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Like innovation before it, co-innovation is quickly becoming both corporate buzzword and gospel. By partnering with tech companies to harness the power of emerging technologies like artificial intelligence and big data, co-innovation has been heralded as essential to future success – especially for businesses that exist outside of the digital realm. 

But before companies rush to embrace this growing trend in corporate America, they would be well served to keep a few key principles in mind when it comes to co-innovation, lest they fall prey to shiny, new capabilities that look great on paper but can’t be implemented or scaled in reality.

As the chief strategy and transformation officer at PepsiCo, I oversee our digitalization strategy so I recognize the power of new technologies – we’re already using machine learning and data analytics to improve existing systems, processes and products. But I also recognize the limits of “one size fits all” solutions and the need to co-innovate with external partners. However, co-innovation has its limits, too, and its success depends on creating a specific set of conditions. 

So when it comes to co-innovation, I always keep in mind five core principles to help ensure the process results in breakthrough solutions that can actually be deployed: 

Innovation isn’t just about technology

Technological innovation must be coupled with process innovation. Co-innovation typically doesn’t work when you try to solve a problem using only technology and without also assessing how processes need to change. It’s easy to become enamored with flashy new digital capabilities, but these new capabilities are doomed to fail if legacy behaviors or systems can’t support them. 

Never underestimate the importance of change management

Groundbreaking solutions will shake up the status quo and operationalizing them will likely affect multiple departments or systems, which means co-innovation projects require sponsorship from the highest levels of management. Similarly, the co-innovation process itself must be overseen by cross-functional teams that cut across silos because of the far-reaching impacts of these solutions. Having broad buy-in and input during the developmental phase will ultimately result in a better solution and aid in its adoption across the organization. 

Co-innovation is not for experimentation

It is not innovation for the sake of innovation and it is not for producing a proof of concept. Co-innovation is best suited to solving specific problems with clear business objectives. Begin with a north star of where you want to go and then work backwards.

That is not to say there is no room for creative exploration or imaginative thinking. Co-innovation is aimed at solving the most complex problems, so creativity is a requirement. But there must be a strong business problem to focus the chaotic energy of blue-sky thinking. 

Create space for conflict

Co-innovation is not outsourcing, so the structure of your partnership is critical. At the core of a successful partnership is what I call the “two in a box” approach, where every expert or resource from our partner is paired with a corresponding expert from our team. Doing so allows them to learn from one another, but — more importantly — challenge one another. Your partner may have technical expertise, but your team has business and operational expertise and the realities on the ground are very different from theory or software.

So at every step of the way, you must question the reasoning and the quality of solutions. The results should be far superior to what you could have achieved as individual teams, and this joint outcome is what distinguishes co-innovation from innovation. 

You are only as good as the strength of your partnership

Beyond carefully selecting a partner and making sure they are a good fit in their mission, values, and expertise, both sides must also be willing to put skin in the game. In other words, both sides should dedicate resources pro bono so everyone has an incentive to make it a success. Viable solutions will mean growth for your company and profits or further funding for your partner. So having the right incentive structure will bolster trust and transparency, which are prerequisites for a successful partnership. 

These are not strict rules, but rather a framework for how to approach co-innovation, and when done right, it can be a tremendous growth lever that yields exponential gains by addressing the thorniest problems your business faces.  A sense of humility is also what ensures co-innovation’s success – the recognition of your limits and the acceptance of a true partner to help overcome your greatest challenges. 

Athina Kanioura is executive vice president, chief strategy and transformation officer at PepsiCo.


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