Cross-Innovation is needed to drive growth in industries and companies

FIZ Frankfurt Biotechnology Innovation Centre's Dr. Christian Garbe

Today the innovative power of any firm is limited primarily to its own industry. Established ways of thinking and dealing with the problems and demands of customers constrain the evolution of the products, services and business models, resulting in incremental product development. This may help to maintain market share, but it does not lead to growth and the development of new markets.

Globalisation and shortening product life cycles are increasing the pressure on companies to improve their innovation processes. The dynamics of global trade mean high-wage countries need to compensate for their disadvantages in relation to low-wage countries through knowledge and innovation.

It is now understood and acknowledged that innovative companies grow faster, and are more profitable, than more staid competitors. Given this, innovation research is no longer focused on demonstrating the importance of innovation as a driver for growth and profitability, but on explaining how innovation is created and how innovation processes can be optimised.

So how do companies generate innovation? What are the main approaches and strategies?

Classical Innovation Model: from Closed to Open Innovation

In the past, companies believed that successful innovation required control and ownership of intellectual property. Under this paradigm of closed innovation, a company controlled the creation and management of ideas. With its focus on internal processes and potential, this approach worked wonderfully for most of the last century.

The twenty first century and the information age gave birth to a new innovation paradigm. It became clear that when seeking to increase customer loyalty and attract new customers, companies need to increase customer involvement in R&D operations. Furthermore, firms can and should use external ideas as well as internal ideas, and internal and external paths to markets, as they look to advance their technology.

A promising approach for innovation: Cross-Innovation

Today, innovation takes place not only within the corporate limits, but is distributed among several internal and external players, who interact with each other. This can be done in two ways, first by the transfer of established know-how and solutions through industry networks, and secondly, the development of innovation through cross-industry collaborations.

IBM’s Global CEO Study 2006 highlighted the importance of external cooperation. According to this study, around 90 per cent of the 765 CEOs interviewed on their views on innovation stated that external cooperation was very important. However, only about 60 per cent of them said they were cooperating to a significant extent. This result demonstrates a “cooperation gap”.

Through cooperation and the combination of complementary knowledge, the innovativeness of firms is strengthened in a sustainable way. Cross-Innovation facilitates radical innovation, provides a greater differentiation potential, and thus enables faster growth and higher margins.

The role of Innovation Centres in promoting Cross-industry Innovation

High technology industries are intensive users of R&D that should lead to innovation, resulting in gains in market share, the creation of new markets, and the efficient use of resources. In this context clusters (including Innovation Centres) can be viewed as the fuel that drives innovation, since they build synergies and thereby initiate exchange and new ideas that can be transformed into commercially successful products.

The FIZ (Frankfurter Innovationszentrum Biotechnologie) Frankfurt Biotechnology Innovation Centre was set up to support small- and medium-sized life sciences companies in the process of turning their research results into marketable products, and to satisfy the demand for more collaboration between industry players. FIZ does this by providing infrastructure and management and consulting services to life sciences companies.

To promote dialogue and cross-sector collaboration between industry stakeholders and to pull in the latest research, FIZ has developed the FIZ Innovators’ Lounge and FIZ Life Sciences Forum, where selected experts meet to discuss their experiences and to develop concrete approaches to particular projects. The goal is to bring key decision makers from life sciences and business together for dialogue, provide a professional, thought-provoking environment, and develop new cross-industry approaches.

Knowledge spillovers in clusters like the FIZ Frankfurt Innovation Centre help to increase the rate of innovation, leading to the creation and growth of new businesses. Moreover, cross-innovation approaches give companies access to a wider range of highly skilled labour and a variety of specialised suppliers and service providers from different regions.

To contact FIZ Frankfurt Innovation Centre, email [email protected].