[Why open innovation with suppliers is important to Dell]
In the high-tech industry, open innovation is the commonly used method to drive product/process innovation by leveraging fresh perspectives from external stakeholders such as customers, user, and suppliers. Many technology giants such as Apple, Google, Baidu, and Microsoft proactively leverage open innovation to solve critical issues they face – they mostly seek innovation seeds from customers and users . However, there have been less focus on who else can play a critical role in open innovation process in high tech and the role of suppliers has been often less highlighted than that of customers .
In today’s economy, competitive landscapes have evolved from competitions between individual companies to competitions between eco-systems of a group of companies – i.e., companies in one supply chain eco-system collectively compete with companies in another supply chain eco-system. Given that suppliers are usually involved in supply chains of multiple companies in the same industry, it’s significantly to have closer relationships with suppliers and have them play critical roles in open innovation in our company. In this regard, it’s the high time to rethink the role of suppliers in open innovation.
This situation is extremely relevant to Dell, the giant IT solution provider, since it has difficulty identifying innovative ideas from existing open innovation sources such as users. Dell has operated Dell IdeaStorm, an online platform, since February 16, 2007, to allow Dell to gauge which ideas are most important and most relevant to the public . The innovation ideas are mostly centered around product innovation and marketing and/or service improvement, and few fresh ideas have been generated from users as time passes by. Dell is highly required to explore all key players and sources in open innovation process in order to continuously drive product and process innovation at the company – the key players/sources in open innovation are listed in Exhibit 1 .
[What Dell currently do to have suppliers in open innovation]
In order to get suppliers fully engaged in open innovation process, what Dell does differently are following three actions: (1) key supplier selection, (2) Innovation tour and (3) supplier innovation workshops. First, Dell evaluates technology capabilities of its suppliers and select top suppliers who Dell wants to collaborate with for product and process innovation. This evaluation and segmentation is done by the cross-functional teams that can evaluate suppliers’ attractiveness holistically from engineering capabilities to marketability.
Once target suppliers are selected, Dell conducts so-called innovation workshops with its select suppliers. Dell invites suppliers to workshops and give them chances to share pain points they experience and/or provide opportunities they see and brainstorm ideas together to solve the situations they mention or capture opportunities they describe. The areas of problem solving and innovation do not limit to new product development – they actually cover all possible interactions that Dell and suppliers can have through business operations. The ideas generated from workshops mostly handle short-term situations and opportunities .
For medium-term innovation, Dell make annual innovation tour to those select suppliers in order to understand what future technology they possess and what opportunities those technology ownership would generate for suppliers and Dell. A cross-functional team with deep engineering expertise and market understanding visit suppliers and try to find technology disruption in 2-3 years down the road. Given that suppliers need to share confidential information on their future technology, this activity actually takes quite a long time for both suppliers and Dell to agree to implement .
[What Dell can do differently]
In the short term, one thing Dell can do differently is to build true partnership with its select suppliers not only at working team level but also at CEO level. Dell can encourage CXOs to share company vision and product and service innovation strategy, thereby sparkling conversations on join research and development efforts.
Also, Dell should consider how they can become choice of customers to their suppliers over time. In order to receive innovation ideas, prior to competitors, from suppliers, Dell should become suppliers’ most favorite customer. Toward this end, Dell should build mutually beneficial relationships with its select suppliers over long term so that they can ensure having first hand access to innovations from suppliers. With these efforts, they can fully have its select suppliers in open innovation.
Open question: how can we continuously incentivize suppliers to share innovation ideas with us ahead of our competitors?
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 Kris Ferreira, Marco Iansiti, Karim Lakhani, Allison H. Mnookin, Willy C. Shih, and Michael W. Toffel, TOM Challenge: 2018, Harvard Business Review, October 22, 2018
 Xavier Nouguès, Damien Calderini, and Stephan Picard, OPEN INNOVATION: HOW CAN PROCUREMENT CONTRIBUTE EFFECTIVELY?, Oliver Wyman, 2017
 Dell IdeaStorm, http://www.ideastorm.com/idea2AboutIdeaStorm?v=1351322692099