Gartner: If you really want to innovate, look outside your industry

How can executive leaders fortify their enterprise for digital-era competition by adopting three tactics for cross-industry innovation?

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This is a contributed article by Stephen Smith, VP Research Analyst at Gartner. 

An intensified competitive landscape coupled with an endeavour to remain viable and relevant, organisations now face increased challenges when applying value-adding innovations.

Today, organisations looking to add the highest-value innovations must look beyond the organisation’s industry, with ideas originating far beyond. As such, executive leaders can adopt three tactics for cross-industry innovation.

  1. Identify innovative business models in other industries

Cross-industry innovation plays an important role for organisations, as it provides opportunities and technological ideas that might normally be out of reach.

Whilst it’s useful to look further afield for examples of innovation, it can also help leaders spot and prepare for disruptions within other industries that have the potential of disrupting their own. This long tail of innovation and technology transfer may occur from the public sector to the private sector, from one industry to another, from B2C to B2B, or any combination thereof.

For example, global estimates of individuals with food allergies range up to 520 million people. Nima developed a set of products that helps individuals with gluten and peanut allergies be more certain about what is in the food they consume. With a small food sample, Nima’s sensor and disposable cartridge will give the user an answer about the presence of a specific allergen in about three minutes. The sensors, connected to an app, provide results from individual testing that can be compiled for individual restaurants. Whilst restaurants that demonstrate the ability to produce food allergy-free gain a competitive advantage, this business model could be applied to different industries.

  1. Accelerate innovation by partnering with others (often aggregating value propositions and IP).

Digital business has enabled multi-industry ecosystems which deliver a largely untapped new revenue stream. These ecosystems enable organisations to combine different value propositions that create new value for its customers. With this in mind, organisations must first find the right ecosystems to participate in and the right partners to innovate with to successfully pinpoint new growth opportunities. The first step in achieving this, is accepting that businesses cannot do it alone and must get comfortable relying on the expertise of its partners.

As identified, digital platforms offer rich opportunities for cross-industry innovation. For example, the Quantum Group’s blubox.care platform stores, aggregates and analyses data from wearable devices. The platform can connect any device to an individual’s electronic healthcare record and enhance the ability of caregivers to treat their patients. This type of technology platform delivers specialised services to the user and collects useful — even monetisable — data. In the long term, partners could connect health and other apps and businesses with this platform to create value for the consumer.

  1. Consider counterintuitive ways to innovate

Create new value propositions by taking learnings from one industry and applying it in another industry. Or take new capabilities and processes that emerge out of digital business evolution and multi-industry ecosystems. By jump-starting the organisation’s innovation efforts, cross-industry thinking reveals new opportunities and possibilities.

For example, Idea Bank, based in Poland, found a new way to add high-value innovations into its value propositions. It established working spaces on commuter trains, including desks, conference rooms, internet access and supplies. Whilst anyone on the train can use the space, Idea Bank’s customers take priority. In addition to these services, Idea Bank employees on the train help their customers, especially small businesses, with their banking. Since 2015, 30,000 people have used these facilities.

Recommendations

Whilst cross-industry innovation has been used for decades, it’s use has now become critical. As the COVID-19 recession increased the pressure to add new revenue streams or to differentiate existing business models, products and services, executive leaders who are guiding digital business transformation should:  

  • Assign an innovation team. That team can create or exploit a technology that will enable new customer value in underserved markets or with new products and channels.
  • Decide whether you should partner for innovation. In some cases, the organisation can simply copy what companies in other industries have done. In other cases, the organisation can develop industry-blurring innovations with a community of partners.
  • Create a permanent process for cross-industry scanning and analysis. Appoint one leader or a small team to look outside the organisation’s field of vision for digital innovations to support digitally advanced innovation partners.

Stephen Smith is a Vice President with Gartner in the CEO and Digital Business Leadership Research team. He covers digital business, the cross-industry impact of disruptive innovation, strategic planning and the blockchain for manufacturers. During his tenure with Gartner, Smith has led the Manufacturing, Life Sciences, Consumer Goods, Retail, Energy and Utilities, Media, Government and Education teams.