Managing Trade-offs Effectively when Adopting External Innovations

Most companies don't think through the trade-off between utilizing an external innovation as is versus customizing it nearly enough. As a result, they tend to suffer in time to market.

When we look to purchase a house, we know that a “new build” will allow us to customize the design to our precise requirements. With a home being built “on spec”, we accept that there is a limited amount of customization possible.

Similarly, in open innovation products and technologies not developed “from scratch” by the technology seeker, these often arrive in a form that may not be precisely what they themselves would have designed. Sometimes, it can be customized extensively (with the customer seeking to encourage the provider to absorb as much of this time and cost investment as they’re willing to tolerate).

Other times, there is a limited amount of customziation possible. The less customization required, the greater the advantage derived from bringing it in from outside. Often, the question becomes, what is an acceptable standard for adopting an external innovation candidate, and deriving a suitably large resulting benefit?

I feel that most companies don’t think through this trade-off nearly enough. I perceive that they usually set their standards so high, that these seemingly are more rigorous than for an external candidate than for an internally developed one. I think that sometimes their requirements can be unrealistic (if not unreasonable), which costs them time-to-market advantages they might otherwise realize.

Some companies have this figured out. Unfortunately many others haven’t. So, how close is close enough for these companies? From the limited number of external innovation successes that I’ve heard broadly publicized, I answer with this popular expression: “Close only counts in horseshoes and hand grenades.”