Innovation Acquisition - An Organizational Sourcing Imperative

Innovation AcquisitionTop Purchasing Organizations, “Have a Defined Role in bringing innovation into the company, which is a key driver of enterprise value” IBM Institute for Business Value and Economist Intelligence Unit Survey

Sourcing Innovation is more important than ever but is different than traditional goods and services purchasing

Bill Kohnen Jan 2015

Summary

• Innovation Sourcing is a high priority for leading organizations

• The process is different than traditional materials and services purchasing

• Measures of success for innovation sourcing are different than traditional sourcing

• As the ordinary becomes more automated innovation sourcing may even replace cost as the top Purchasing priority by 2020


Leading Organizations Make Innovation Sourcing a Priority


Traditional Sourcing vs Innovation Sourcing

Traditional Material and Service

• Defined Requirement

• Historical data for comparison

• Cost measurable

• More know sources

• Established process for business relationships

• Internal Stakeholders have “framework” for process

Innovation Sourcing

• Concepts and Needs

• New for Buyer Organizations

• Cost not clear

• Consideration of new sources

• New relationships and business terms

• No existing internal framework


Google “Innovation Process” and You Get Hundreds of Different Options

• Need• Concept• Exploration• Develop Ideas• Test Ideas• Develop Ideas• Trial• Implement• Adoption and Diffusion


Innovation Sourcing includes…

• New Process

• New Products

• New capability

• New Markets

• Can include improvements with existing products/ services

• Can be with current or new suppliers


Steps and Measures • Less linear and schedule driven than Traditional purchasing or

Strategic Sourcing

• More Collaborative

• Success Measured over longer period of time

• Leading process measures more relevant

• Requires more face to face interaction

• Interaction outside of traditional meetings important (more seminars, tradeshows, visits, meetings, benchmarking)


Innovation becomes an Organizations Purchasing Priority

• Technology enablers (M2M, Cloud, SaaS, Mobile) with fully automate the ordinary purchasing and supply chain activities or place tactical decision making in the hands of requestors

• Even “higher level activities” such as Strategic Sourcing, SRM and Risk Management will see standardization and delivery of solutions which increase productivity by 5X to 10X

• Innovation will remain as an area that requires Human to Human interaction



Purchasing Skills

2015

Innovation Sourcing

Need for System

Automation and

Maintenance

Need for same skills

2020

2020

2020

2015 Purchasing Skills in Demand will ChangeThose that will remain:• Strategic Sourcing• Negotiation• Soft Skill• Market Knowledge

2020 Innovation Sourcing Is Top Goal Purchasing Goal For Organizations

What Skills Are Needed

• Broader understanding of business• Base content knowledge in a category but more

importantly ability to learn and develop knowledge about markets

• Ability to collaborate as a credible partner with diverse teams such as: highly technical R&D teams, Marketing, Product Development and Executive Management

• Comfort Leading projects without a set process, goals or timeline but still demonstrating real value to the organization


No Particular Department In Most Organizations Today Is the Clear Choice to Lead Innovation Sourcing

• Tendency is to have this led primarily by technical people that may have some project management OJT.

• Most Purchasing Involvement comes late in the process if at all

• The skills of most in Purchasing today probably lend themselves more to working on details of automating the ordinary


Summary

• Innovation sourcing is a top organizational goal for leading organizations

• The process is different from traditional sourcing, definitions of innovation sourcing vary and the skills needed cross functions.

• The skills of todays Purchasing Professionals can contribute to the process but are not sufficient to take leadership for Innovation Sourcing

• Given that Innovation Sourcing will be a top goal for organizations purchasing professionals should develop capabilities in this space to enhance their career goals.


Innovation Acquisition - An Organizational Sourcing Imperative

Business

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