In an increasingly disrupted world there is an onus on companies being able to innovate effectively. But the challenge for most corporates is that many costly endeavours may never come to fruition.
But in the digital age, an increasing number of organisations are turning to collaboration with partners outside their sector, to provide the resources needed for innovation that can deliver competitive advantage.
Take the recruitment giant Hays that spends £10m a year on innovation spending- a relatively modest figure compared to operating profit of £211.5m last year. That’s because Hays has been working with Google to develop analytics for interpreting how the global white collar recruitment market, that it is the world’s biggest player in, is evolving.
“It is about understanding every trend that is going on in the world,” says Paul Venables, finance director of Hays. “Our CIO is a regular visitor to Google’s headquarters at Mountain View,” he says.
Venables says Hays has also been collaborating with global networking site LinkedIn since 2012, whereby Hays consultants are contacted every time a candidate tweaks their LinkedIn profile.
“What you’ve got to do when you build such relationships is to get to know the partner you’re working to undertand what are they looking to get from it,” says Venables. “You need to ask: How can I help them make their product better, because if you know that, then you can say –what’s the commercial value I can get?”
He says: “With LinkedIn we said we want to work with you and help you improve your product, in return we want cross-system awareness. That means if somebody’s on LinkedIn, either they’re on our database or that individual is linked in with one of our consultants,” he adds.
“In building that relationship we receive information that will let us know a few days quicker than our competitor that this person is really serious about finding a job. It allows us to outperform the competition,” he says.
Venables says that of all the major recruiters, Hays has the most developed relationships with tech companies. “What’s interesting regarding Google is that they approached us and asked us to work with them in the US, where we have a relatively small business,” he adds.
In order to maintain relationships with tech giants, Hays runs a team in Silicon Valley constantly interacting with them. “It’s partly to make sure we’re driving forward that part of the business,” says Venables.
A new approach
For Easycar CEO Richard Laughton, collaboration is an approach he is using to deliver value for the group’s peer-to-peer rental scheme easyCar Club, which allows members to rent under-used private cars.
The enterprise, launched after trialling in London in 2013, operates a model in which the group takes a percentage of the owner’s charge, seeking to capture as much of the peer-to-peer market by offering the best price in the two to three day rental period.
The next stage of innovation is most likely to feature a form of collaboration with other parties, says Laughton who has begun discussions with car manufacturers about developing vehicles with the shared economy in mind.
“We ran a trial with Ford, and more recently we have seen Toyota, Audi and Mercedes among others being active in the market. This reveals their changing approach- where they’re talking not just about cars sold in a year but also about miles sold over a year,” explains Laughton
“We’ve also had conversations with dealers and distributors about opportunities to collaborate,” Laughton enthuses. “In fact we’re looking closely at every point of the value chain to see where we can find opportunities,” he says.
The business model that Laughton and his team are working to revolves around an appetite for co-operating and co-creating with other parties, he says. “Certainly there will be a blurring of lines in terms of how cash flow is collected and distributed,” says Laughton, revealing that any kind of complicated operating model is possible.
A potential value driver is the vast accumulation of data that Laughton says will be an increasingly important feature of the group- providing the kind of consumer intelligence that all kinds of players in the space would be attracted to.