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Leading Your External Innovation Network

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Orchestrating Collaboration

Leading Your External Innovation Network

GUEST POST from Art Inteligencia

The days when a single organization could dominate innovation solely through internal R&D labs are over. In the age of exponential change, innovation is a contact sport. As a thought leader focused on human-centered change and innovation, I see the most successful companies shifting their focus from being self-sufficient inventors to becoming expert orchestrators of external networks. They understand that the collective intelligence of an ecosystem—comprising startups, universities, competitors, and even customers—far exceeds the capability of any lone corporation.

Leading an external innovation network is fundamentally different from managing an internal team. It requires shifting from command-and-control to influence and co-creation. It’s about building a robust, diverse, and fluid network of partners who share a common purpose but bring radically different skills and perspectives. This isn’t just “open innovation”; it’s strategic, purpose-driven collaboration, designed to achieve breakthroughs that would be impossible alone. The challenge for today’s leaders is not acquiring external assets, but mastering the art of the symbiotic relationship, where mutual value and growth are guaranteed.

The Three Imperatives of Network Orchestration

To successfully lead an external innovation network, a leader must focus on three core imperatives:

1. Define the Shared Problem, Not the Solution

External partners aren’t looking for a contract; they’re looking for a mission. Your organization must clearly articulate the Wicked Problem it aims to solve (e.g., “How do we make urban logistics carbon-neutral?” rather than “We need a faster drone model”). Defining the problem invites a diversity of approaches and technologies. Defining the solution constrains creativity and filters out the radical ideas often found outside your walls. This clarity establishes the shared purpose that binds the network.

2. Design the Interface for Trust and Speed

Bureaucracy kills collaboration. The interface between your company and its external partners must be lean, fast, and built on psychological safety. This means simplifying IP agreements, offering flexible contracting models (like joint ventures or co-development agreements rather than simple vendor contracts), and establishing clear, transparent communication channels. Trust is the transactional currency of the external network, and a fast, clear process is the best way to earn it, particularly with agile startups.

3. Cultivate a Portfolio of Relationship Models

Not all external partners are created equal. A startup requires venture capital and mentorship; a university needs joint research grants and data access; a mature competitor might require a formal standards consortium. Successful orchestrators manage a portfolio of relationship models, matching the right type of engagement (e.g., challenge, investment, acquisition, co-development) to the specific partner and the innovation maturity level. This avoids treating every partner like a transactional vendor.

The Internal Barrier: Managing Cultural Change

External innovation is doomed to fail if the internal culture remains resistant. Leaders must proactively combat the pervasive “Not Invented Here” (NIH) syndrome. This requires:

  • Mandating “External Ambassadors”: Creating roles or rotating assignments where internal experts are rewarded for successfully sourcing and integrating external ideas.
  • Measuring Network Health: Shifting innovation metrics to include Relationship Velocity (how fast partners move from ideation to pilot), Diversity Index (the variety of partners used), and the Rate of External Integration.
  • Celebrating External Wins: Publicly celebrating the external partners and the internal teams who worked with them, positioning collaboration as a prestigious act of corporate agility.

The goal is to transform internal employees from being gatekeepers of ideas into curators and integrators of solutions.

Case Study 1: P&G’s Connect + Develop (C+D) Program

The Challenge:

In the early 2000s, P&G realized its internal R&D productivity was declining, despite massive investment. They were constrained by the “Not Invented Here” syndrome and needed to source more ideas and technologies from the outside to meet ambitious growth targets.

Network Orchestration Model:

P&G fundamentally shifted its innovation strategy to Connect + Develop (C+D). This was not a passive idea submission portal; it was a global, active network orchestration effort. They created specialized internal “Technology Entrepreneurs” whose sole job was to scout, broker, and integrate external innovations. Key partnerships included:

  • NineSigma: Used to run open challenges and solicit solutions from a vast network of scientists and small firms worldwide.
  • Innovation Intermediaries: Partnering with consultants and organizations that specialize in linking technology with unmet consumer needs.

Crucially, P&G made its own proprietary technologies available to partners, fostering a two-way intellectual property exchange built on mutual benefit. P&G offered scale and market access; partners offered speed and radical concepts.

