What is external innovation management and what are the advantages?
Innovation management is not only an internal company process, but often also involves external innovation service providers who take on different tasks. On the one hand, this involves the outsourcing of innovation activities that the company cannot or does not want to carry out itself and therefore purchases as a service package. On the other hand, personnel capacities will be expanded or supplemented and additional know-how will be brought into the company.
External innovation management thus uses the knowledge of external innovation service providers for internal innovation processes without having to build this up within the company itself. In this article we will show you four examples of the concrete benefits that innovation management can bring as an external service.
1. Secure entry into innovation management
One of the most common reasons or triggers for external innovation management is the achievement of a certain company size. In most cases, structured innovation management is becoming increasingly important for 200 to 250 employees or more. For companies, this raises the crucial question of how this area can be sensibly structured and set in motion within the company. Should an innovation manager be hired, an employee from within the company take over this task or an external innovation service provider be consulted?
Since internal employees often do not have sufficient know-how for professional support of innovation processes and the employment of an innovation manager is associated with corresponding costs and risks, many companies involve an external innovation service provider in the initial phase. The advantages of this option are obvious:
- The company can be introduced to the topic with professional support and takes the first steps in innovation management together with the external innovation partner.
- The company can get an idea of what it needs to professionally anchor internal innovation management in the company.
- Once the project goes well and is successful, the company can still choose to hire an innovation manager.
Innovation management needs to be learned. If a company does not yet have any experience in this area, external consultants guarantee a secure introduction to the topic.
2. Support of the internal innovation manager
Innovation management can also be profitably outsourced if innovation management already exists as a position in the company but few successes are achieved. The external service provider then takes on the task of assisting and supporting the internally commissioned innovation manager with methods and know-how. This has the following advantages:
- The internal innovation manager usually knows only one company and one industry. External service providers are active in many different industries and thus have a better overview. Often there are already solutions from other industries that the company can use in its own innovation projects in the sense of "learning by analogies". The diverse industry experience of the external consultant thus expands the resource pool of the internal innovation manager and supports him in solving upcoming problems.
- Internal innovation managers are usually left to their own devices. External innovation service providers, on the other hand, usually employ several innovation managers who exchange information about industries, products or projects in order to find solutions. This pool of knowledge and experience is also indirectly available to the internal innovation manager.
- Internal innovation managers have very deep knowledge in their area of responsibility, but sometimes the focus on the solution is lost. Rather, the focus is on the reasons why something does not work. An external consultant is less influenced by internal barriers. Above all, he sees the unsolved problem and focuses on finding a solution as quickly as possible.
3. External innovation management as a catalyst
If an innovation manager is appointed from within the company's own ranks, then he usually has not only supporters but also many opponents, according to the motto "What do we still need innovation management now, we already have product management anyway. What's the difference and what's the point?".
The new innovation manager is often worth nothing as a prophet in his own country, which means that he also lacks the necessary assertiveness in the company. The same fate often befalls young, inexperienced innovation managers who have just graduated from university and have little experience. To make matters worse, the position of innovation manager is usually located somewhere in the organization chart and is not in direct line with the owner, managing director or board of directors. This further weakens the innovation manager's power of penetration or the right of penetration.
The use of an external consultant can alleviate these difficulties and significantly accelerate the development of internal innovation management:
- For the internal innovation manager it is of great advantage if he has an external consultant at his side who is used to dealing with tensions of this kind.
- The workforce will recognize an external consultant as an expert in innovation methods faster than a colleague or graduate.
- In 99 percent of all cases, the external service provider is commissioned by the owner, managing director or board of directors and also reports to him regularly on where there are difficulties, what is going well and what needs to be changed. Innovation projects can thus be driven forward more quickly.
External innovation service providers are thus a strong catalyst for advancing innovation management in the company and training and strengthening the position of the internal innovation manager.
4. External innovation management for strategic projects
Innovation projects that involve a complex strategic topic often exceed the human resources of the company's innovation department. Either there are too few employees with the necessary skills to handle this highly strategic topic correctly, or the employees of the innovation department are already so busy with existing tasks that there is no longer any scope for this additional task.
The company would have to start a time- and cost-intensive recruiting process in order to complete the project. Thus, many companies are looking for an innovation service provider for projects of this kind. Especially if the management wants to start quickly and have detailed concepts including business plan and first prototypes on the table within a few months.
Before time and money is invested in recruiting, many companies immediately award the contract to an external innovation consultant. This means that responsibility for the project can also be relinquished. If the project fails, the responsibility lies with the service provider.
Conclusion: What is external innovation management and what are the advantages?
Successful companies do not only rely on their own competencies in innovation management, but also on external impulses. External service providers expand the organizational basis for innovation, make innovation-relevant external knowledge accessible and expand the possibilities for finding ideas and solutions through their diverse industry experience.
Born in Graz, Austria. After positions as project manager & head of innovation of the project management at LEAD Innovation, Daniel Zapfl has been responsible for the success of the innovation projects of our innovation partners since January 2018.