LIFE 2 - Innovation through collaboration

An enterprise’s ability to innovate has always been considered a key success factor. Of the more than 9,300 managers surveyed in the Global Executive Survey by McKinsey & Company, 43 percent specified innovation as the most important growth lever.¹⁶ Despite the uncontested influence that innovation has on entrepreneurial success, many companies repeatedly find it difficult to successfully develop new services and products and launch them on the market. Across a wide range of sectors, there are reports of dramatic flop rates of up to 90 percent. Very often, the reason that a product or a service fails is an information deficit at the “fuzzy front end”, i.e. at a very early stage of the innovation process.¹⁷

With the aid of virtual collaboration enterprises can tap into new innovation potential by specifically integrating third parties, for instance external experts, suppliers or customers, in the innovation process. The keywords “crowdsourcing”, “open innovation”, or “prosuming” describe exactly this process: Complementary knowledge is made useable for the company, partners and customers are participated in the innovation process at an early point. Some of the greatest potential of virtual collaboration lies in the field of innovation development, a view supported by the members of the think tank.

“Virtual collaboration presents great potential for creating value, potential that would be impossible or very difficult to exploit otherwise.”
Matthias Roggendorf, McKinsey

“Virtual collaboration already occupies an important position in development and innovation processes, and particularly in the automotive industry.”
Christophe Châlons, Chief Analyst, PAC Group

So how are virtual collaboration applications being integrated in the innovation process within enterprises? 19 percent of the 1,559 ICT executives surveyed for this study state that solutions for integrating partners and customers in product development are already implemented within their enterprises. In an international comparison the United States and Germany emerge as pioneers in crowdsourcing, open innovation and prosuming. One in four (25%) and one in five (22%) companies have already implemented the necessary solutions. In total, 30 percent of the companies surveyed are presently planning to implement and use these solutions and technologies.

Figure 5-4: Innovation through virtual collaboration (development costs)

In Germany alone, just under 700 enterprises with more than 1,000 employees are currently looking at the possibility of using crowdsourcing, open innovation and prosuming. Overall, in Germany, France, the United Kingdom, Spain and the United States, more than 4,500 companies with over 1,000 employees are in the planning phase for these technologies.¹⁸

A look at the enterprise clusters shows that the cluster of Pioneers very clearly occupies the top position when it comes to using virtual collaboration in innovation processes. Of this cluster, 44 percent have already implemented solutions to integrate partners and customers in product development processes. A further 37 percent of the Pioneer cluster and 33 percent of the Open-minded users are currently planning to implement this technology.

Figure 5-5: Innovation through virtual collaboration (time to market)

With regard to the advantages of virtual collaboration in innovation processes, 62 percent of the ICT executives believe that the use of virtual collaboration tools could significantly reduce or reduce development costs within their company (see Figure 5-4). Almost as many (60%) believe that virtual collaboration will significantly reduce or reduce the time-to-market for their products (see Figure 5-5).

This shows that virtual collaboration in innovation processes within companies is already clearly perceived as being important. However, the results of the LIFE 2 Study make clear that virtual collaboration in innovation management is not universally utilized – and that there is still further potential. For example, the study reveals that in innovation processes (as in other business functions) it is predominantly the internal potential presented by virtual collaboration that is widely exploited. Of the 676 ICT executives in whose companies virtual collaboration already plays a role in product development and research, 57 percent stated that virtual project meetings are used to bring teams together. Just over half of these ICT executives (53%) state that virtual project rooms are used for internal development teams in their companies.

In contrast, external forms of virtual collaboration (e.g. virtual project rooms or product development platforms used jointly with partners) are mentioned far less frequently (37% and 38% respectively). The least used of these options is the integration of customers in product development through crowdsourcing (25%) or presuming (20%), showing that many companies still have enormous information deficits at the “fuzzy front end” mentioned above. The results of the survey reinforce the assumption voiced by Professor Arnold Picot from Ludwig-Maximilian University in Munich: “Virtual collaboration with customers is still not very widespread. There is certainly still quite a bit of potential here.”