Innovating Innovation: Moving Towards A Distributed Innovation Model
Innovation. Pursued by many. Perfected by few. When done correctly it can change entire games. However, the path to innovation success has become somewhat skewed.
One of the biggest problems is the fact corporate innovation is designed to benefit those with investment capital rather than those creating and developing ideas.
While there are several tried and tested ways of helping companies stay ahead of their competition — Closed & Open Innovation strategies — they all fall down in different ways.
However, an alternative is emerging: Distributed Innovation. This is a methodology that aims to foster open collaboration between those with ideas and those able to bring them to fruition — in a fair and open way that aims to democratize innovation and reward everyone for their contributions.
Let’s take a closer look at several types of innovation programs, their strengths and weaknesses, before delving into ways that a distributed, decentralized approach can benefit all parties involved.
Why Is Innovation So Important?
First of all, we need to understand why innovation is so critical to businesses. It almost seems a given… but why is this the case?
While market forces, consumer expectations, and a youth-driven culture all play their part in the pursuit of innovation; the pace of change in business can’t be ignored — neither can the surge of money being ploughed into R&D.
According to a recent PwC study, R&D spending among the world’s leading innovators increased 11.4 percent in 2018, to a record high of $782 billion. And according to the Harvard Business Review (table below), R&D spending far outstrips advertising budgets.
While the evidence is hard to ignore, when you consider that entire industries are being disrupted overnight — largely due to the way in which technology can be incorporated into, well, pretty much anything, the ‘why?’ becomes pretty clear. You only have to look at the rise of companies like Uber and Airbnb to see why taxi drivers and hoteliers are losing business.
As service users, we’ve never had it so good. We’re empowered to share our ideas and opinions through the myriad of social media platforms and via the feedback channels so many companies seem keen to set up.
However, increasingly we’re being given a more active role to play in contributing to these new economic models. Whether we decide to work as Uber drivers, back crowdfunding campaigns, or publish our creative writing online; the sharing economy is levelling the playing field — essentially allowing anyone to be a part of the innovation revolution.
The Corporate Innovation Conundrum
Change is constant which means that to keep up with challenger startups flipping business models 180 degrees, bigger more established companies need to attract the right talent — in order to grow, develop, and maintain their competitive edge. And where do they find this talent? At the exact companies that are disrupting the status quo.
This creates a paradox; one in which established businesses and innovation-driven startups become unhealthily co-dependent on each other. There are several ways that they do this — which although may look mutually beneficial to some extent, all have significant flaws.
Different Innovation Models
There are two main types of corporate innovation:
- Closed Innovation: where businesses develop massive in-house R&D teams or create programs designed to bring innovators under their roof.
- Open Innovation: when companies collaborate with and incentivize external innovation teams to develop a solution to a particular problem.
They stack up in a few different ways when put into action.
Closed Innovation: Intrapreneurial Programs
Intrapreneurial programs are essentially company-driven innovation departments and search groups designed to create new products, improve existing ones, or even launch startups within the company itself.
While some notable successes have yielded great results (Sony Playstation, Facebook’s ‘Like’ button), they usually require a great deal of capital to get off the ground. This increases the risk level, and if unsuccessful could be a very public way to fail.
Strengths
- Full company control
- Company ownership of all Intellectual Property
Weaknesses
- Slow path to real change
- Expensive from the very start
Closed Innovation: Corporate Accelerator Programs
Corporate accelerators look a lot like traditional startup accelerators from the outside — except their primary purpose is to gain access to new ideas and technologies rather than big returns on equity investments.
It’s easy for big corporations like Disney, Barclays, and Google to launch accelerators and align them with their own business challenges. And given the amount of money, support, and prestige startups that are accepted will get, these accelerators are an attractive proposition for many.
The biggest selling point is also the biggest downside — namely a startup’s lack of control over the direction they take and potential closure if the product or service fails to deliver the value required.
Strengths:
- Opportunity to be selective
- Shared risk model
Weaknesses:
- Limited control
- Low ownership
Open Innovation: Outsourced Innovation
Another common strategy that corporations use to increase efficiencies, create new product lines, improve customer service existing products is to open up the playing field. This often involves the creation of an initiative for external partners to participate in — such as a crowdfunding competition, open hackathon, or direct collaboration — steered by an internal innovation team.
However, for the innovation team to do their job effectively, they will need a significant amount of experience to accurately assess the ideas put forward. This can involve scouting startups, reviewing entries and idea pitches, doing due diligence, and brokering pilot programs.
Strengths:
- Opportunity to be selective
- Comprehensive market insights
Weaknesses:
- Requires “insider” relationship
- High time and labour costs
- Slow process
- High commitment
Distributed Innovation: A New Hope
Looking closely at these models one thing becomes glaringly obvious: the power balance hangs firmly in the corporation’s favour. And while all parties can benefit in different ways via each of these different models, the true beneficiary is always the single, largest player.
As a result, true innovation cannot exist. There’s no impartiality or objective perspective, ultimately — it’s always a case of the HIPPO (Highest Paid Person’s Opinion) winning. In reality, the best ideas can come from anywhere — and not always from those able to build, fundraise, or bring the idea to market.
In a similar way, with the models outlined above, there’s no way of attributing ownership and responsibility fairly. Nor are they structured well-enough to evidence ‘who-did-what’ from a project contribution perspective.
But Distributed Innovation aims to change all of that — and here at a-Qube we’re using blockchain technology to address this imbalance.
Our framework breaks the innovation process down into easily executable tasks; allowing participants to take part in different steps of the process, and get rewarded for doing that.
Open Innovation: a-Qube’s Distributed Platform
Using a Consensus model for real-world collaboration, our aim is to facilitate a distributed network for innovation. Essentially, we’re building a ‘free market’ where people put forward ideas and others promote, support, nurture, and contribute — all playing their part to bring innovation projects to fruition.
Because our platform uses blockchain technology, every individual’s contribution is recorded using Distributed Ledger Technology — providing irrefutable evidence of their level of participation.
Mirroring the functionality of forums in the early days of the internet, our platform allows the best ideas to thrive — and for entrepreneurs and corporations alike to tap into this rich tapestry of innovation. For businesses, it’s a low-risk/high reward corporate innovation model.
Strengths:
- Full control over the completion
- Fastest path to real change
- Rational valuation metrics
- Real market-validation by the end-user
- Cost-effective
- Easy integration to the business cycle
However, this isn’t all just theory — we’ve already put it into practice via a proof-of-concept in a series of workshops called Startup Idea Validation. This was a series of ‘incubator’ workshops held in Tallinn, Estonia where we helped participants to turn simple ideas into full business proposals.
What we were able to prove was that there is a viable alternative to other innovation models; one that’s fairer, universally accessible, and that allows individuals to contribute to the best of their ability — regardless of where they are.
Validation Needs Impartiality
Innovation is a crucial part of modern business — but all things considered, do we really want the same few players owning all of the best ideas?
Bigger companies that offer startups the chance to problem solve in an open or closed innovation environment usually have an eye on the acquisition. From a startup’s perspective, this can compromise the founders’ own control (and equity share) — and can also inhibit progress.
When it comes to testing ideas and trialling products, an impartial perspective is critical. Everybody has ideas. They’re not all good ones. They need validation to work. They also need championing, refining and supporting.
Innovation doesn’t have to be just a game between startups and corporations. Our goal is to make innovation inclusive — so everyone can benefit. However, closed innovation models have essentially echoed chambers, and most open models merely reward once rather than set a grounding for acknowledgement and recompense.
However, change is coming. And it’s not ironic that innovation is making it possible.
