Hardly no one will regret 2020, it seems. Yet, 2021 ahead is hard to predict. There are hopeful signs that pave the way for a better, stronger future, but as we have now the experience, our world can go upside down almost overnight.
In this paper, we propose to explore why and how a company needs to embrace an ecosystem approach in its innovation strategy. In Part I, we’ll see why it makes sense to think in terms of ecosystems in front of the challenges ahead. In Part II, we’ll walk through how to organize one or multiple ecosystems and set up the proper environment to manage and grow them.
1: Uncertainty May Open New Horizons
Uncertainty is the name of the game today. No one likes uncertainty, and definitely not in the business world.
Still, from uncertainty sometimes emerge the greatest thoughts. Think of René Descartes, a 17th-century French philosopher. After wiping out all the beliefs he had been taught or acquired, he decided that nothing was certain anymore. Doubt would prevail. Descartes embarked on a journey to find an undoubtful truth, from which he could rebuild true, clear and distinct knowledge from the ground up, in a systematic, orderly way. He was looking for this undoubtful truth (which he found into the famous “cogito, ergo sum” (I think; therefore, I am)) as Archimedes was asking for a fulcrum to move the world with a lever.
If there is one thing we could draw as (almost) certain from the uncertainty we are in, it is that collaborating, and cooperating, can help achieve beyond what anyone could think of.
In less than a year, the scientific world found, gathered, evaluated, published and shared more data on the deadly Covid-19 pandemic than ever before. Corporates, start-ups, research laboratories, universities have launched an unprecedented effort to understand in depth the SARS-CoV2 virus and find how to successfully eradicate it.
It, of course, did not come out of the blue. The convergence of a flood of money, advanced research for many years, innovation, intelligence & skills, industrial capacity, lots of trials and errors have materialized in the release of not just one, but multiple, promising vaccines being rolled out. The health regulatory authorities have also fast-tracked the process to go to market, not by overlooking some of the qualification steps but by innovating how they would vet on the go the data at their disposal.
This incredible achievement is still too early in its development to tell how the future will unfold. Yet, we can certainly draw some interesting insights we would like to apply to the corporate world.
2: Ecosystems Are a Solution
When the will of multiple stakeholders converges and aims at one objective, it creates such a momentum that results show up fast. We have literally seen the fast emergence of a global ecosystem combining skills and competencies and organized around one common goal every stakeholder has aligned on.
If we take a step back and transpose this achievement to the corporate world, we can infer a number of traits that characterize how innovation is at play today. We can then explore what to do to put this in motion at a company level.
The notion of an ecosystem has gained quite a lot of traction in the last years. The fact is that many organizations today contemplate ecosystems as a way to innovate faster and more efficiently. It is the opportunity to think how to (re-)organize a company’s innovation strategy going forward.
In the last four months since we incorporated our new venture, Hypsous, we had the chance to discuss with lots of companies in different sectors. Many of our exchanges confirmed the need for changing how to run innovation, notably, along the lines just described above. And indeed, ecosystems at large seem to resonate well as a new driver for structuring a more effective innovation strategy.
Why? For many of the reasons the global ecosystem informally set up to work on the vaccine did achieve results: speed, bundling of complementary skills, trials and errors, adaptiveness & agility, working in uncharted territories, breaking from traditional, slow and linear processes.
An ecosystem is a living organism with a purpose. It is built through a managed process. It is composed of intertwined participants, each bringing something to the whole. It grows, adapts, transforms and dies. An innovation or business ecosystem is a dynamic, fit for purpose entity, combining skills, competencies, technologies and complementary knowledge brought by new partners that want to work together.
3: Urgent Call to Action
As most companies and industries are facing an unprecedented convergence of risks and challenges, they feel a growing sense of urgency to act and radically transform their business. Innovation is still, and perhaps more than ever, a key driver in that perspective.
Companies have several tracks to explore and experiment to leverage innovation as a growth driver. We have identified at least three, among others, where the set-up of ecosystems can help speed results, which could not necessarily be achieved by keeping with the same old way of innovating. Companies may indeed seek to:
- Complement and add value to their current offers
- Leverage their core technologies, skills and competencies to enter and develop new territories
- Change completely the value proposition and the markets they traditionally operate in
The first two tracks are within reach for immediate actions, while the third one can actually reflect a dramatic shift in the business model, if not in the company’s core business.
In the context of at least the first two tracks, companies will be required to explore unfamiliar, uncharted, even unknown spaces. Indeed, off-the-shelf, ready-to-market solutions are less likely to be found because of the increasing complexity of new technologies required for a fit for purpose solution. It is rather likely that parts of a solution will come from various domains from across industries and technologies. Hence the call for building & managing as many ecosystems as domains a company wants to explore. Moreover, it is likely that multiple ecosystems will make sense for only one domain, similar to investing in a few new ventures to maximize the return on at least one eventually succeeding.
In that perspective, an effective innovation strategy will call for managing multiple ecosystems, some intersecting, other independent, around the company’s core.
We are not talking about the existing, traditional networks each company entertains, such as the same group of universities, same suppliers, some start-ups and the like. One cannot expect anything really new from the same old. There is a gregarious effect in that many companies tend to partner with the same academic institutions or join the same global technology hubs. Despite the undisputed relevance and strengths of both, it does not mean they are necessarily the right fit for every company.
The organization of the innovation strategy will resemble an Archipelago of Fit for Purpose Ecosystems.
4: Organizing Ecosystems
Structuring an ecosystem-based innovation strategy requires to abandon, or at a minimum revisit, some of the habits fashioned by the corporate culture, embrace a dynamic way of doing things and take a leap into uncharted territories.
Because of the urgency, there is no time to lose to the “Big Corporate Time.” Forming an ecosystem requires swift actions and speed to build enough momentum and sustain a dynamic approach.
