Smart companies know that technology combined with new ways of doing business is the key to innovation. Here are four technology enabled trends from The McKinsey Quarterly that will help shape businesses in 2008 and beyond.
Why innovate yourself when you can get others to do it for you. Technology now allows companies to delegate substantial control to outsiders such as customers, suppliers, small specialist businesses and independent contractors. In essence companies are outsourcing innovation to business partners that work together in networks. By distributing innovation through the value chain companies can reduce their costs and get products to market faster.
Recent advances in open standards-based computing (for example computer aided design programs that work well with other kinds of software) are making it easier to co-create.
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Loncin, a leading Chinese motorcycle manufacturer, sets broad specifications for products and then lets suppliers work with one another to design the components. Expect more co-creation in 2008.
Using consumers as innovators
Best example? The online encyclopedia Wikipedia is a service PR product created by its distributed customers. Ohmynews is another – a popular South Korean online newspaper written by 60,000 “citizen reporters”. Companies that involve customers in design, testing, marketing and after sales process get better insights into customer needs and behaviour.
Tapping into the world of talent
As new collaboration and communication tools emerge, companies can outsource increasingly specialised aspects of their work and still maintain organsiational coherence. Work can be parceled out to specialists, free agents and talent networks. Top talent for a range of activities – from finance to marketing and IT to operations – can be found anywhere. Software and internet technologies are making it easier and less costly.
Putting more science into management
Technology is helping entrepreneurs and managers exploit ever-greater amounts of data to make smarter decisions and develop insights that create competitive advantages and new business models. The holy grail of deep customer insight – more granular segmentation, low cost experimentation and mass customisation – becomes increasingly accessible through technological innovation in data collecting, processing and in manufacturing.