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By Sonja Winschel & Sven Denecken

In the first two blogs of this series we covered Co-Innovation as a state of mind that comes with the shift to the subscription economy on the one hand. On the other hand we pointed out how Co-Innovation helps understand the value levers of business and how technology can contribute to them with SAP S/4HANA as an example. You can find the second blog here: http://scn.sap.com/community/s4hana/blog/2015/10/13/co-innovation-leads-to-co-validation-part1--the-...

Today we will turn to some examples of Co-Innovation done right and the win-win situation if it’s done right.

Digitalization requires re-thinking

Even though the topic of digitalization still is the cause of many debates, there are no doubts that the pace of technological change has severely accelerated over the last years. Constantly evolving customer demands rapidly change the marketplace. Studies show that every third company expects a severe or even fundamental change of their business model until 2020. With the Co-Innovation approach the barriers brought by this change can be overcome easier and therefore helps customers to respond to the digital transformed world.

If enterprises do not keep up with the technological trends like cloud, business networks, big data and mobile, 40% of the S&P 500 will no longer exist in the next 10 years (see also https://www.capgemini.com/resource-file-access/resource/pdf/The_Digital_Advantage__How_Digital_Leade...).

Early adopters of the digital transformation are already now able to yield benefits from their shift to digital innovations and derive significant financial advantages compared to their industry competitors. Co-Innovation is the key to open the path for customers to change the way they work, adjusting to new business models and being prepared for the trends of tomorrow’s digital economy.

Listen, divide and conquer

There are several ways to listen and react on potential co-innovation ideas. One driving aspect can be studies from research companies. In addition networking with multiple business experts from customers and partners as well as acting as thought leaders will add good indicators to agree on dedicated Co-Innovation projects.

As every Co-Innovation interaction works differently, the process is not predetermined nor inflexible. It is thought to be individually adjusted to each defined topic in a “not one size fits all” approach. Overall we differentiate between three innovation types, strategic, enriching and transformational innovation.

First the strategic innovation focuses on the long-term vision of future breakthrough ideas and ground breaking innovation. It is a very high level view on what might drive the business growth in the upcoming years. It brings up new business models and processes, which could make the difference. This type creates the most noticeable business value.

Contrary to the strategic innovation, which is about new objectives, the enriching innovation revolves around improving, enhancing, and optimizing already existing solutions. It is a short- and mid-term amendment achieved in a continuous and iterative cycle to meet the changing business needs. This type of innovation also creates valuable business impact.

Last but not least the transformational innovation is a necessary component to build the framework for the other two innovation types. For instance, with this type companies follow the trendsetters to keep up with the changing market requirements. Often it is difficult to assess the generated value, because there might be no direct impact for the operational business. More precisely, the basic elements of a company, such as processes, technologies, and legal requirements, are what the transformational innovation is all about.

Pick the best-fit methodologies for your project

We have already learned about the Design Thinking methodology as a part of a suite of tools to help solve problems and unlock potential in the Co-Innovation process. Now we want to have a look at the Business Model Innovation. The focus of this methodology is to understand the economic viability, both from vendor’s and customer’s perspective. Digging deeper into business models and creating a business model canvas per Co-Innovation topic can be one outcome. The stages to run through having those insights in focus are design, test and run. For example, in the test stage a minimal viable scope can be evaluated and verified with the ones who should gain benefit.

To derive the most out of customer engagement via Co-Innovation projects, it is important to involve business and IT users in a collaborative, iterative, and sustainable process from the beginning. The earlier the engagement the more space to influence the future roadmap – both on SAP side as well as on customer side. With the figure above we want to outline three stages and an exemplary process of an early customer engagement. As Co-Innovation takes place mainly in the first two phases, we will explain them shortly. In the first phase it is all about inspiration. Brainstorming on expectations of future users and new processes are crucial to facilitate user-centric design and business value, e.g. via Design Thinking. In the ‘Plan and Design’ phase close collaboration with customers can focus on building mock-ups, running demos, and evaluating business models. By understanding customer needs, SAP significantly boosts the efficiency and effectiveness of the product development process.

The Business Model Innovation methodology was used in an example of a successful Co-Innovation project. The idea was to illustrate what SAP, its customers, partners, and the consumer would need in order to be part of the ‘Buy now’ trend. Giving consumers the possibility to buy their goods within their used social media environment and without having to enter their information again and again, makes lives easier for them but also brings new challenges for enterprises.  In a workshop we were able to work hand-in-hand with affected stakeholders to elaborate how processes and functionalities should be adjusted in order to overcome these challenges. Afterwards use cases have been defined successfully, followed by business model canvas creation. This is an example for a strategic innovation that completed the ‘Ideate’ and ‘Plan & Design’ phase in order to bring ideas to life.

Summary and Outlook

Co-Innovation is a flexible approach which needs to be individually adjusted per topic and innovation type. With the help of different methodologies the impact and speed of Co-Innovation projects can be significantly increased. The necessity for companies to be prepared for the digital economy requires to start now.

There is an updated Co-Innovation @S/4HANA brochure available , where you can read about these topics and find out more.

Want to engage right away? Looking forward to your co-innovation engagement @ MAILTO: s4hana-coinnovation@sap.com

...and follow us for frequent updates @SDenecken and @BeSchulze


Co-innovation leads to co-validation (Part1) - the relevance of co-innvation

Co-innovation leads to co-validation (Part2) - the value lever of SAP S/4HANA