Fraser Kelton, an entrepreneur, and writer of Disruptive Thoughts, has written the following post exclusively for SHARKRIDE.

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Innovation is changing. The process itself is taking direction from its definition and is adapting to our changing world.

Traditionally, we’ve had manufacturer-centric innovation processes: companies innovated and launched new products, improved products, or created entirely new market segments. Occasionally a visionary individual, independent of an organization, would introduce a new innovation. However, these individual innovations still followed the manufacturer-centric innovation process – a company was formed around the innovation and grew with its success (an example is Henry Ford and the Ford Motor Company).

A number of innovative forces guide this form of innovation – internal industry experts, focus groups, market researchers, etc. There has been valuable discussion over the past few years about the challenges and limited return from this form of innovation.

Lots of smart people have discussed this issue and I’m not going to get into the benefits of the “Democratizing of Innovation” except to say that they’re real. And that the democratizing of innovation isn’t the change that is occurring. It’s simply an enabler of a greater change that is underway.

There’s another piece of the innovation of innovation puzzle that needs to be understood before we continue – the appearance, and rise, of specialization companies.

Innovation is not only being democratized, it’s also being segmented into specializations. These two enablers are introducing significant change to the innovation process.

So where’s innovation going? Here’s a quick summary of a number of changes that we’re going to observe during the coming years (I’ll expand and explore them further in the coming weeks/months at Disruptive Thoughts):

Innovation off of the balance sheet

P&G has made it a goal for 50 % of their innovation to come from outside sources. As they’ve worked towards this goal they’ve had fantastic results. The positive results will continue, other companies will follow the lead, and, the results will only get juicer thanks to…

The maturation of the matching process

A number of services have been developed that harness new technology to enable innovators to connect with interested organizations – literally creating a market for innovation. These markets, like any young and immature market, are inefficient (economist speak for far from perfect) but will improve over time. These markets are paving the way for…

The rise of specialized innovation companies

Increases in technology paired with falling prices, the creation of innovation markets, easy access to capital, etc. have made specialized innovation companies possible. Small groups (1 +) of experts of a specific technology can now focus on continually innovating within their area of expertise without worrying about the manufacturer-centric processes traditionally required to help monetize the innovation. Because of their size, expertise, etc. along with their distance from the commercialized product these companies will have a competitive advantage with respect to developing disruptive innovations and all other innovation that creates a new technological curve, rather than simply an upward improvement. However, because of their arms-length distance from end-users and the commercialized product these companies will have a disadvantage with respect to sustainable innovation. Sustainable innovation will be handled by…

The new role of an organization’s innovation process

Organizations who take substantial amounts of innovation off of their balance sheet will continue to have a role for internal innovation. It’s up to the organizations to develop the ability to rapidly integrate an external innovation into their system. Not only that, they’ll have to become hyper-efficient at producing sustainable innovations, internally, for their products. This will come from harnessing the power of democratized innovation and monitoring, and listening, to all of the new streams of information.

Other business processes have significantly changed and developed during the past decade(s) and the process of innovation has begun to, well, innovate. The change will bring substantial benefit to many. The real winners will be the large organizations and the small innovators who anticipate the change and adapt their processes quickly to harness the new innovation model. The losers, as always, will be those who are too blind with pride to adapt and open.