There are multiple ways to organize fit for purpose ecosystems depending on what is required. But there are a set of common traits that are foundational. Let’s explore some of them we believe are necessary.
4.1: Unfamiliar Spaces
Whether to explore unfamiliar spaces, launch in parallel multiple initiatives on the same domain, complement and expand your competencies with new ones, open new opportunities while capitalizing on your core expertise, develop a network of new talents or solve technology issues, building a fit for purpose ecosystem require to identify fast who will fit in, what they bring to the table, if they are willing to work towards a common goal.
Multiple iterations are expected to refine, focus and zoom in on specific areas or on the contrary, to zoom out and take a step back. Such iterative movements can today be achieved by mining thorough databases and relying on AI and Machine Learning algorithms to break new ground on cross-linking information and uncover connections. The latter allows for mitigating the “Streetlight Effect,” stating that one rather searches where there is light, that is, in known or familiar spaces.
Speed is important to ensure that a baseline is rapidly established to acquire an exhaustive view. No need to spend months building a full landscape. We indeed keep hearing that searching today is no longer a problem. It is a reason for going fast during that phase.
Speed ensures that a momentum is built up and maintained. Too often have we seen in open innovation projects a clear excitement at the beginning but fading away after several weeks or a few months while working on a long search. Inevitably, the stakeholders lose interest or are caught up by their daily operational routine. By involving them early on and keeping them afresh through a range of carefully planned iterations, the momentum can be entertained.
With technology today, the wealth of data from different perspectives can be efficiently mined in an iterative way. The goal is not to come up with endless lists of findings, rather, to make sure that various angles are covered. It may well be the case that we need to acquire sufficient knowledge only, rather than spend days on collecting and analyzing exhaustive knowledge.
However, technology alone might not be enough, when it comes to forming an ecosystem. We believe that it is important to combine the search phase with a thorough curation process of the identified parties and technologies to verify how fit they are for the ecosystem. Technologies can be vetted by external expertise combined with the internal one. But it is not just about technology relevance or expertise, it is also about the willingness of the parties to work in an ecosystem, how they align with the objective and the sponsor’s constraints and if they understand the risks and benefits of doing so.
Since it may be difficult to find the perfect fit, it can make sense to consider establishing several ecosystems on the same topic, as said before. Trials and errors in parallel will help eventually select the right path. If one puts all eggs in one basket, the outcome may after a few years come to a dead end, without any fallback plan to rely on.
To avoid the dead-end situation, and if multiple ecosystems are not feasible, agility is even more required. We have mentioned above that an ecosystem is a living organism. Hence, it can adapt, grow, shrink or disappear. In that regard agility can be ensured by constantly evaluating the options to either complement or replace a partner or a technology when it is no longer enough fit for the objective.
5: Setting Up & Managing Ecosystems
After selecting the partners, it is important to put together a framework in which all parties are aligned, agree on the rules of engagement and feel secure. This is probably the critical phase as the previous efforts have to materialize into a concrete action plan capable of delivering results. Too often again have we seen at work the misalignment and misunderstanding between the sponsor and the new partners, which has oftentimes led to frustration, lack of momentum, eventually failure. Each party has to balance its own interest with that of the ecosystem, hence that of each of the other parties. One party cannot impose on the others their agenda upfront. However, the sponsor has to guide and set the objective. A clear program plan and shared budgets need to be put and agreed upon together. A reasonable timeframe to achieve a pragmatic objective (e.g. a Proof of Concept, an MVP, a Prototype) need to be set to evaluate the relevance of the ecosystem or to take corrective actions early enough.
At this stage there is still room for postponing the ever-ending discussion around ownership and IP. It is probably a better move to leave it open for a while until the first objective is reached. At least the ecosystem framework should already define a dedicated time and task to discuss the matter, but once progress has been made. By doing so, it can help each party test the waters with the others, evaluate how fit the ecosystem is and adapt it if need be. This is why a trustworthy environment is a foundation for an ecosystem.
Some companies are already well equipped to manage ecosystems. Yet, it will require new skills beyond the ones fit for managing an internal team, among which, strong relationship management backed by some common diplomatic sense, a deep understanding and protection of the various stakeholders’ needs, incentives and interests, the transparency of the process and intent at all times and the envy to orchestrate the ecosystems in such a way to foster the right momentum.
To start with, it can make sense to manage them externally in order to mitigate the inherent frictions brought in by new partners inside. It can be a way to mitigate the internal resistance that inevitably a new way of working introduces. A third party acting as project manager on behalf of the sponsor is also more prone to interact with the various stakeholders in the ecosystems. Indeed, a typical line manager inside a company is trained to manage a team under her own authority. An ecosystem cannot be bound to the authority of one partner. Persuasion and careful appreciation of how the interest of each party is maintained and fostered seem rather the way to go.
6: Going Forward
This notion of ecosystems is today more and more embraced by companies, although at a different pace, depth and in various forms. Academic papers and consulting studies are starting to put some theoretical background to the idea and reflect on some achievements, most claiming that it is a way to go.
We realize that the path is still long to fully organize a company’s innovation strategy as an Archipelago of dynamic, fit for purpose ecosystems.
But through a methodological, step-by-step approach, it is within the reach of each company, whatever its size, in that, ecosystems can be easily tailored to fit that company’s culture and organization. In that regard, being agile and adaptive to the changes helps build and keep the right momentum by involving, not only the new partners, but also the internal teams that will benefit from it.
Ecosystems can achieve more with less. Innovation and business ecosystems if carefully organized can lead to tangible results faster, more efficiently and in a scalable way.
We will be happy to further discuss your plans for organizing your future innovation strategy as an Archipelago of dynamic, fit for purpose ecosystems.
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