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Toward an Innovation Sourcing Strategy

July 15, 2003 | Jane C. Linder , Sirkka Jarvenpaa , Thomas H. Davenport | Innovation

Companies are increasingly looking beyond their boundaries for help with innovation -- working with customers, research companies, business partners and universities, and even competitors. They are also expanding the purposes for which they consider external sources appropriate. Businesses today are using external sources for all phases of innovation, from discovery and development to commercialization and even product maintenance.

While these changes sound good and are benefiting a great many companies, they add a new layer of complexity to the manager's tasks. And unfortunately, despite the growing acceptance of external innovation, the authors have found that many companies lack a sourcing strategy to guide them in managing it. They often take an ad hoc approach that produces uneven results, the very problem they are trying to avoid. Instead of dealing with external sources one by one and one at a time, companies should systematically examine and rationalize the increasingly important activity of innovation sourcing. The authors explain how companies can organize their use of external sources holistically, using innovation channels just as they manage specific distribution channels to reach end customers.

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