The Innovation Supply Chain

Stephen DeAngelis

November 24, 2015

“Innovation is difficult,” writes David Berry (@DavidBerry26), an inventor, entrepreneur, and partner at Flagship Ventures. “If one is willing to traverse the boundary of the unknown, one should pursue the course that promises the greatest potential impact.”[1] Berry states that he was taught to “think big” while attending MIT. Thinking big and crossing boundaries into the unknown are great motivational statements; but, like pioneers facing a vast and unknown wilderness, taking that first step can be difficult if you don’t where you are going. As I have noted in previous articles, the best place to start any journey — including the journey from concept to product — is with good questions. “What if?” asks Mike Myatt (@mikemyatt), a leadership advisor to Fortune 500 CEOs and Boards. “What if you could reinvent your business? What if you could change the perception of your brand? What if you could break from the status quo? What if you could attract better talent? What if you could reenergize your corporate culture? What if you could make the changes you know you need to make? What if? To the one, great leaders aggressively pursue what if – do you?”[2]

Great questions can lead to great solutions; but, there is a process that must be followed to get from one to the other. Berry calls that process the innovation supply chain. He explains, “The innovation supply chain [is] the process by which companies obtain and/or develop future products and improve on their current products.” Because companies don’t think of innovation in that way, Berry insists most innovation processes tend “to be characterized by inefficiency, ambiguity, and competition. And, in many cases, no supply chain is in place.” Having an ineffective innovation supply chain (or worse, no innovation supply chain at all), is bad for business. Ernst & Young analysts, Danny Baer and Luc Charbonneau, explain, “Innovation is the primary force that can catapult a company to market leadership and keep it ahead of its rivals.”[3] They continue:

“As a business grows, you need to keep the spirit of creativity alive — it’s too easy to snuff out the creative spark with a stifling layer of process and bureaucracy. Successful companies focus on more than just growth, profit and the bottom line. They build in new capabilities, functions or even departments that centre on creative, disruptive and sustainable ventures.”

Or, as Berry would put it, the best companies ensure they have an innovation supply chain in place and working effectively. Admittedly, that is easier said than done. The reason that your company needs an innovation supply chain is so that it can fill in the blank spaces between questions and solutions. A solution you dream up may be difficult to achieve; but, Berry insists, having that goal in mind will help you in the long run. “In exploring a wide range of subjects — energy, agriculture, medicine, and more — one approach has, in my experience, emerged as the most effective,” he writes, “begin with the end in mind. By identifying the problems and envisioning the preferred solution, one can define the set of constraints into which technological innovation fits, and establish a clear, albeit often difficult, path to its realization.” The best companies map their manufacturing supply chains so they can identify weak points and bottlenecks. A similar approach needs to be taken for the innovation supply chain. Berry explains, “Just as individual innovators must challenge conventional wisdom, companies must replace the established approach to the innovation supply chain with one that more closely resembles how they create and maintain a manufacturing supply chain.” The reason that Berry invokes supply chain imagery is because he believes that no company can maintain its creative edge if their culture is one that rejects any idea that is not invented in house. He explains:

“If market incumbents are willing to share ‘innovation specifications’ (which should not be confused with innovation methods), they can develop an effective network of innovation suppliers, thereby increasing the reliability of the product-development engine. And, as with effective manufacturing supply chains, the supplier and the purchaser must build a reciprocal relationship, in which they do not compete with each other, practically or economically, in the specific activities that they are performing. An efficient supply chain can transform innovation on both the individual and industry levels. Indeed, a common approach – defining key market needs, coupling them with solution constraints, and pushing the boundaries of current thinking – applies to all kinds of innovation. With an innovation ecosystem organized along these lines, ‘obvious’ advances could occur significantly faster.”

Some analysts refer to the innovation supply chain as an innovation ecosystem (you might even call it an innovation value chain). The well-known creativity guru and research fellow at MIT Sloan School’s Center for Digital Business, Michael Schrage, writes, “Running a truly innovative company means constantly improving your innovation culture and process. Running a successful innovation ecosystem, however, demands more. Successful innovation ecosystems make people outside the company measurably smarter, richer, and more innovative. Biologically speaking, innovation ecosystems invest in symbiosis, not parasitism. Growth isn’t zero-sum.”[4] He adds, “While successful innovators reap new profits from new products and services, successful innovation ecosystems cultivate profitability by encouraging others to create valuable new offerings.”

Jacob Morgan (@jacobm), an author and futurist, writes, “The best ideas and the smartest people can be anywhere which means opening up the doors to innovation from anyone. … Innovation is no longer something that can be done by a few people or a single department.”[5] Berry would certainly agree with that point. Just as there are many suppliers in most supply chains, there should be many idea suppliers in the innovation supply chain. How companies turn ideas into marketable products or services is as varied as the companies themselves; however, fostering an effective innovation supply chain could be just as important for a company’s success as ensuring an effective supply chain is in place. Tim Kastelle notes that out of hundreds of organizations he has had his students assess, only about 5 percent of those organizations have had any difficulty coming up with new and good ideas. So coming up with ideas is rarely the problem. Tim Kastelle (@timkastelle), who teaches at the University of Queensland Business School, insists, “It’s much better to think of innovation as a process than to think of it as an event.”[6] If you can get your company thinking about innovation using the language and approach of supply chains, you will have a much better chance of putting the right process in place to make innovation an ongoing reality.

Footnotes
[1] David Berry, “Fixing the Innovation Supply Chain,” Project Syndicate, 19 June 2013.
[2] Mike Myatt, “The Power Of ‘What If’,” Forbes, 8 February 2013.
[3] Danny Baer and Luc Charbonneau, “Ernst & Young Insights: The innovation engine: Your company’s success may depend on it,” Financial Post, 1 February 2013.
[4] Michael Schrage, “How Innovation Ecosystems Turn Outsiders into Collaborators,” Harvard Business Review, 30 April 2014.
[5] Jacob Morgan, “The Innovation Ecosystem For The Future Of Work,” Forbes, 12 August 2015.
[6] Tim Kastelle, “How to Manage Innovation as a Process,” Innovation for Growth, 6 November 2012.