The Missing Link In Innovation

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Procurement: The Missing Link In Innovation
Corey Billington and Francis Jager in Procurement: The Missing Link in Innovation (2008) examine how corporations can utilize the internet to change the prevailing convention in procurement and increase innovation and profits in organizations.
The internet is a global network that connects seekers, such as corporations that need a problem to be solved, with service providers called solvers who solve the problem for the company for prize money. Billington and Francis call these relationships "seeker- solver networks". There is no previous relationship between the two parties and the connection is usually made once in order to resolve the problem at hand. An example is Goldcorp, which used seeker solver networks to look for innovation from external providers.
Billington and Jager observe that innovation is increasingly difficult in terms of return of investment. Research and development fails to generate profits most of the time. There is increased spending in innovation while the returns realized by the innovation are minimal (with minimal positive outcomes) spending in innovation. Pharmaceutical companies are an example of organizations that have fallen victim to failed R&D efforts.
The Authors also point out knowledge brokering by Andrew Hargadon and Robert Sutton (24) as an effective innovation strategy. Instead of reinventing the wheel, it is more profitable and much faster to reuse established ideas in different circumstances. Open innovation is a form of knowledge brokering. Companies may outsource innovation and also sell some of their unused intellectual property to increase revenues. Companies should source ideas from both inside and outside the organization.
The internet is a useful tool for open innovation as it pairs seekers to solvers with different problem solving methods. The internet provides quick and efficient sourcing of external solvers with the additional possibility that there already exists a solution to the problem faced by the company. It also enables safe and secure transfer of intellectual property. Internet based networks include InnoCentive and Nine Sigma. Volunteers and low paid hobbyists found in the networks charge less for resolving complex issues once handled by R&D departments.
Procurement organizations do not deal in innovation ideas due to various factors in the structure of the company. One of them is that reduction of costs is the main occupation of most procuring organizations and thus they do not delve into the business of innovation and improvement of company growth. Procurement departments, being understaffed, are already too occupied with duties to lend a helping hand to the research and development departments without sufficient reason or assistance from upper management. Communication problems in companies and The tendency of large firms to stick to outdated business practices also hinders the development of new ways...