It was not all that long ago that innovation was viewed as something that took place almost exclusively in academia, as well as in R&D labs in the private and public sectors. The scientific and technological knowledge resulting from such research, then made its way to new products and services in the private sector, and advanced weapons for the military. Such a lab-centric model of knowledge and innovation, relied primarily on the scientists and technologists working in the labs to come up with new ideas and products, which they then threw over the transom to those responsible for marketing, selling and customer support.
This ivory tower view of innovation made sense in the industrial economy of the last two hundred years, when our primary focus was on inventing, developing and manufacturing physical objects. But the model started to break down several years ago. A surprising finding in the IBM 2006 Global CEO Study was that when asked where they looked for fresh ideas and sources of innovations, CEOs cited clients, business partners and employees in general about two to three times more often than their own R&D labs, which were mentioned by just over 15%. This clearly would not have been the case only a decade ago.
I believe that this is another indicator of the massive shift that is taking place in the very nature of innovation, as we are transitioning from an industrial to a knowledge-based economy. A growing portion of a company's innovation is now taking place in the marketplace, where clients, business partners and a large fraction of the employees are found - not just in R&D labs as was the case in the past. How then do you now organize innovation in a company - when the real experts are those employees closest to the marketplace and the products and services that their clients buy and use?