Organizing Open Innovation – Ecosystems or Communities?
The concept of Open Innovation (OI) has gained tremendous traction in recent years, as companies realize the potential offered by capabilities, technology and resource outside the organization’s borders. The OI principles outlined in Henry Chesbrough’s eponymous book from 2003 fall into two main areas, “inside out” when your assets are used by others; and “outside in” when you use other people’s. Most OI uses the latter approach, and companies who employ it well need to consider many different things, one of which is how to structure and organize their OI efforts.
The organization of OI is best addressed from two perspectives, structural and human. Starting first with the options for how you draw your organogram on paper, there are three basic models. The first has a central group acting as a centre of excellence, spreading good practice throughout the rest of the corporation. The second is a devolved structure with OI people in each operating division. Finally, the hybrid model has both a central core team and OI people spread around the “coalfaces” of the company.
That’s fine, now we understand our structure. However the next key element of organization deals with how the OI groups operate. What is their strategy? What are their priorities? What are their values and approach? Should they get the best possible single deal or identify long-term partnerships with the potential to deliver serial innovation? The concept of partnership is now recognized as key to delivering value from OI, and the human factors it implies are fundamental. This even extends to training OI managers in the human factors, as Unilever do with their seven soft skills approach.
Many companies working in OI now operate with a number of interlinked partners and face the question of how to organize them. Should they continue to manage them bilaterally in a series of one-to-one relationships? Increasingly companies seem to be moving away from this approach, recognizing that new opportunities and synergies can be gained from linking diverse partners to create new value for the “hub” company. Jeff Bellairs of General Mills aptly describes the future of OI as moving from one-to-one to many-to-many.
Consequently there is a lot of discussion about OI ecosystems. These can involve physical infrastructure, like Philips’ Hi Tech campus in Eindhoven. These networks are built to contain many different partners, often with a bilateral relationship to the sponsor company at the centre. There are different connections, not all of them to the core. Reflecting back on the original definition of an ecosystem, of an environment in which many different organisms can thrive, this is fairly accurate and certainly not something I would criticize.
My challenge is this – describing these networks as ecosystems does not give enough prominence to the human factors that drive relationships that drive synergy that drive value that drives success. In addition ecosystems only provide the environment, they don’t provide the spark and the drive for collaboration and new value.
That’s why I think we should not only talk about, but also strive for, OI communities. A sense of community is the starting point. This doesn’t mean a purely philanthropic, “nicey-nicey” approach, or one where we all address each other as comrade. A community is a collection of people (or companies) with a common purpose, a sense of belonging and a distinct identity. It’s not exclusive; you can belong to a number of communities. Think about your town, your country, the sports team you support, your church, your sports club etc etc. You belong to all of them; you feel connected both emotionally and physically. The sense of community drives what you do and has a big impact on how you feel.
You can create an OI community around the needs of one large company, with suppliers, development partners, universities and other experts all joined together in that sense of common purpose. Hard-edged business objectives must still drive everybody’s agenda. The ultimate objective is still to create value for consumers, customers, employees and shareholders.
So is this all semantic, or even worse, pedantic? I don’t think so. If you start out your OI journey intending to create an ecosystem, I strongly believe your plans and actions will be different to those on the agenda if you intend to build a community in the longer term. You will not only identify the objective characteristics but also consider the human and relationship elements that help to deliver the tangible output in the longer term. Elements such as trust, governance and openness will take a higher priority in a community approach.
An ecosystem is an environment. A community is a deeper manifestation of your OI intent, and a better destination for you OI journey.
Kevin McFarthing runs the Innovation Fixer consultancy, helping companies to improve the output and efficiency of their innovation, and to implement Open Innovation. He spent 17 years with Reckitt Benckiser in innovation leadership positions, and also has experience in life sciences.
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