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Is your department a business unit?

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It’s hard to dispute that open innovation has certainly come a long way since Henry Chesbrough first popularized the concept over a decade ago.  He described two forms of open innovation.  The outside-in form is very well trodden, with the crowdsourcing movement finding applications in ever more interesting ways.  That organizations can pull in knowledge and insights to supplement their internal talent is now a pretty well established line of thought.

The second form however is much less commonplace.  Inside-out innovation is when internal innovations are made accessible to external parties.  There are certainly instances of it in use, albeit not to the extent of crowdsourcing, or outside-in innovation.  Amazon for instance have taken their innovation with online shopping, and made their platform available to third party retailers.

Arguably a more interesting example came earlier this year from Canadian telecom company Telus however.  They were so successful with their business transformation towards more social principles that the team behind that change, led by Dan Pontefract, were given the freedom to market their talents to external clients.

Which is interesting precisely because they’re not offering a technology to external people, but rather the talented people they have working for them.  This is something that is not all that common, and I believe that is often the case because there is little understanding of, nor attempt to assign value to, the direct financial contributions of various departments.

Consider a scenario where your marketing department, for instance, operated as though it were a standalone company.  It had its own profit and loss account, and could sell its services externally as well as internally, with those internal clients paying the market rate for the talent they’re utilizing.

If nothing else, this kind of practice provides an interesting level of transparency.  For instance, if a unit/department is attracting strong custom externally but very little internally, it is easy to beg the question of whether other units are buying wisely, or whether that unit is indeed still required.  Both of these can provide interesting insights for future strategy.

Likewise, if a unit has primarily internal sales, despite there being strong apparent external possibilities, then that in itself can be explored to find out why that is the case.

These kind of input units, that primarily service internal clients, can easily be transformed into revenue generating units with a dollop of adaptable thinking.  Hopefully, the more examples we have, such as at Telus, the more encouraged other organizations will be to follow suit.

Whilst you mull it over, check out this interview with Henry Chesborough at the World Economic Forum.  He talks primarily about the possibilities of offering technologies and intellectual property externally rather than talent and processes per se, but it is nevertheless an interesting clip.

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