To depict the future we need to take a look at the current situation - and these are exciting times… Contemporary challenges for large organizations include rapid technology development, shorter product lifecycles, increased competition and well informed customers that ask for personalized products. Innovation has been put forward as the main road to salvation. But what is innovation really about? Many companies have come to confound innovation with new product development and through making their R&D processes more efficient than ever, they expect to put more innovative products on the market. Although this rationalization has been successful in eliminating slack and creating development synergies, it has mainly lead to incremental innovation – further developments of existing products - which is not enough to stand out as an innovative company.
In parallel, the intensive technology development has led to a destabilization of some of the basic constituents of innovation. Products are rapidly changing – the mobile phone, for instance, has transformed from a mere telephone that could be brought along to a fully fledged portable computer in only a decade. The roles in the process are also changing - customers are no longer interested in mere consumption, they are invading the design and development processes! The sequential processes that companies have built their R&D organizations around: ‘design – develop – produce’ are also badly adapted to the strong trends of mass-customization and crowd sourcing that are currently growing stronger.
If, in a more open innovation process, both expert knowledge and concept development lies outside of company boundaries, large firms need to start questioning their basic assumptions and develop new ways to interact both with customers and other companies. Then the logic of selection that R&D processes are based on (with models such as the development funnel and absorptive capacity) is no longer sufficient – firms also need to work more actively with their creative processes (generative capacity). When acknowledging that not all relevant knowledge can be found in-house, companies also acknowledge that they might not be able to best select themselves. Therefore, the processes and practices around knowledge generation and knowledge integration become key capabilities and are transforming the kind of relations that firms have not only with competitors, collaborators and suppliers – but also with customers. The future of innovation therefore belongs to firms that excel in managing relationships, something that will have important consequences for all firms that want to be a part of it.