The brokerage concept: a new perspective on strategy and innovation

Making radical innovation a business reality

A new era of technology that is led by AI and other advancements signals huge opportunities for radical and disruptive innovation. Existing markets are transforming and new markets are opening up. 

For business leaders, it can be difficult to know which path to take in an environment that is changing rapidly. Here, we introduce some concepts that are critical to developing commercially viable business models and making this innovation a business reality.

What is the innovation brokerage concept?

The brokerage concept defines the demand vs supply side factors required to achieve scalability and really make the market for new products and services. It challenges some of the ideation, design-thinking, and research and development norms that are typically attached to innovation thinking and activity. While the focus that this concept places on commercial scalability is not uncommon, particularly from an investment funding and startup venture perspective, what is different is the manner in which it prioritises developing an understanding of how to make innovation real. 

What is demand aggregation?

This concept focuses on understanding how to create enough demand to demonstrate commerciality and justify investment in creating the scalable supply of a new product or service. It can often be the best approach to maximise the volume of demand and thereby incentivize suppliers to deliver a new product or service.

Demand aggregation in practice: Infrastructure and Construction organisations working together

In a powerful example of innovation brokerage, infrastructure organisations, and construction companies are working together to aggregate demand for radically advanced machinery. This has meant the supply market, in other words equipment manufacturers, has been given no choice but to respond to this demand.

Radically advanced machinery in the construction sector refers to the usage of self-driving and independently operating vehicles and equipment (advancements that originated in the agriculture and mining industries). This innovation applies a number of industry 4.0 technologies, most specifically automation, interconnectivity and machine learning. The innovation is revolutionary for the UK’s infrastructure sector and is expected to totally transform productivity with significant emissions reduction and safety benefits. These technologies have the potential to deliver in excess of 20% in construction productivity efficiencies. The potential cost benefit this innovation offers is huge; the government’s Analysis of the National Infrastructure and Construction Pipeline 2023 identifies £700-£775bn of planned investment over the next 10 years.

The challenge has been in establishing how to scale this innovation. How to move beyond only being able to apply these technologies on one or two projects in a testing environment. As construction companies express their ambition and commit to contracts at the major multi £bn programme level, often within programme budgets that assume the realisation of productivity efficiencies, it becomes increasingly apparent that the real challenge to this innovation has arguably been on the supply side. Equipment manufacturers only have the capacity to provide advanced machinery and services for a handful of projects across the globe. Until recently, the market for this innovation has not existed.

The game changer has been industry collaboration that steps beyond the discreet innovation project or flagship programme level to scan the full projected investment pipeline and plans of all national infrastructure organisations. This has meant a totally new level of cross-functional, intra-business, intra-industry, and cross-sector collaboration. It has enabled the shared identification of £bns of planned investment in different categories of construction activity suitable for the application of connected and autonomous machinery.

While consideration must still be given to navigating things such as intellectual property challenges, approaching innovation from a brokerage perspective has the potential to be hugely effective because it is focused on developing commercially viable business models.

Demand of this scale justifies and underwrites the investment required by equipment manufacturers to develop the necessary capacity and commit to supplying the advanced machinery. This is innovation brokerage and it’s creating the market for innovation.

The perspective and capability required to facilitate innovation brokerage cuts across alliance and partnership management, R&D, Sales, Finance, Delivery, Commercial and the Executive decision makers. It requires a new and enhanced  level of innovation thinking and cross-business mobilisation in order to make things real in this new era of technology and radical change.

If you’re looking to navigate the landscape of innovation with confidence, please get in touch with our team of experts – we’d love to help.