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Open Innovation ecosystems: Why they matter and how to manage them

Last week I had an interesting one-day workshop with Open Innovation managers from 15 leading companies, among them innovation leaders such as Lufthansa, SAP, Beiersdorf, Bosch and Wacker Chemicals .

The topic that brought us together was “(Open) Innovation ecosystems”.

Our discussion started with the observations that

  • a good deal of breakthrough / leap-frog innovations are in essence ecosystem innovations
  • leading companies, in particular in the ICT industry (e.g. SAP, Apple, Facebook and  Google) are competing at a platform (ecosystem) level.

We found some interesting ways to look at innovation ecosystems and generated some nice methodologies to clarify ecosystem structures, to set goals and strategies in ecosystem management and to establish appropriate management processes.

[slideshare id=5346515&doc=innovationecosystems-101003093557-phpapp01]

The concept of an innovation ecosystem builds on the focus that a well-managed inter-organizational flow of technology and information among people, enterprises and institutions is key to many innovations. This flow contains the interaction between the actors who are needed in order to turn an idea into a process, product or service innovation on the market.

A large number of recent leap-frog innovations such as the “Airbus A380 into service” or the Apple iPad are in essence ecosystem innovations since a multitude of partners – frequently from different industries – are needed to deliver the innovation.

Ecosystems can be visualized graphically. They may appear in a cloud-like structure such as the downstream innovation system of Key Opinion Leaders, Payers, Regulators etc. of a Pharma company. Or they can have a solid structure such as the innovation ecosystem of lithography used in the semiconductor business.

Given that a firm is aware of the ecosystem it innovates in the ecosystem strategy determines the structure of the ecosystem to be set up and in particular whether the ecosystem partners should be organized in a collaborative community or in a competitive setting.

Since each innovation bears some risk per se this holds also true for ecosystem innovation. Depending on the role the ecosystem partners play in ecosystem innovation there are particular risks to be managed. Depending on the particular risk, effective risk management strategies and tactics can be deducted.

Last but not least, if a firm wants to manage its ecosystem it needs to have clarity on what could be effective control mechanisms and implement them. To do so it is useful to visualize the partner onboarding and partner co-innovation process and from there identify the appropriate control mechanisms.