What is the right strategy for external sourcing of innovation?
Is it Open Innovation? Supplier Innovation? Supplier-Enabled Innovation? Supplier Collaboration & Innovation?
In essence they all tackle the same exact problem: big companies can’t innovate by themselves.
In recent years, long established companies have been disrupted overnight by new technologies or business models. This has raised alarms in every big corporation around the globe making them aware of the need for innovation.
Since these companies lack the ability to create and test innovative products and ideas at speed, they are urged to find another solution.
If innovation can’t come from the inside, it will have to come from the outside. This is what we call ‘external sourcing of innovation’.
In order for it to be successful, procurement, supply chain and R&D leaders have had to come up with a strategy to make external innovation sourcing feasible and real.
OI, SI, SEI and SC&I are just similar approaches to tackle the same issue.
So, let’s analyse two of the most common ones to understand what the differences are:
Racounteur defines SEI as an enabler for companies to benefit from the expertise of their supplier network, to develop new products and services or refine existing ones. The focus here is to tap into existing suppliers to get innovation. Due to their specific expertise, suppliers can suggest product improvements with an objective and perspective that internal teams may lack.
As David Rae suggests, “If you have thousands of suppliers and a portion of them have R&D divisions focused on your sector, then you’d be mad not to tap into that resource.” As SEI is aimed purely at innovation, companies and suppliers will combine their innovation efforts to bring products to market faster, giving them a competitive advantage.
Supplier Collaboration & Innovation
Vizibl’s CEO and Founder, Mark Perera, defines SC&I as an enterprise approach focused on delivering business speed and growth through managing the extended innovation ecosystem. At first, it might seem exactly like SEI, however, there is a key difference.
The key is in the word ‘collaboration’. Even though the end goal of SC&I is also getting innovation from suppliers, collaboration plays a very important role. The aim is to improve the relationship with suppliers by collaborating together. By introducing consistency, structure and proper governance, companies can build trust with their suppliers and work towards closer collaboration and innovation. Unlike SEI, innovation is not the main objective, but it is the outcome of close collaboration, done right.