The importance of cross-industry innovation in an inspiration-driven economy
Whereas the growth of our economy used to be determined by efficiency, these days it is mostly driven by inspiration and creativity. Very often, it is not enough for companies to keep looking within the confines of their own company or even their own branch of industry. On behalf of Flanders DC, Vlerick Business School therefore examined what makes cross-industry innovation successful. In addition, the study was recently translated into the new, practical online tool innovatiefsamenwerken.be.
In the past, the company that boasted the best and most efficient machinery was the most successful. Today, the secret lies in the development of the most innovative and creative ideas. In this type of economy, inspiration is a vital criterion for survival. However, this is not always present within a company or industry. More and more companies are starting to realise the importance of translating knowledge and ideas from other companies, regions or industries and applying them to products, processes, and business models within their own context: cross-industry innovation, in other words.
Cross-industry innovation is the process that impels organisations to collaborate across different industries, inspiring each other to discover a joint challenge and develop an innovation which can be commercialised. Vlerick researcher Bart Devoldere: ‘Despite the evolution of economic growth, managers and entrepreneurs are still not giving enough thought to cross-industry innovation. They only rank it 14th out of 16 possible sources of innovation. A change in mindset is therefore urgently needed. Although Flanders is ideally positioned to take full advantage of the potential contributed by the inspiration-driven economy, when it comes to innovating on the basis of cross-pollination our skills require drastic improvement.’
Several characteristic trends among today’s companies demonstrate the importance of cross-industry innovation as a primary success factor. Bart Devoldere: ‘We notice that companies are increasingly focusing on the importance of strategic innovation in order to remain competitive. The fact that more and more competition is coming from outside these companies’ own branches of industry is an important aspect to take into consideration here. Disruptive new business models, like that of Airbnb, do not stem from the traditional hotel industry. In the case of Airbnb, it is the digital industry which is having an extremely unsettling impact on various industries. But whereas benchmarking only draws a comparison between you and your competitors, cross-industry innovation can offer a more unique and creative approach which will allow you to differentiate in the longer term.’
‘A second trend is scenario planning. Companies develop future scenarios and work out ways to respond accordingly. What should we do in order to retain a significant position ten or twenty years down the line and to keep on performing well? Here too, the cross-industry innovation process appears to provide the ideal step-by-step plan. Finally, there is the growing realisation that as well as having an economic impact, companies also have a social influence on their environment. Once again, cross-industry innovation can make a substantial contribution here. After all, bringing together different types of partners – from both profit and non-profit sectors – gives them far better insights into their responsibilities and how they can contribute to society, aside from the economic aspects.’
Expand your business
The essence of cross-industry innovation is that as a company, you open up to other industries on the basis of your strengths. You seek out ways to link your own expertise with that of someone else in order to create new business as a result, in both social and economic terms. Or you identify an imminent disruption by means of which a player from a different industry starts to operate in your domain. You will need to respond accordingly and apply your own expertise to other industries. You can also learn from the complementary strengths of players in other industries how to regain your competitive edge in your own branch of industry.
Ultimately, the essence of every company boils down to the same thing: you offer a solution to a problem. Someone has a problem or a demand and you provide a solution. If you know which problems your business solves and dig deeper, you can take a broader view to see which other industries, even those far removed from your own line of business, are also engaged in solving this problem.
Focus on content and collaboration
When implementing cross-industry innovation, it is important to focus on the various steps:
- Challenge. Formulate a challenge which attracts and retains different partners across industries.
- Connect. Establish contact with the right cross-industry partners in order to tackle the challenge.
- Cross-pollinate. The partners exchange knowledge and ideas in order to come up with creative solutions to the challenge.
- Create. Develop creative ideas into concrete output which responds to the challenge with cross-industry partners on the basis of cross-pollination.
The various steps in this cross-industry innovation process are described in a practical case study presented in the research report ‘Managing cross-industry innovation clusters’.
However, you must also focus on the active management of the people involved. After all, the innovation teams are highly diverse and spread across various industries. Points of concern in the cross-industry innovation process are as follows:
- Do we still have the right partners on board?
- Are we still focusing on the right thing?
- Do we still have enough energy?
The study was recently translated into a convenient online tool which you can use to get started right away. By creating a low-threshold tool, Flanders DC wishes to encourage this form of innovation among entrepreneurs and managers. For companies and organisations, this should lead to increasingly effective cooperation projects. Anyone who wants to start up a cross-pollination project will therefore find it a source of inspiration and a handy reference tool. ‘The innovation workout which is used throughout the tool also gives you a guideline which allows you to get started on the shop floor,’ says Peter Bertels of Flanders DC, who followed its development. Would you like to find out more? Visit www.innovatiefsamenwerken.be/en.