Goliath's Revenge

Chapter 7 Rule 4: Accelerate through Innovation Networks

It’s rare that originality comes from insiders.

—Neil Blumenthal, Warby Parker cofounder

As you’ve worked through the first three rules of Goliath’s Revenge, you have almost certainly committed your company to deliver more innovations on a faster timeline than your current capabilities make possible. The wrong answer to this mismatch is dialing back on your goals. You are in a race with other established companies, as well as with your industry’s digital disruptors, to bring step-change customer outcomes to market.

Instead, learn from best-practice innovators such as NASA, Procter & Gamble, UnitedHealthcare, GlaxoSmithKline, and Under Armour. Put open innovation on equal footing with your internal efforts to achieve more in less time with lower risk. The payoff from orchestrating a network of innovation instead of building it all yourself can be profound.

In research by Wharton’s Jerry Wind and IBM’s Shanker Ramamurthy, network orchestrators that tap into the value of external partners enjoy market valuations of eight times revenue, versus five times revenue for technology creators and three times revenue for service providers. For perspective, the S&P 500 has historically valued large companies in the United States at a multiple of one and a half times revenue.

In spite of the attraction of open innovation networks, less than a third of large companies and less than half of smaller companies in our survey have fully ...