Vertical innovation is an innovation on the quality of the goods, it consist to improve the quality of items by innovation permitting to those items to access to the highest quality available on the economy. In the literature of growth it is oppose to "horizontal innovation" which in turn refer to product innovation mean the introduction of new items in the economy. 'vertical integration' and 'open innovation'. The term vertical integration describes a style of business management control, and is typified by one firm engaged in different multiple parts of a production process. Open innovation is a term promoted by Henry Chesbrough, a professor and executive director at the Center for Open Innovation at the University of California, Berkeley. "Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology."
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The company Nottingham Spirk coined the phrase 'vertical innovation' in 2011, to describe the proprietary process developed over the forty years at the firm. The process is a development strategy to take new product and service concepts and turn them into tangible items within a compressed timeframe. Nottingham Spirk serves clients as an open innovation partner and uses a vertically integrated model to execute on development; hence a 'vertical innovation' strategy.
Vertical innovation is both a process to encourage efficient problem solving and a corporate culture, where all development activities are handled by a cohesive and experienced team of experts. This group leverages the skills and talents of many individuals to move product development quickly forward. This process focuses on continuous improvement through each phase of a development program.
Vertical innovation approach
Vertical innovation ideally takes place at one location, providing many points of collaboration, continuity in communication and helps ensure confidentiality. Co-located skill groups have individuals participating in each of the typical development stages: Market Analysis, Customer Insights, Ideation and Design, Engineering and Prototyping, Packaging and Retail Experience, Sourcing and Production Support. This allows for continual improvement and optimization at many points along the development process, while providing shortened development timelines. The vertical innovation approach also encourages random connections between different skill sets to provide the best chances for new and innovative advancements.
A real-life example of a physical space that encourages creative collaboration is the building that houses Pixar, the computer animation studio that created innovative, Academy-award-winning blockbuster films like Toy Story, Monsters and Finding Nemo. As Walter Isaacson writes in his biography of Steve Jobs, Jobs designed the Pixar building to promote chance encounters and unplanned collaborations. "If a building doesn't encourage that, you'll lose a lot of innovation and magic that's sparked by serendipity," Jobs said. "So we designed the building to make people get out of their offices and mingle in the central atrium with people they might not otherwise see." The front doors and main stairs and corridors all lead to a central atrium, where a cafe and employee mailboxes are located as well. John Lasseter, Chief Creative Officer at Pixar, confirmed the success of the building’s layout: 'Steve's theory worked from day one. I kept running into people I hadn't seen for months. I've never seen a building that promoted collaboration and creativity as well as this one.'
Common innovation approach
Corporations commonly rely on different companies, groups or separate individuals for different skill sets. They use separate internal groups or external organizations to provide the skills necessary for innovation development. For example:
This chain of hand-offs typically lengthens development timelines, hinders innovative ideas and dilutes responsibilities needed for project success.
Open innovation approach
The central idea behind open innovation is that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead buy or license skills, processes or inventions (i.e. patents) from other individuals or companies.
This format makes use of many different inputs of skills and data into a development program. Because these connections can occur from the inside or outside of a company, there is still a high need for analysis, coordination, testing and maintaining of confidentiality.