The 5 Types Of Innovation For The Future Of Work, Pt. 3: Partner And Supplier Innovation

As the world of work continues to evolve at a rapid pace, innovation continues to become both a top priority and a top challenge. For most companies, innovation is handled behind closed doors in a secluded part of the company that only a few have access to. This type of innovation is no longer practical, scalable or effective when thinking about the future of work. In order to succeed and thrive in this rapidly changing world, organizations must adapt by implementing five innovation models, all five of these are crucial and are part of a broader innovation ecosystem. The five innovation models are:

1. Employee innovation (already published)
2. Customer innovation (already published)
3. Partner/supplier innovation
4. Competitor innovation (already published)
5. Public innovation (already published)

Many organizations around the world today don't stand alone as independent entities. They work with and form alliances with suppliers and partners who they trust. Pretty much any organization you can think of today is somehow aligned with or supplied to another organization. Starbucks and Barnes & Noble , HP and Disney, Coca Cola and the World Wildlife Fund , IBM and Box, and the list goes on and on. The point is that in today's world companies realize that the chance of individual success is slim to none. Partners and suppliers are oftentimes the lifeblood of thriving organizations because they provide many of the parts, services, and referrals that allow these companies to flourish. Without these types of ecosystems these companies would not be where they are today and chances are, many of them wouldn't even be around anymore. This brings us to the third type of innovation ecosystem that companies must create for the future of work by teaming up with and innovating with partners and suppliers. Unfortunately many business leaders are still not comfortable sharing data information with their employees and customers let alone their partners and suppliers, but that is a mistake.

Walmart is the world's largest employer (2.2 million people) second only to the People's Liberation Army of China (2.3 million people) and the U.S. Department of Defense (3.2 million people). Today they are recognized in virtually every corner of the world but how Walmart was able to grow and outpace the competition is a rather fascinating story. In the 1980's Sam Walton (who some consider an early pioneer of big data) understood the importance of opening and sharing more data with their suppliers such as P&G. This type of data included things like inventory data and store level sales. By doing this Walmart was able to dramatically improve forecasting, minimize inventory turnover, and improve shelf space. When Walmart first started doing this in the 80s their annual profit was around $25 billion and Sears and Kmart were at $31 billion and $29 billion respectively. Fast forward to today where Walmart's annual profit is over $482 billion while some are speculating that Sears and Kmart are going to disappear altogether (in 2014 Kmart was near $16 billion and Sears was around $20 billion). Recently Walmart also developed a program called "Get on the Shelf" which is designed to help smaller suppliers showcase their products.

L'Oreal is another great example of a company that innovates with its suppliers in a hosted event called Cherry Pack. During this in person event suppliers meet with L'Oreal executives and managers to talk about everything from formulas being used in products to ideas around marketing and packaging. It's a candid conversation where attendees share insights around customer needs, challenges, and demands. This helps make sure that the L'Oreal suppliers can continuously create the best and most unique products for the company and that L'Oreal can also sell more of the products that the suppliers create. These suppliers also get strategic insight and direction straight from L'Oreal so that there are no surprises down the road. Not only that but the Cherry Pack dramatically helps improve efficiency while reducing waste of products, time, and resources. When L'Oreal first started doing this in 2010 the idea of bringing together a cosmetics company with its suppliers was pretty much unheard of. One of the several innovations that came as a result of this relationship was the self-loading pipette that is used in many of the Lancome products.

Creating this third innovation ecosystem with partners and suppliers does of course require a certain level of trust. But the idea of hoarding information to succeed is not one that will prevail in a world where knowledge and information is becoming commoditized. By opening up information and innovating with suppliers and partners both parties will win. Suppliers and partners will be able to provide better products and services that customers are asking for and the organizations will be able to dramatically improve forecasting while dramatically reducing wasted resources and time spent. The earlier the company can bring partners and suppliers into the innovation process the more effective the relationship will be.

While innovating with partners and suppliers is important, it is but one part of the innovation ecosystem which includes 5 innovation types listed above. Next time I will explore competitor innovation.

Jacob Morgan is a keynote speaker, author (most recently of The Future of Work), and futurist. To have Jacob speak at your event, to get access to his videos, podcasts and articles, or to subscribe to his newsletter you can visit TheFutureOrganization.