Kai Engel
Published Date1/22/15 5:49 PM
The fate of Europe’s economies is in the hands of millions of small companies. Many of these companies supply large multinationals through an end-to-end value chain. Unfortunately, the large companies and their respective value chain partners are too focused on complicated cost-out and framework contracts. It’s obvious that small companies stand for differentiation and innovation, something that large OEMs need—especially when it comes to process, product or business model innovation opportunities driven by digital trends. The key for companies now—both large and small—is collaborative innovation.
The concept of collaborative innovation explores the ways in which young vibrant firms and large established companies join forces to commercialize cutting-edge ideas. Such relationships promote long-term growth and enhanced competitiveness for everyone involved.
These symbiotic relationships are vital to boosting Europe’s economic competitiveness. They are critical in helping entrepreneurs scale up while giving established companies access to innovations, and chances to compete in global markets. The one obtains a superior technology while the other reaps the benefits of co-branding, exposure, and access to expanded markets.
It goes without saying that more competitive economies are associated with higher employment and higher incomes. In a recent study A.T. Kearney conducted in Europe, we uncovered high expectations for collaborative innovation that will lead to revenue growth across sectors. Innovation’s relevance is increasing—66 percent of the 1,000 respondents in the study expect product and service innovation to be at least 25 percent of their business revenues by 2015. Further, 62 percent say they expect 25 percent of their revenue to result from collaborative product and service innovations in 2015. By 2030, 71 percent say that collaborative innovation will attribute to more than a quarter of revenues.
To reach these scores, there are still several challenges to address. First, companies must establish business cases by assessing risk and benefits of innovation partnerships. This will require measuring complexity and costs versus benefits. Finding the right networks and partners to collaborate with while evaluating the value of relationships will also be crucial. The partnership structure from a legal, contractual, and governance angle will be a critical determinant in the set-up of effective collaborations. We also can’t forget the importance of intellectual property (IP). IP protection and agreements on the right IP design are essential to building trust and realizing a true partnership. Finally, there must be cross-organizational and cultural readiness at the heart of every collaborative union.
Once the young companies and the large enterprises identify the best way to achieve collaborative innovation, space for revenue growth, profits, and hiring opens.
This is an opportune chance for many regions in Europe where competitiveness still needs a push. By supporting collaborative innovation between small and large companies across regions and countries in Europe, policy makers can bridge the competitive divide between northern and southeastern Europe.
Collaborative innovation will continue to be top of mind for me as I attend the World Economic Forum’s annual meeting in Davos, Switzerland. I’m certain this will be at the center of many conversations to come as more companies find new opportunities through successful partnerships that will benefit both Europe and the rest of the globe.
Posted on Jan 22, 2015 at 11:49 AM
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