Co-innovation is essential for business success in the digital era

Published: 24 September 2020 - midnight

Every company in every industry is facing digital disruption as digital empowers new competitors to do things better, faster and cheaper. Enterprises need to be on the lookout for new ways to create new value for their customers and to capture new value for their business with better digitised operational processes that result in higher margins. They need to be agile, because changing market conditions mean that they’re almost always trying to hit a moving target.

In the past, companies closely guarded their ideas, innovations and intellectual property, keeping new concepts away from curious third parties. They developed their ideas in isolation, built a prototype and then took it to market.

Today, co-innovation is essential for success in the digital era.

Smart companies have realised they can no longer innovate in a vacuum. The cross-pollination of ideas with organisations from other industries, of different sizes and stages of maturity – in addition to input from the end-customer or end-user – is now essential. It brings in new thinking, knowledge and skills that can lead to genuinely disruptive ideas that an enterprise can turn into real world innovations.

Insights for new innovations can be found in data

The key to success lies in all the data that a company already holds and can access from their ecosystem and public sources. It enables them to uncover insights into how customers make particular purchasing decisions or why a business process is taking longer than expected. The advantage of a co-innovation program with partners, suppliers and customers is that it creates access to more data than ever before.

These advances wouldn’t happen without the right co-innovation ecosystem and governance framework.

At the same time, it’s important to have a structured approach to innovation. Research by Accenture shows companies with extensive innovation governance achieve twice the revenue growth of those that don’t. With an effective digital innovation process that directs innovation efforts strategically, it’s possible to turn these investments into profitable growth.

According to International Data Corporation (IDC), spending on Internet of Things (IoT) technologies in the Middle East and Africa (MEA) region will accelerate and reach $17.63 billion by 2023 as governments and businesses increase their investments in Digital Transformation projects and further development of innovative industry-specific solutions.

As an example, we have announced the successful completion of a co-innovation pilot project with our customer De Beers Marine South Africa – a division of De Beers, the world’s leading diamond company. We jointly installed and tested a customised IoT solution to provide geofencing to maintain safe working distances for crew around the heavy machinery involved in marine diamond mining operations.

The IoT pilot was developed in response to De Beers’ ‘zero harm’ objectives and De Beers Group Technology SA is exploring additional applications, while we are now interested in developing other applications across different industry sectors as IIoT (Industrial Internet of Things) gains traction. For example, we have a number of potential applications in the mining sector in Africa, in the oil & gas sector in the Middle East, and the maritime sector is also undergoing rapid digital transformation.

What is innovation?

At Orange, we define innovation as the process of creating value for consumers, businesses or society as a whole by applying fresh solutions to meaningful problems. This can include creating new products, services or business models. Innovation is about more than having an idea or coming up with a concept. It also requires the commitment to follow through and execute the idea, by scaling it in the real world and ensuring it works reliably over time to deliver benefits that people can enjoy.

What is co-innovation?

Co-innovation ecosystems incentivise external resources to focus on a goal or mission. Technology has become so specialised that nobody can afford to do everything at the highest level, and companies have to partner with specialists to achieve results. Businesses are increasingly looking to suppliers, vendors, end-users, consumers, partner organisations, university labs and independent inventors for new ideas and insights.

The general trend is for the sharing of risk and rewards by all parties in a tightly-defined contractual arrangement that covers topics such as IP (Intellectual Property) rights. At Orange, we have a co-innovation board and investment fund to assess opportunities to co-innovate with our customers in areas where our capabilities and aspirations overlap.

Creating a balanced co-innovation portfolio

It’s important to have a portfolio of innovations that will have an impact over three different time frames or horizons. Incremental innovations that improve an existing product, service or business process. Adjacent innovations that extend your current competencies into new, related markets. And disruptive or breakthrough innovations that change the nature of your industry and addresses unmet needs.

Not everything has to be a breakthrough idea. In fact, it is preferable to have a balanced pipeline of big and small ideas if this meets a company’s needs. According to the Benchmarking Innovation Impact 2020 report by KPMG, companies spend 48 per cent of their efforts on incremental innovation, and 26 per cent each on adjacent innovation and transformational innovation.

Companies focusing exclusively on exciting, transformative innovations risk losing their business edge to current competitors who are using incremental innovations to improve their operations right now.

So, to be competitive in the market tomorrow, you need a diverse range of strong prospects in the co-innovation pipeline today.

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