Innovations that deliver successful answers to the foremost digital challenges of the 21st century cannot be implemented by individual actors. More and more actors within the economy work together in so-called innovation ecosystems: together they develop sustainable solutions that are only attainable by an interplay of different perspectives, competences and resources. This poses the following question: how can companies take part in digital innovation in the 21st century? To put simply: by ceasing to be lone fighters and instead using their corporate ecosystem to their advantage. True to the motto: “learn, collaborate, grow, survive”.
What are Innovation Ecosystems?
The picture of an innovation ecosystem resembles the reference to a biological ecosystem. A system which is a comprehensive, adaptable, resistant wave of organisms and their interactions. In such, the organisms engage in various forms of relationships: from symbiosis over collaboration to competition. Actors are no longer defined to their own territory and their delimitation to competitors, but rather to their role in value creation.
Two ideas stand at the core of the concept. Firstly, the ecosystem is based upon the principle of permeability. This means that ideas and solutions can freely flow between companies and involved actors, horizontally as well as vertically. Hence, innovation ecosystems are more than the mere interaction of actors within a network, but rather a hub of symbiotic relationships between them and their unilateral as well as multilateral innovation efforts. It is a value-creating system in which innovation is delivered via the flow of information and resources for innovative ideas. Just like in a biological ecosystem, the scope of an innovation ecosystem can vary according to the interplay of its actors and their resources. Such interplay on the other hand, is shaped by the goal, size and impact of the innovation at hand.
Secondly, all actors within the ecosystem bring valuable ideas and knowledge detached from their roles and organisations to the table. Their degree and phase of involvement hereby varies.
Generally, the actors of an innovation ecosystem can be depicted as follows:
While the five groups of actors are actively involved in an innovation ecosystem, the realm can be described as the outside surrounding of the ecosystem. The realm is hereby not actively involved in innovation efforts, but rather shapes the conditions of the ecosystem, thereby influencing its participating actors doings and relationships as a dynamic environment.
Rethinking Innovation: Collaboration as the new competitive advantage
Compared to innovation efforts in the 80’s, innovation in the 21st century is no longer solely confined to incremental product adjustments stemming from laboratories or R&D centers. Before digitalisation and rapid changes in market dynamics, a competitive advantage for companies was obtained from the inside-out: innovation efforts were based upon strong confidential knowledge within the company. However, fast developments in customer and market demands and increased access to new technologies do no longer allow for a static, unilateral approach to innovation. Instead, disruptive innovations flourish in ecosystems, in which the focus is set on collaboration – far away from “me-first” elbow thinking.
This does not imply that the concept of competitive advantage is obsolete – on the contrary: in a time where institutions and companies can no longer shoulder innovation efforts entirely by themselves, it is more important than ever. Simply the paradigm has shifted: instead of an inwardly focused competitive advantage that is created from the company within, it is now attained and shared via collaboration in a dynamic, fluid innovation ecosystem. Collaboration in innovation ecosystems becomes the new competitive advantage itself.
Thereof, rethinking innovation as part of the innovation ecosystem implies the following collaborative mind-set:
- Work together, learn together: learning from successes and mistakes together generates better, mutually-beneficial results than competing with one another to be #1
- Diversity is crucial for success: diversity on all levels – individual knowledge, organisational actors, industry – allows to break-free from silo-thinking
- An ecosystem is as sustainable as its relationships: shared vision, values and ambition constitutes the foundation of any innovation effort
What an innovation ecosystem can bring to the table: The example of Maschinenraum
Innovation ecosystems can vary in size, complexity as well as scope of their ecosystem. One example worth mentioning is Maschinenraum – a virtual as well as physical space to build an open peer-to-peer environment for long-term innovative collaborations. In a nutshell: a shared innovation ecosystem upheld by peers. The differentiation to other ecosystems: Maschinenraum sets a focus on the German Mittelstand as well as family-owned businesses to tackle the challenges of digitalisation across industries. Actors can support each other in their projects, develop new ideas through shared resources and validate them right at hand. Especially across innovation management, internal communication and human resourcing, Maschinenraum stimulates frequent collaboration.
How to build a shared innovation ecosystem strategy
For engaging in a shared ecosystem, actors run through several sequential steps. Starting from an internal organisation-based perspective, actors’ thinking shifts outward as they go through the process of committing to an innovation ecoystem.
1. Determining an open innovation strategy
Every company – or thereof actor – taking part in an innovation ecosystem should formulate an individual open innovation strategy. Based upon this, a company can determine their expectations towards other actors, the outcome or goal of the innovation efforts and the resources that are put into place.
2. Creating a co-creating innovation environment
A dedicated space outside of organisational boundaries also provides the room necessary for ideas to flourish freely. A neutral space in which all actors are new also bring the benefit of reducing organisational hierarchies. Further, it must be decided upon the proximity to customers in case they are seen as a substantial element of the innovation ecosystem.
3. Developing and deciding upon tools and methods to collaborate upfront
As the pool of actors includes several actors from different stages of a value chain, it is important to decide upon tools and methods to share resources. These can include brainstorming workshops and mentoring programs upfront as well as the simple question as to which software tools to use for communication.
4. Focusing on solution-based thinking
By coming together to innovate, expectations about the outcome can collide. Focusing on the innovation itself and the solution it provides, is therefore crucial – also while aligning on KPIs to track progress.
5. Encouraging diversity of ideas and thoughts
An innovation culture in which diversity of thoughts and ideas across titles, roles and hierarchies is encouraged increases the free flow of information and knowledge across organisational boundaries.
Especially for established companies, foremost the German Mittelstand, it is clear that innovations can no longer be generated individually, as startups and international competitors increase the pace of innovation cycles. Therefore, it is crucial to engage in other forms of innovation efforts such as innovation ecosystems to maintain their strategic market positions. Companies, managers and other actors involved in ecosystems must no longer think in concepts of traditional organisational-bound competitive advantages but rather collaborative advantages to form long-lasting relationships within such systems. After all, an innovation ecosystem resembles any other form of ecosystem in which actors build mutually beneficial synergies as well as competitive relations for a heightened form of existence.