As the global economic crisis forces businesses to operate leaner, competition continues to accelerate at lightning speed. Simultaneously, consumers are clampingdown on discretionary spending and demanding more value and options in the purchases they make. Innovation management—or finding and realizing new sources of value—is key to helping businesses keep up with this constantly changing economic and competitive landscape.
A transformation that began quietly at leading-edge organizations promises to revolutionize the way companies develop and realize the benefits of innovation as a corporate competency. This transformation—using collaborative, Web-based technology to reach the “Long Tail” of innovation across and beyond an organization—not only changes the way businesses innovate, but also recasts IT from a supporting role to a strategic one.
In his article “The Long Tail,” Chris Anderson, editor-in-chief of Wired magazine, describes the potential of great profitability existing not in the head of the demand curve, but in its Long Tail.1 The Long Tail concept asserts the benefits of offering a large selection of hard-to-find items to a broad base of niche customers, as opposed to mass marketing the most popular items to the mainstream consumer. Amazon, eBay, and Google have all based their business models on the Long Tails of their chosen markets.
Leading companies are starting to realize that the concept of the Long Tail can be applied to create an open innovation model that delivers new sources of competitive advantage. With innovation, the Long Tail is a source for ideas or enhancements that bring incremental benefits instead of the next great blockbuster breakthrough. Over time, these incremental innovations can add substantial value and create a managed platform for sources of sustainable innovation. Innovation’s Long Tail is found not in corporate research and development (R&D) labs, but in the untapped knowledge that resides within a company’s employees and its customer and partner base. For most companies, these sources of inspiration, ideas, and insights are an untapped wellspring of continual improvement and sustainable competitive advantage.
But unlike other strategic transformations that came before, this aspect of innovation management is entirely dependent on IT. Why? For years, ideas for incremental improvements largely sat dormant in the Long Tail, where they were smothered under too much institutional weight. The technology that is available today can set these innovations free. This technology is the conduit that enables companies to reach the Long Tail through collaborative, social media dialogues. Without IT and these technology tools, businesses cannot connect with the Long Tail efficiently, if at all. Collaborative technology is catapulting innovation management to the forefront of modern business. It offers an unprecedented opportunity for CIOs to have a hand in shaping their companies’ future and forever changing their role and position to that of a value creator.
The question isn’t whether organizations should leverage the technology that delivers today’s innovation management models, but how. IT, as the owner of the engine behind innovation, must emerge as the leader. With careful thought, planning, and ingenuity, IT can help businesses move from a closed innovation model to an open one, playing a pivotal role in capturing an increasingly elusive competitive advantage.
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