Why organisations need an innovation ecosystem and what it should look like

Innovation has been the mantra of organisations for many years now. But at the World Business Forum in Sydney this year, Kellogg Graduate School of Management professor Mohanbir Sawhney challenged the audience to shift its collective mindset from an ‘invention model’ to a ‘connection model’.

It has become evident that ideas and collaboration can no longer solely happen within the walls of an organisation. Creating an ecosystem of innovation partners – through crowdsourcing, innovation markets or scouting – is the key to a sustainable and successful culture of innovation, according to Sawhney.

“You need to tap into the global brain, because the smartest people in the world don’t all work for you,” he said. “But they’re available on demand through networks.”

Harvard Business School professor, Rosabeth Moss Kanter, also discussed the importance of networks in her presentation on the forces reshaping business strategy.

“You can't just do things better; you need to get out of your building,” she told us. “This requires a change in mindset, stepping away from the ‘classic walled garden’ proprietary approach to data.”

She gave the example of Verizon’s reaction to Apple’s game-changing iPhone launch in 2007, when it realised it didn't have the internal capability to compete in this new mobile world.

Verizon formed a strategic partnership with Google to develop on the open Android platform. According to Kanter, a chance call with Motorola brought the hardware provider on board.

“Strategy no longer comes in a neat plan that follows a script. It’s more like improvisational theatre,” said Kanter. “It depends on serendipitous encounters. You need to find new ways to use your network, and be open and opportunistic.”

Digital co-creation on tap

“Think of the world as your lab, not the lab as your world,” advised Sawhney.

An open approach to co-creation includes reaching out to potential partners like innovation marketplaces, venture capitalists, research institutes, universities, entrepreneurs, government agencies and industry bodies.

Using this innovation ‘connection model’ will allow organisations to amplify reach, accelerate progress and improve quality of outcomes.

Sawhney suggested three different ways of identifying potential innovation partners:

• Crowdsourcing
• Innomediation
• Scouting

Siemens uses crowdsourcing initiatives such as the Smart Grid Innovation Contest to identify new business models that support smarter, more flexible and more intelligent energy networks.

The company now regularly cooperates with universities, research institutes and small startups to create more open collaboration.

Innomediation refers to emerging innovation markets that act as a matchmaking service. One example is Innocentive, which provides a global network of scientists and problem solvers.

“This is different to open crowdsourcing, as you expand your reach but the intermediary vets the applicants for you,” explains Sawhney.

Scouting is another way to find fresh thinkers. BMW’s Startup Garage invites startups to develop a functional prototype for a relevant application. If successful, that solution may be integrated into a BMW vehicle or service which will in turn accelerate that startup’s progress in the global market.

What’s truly important is that all three mechanisms allow any organisation to develop a co-creation platform without distracting from its core business.

Harvard’s Kanter also emphasised the importance of including government agencies and regulators in the ecosystem.

This is something Australia Post understands well. The recent announcement of a new collaboration with the Digital Transformation Agency on Australia Post’s Digital iD™ is one example.

“You can’t do it on your own,” said Kanter. “You need to include partners beyond your industry, and you can't ignore government stakeholders.”

Embedding a start-up mentality

Kanter also spoke on the trend of cultivating entrepreneurial startups from within. Haier, a Chinese manufacturing company, is now becoming a platform for entrepreneurs.

Any employee can start a business internally, and the company has seen some early successes – from video games to kitchen design.

“Ideas have been unleashed because they don’t have to report through a bureaucracy,” she observed. “Startup mentality is sweeping the world, and many established companies believe their future lies in making their employees more like entrepreneurs.”

In World Business Forum’s closing address, Randi Zuckerberg shared the same philosophy.

“The lines are now blurred between who is an employee and who is an entrepreneur. We now need to be both,” she said.

Establishing a proactive innovation ecosystem can help you empower that entrepreneurial mindset, both inside and outside your organisation. It opens the door to alternative perspectives, and lets you adapt quickly if the model needs to change.

“The old innovation paradigm is slow, it’s expensive and it’s rigid,” said Sawhney. “We need to reinvent innovation as a collaborative construct."