Understanding The Evolving Ecosystem Of Innovation Service Providers

I recently finished the draft of my report on the ecosystem of innovation services providers.  This report, to be published in July, explores the landscape of companies that are unified by a single purpose:  they are dedicated to helping their clients unleash their own innovation potential.  These are not companies who simply use "innovation" as a marketing buzzword.  Rather, they are dedicated to the discipline of innovation – and bring unique innovation expertise to clients in wide variety of corporate roles. This report builds on much of Forrester’s previous work related to Innovation Networks and Innovation Management, but expands the "ecosystem" to consider all of the companies I interact with that have a distinct innnovation focus.  In the report, I explore the offerings of:

• Strategy consulting organizations
• Technology service providers
• Product management firms
• Outsourced product development firms
• Idea management/solution generation companies
• Other niche service providers (including training program, design firms, and others)

I argue that this ecosystem of providers will be an increasingly important part of a comprehensive innovation strategy. However, it will be up to very knowledgeable and “connected” individuals within companies to help manage the diverse players, and connect suppliers to the right role, at the right point in the innovation process.  I also argue that this is an opportunity for SVM professionals who want to play a more strategic role  in their organizations.

Why is this ecosystem so important? There is quite a bit of evidence that the management of innovation will be the key management discipline in the 21st century, similar to the process management disciplines of the 20^th century.  For example, the leaders in the late 20^th century (GE, Dell, Wal-Mart) were the companies that recognized the importance of process expertise, and committed their organizations to mastering this discipline.  The evidence hints that same will be true for innovation – where Apple, Google, and P&G have developed positions as the century’s early innovation leaders and created quite a bit of shareholder value in the process.

For the suppliers in this ecosystem, there is still quite a lot of opportunity, but the road is far from clear.  If innovation is going to avoid buzzword status (and there’s also a lot of evidence that this is happening), suppliers will need to:

• Operate as an ecosystem partner, not a single entity.   This innovation ecosystem is still far too immature and disparate for organizations to be treating each other like rivals.  The best vendors in this space realize that every positive client experience linked to innovation is a potential for market growth, and they are working with other players in the marketplace on marketing, branding, and partnership opportunities.
• Be bold and clear about differentiation and stakeholder focus.  At the same time, its important to remember that the innovation focus of market players is constantly being diluted by market generalists and the “noise” from marketing hype.  If the companies in this space want to be viewed as experts, they must be very clear about their specialized innovation expertise.  This means having a clear understanding of which roles they serve, and how their offerings are clearly distinct from every other player in the marketplace.  For example, there is a growing base of social collaboration tool vendors eager to capitalize on the popularity of the innovation theme -- how will the true specialists defend their market position?
• Keep pushing the innovation thought leadership forward.  In the past few years, the industry-driving thought leadership on innovation has waned, perhaps a bit diluted by the broad range of interest in innovation .  It falls at least partially on the players in this ecosystem to identify and focus on the new innovation themes that will matter to the marketplace in 2011 and beyond

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