Uber, Domestic & General and Dentsu Aegis Network are leveraging small suppliers to drive co-innovation
Innovation is integral to sustaining the long-term competitiveness of your business. Even companies with 25 years of experience need to innovate to remain competitive. But have you considered the importance of small suppliers when trying to drive co-innovation?
Of course, innovation is not just relevant to technology or product development. Innovation is just as relevant in low-tech industries as it is in the manufacturing and technology industries.
Innovation has become a core focus for 66% of CEOs in the last couple of years, as businesses realise they need to change to remain competitive. Companies have begun to recognise that external sources such as suppliers can be valuable sources of innovation when resources, capacity, creativity, or talent is scarce.
Suppliers have huge innovation potential because they have spent considerable time getting to know what their clients and customers want. Small suppliers have even bigger innovation potential since they have less bureaucracy to contend with.
But suppliers cannot be expected to ‘do innovation’ in your company alone. Here’s where co-innovation comes in. Continue reading for our guide on how to facilitate co-innovation with your suppliers.
1. Ensure that suppliers are a good fit for your business
Finding the right suppliers isn’t as simple as finding the right price point. A suppliers’ culture has a huge impact on the relationship you create and the results you will see.
If the issue is talent scarcity, you may look to the most influential industry experts for help. If your issue is capacity, a smaller agile supplier might be a more appropriate fit to provide extra momentum to your projects.
Small suppliers are often disruptive in their industries and at the forefront of emerging trends, so you can expect fast results from a startup supplier.
So, what exactly are you looking for? A big brand name with a great reputation and proven authority, or fast and disruptive results? Be clear about that from the off to avoid disappointment later on.
2. Regularly communicate and update suppliers on your company’s vision
Your company undoubtedly has a vision guiding your innovation strategy. Whether it’s a vision for your technology, product, processes, business model or your organisation as a whole.
The thing about innovation is that it usually involves huge disruption to business-as-usual across your whole company. Take Dentsu Aegis Network for example. Their vision is to become 100% digital by 2020. This will require some fundamental changes to the way they operate, and suppliers need to be on board.
Without clarity on the company’s ultimate vision suppliers can become opponents, banging heads with stakeholders and wasting precious resource on misguided efforts. The earlier you can bring your suppliers in on your vision, the better.
Whether it’s a possible change in strategy or an upcoming organisational restructure, your suppliers have the expertise to help. Or at least they can spot a potential problem.
If they’re a small supplier or even a startup, they are used to rapid changes in direction, approach, and vision. Take advantage of objective advice from the experts and work together to drive co-innovation.
3. Create mechanisms to transfer knowledge, and maintain them
A good supplier will ask a lot of questions, listening intently to uncover your pain points, bottlenecks, and processes. It is integral that there are mechanisms in place to facilitate knowledge transfer so you can benefit from your supplier’s insights.
When working with a small supplier, it’s unlikely that your project will remain exactly the same as when it begins. An agile supplier will most likely continue to bring fresh new ideas and insights to the table every week. They will see your project as a living thing rather than a plan that is set in stone.
It is so important that you continue to assess and consider these ideas to get the most from your supplier relationship. According to AT Kearney, 90% of leading companies have a structured process for collaborating with suppliers, compared to just 54% of non-leading companies.
Whether it’s a weekly update or conference call or a shared dashboard creating these mechanisms provides the structure you need to keep those new ideas flowing. Put the mechanisms in place now and honour them to watch the co-innovation flourish.
4. Adopt a unified innovation language
This next point applies to innovation projects with any suppliers, large or small.
Coordination internally will make all your supplier relationships that much more productive. To manage change successfully, everyone needs to be singing from the same hymn sheet. Time and again, sound strategies fall at the first hurdle because company culture or internal disorganisation caused problems.
A unified and consistent language for innovation-related projects is one way to make supplier relationships more manageable for your team. Your vision, goals, and strategy, should be communicated consistently to ensure that everyone is aligned and working in unison.
5. Measure success with custom KPIs
No business is a stranger to KPI’s. Certainly, you’ll already have many KPIs and tracking processes in place.
But, to measure the success of your innovation projects you will need to develop custom KPIs which go beyond the standard measures. These KPIs need to take into account all the intricacies of your business and its operating environment.
These will help you to keep your suppliers accountable. With agreed targets and timelines, you can easily track success or lack thereof. Plus, these measurements will help define how successful your drive for co-innovation has been. For Dentsu Aegis Network, one of their core metrics is cost savings – so suppliers need to ensure they measure up to expectations when it comes to those KPIs.
In solid supplier partnerships, all parties will regularly check on how their hard work is impacting your company’s growth targets. Don’t forget to thoroughly and honestly assess your current performance at the time of sourcing your supplier. That will come in handy later when you present your shared success to the board.
6. Be ready to make some changes
Change is coming to your industry no matter what business you’re in.
Your company should have innovation at the forefront of everything it does, constantly evolving to remain competitive. If you do not have the resources internally, seek suppliers to help you improve efficiency or reduce churn.
Small suppliers are ideally placed for innovation projects like yours. They are very comfortable with change, tolerant of risk, agile and disruptive at their very core. Help them to help you.
Low-tech industries will not escape the vast changes on the horizon. Make sure your company is ready for the change when it comes, with the right team behind you. You could even be leading from the front.
HeadBox is working to disrupt the events industry by providing one platform where you can search, book and pay for all your event Spaces. Try HeadBox today, or speak to the team about how to digitally transform your company through HeadBox Business.