like rugby, all of us should run together, pass the ball left and right, and reach the goal as a united body.”

Similarly, Fuji uses product development teams of up to 30 members, drawn from the R&D, production, sales, marketing, planning, service and quality control departments. While the R&D and production departments have the largest number of members, the input of the others is again seen as critical to success. The shared knowledge of all the team members helps create projects that are not only functional and practical to produce, but meet customer demands.

Japanese companies use this team-based system to develop internal collaboration. Another option favoured by some western businesses is the matrix organisation. Here again, project teams are organised so as to cut across functional boundaries. A single team might include members of half a dozen or more departments, with the whole team reporting to a project leader. However, team members also continue to work within their own units, and report to their own departmental heads.

Managing this structure can be challenging because, in effect, everyone reports to two bosses and the potential for role conflict is high. However, well-managed matrix organisations can be very successful. Polaroid, one of the first companies to experiment with this form, used a matrix organisation during the development of its famous SX-70 instant camera.

But promoting good internal collaboration is only half the story. Increasingly, innovation is becoming a matter of collaboration between companies, sometimes even between competitors and rivals. Professor Kristian Möller of the Helsinki School of Economics believes that the growing complexity of markets and technologies is driving this trend. “Individual companies, even major multinationals, cannot master alone all the relevant activities of the value chain, from product innovation to customer care,” he says. “Nor is it economically sensible for them to try.”

Inter-company collaborations for innovation have traditionally been rarer than collaborations that manage supply chains or distribution, for example. The reasons for this were the difficulties of communication in the pre-internet days, but also an unwillingness on the part of many companies and managers to share proprietary knowledge. But advances in ICT have broken down the first barrier, and companies, especially those that operate globally, are beginning to see the advantages of sharing knowledge.

Nokia, the Finnish mobile telephone maker, engages in a number of collaborative partnerships on many levels, including for research and development. The company sees these collaborations as a key source of competitive strength.

In Prof Möller’s view, there are several prerequisites for a successful collaboration for innovation. One condition is that the companies should share an agenda and a vision, and have a clearly agreed set of goals. He points to the example of the Bluetooth wireless project, created by a group of companies sharing a common technological vision. Another key factor, he says, is “an open and trusting culture. Partners must be willing to share knowledge and view activities from each other’s perspective. The attitude should be one of, ‘What can we do for them – what can they do for us?’”

When considering potential external partners for innovation, it is useful to examine the whole of the value chain and see where collaborators might be found. Management writer Gary Hamel urges companies to consider suppliers, and even build coalitions. Airbus Industrie – itself a coalition of collaborating organisations – uses collaborations to develop new designs as well as to build and market its aircraft. In his book Competing for the Future, Prof Hamel suggests companies should actively seek to innovate in these ways: “Ask yourself: can we look beyond our own resources and markets and imagine new resource combinations that could create new products and services? Can we use a coalition to bring a highly risky project into the realm of feasibility?”

One of the potentially most exciting areas for collaboration for innovation lies in collaboration with customers. Toolmaker Hilti has been using customer collaboration as part of its innovation process for some years. Groups of key customers, or “lead user groups”, are integrated into the creative process, giving input on design and functionality as the development process proceeds.

In software development, the concept of “extreme programming”, first developed in the late 1990s, is being more widely used. This involves initial consultation with lead users on their needs. A simple program then meets those needs and customers experiment with it, coming up with suggestions for further features and improvements. There follows an iterative process in which the evolving product may pass back and forth between the parties several times before the final version is reached.

Commenting on customer-led innovation in an article for European Business Forum, Patricia Sandmeier and Oliver Gassman commented that it can be a difficult process to manage. Problems include reduction of the developer’s control over the process, the additional time and costs required to manage the relationships, and limited customer knowledge sometimes generating inaccurate feedback. However, the rewards – getting customer feedback early and providing a product that meets customer needs more accurately – outweigh the problems.

The lesson would seem to be that the days of the heroic lone inventor are over. Now and in the future, companies are turning to collaboration for innovation. Teams, partnerships and coalitions within and between companies, and including suppliers and even customers, may be the way forward.

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