The Innovation Impact:

Within a few years, C+D was responsible for over 50% of P&G’s product initiatives and billions in revenue growth. Iconic products like the Swiffer Duster and Olay Regenerist were either fully or substantially developed using external technology. P&G demonstrated that external innovation is not a marginal activity but the main engine of corporate growth when expertly orchestrated.

Case Study 2: BMW’s Open Manufacturing Platform (OMP)

The Challenge:

BMW, like all automotive manufacturers, faced the challenge of digitizing its vast, complex global production network. Achieving real-time data analysis, predictive maintenance, and operational efficiencies required a common data and technology standard across its supply chain and factory floor, a goal too large for one company to tackle.

Network Orchestration Model:

Instead of building a proprietary solution, BMW co-founded the Open Manufacturing Platform (OMP) with Microsoft. OMP is an open, community-driven initiative built on open standards and open source technologies (specifically, the Microsoft Azure cloud platform). The goal was to create a common reference architecture for industrial IoT and AI solutions. BMW actively encouraged competitors and suppliers—including Daimler, Bosch, and hundreds of smaller tech firms—to join. They relinquished proprietary control to foster a pre-competitive collaboration space for infrastructure, ensuring they could focus their internal R&D on differentiated applications.

The Innovation Impact:

By orchestrating this platform, BMW gained access to a wider pool of talent and accelerated the development of key manufacturing solutions. The OMP rapidly became an industry standard, benefiting BMW by creating a harmonized, scalable technology ecosystem that they could then build differentiated applications on top of. This case illustrates leading an external network not through ownership, but through platform stewardship, focusing on shared infrastructure to unlock superior results for all participants, dramatically reducing the cost and risk of digital transformation.

The future belongs to the innovation ecosystem architect. To succeed, leaders must cultivate a culture that views external partners not as threats or transactional vendors, but as co-investors in a shared future. It requires courage to give up some control, trust to open up the IP discussion, and clarity to define the societal or market challenge you are collectively addressing. By mastering the orchestration of this dynamic network, your organization can move from incremental improvement to exponential, sustainable breakthrough.

Extra Extra: Futurology is not fortune telling. Futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.

Image credit: Google Gemini

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Measuring the Impact of Innovation

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Key Metrics and Best Practices

Measuring the Impact of Innovation

GUEST POST from Art Inteligencia

Innovation is the lifeblood of any forward-thinking organization. But how can we effectively measure its success? To transform innovation from a nebulous concept into a structured business function, it is crucial to establish key metrics and best practices. This article aims to provide a comprehensive guide to measuring the impact of innovation, enriched by concrete case studies for better understanding.

Key Metrics for Measuring Innovation

While financial performance is a significant indicator, a holistic approach to innovation measurement includes multiple dimensions. Below are essential metrics every organization should consider:

  • Number of New Products/Services Launched: This metric acts as a direct indicator of an organization’s innovation capability.
  • Revenue from New Products/Services: Revenue generated from recently launched products or services demonstrates the market acceptance and commercial success of the innovations.
  • Time to Market: This measures the efficiency of the innovation process, tracking the duration it takes for an idea to become a marketable product.
  • Customer Satisfaction: Customer feedback and Net Promoter Score (NPS) are invaluable in determining how innovations have affected customer experience.
  • Research and Development (R&D) Spending: This metric tracks the investment made in innovation activities, often correlated with future growth potential.

Best Practices for Measuring Innovation

The following best practices offer a strategic approach to measuring and comprehensively understanding the impact of your innovation efforts:

  • Align with Business Goals: Ensure that your innovation metrics are aligned with your organization’s broader strategic objectives.
  • Incorporate Stakeholder Feedback: Engage with stakeholders—including employees, customers, and partners—to get a 360-degree perspective on innovation effectiveness.
  • Use Balanced Scorecards: A balanced scorecard can help in evaluating innovation from multiple dimensions—financial, customer, internal processes, and learning and growth.
  • Continual Improvement: Regular reviews and updates of your metrics are crucial for keeping up with evolving organizational goals and market conditions.
  • Data-Driven Decisions: Leverage advanced analytics and data-driven insights to refine innovation strategies continually.

Case Study 1: Procter & Gamble

Scenario: In the early 2000s, Procter & Gamble (P&G) faced stagnating growth. To reignite commercial success, the company invested heavily in innovation.

