Ecosystems and open innovation: Co-create or stagnate

Not all innovation is created equal. In a world of increased volatility and continuous change, there’s a real risk of “innovation fatigue.” When everyone claims to be innovating, it can begin to feel like no one is innovating. Innovation can become commoditized. And with new ideas and products flooding the marketplace on a daily basis, it’s no longer enough to innovate more. To differentiate itself, your organization needs to innovate better.

The impetus for change is especially urgent in the wake of generative AI. Executives expect generative AI to have significant impact across the entire innovation lifecycle, from ideation, discovery, and evaluation to execution and commercialization—not to mention collaboration with partners and measurement of outcomes (see Figure 1). Business leaders don’t just view generative AI as another tool in the innovation toolbox; they see it as fundamentally altering the nature of innovation in the modern enterprise.

Executives expect improved performance from generative AI at every step of the innovation lifecycle (percentage of executives expecting improvement from generative AI)

With generative AI already poised to upset the innovation landscape, now is an ideal time for organizations to re-evaluate their approach to innovation.

Innovation has traditionally been closed—an internal process that uses organizational resources to maintain secrecy, surprise, and competitive advantage. But traditional “closed” innovation is no longer adequate. In the current ecosystem economy that runs on partnerships, the clear choice for growing one’s business is open innovation.

Collaboration is key

Based on collaboration and co-creation, open innovation has become a prevailing aspiration, with 84% of executives saying open innovation is important for the growth of their business. Their instincts are right: the rate of revenue growth for open innovation leaders is 59% higher than that for other companies, according to research by the IBM Institute for Business Value (IBM IBV).

The rate of revenue growth for open innovation leaders is 59% higher than that for other companies.

Our most recent research reinforces this. In a typical large organization, as much as 10% of revenue stems from open innovation. If effectively adopted across all Fortune 500 companies in the US, that would translate into $1.8 trillion of revenue per year.

But a large share of this potential value remains untapped. Many companies haven’t yet converted the opportunity into reality.

Organizations that are more mature with regard to open innovation are 3.3 times more likely to outperform less mature organizations on revenue growth, and 2.7 times more likely to outperform them on profitability.

Treat innovation as a team sport—or lose to those who do

To move from aspiration to realization in an era of exponential technology, organizations must determine what business value they can derive from innovation with ecosystem partners and what’s required to facilitate it.

To this end, the IBM IBV and APQC jointly developed a maturity model that we used to analyze whether maturity on key open innovation capabilities results in a more efficient innovation process and improved business outcomes. We call it the Ecosystem Enabled Innovation Maturity Model (EEIMM), and we have tested it with more than 1,000 companies.

Our results are compelling: organizations that are more mature with regard to open innovation significantly outperform less mature organizations. For example, they are 3.3 times more likely to outperform less mature organizations on revenue growth, and 2.7 times more likely to outperform them on profitability.

Download the report to learn what open innovation maturity looks like, how it can drive business performance, and—most importantly—what it takes to get there.