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Like innovation before that, co-innovation is quickly becoming both business buzzword and gospel. By partnering with tech companies to harness the power of emerging technologies like artificial intelligence and big data, co-innovation has been heralded as essential to future success, especially for companies that exist outside of the digital realm.
But before companies rush to embrace this growing trend in corporate America, they would do well to keep a few key principles in mind when it comes to co-innovation so they don’t fall prey to shiny, new opportunities that look great on paper, but don’t deploy or scale in reality.
As Chief Strategy and Transformation Officer at PepsiCo, I oversee our digitization strategy, so I recognize the power of new technologies – we are already using machine learning and data analytics to improve existing systems, processes and products. But I also recognize the limits of “one size fits all” solutions and the need to innovate together with external partners. But co-innovation also has its limits and its success depends on creating a specific set of conditions.
So when it comes to co-innovation, I always keep five core principles in mind to ensure that the process results in groundbreaking solutions that can actually be deployed:
Innovation is not just about technology
Technological innovation must be accompanied by process innovation. Co-innovation usually doesn’t work when you’re trying to solve a problem with technology alone and without also assessing how processes need to change. It’s easy to fall in love with flashy new digital capabilities, but these new capabilities are doomed to fail if legacy behaviors or systems cannot support them.
Never underestimate the importance of change management
Breakthrough solutions will shake up the status quo and getting them operational is likely to impact multiple departments or systems, meaning co-innovation projects will require sponsorship from the highest level of management. Likewise, the co-innovation process itself needs to be controlled by cross-functional teams crossing silos because of the far-reaching implications of these solutions. Having broad buy-in and input during the development phase will ultimately result in a better solution and aid in its adoption across the organization.
Co-innovation is not for experimentation
It is not an innovation for the sake of innovation, nor is it to produce a proof of concept. Co-innovation is best suited to solve specific problems with clear business objectives. Start with a pole star from where you want to go, then work backwards.
That’s not to say there isn’t room for creative exploration or imaginative thinking. Co-innovation is aimed at solving the most complex problems, so creativity is required. But there must be a strong business problem to concentrate the chaotic energy of ‘blue sky’ thinking.
Create space for conflict
Co-innovation is not outsourcing, so the structure of your partnership is critical. At the heart of a successful partnership is what I call the ‘two in a box’ approach, where each expert or resource from our partner is matched with a corresponding expert from our team. This allows them to learn from each other, but more importantly, challenge each other. Your partner may have technical expertise, but your team has business and operational expertise and the reality on the ground is very different from theory or software.
So at every step you have to question the reasoning and the quality of solutions. The results should be much better than what you could have achieved as individual teams, and this collective result is what distinguishes co-innovation from innovation.
You are only as good as the strength of your partnership
In addition to carefully selecting a partner and making sure they are a good fit with their mission, values and expertise, both parties must also be willing to put skin in the game. In other words, both parties must commit pro bono resources so that everyone has an incentive to make it a success. Viable solutions mean growth for your business and profit or further financing for your partner. Having the right incentive structure will thus enhance trust and transparency, which are prerequisites for a successful partnership.
These aren’t strict rules, but rather a framework for how to approach co-innovation, and when done right, can be a huge growth lever that delivers exponential gains by addressing the most thorny issues facing your business. A sense of humility is also what drives co-innovation success – recognizing your limits and accepting a true partner to help you overcome your greatest challenges.
Athina Kanioura is executive vice president, chief strategy and transformation officer at PepsiCo.
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