Metrics and Measurement: P&G focused on the number and quality of new product launches, alongside revenue generated from these products. They also tracked time to market and customer satisfaction metrics.

Outcome: By aligning their metrics with overall business objectives and keeping a customer-centered focus, P&G achieved significant success. Their innovation pipeline led to the introduction of products like the Swiffer and Crest Whitestrips, which revitalized their market standing.

Case Study 2: 3M

Scenario: 3M has long been a pioneer of innovation, driven by a goal to derive at least 30% of its sales from products developed in the last four years.

Metrics and Measurement: The company measures the percentage of revenue from new products, R&D spending, and employee engagement in innovation initiatives.

Outcome: 3M’s innovation culture has led to the creation of iconic products like Post-it Notes and Scotch Tape. The company’s methodical measurement practices ensured they remained particularly agile and responsive to market needs.

Conclusion

Measuring the impact of innovation is essential for its sustainability and growth. By employing a mix of key metrics and best practices, organizations can not only quantify their innovation efforts but also continually improve them. The cases of Procter & Gamble and 3M illustrate that with the right framework, the transformative power of innovation can be methodically harnessed to drive significant business success.

In the fast-paced world of business, continuous innovation and its accurate measurement are not just beneficial—they are imperative. Embrace these strategies, and watch your organization not merely adapt to change, but lead it.

Bottom line: Futurology is not fortune telling. Futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.

Image credit: Pexels

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Amazon Changes Everything in a New Way

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Tide Dash Button

The arrival of the Internet began major disruption to decades old methods of consumer packaged goods (CPG) distribution. The tried and true method of manufactures selling to a collection of wholesalers, who then sold the product on a range of retailers began to be reexamined. We saw the arrival of online retailers like Amazon who sought to compete with brick and mortar retailers, trying to offer a wider selection while also offering potentially a more convenient (and possibly cheaper) shopping experience for a few (or possibly for many). We saw retailers experiment with selling on Amazon (adding an extra layer of intermediation) and grocery stores experiment with online ordering and local delivery.

But at the same, in 2010 we saw manufacturers like P&G start to experiment with selling direct to consumer over the Internet via sites like pgshop.com and then in 2013 P&G started selling their wares on Amazon. Below is a screenshot of a Pampers product listing on Amazon:

Pampers Amazon Screenshot

As you can imagine, when companies like P&G start selling direct to consumers and via Amazon, this makes traditional retailers nervous. And while maybe some day their nervousness will translate into major volume declines, we’re probably not quite there, yet. But for manufacturers, the possibility of selling direct to consumers or via Amazon changes everything. It changes everything because it requires companies selling consumer goods to build new marketing capabilities, and possibly even new manufacturing and distribution capabilities as well.

Frito Lay Amazon Box

Here we have an example of a Sweet and Salty Box being sold to consumers via Amazon by Frito Lay. Compare this with a P&G Pampers page on Amazon and you’ll see that Frito Lay is still learning how to market via the Amazon channel and hasn’t completely figured out how to optimize the experience they create for consumers or likely how to maximize their conversion. But, you may also notice that the Amazon channel offers Frito Lay the opportunity to sell something they probably couldn’t sell in a Krogers, or Whole Foods, or Tesco, or 7-11.

In both of these examples, Amazon is taking and selling the inventory much as a grocery store would, but the customer wants, needs and expectations in the Amazon channel are different, and the skills to effectively market in this channel are different too. These are the reasons that Amazon changes everything for CPG companies. As Amazon continues to grow in importance as a channel for nearly everything, and as other sites like Facebook make a stronger push into eCommerce, and as consumer preferences for where and how they want to buy things changes, it presents a great opportunity for the forward thinking among us to take existing products and create new offerings that resonate with consumers showing a preference for existing and emerging digital channels and to create entirely new solutions that may involve a new product or possibly move beyond a product. Companies in CPG must continue to ask themselves:

  1. What is possible online that isn’t possible in-store?
  2. What do online shoppers want that is different than in-store shoppers?
  3. If we were to move beyond the confines of the product (and how it is packaged and presented), what would resonate with this type of consumer?

You can see on the Pampers page on Amazon above they’ve done a number of different things without changing the product:

  • Offering a range of product quantities
  • Coupons
  • Amazon Dash buttons (push the button and it automatically orders for you)
  • Etc.

