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This article was published on November 19, 2018

Develop your innovation partnerships the same way you build your products

Develop your innovation partnerships the same way you build your products
Matthew Milan
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Matthew Milan

Matthew Milan is the CEO and co-founder of Normative, an innovation and design firm headquartered in Toronto. Matthew Milan is the CEO and co-founder of Normative, an innovation and design firm headquartered in Toronto.

The best innovation teams don’t work alone. They bring in partners from different backgrounds, countries, and even industries to help provide fresh thinking and ideas. The process of finding and forging partnerships and collaborations, however, is not easy to do well.

The best teams I’ve worked with have come up with a clever solution: They develop partnerships in much the same way they develop products.

Rather than simply hiring vendors, the most innovative companies establish processes and frameworks that allow them to quickly validate whether a partner will be a good fit.

They’ll get to work immediately, and focus together on the smallest tangible outcome that will provide proof that the partnership is actually working. I like to call it a “Minimum Viable Partnership” model. In this model, the partnership IS the project.

The “test and learn” partnership model

Most business partnerships are quid pro quo. An organization identifies a problem, and then sets out to hire a vendor to provide a solution. When it comes to innovation partnerships, however, the traditional model may not always produce the best output.

Why? Because innovation teams don’t have specific, concrete problems to solve.

They have problem spaces to explore. In situations like these, paying another company to help explore the space with you doesn’t make sense. There’s too much uncertainty to justify large commitments for an unknown payoff.

So, the best internal innovation teams start by testing potential partners first, before getting down to business, so they find the right talent who can iterate on solutions together.

Great innovators use this “test and learn” approach to partnerships no matter how big or small their company is.

Using tools like the Lean Startup methodology, these innovators quickly explore and refine different partnership approaches with complementary companies instead of directly hiring firms to do a specific job.

My team and I used this approach when we worked with a small healthcare startup. To reduce patient neglect in hospitals, the startup wanted to design an AI-based, wall-mounted device that monitors everything that happens in a patient’s room to help nurses and hospitals understand how well they’re taking care of patients.

The startup’s founders realized that to build their product they needed outside expertise from technologists and healthcare practitioners to augment their core team.

Our first few interactions demonstrated that we could work well together, and ultimately, everybody benefited from this approach.

The small healthcare startup got the experts in the room they needed, the technology companies got exposure to a new, lucrative industry, and the healthcare providers got early access to new ways of thinking and technology that changed the way they thought about patient care.   

The resulting product, iN, is currently being implemented and deployed at a major academic medical center in New York City, and was just recognized by Fast Company as an “Innovation by Design” award winner.

But you don’t need to be a startup to use the Most Valuable Partnership model. The best example I’ve found of a large company using this approach is Johnson & Johnson’s JLABS program.

Melinda Richter, the global head of Johnson & Johnson Innovation, JLABS, recently told me that the goal of her program is to make it easy for the company’s innovation team to start exploring partnerships without worrying about competition, IP, or budget.

She said her team starts their partnership process by inviting startups, research labs, granting agencies, and even competitors to events around the world, where they discuss shared scientific challenges.

Using these events, the innovation team identifies potential partners, and invites the most promising ones to collaborate even further by inviting them to work at one of its 12 JLABS incubators.

These JLABS include shared laboratory equipment that only a company with the scale of Johnson & Johnson could afford. The process doesn’t end there.

In some cases, JLABS will give partners access to additional talent, data, and even funds to run quick experiments. And they do all of this without taking any economic stake in the partners they work with.

Investing in a partnership or collaboration without asking for equity or revenue-sharing may seem crazy, but that’s precisely why this model works so well.

Because JLABS doesn’t have to worry about the ROI of every decision they make, they can try lots of unconventional collaborations quickly and cheaply, giving them access to research and ideas they would ordinarily never be exposed to.

It turns out this approach pays off. The most extraordinary example Richter shared with me was a company called Arcturus, which was interested in rare diseases, an area of research that typically isn’t profitable for large pharmaceutical companies.

Richter met Arcturus’ founders at multiple JLABS events, where she grew to love the passion of the two founders. Because of JLABS’ unique no-strings attached approach, she had no problem giving Arcturus access to R&D experts to develop a plan, and laboratories to conduct initial research.

When they came back with promising data, Johnson & Johnson helped them raise venture money by validating their results. A few months later, Richter asked Arcturus to present their data to Johnson & Johnson’s R&D leadership.

At that presentation, one of Johnson & Johnson’s leaders realized that the same technology Arcturus was developing for rare diseases could be used for Hepatitis B, one of the world’s deadliest, most debilitating diseases, and ended up partnering with the small company on technology that even eventually did more than $2 billion worth of deals and is now a public company.

Not all JLABS partnerships are that successful, of course. But by creating a process where they can test out partnerships with minimal friction and risk, Richter’s team has developed a lean process that can turn networking events into billion-dollar innovations.

A new partner discovery playbook

The partnership-as-product approach isn’t limited to big companies partnering with startups. In fact, sometimes it works best when you need to make sweeping changes across a large, slow-moving industry.

To understand their approach, I called up Tina Wung, who was formerly a longtime corporate innovator and now consults for Fortune 1000 companies who are looking to innovate.

She told me that innovation challenges at large corporations look very different than than they look at most companies. When they want to explore a new idea, they don’t just need to explore it with end consumers; they need to work with manufacturers, marketers, distributors, retailers, even sports leagues.

To innovate in such a complex space, she said she often deployed a tactic from lean product development playbooks: I’m calling it “Partner Discovery.”

Wung often started the process by identifying partners who were interested in working in an innovative way and were willing to experiment on solving any one of the company’s core interest areas (i.e., improving sustainability in the supply chain).

Once her team identified potential partners, they started discussing ideas and challenges across the industry that they might be able to solve together.

As trust grew, they were able to be more transparent about what they were each developing internally, ultimately sharing ideas and product roadmaps that had previously been closely guarded secrets.

In taking this approach, Wung was able to decrease the risk for all of her partners’ innovation teams by effectively spreading it across multiple organizations. This allowed the entire industry to cut losses faster and increase the pace of innovation.

Whether you’re a startup trying to get a complex product off the ground, a multinational business looking to explore moonshots outside your core business, or a conglomerate trying to make an industry more innovative, you should consider taking a lean, product-development approach to building partnerships.

There’s no better way to navigate the complex world of innovation work that with the tried and true approach of “build, test and learn” to establish a fit between you and and a new partner.

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