All around us, we are faced with new challenges. One of those is a profound shift taking place relating to innovation. Increasingly we are seeing a growing dissatisfaction on the impact that innovation is having; in growth, in returns, in market and customer impact.
One of the implications is this growing recognition that innovation is rarely succeeding in isolation but is growing on a more highly dependent type of complementary innovation. This will have a significant impact on organizations innovation management design and approach.
Innovation ecosystems are being established that fundamentally are challenging the way we are managing currently and in the future our innovation activities, setting about our innovating of “doing things” in very radically different and more connected ways.
These are threatening to dismantle the way innovation is being managed today, and due to this, we require a radical adjustment in our approaches to achieve a far more collaborative one built on innovation ecosystem thinking.
So what is this change occurring for us to consider the value of Innovation Ecosystems? Making the case.
Business is certainly changing. Regretfully many businesses are still caught in the change over from the past industrial era, we have not fully absorbed or translated the impact of the digital effect. The rising expectations from technology are ‘running way ahead’ of our ability to transform the organizations to be digitally ready. We are in need of finding and developing environments that are far more connected and open, simple yet intelligent to reduce complexity, yet fast and scalable as the frequency and collaboration needs are changing, all placing increased demands on the organization.
With the consistent onslaught of social media, the potential of cloud computing and the increasing reliance on the mobile or smartphone, the pressure is on organizations to adapt and respond accordingly. The consumer expectations are dramatically shifting to expecting these connected experiences we have written about, they are seeking higher levels of personal gratification.
Working in Ecosystems will change the nature of business activities
Ecosystems will have the potential to expand capabilities and enable experiences beyond anything possible today in the present ‘disconnected’ world, where technology is not playing a significant part. It is by the very nature of the interacting and interdependence in relationships that is driving this need of participating in an interconnected system, one that is looking to create and allocate new business value, acting together, that offers the potential for the outcomes to be greater than the sum of the individual parts and it will be technology driven.
Recognizing the significant changes underway let’s look at many parts of today’s environment that are coming together to make the conditions for a ‘perfect storm’ that we have to navigate through.
Multiple elements are combining to drive change.
- Business has a growing need for finding new competitive battle zones as they exhaust the traditional ones
- There are these higher risks of disruption happening today, across all industry sectors
- The scramble to scale and globalize is increasing the pressure for speed, adaptation, and new outlooks.
- Customers are more sophisticated and demanding, expectations and empowerment are on the rise.
- Customer experience is becoming more compelling, individualized and offering integrated experiences.
- Digital transformation, big data analysis and the ubiquity of information is changing the knowledge game
- Industry lines and conventions are blurring and merging through the need for technology and overhaul
- Power is shifting from single company offerings into platform offerings, built on collaboration needs
- The existing Business Model is increasingly under threat and shorter in its ‘shelf life’
- Collaborative Needs are increasingly the basis for achieving competitive advantage
- Reality is that every innovation and company is part of a broader, evolving ecosystem
- Our futures are far more intertwined and dependent on others
- Technology is leading us all in an unparalleled rate of change in most of what we do in our lives.
- The reinventing of the rules of competition have dramatically opened up (startups, venture capital etc)
- We all cannot navigate the future alone, we are becoming increasingly reliant and dependent.
- Technology offers business greater access to intelligence that is fast and scalable
- There is a shift in the economic equation to collaboration, transparency and customer engagement.
These shifts are altering the business environment and organizations have got to find solutions to address these, as these shifts are increasingly making the environment highly complex to navigate through. Ecosystem thinking holds a crucial key to managing this growing complexity, in radically connected ways.
Business Ecosystems are not new but they hold tremendous promise for innovation
Business Ecosystem thinking, although not new, is rapidly becoming the new organism to coalesce around to tackle growing complex challenges and a more demanding consumer. It has the mechanisms to encompass all necessary players to share and relate to the challenges and collectively work on solutions together, often in a growing world of complexity.
Ecosystems comprise of entities that operate out of an orchestrated, mutually shared interest, with the aim to produce something of greater value by collaborating together. This ecosystem approach is increasingly being built on platforms that offer the technical and organizational context. Ecosystems participants gather around complex challenges so they all share and relate to the opportunities and vision, and determine their part in the solution by contributing their individual value they derive from participating; to achieve the shared goal and deliver on the opportunity. It is in the changing nature of creation and the eventual delivery, that it offers a transforming effect.
Additional add from Gartner to define Ecosystems. “Ecosystems are an interdependent group of actors (i.e., people, things, enterprises) sharing standardized digital platforms to interact with one another to fulfill some commercial or civic purpose”
Platforms provide the community the place to interact for this shared purpose, as a larger network of connected organizations, where they build their knowledge and share. The place to exchange value, it is designed to facilitate, be accessible, scalable and efficient for its network of users to make the value exchanges build and form . They are organized around one focal point, firm or platform, that has producers, designers, solution providers and user-sided participants, all focused on new connected ways of value through innovation working on this common, shared platform. Platforms provide the mechanisms and conditions for interactions to occur to support the ecosystem to flourish.
The network effect is the diversity and vibrancy of what and who is drawn into the ecosystem and platform. Competitive advantage is achieved at this networked level. It is through the connections and interactions. It is over this network that value is created, distributed, discovered and consumed by building a strong ecosystem, constantly interacting and connecting around the ideas that are ‘captured’ on the platform and eventually turned into the final solution that delivers on the shared, sometimes evolving vision.
We also need to recognize ecosystems accelerate learning for innovation.
The combination of ecosystem thinking and the use of platforms offers the potential result of integration and connection across different fields of expertise and knowledge domains. It allows for a greater use of a diverse pool of sharper minds, available only in this broader network, offering independent as well as collective wisdom and thinking.
Ecosystems increasingly give access to smarter resources that more than one organization can bring to bear to offer different innovation value.This allows for greater value capture, to then lead to new value creation.
Ecosystems have distinct challenges and implications that need thinking through
How do you set about the necessary evaluation of pro-actively thinking through the implications for building the capabilities and capacities to determine the role innovation ecosystems will play within your present and future business?
The ability to collaborate can allow each party to act differently on their strategies and business models as they can extend these way beyond the ‘realm of one’. Leadership, vision, core capabilities, value creation and the capturing systems can scale way beyond the existing organizational model. Ecosystems through collaboration can liberate, accelerate and realize business options that can have a radical effect on the organization. They can radically shift the core.
Technology, coupled with a far more open, collaborative set of innovation partnerships, can increase innovation value through applying ecosystem and platform thinking. It can help provide increased opportunities to understand, then build on sustaining and nourishing the customer engagement in a constantly connected, permanently on, world.
The solutions will often be complex to build so you will increasingly need these powerful combinations found in ecosystems where collaborators will be ‘seeing’ increased value in what can be offered by combing resources, to sustain and grow their businesses.
We believe the era of the innovation ecosystem is upon us.
In the next few posts, we are planning to explore ecosystems and platforms more specifically.
*since the original post two days ago I have added a “network effect” definition.