And Frito Lay took their existing products and re-packaged them in a different way to suit the capabilities and needs of the channel because selling one individual bag of Doritos doesn’t make economic sense (and so Amazon won’t let you do it unless it is part of a larger Prime Pantry box).

If you were in charge, and had the product range that P&G or Frito Lay have, what would you do to optimize your results in the Amazon channel, or even more broadly in a direct to consumer context?

Please add your comments below.

Build a Common Language of Innovation

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How Leading Organizations Manage Their Open Innovation and Crowdsourcing Efforts – Part Two

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How Leading Organizations Manage Their Open Innovation and Crowdsourcing Efforts - Part OneIf you missed How Leading Organizations Manage Their Open Innovation and Crowdsourcing Efforts – Part One, you can find it here.

So what do leading organizations do to encourage the successful use of external talent?

They build a solid foundation:

  1. Seek to understand where the challenges will lie in the transformation
  2. Have passionate business owners
  3. Secure top level support
  4. Make a long term commitment to the use of external talent
  5. Negotiate master agreements with external talent providers at the center
  6. Create a common language of innovation and external talent
  7. Implement the processes and systems to manage and measure innovation efforts

They get strategic:

  1. Create an external talent strategy
  2. Make a plan for achieving the strategy
  3. Attach goals to the strategy (e.g., P&G’s 50% goal)
  4. Communicate the goals of the strategy and measure goal achievement

They focus on communications and ownership:

  1. Do not underestimate the importance of communications, education, and dialogue
  2. Create guidelines for when and how to use different external talent sources
  3. Have someone own and manage the external innovation efforts
  4. Have owners and champions in place in different business units or product groups
  5. Educate employees on how to engage owners and champions

They continuously reinforce their efforts:

  1. Recognize and reward those who go outside
  2. Weave external focus into internal systems (e.g., innovation system prompts)
  3. Get cross-functional input into problem definition and challenge formation
  4. Make resources available for integration
  5. Work to make the organization more flexible and adaptable

In addition, successful organizations understand that it is about making and maintaining connections and community – you build it for when you need it, instead of building it when you need it. Successful organizations understand that attracting and managing external talent is as important as finding and hiring the best internal talent, and are changing their budget allocations to fit this new paradigm. The role of HR in the near future will not be just to recruit, develop, and manage staff, but also to build and curate talent pools. The HR profession will have to build new core competences in network orchestration and managing talent – no matter where the talent lives (inside or outside the organization). It is time to start preparing.

Build a Common Language of Innovation

Before moving on to the final section, let us look at a few brief examples of different companies engaging external talent for business success and one case study of a leader pushing farther:

  • Threadless decided to base their whole business on external talent and build a community of designers and customers that they could leverage to come up with the t-shirt designs that they sell.

  • Quirky has taken the Threadless model of utilizing external talent to simultaneously make invention accessible and build a consumer products company. You submit your idea, the community curates it, the company evaluates it, and actually produces and sells the chosen inventions online, and even at a handful of retailers.

  • P&G went outside with a plastic technology and created a joint venture with competitor Clorox that focuses on trash bags, food storage, and related areas.

  • Intuit uses its Collaboratory web site to connect with entrepreneurs and to publicize their open innovation challenges, and their Labs web site to engage with the developer and customer communities to get immediate feedback on some of their experiments in order to engage in some level of co-creation.

  • Psion Teklogix has built one of the more robust corporate open innovation communities – Ingenuity Working – complete with a video from their CEO front and center.

  • SAP has started The Global SAP Co-Innovation Lab Network (aka COIL) with HP, Intel, NetApp, Cisco, VMware, and F5 Networks to facilitate project-based co-innovation with its members and to enhance the capabilities of SAP’s partner and customer ecosystem through an integrated network of world-wide expertise and best-in-class technologies and platforms.

  • MyStarbucksIdea.com is an example of engaging the creative energy outside your organization that most companies will not want to follow. They throw things wide open for all idea submissions, not focused on any particular challenges, for all to see. As a result, Starbucks exposes the company to the risk of brand equity destruction from not following through on suggestions. At the same time, this approach provides free market research for competitors and creates a lot of sifting and communications work for internal resources.

If you missed How Leading Organizations Manage Their Open Innovation and Crowdsourcing Efforts – Part One, you can find it here.

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