Innovating across business ecosystems

Organizing innovation by collaborating with complementary organizations

GLOBAL Challenge

Innovating across Business Ecosystems

The challenge

Organizations can innovate by collaborating with complementary organizations. Businesses are moving beyond traditional industry silos and coalescing into richly networked ecosystems, creating new opportunities for innovation alongside new challenges for many incumbent enterprises.

Why is this challenge worth embracing?

To survive and thrive in a networked society, enterprises must innovate not only at the level of products and services, but at the level of business models. Ecosystems provide a managed, yet open innovation strategy in which co-innovators could be competitors, suppliers or even customers.

What needs to happen to get from here to there?

It all starts with a sustainable business model, based on collaborative co-creation extending beyond traditional boundaries. The next step is finding the right partners for the ecosystem, and creating an environment of trust and co-creation that includes partner equality. In collaboration with these key partners, it’s time to establish management, governance and measurement within the ecosystem and define the rules of engagement for communication, collaboration, and innovation. It’s crucial for innovation to be a process driver for your company, as well as for customers, suppliers, and partners. If you and your partners can work together to create adaptive environments, everyone will be able to respond more rapidly to disruptions. Ideally, you want to make sure the ecosystem is orchestrated to meet the desired outcomes and include the right mix of technologies, services, financing, and fulfillment capabilities that complement one another – orchestrating agile relationships at warp speed. And once it’s all set up and running, you can help people explore potential paths within business ecosystems, anticipate trends, align activities, and mobilize energy for change.

What could delay success?

Innovation across business ecosystems starts when you recognize your company’s weaknesses, find complementary strengths, and identify potential partners. However, acting on this information to establish a business model that benefits you and empowers your partners is a complex undertaking that may require your company to make fundamental changes. Co-creation involves a mélange of talent from different ecosystem players coming together to redefine value based on customer desires, based on a platform which is connected and integrated to other complementary products and services. Risks and success factors need to be managed and distributed differently in a co-creative ecosystem; you still need to hit your targets and convince customers, but also use your competitors’ strengths to your advantage, making them a part of your ecosystem.

What will success look like?

Collaboration in an innovative business ecosystem has achieved a balance that is the sum of all strengths, growing the market and benefiting all the partners. Your company has established a reputation as an innovator that provides access to new markets, new technologies, new clients, and unexplored value networks. Time to market and R&D are reduced and waste has been minimized or eliminated, and your company is able to respond rapidly to new developments. The company and your partners are great places to work and have dedicated, enthusiastic, inspired teams.

Key questions

What is a fair business model with a distribution of benefits proportionate to contributions? How can it be sustained in the long term? How can an adaptive environment be created without overlooking legacy systems? How can we deal with resistance to change within our company? What would an ecosystem-based workforce based on cross-enterprise teams look like? What incentives could be put in place? How are risks managed in an innovative business ecosystem? How do we define success in this setting?

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