To develop tech and stay abreast of trends, organizations need to adopt open innovation as the answer to the talent crunch
By Ken Durand, Accelerator Director, The Farm & SportsTech, Boomtown Accelerators
Technology continues to be a primary catalyst for change in the world, McKinsey & Company states in its recently-published 2022 Outlook on technology trends. Tech advances offer businesses more opportunities to lift their productivity, invent and reinvent new offerings, and advance prosperity and well-being for all of humanity.
But there are challenges inherent to developing new technologies that present significant roadblocks to real innovation.
Perhaps the biggest recurring problem for organizations endeavoring to generate and disseminate innovation is the war for talent. The McKinsey study provides a granular assessment of trends in two thematic groups: Silicon Age, which encompasses digital and IT technologies, and Engineering Tomorrow, which encompasses physical technologies in domains such as energy and mobility. In these areas, the lack of available talent deprives organizations of the expertise they need to drive successful adoption. Three years ago a department head at one of the nation’s leading engineering schools noted that 60% of his program’s master’s and doctoral level data science graduates went to work for just three companies. Most of the remaining 40% went to work as freelance contractors, chasing huge earnings. Where does that leave the rest of the Fortune 500?
If an organization can’t acquire the talent necessary to innovate on its own, one option is to outsource the problem to one of the big three cloud providers who will claim everything can be centralized, allowing the firm to focus on what it does best. But can an organization really be its best if its entire technology vision is outsourced to a cookie-cutter cloud tech stack for things as important as AI or cybersecurity? In the long run, turning over one’s technical innovation is unlikely to move a company forward.
There’s another way. First, it’s important to recognize that true innovators prefer to have control and long-term upside for their ideas, so they flock into startups that allow a certain amount of personal freedom to chase ideas outside the current mainstream, and in so doing, they also take on risk that is not tenable for the Fortune 500. Real innovation – the kind of disruptive innovation that’s needed to create new offerings and pioneer technologies – is most often accomplished by startups, not by corporate R&D functionaries. Corporations are bogged down by the status quo, and are unlikely to take on risks they fear could drag the company down for a decade.
Second, embracing open innovation can help organizations to capitalize on the idea that fruitful knowledge is now widespread throughout society. No one organization has a monopoly on ideas, and every entity, no matter how effective it is internally, must engage deeply and meaningfully with external knowledge networks if it wants to succeed and thrive. That’s according to Henry Chesbrough, business professor at the University of California and Berkeley, widely viewed as the progenitor of open innovation.
Connecting with external networks of knowledge will be all the more necessary as technological changes continue to have a massive effect on every sector, as the McKinsey report states. The research firm says it expects to see the multiplying effect of “combinatorial innovation,” as different technologies come together in creative ways. For example, this is happening now as organizations combine different technologies to create the metaverse and the many layers that make it up.
Another example of combinatorial innovation: We are now entering a third generation of software-as-a-service technologies. The earlier move to cloud/Saas exposed a lot of gaps in the thinking around topics like security, edge v. cloud data processing, and maybe most importantly … application programming interfaces (APIs).
“APIs are the building blocks of modern software development representing re-usable components that make programming faster and more productive. APIs can now power many aspects of software that 5-10 years ago would have been custom.”–David Cummings
No one would dream today of creating software that did not have a robust set of APIs that enable high speed, secure, seamless integrations between systems. Going forward, it will be designed into products from the beginning. This will make interoperability possible among groups of seemingly disparate systems, driving new combinations of technology that will spark innovations that today are going unnoticed.