Ecosystem Innovation: Dimensions, Essentials and Measures for Successful Collaborations
What is Ecosystem Innovation?
Ecosystem innovation describes the collaboration of partners within a network with a common goal. This form of innovation differs from other types as the different value propositions of the partners (e.g. startups, companies, technology providers, etc.) have to be harmonized or a common goal has to be the focus of the collaboration.
An essential distinction between classical competitive strategy and ecosystem innovation strategy is the complexity of the value propositions. In the classical competitive innovation strategy, the differentiation is based on the value proposition from the supplier to the customer (e.g. a differentiating offer of a service provider for its end customers). In an ecosystem innovation strategy, the complexity is much higher: differentiation is achieved through a portfolio of value promises among each other and toward the customer. This means that actors must define common goals and benefits among themselves (such as synergy effects, reach, etc.) and for the end customer. In the ecosystem innovation strategy, the differentiation thus consists of the value propositions from actors to end customers and between ecosystem operator and actors.
Dimensions of Ecosystem Innovation Collaborations
The complexity of ecosystem innovation is not only intricate in regards to the value proposition, but also in many other aspects. It is therefore important to define and challenge the actors involved, their motive and motivation as well as the form and conditions of the collaboration from the very start. The actors should also define the level of participation and commitment, i.e. who contributes what until when? Likewise, it is advisable to discuss the duration of the collaboration in order to ensure that the actors’ expectations are met and resources are allocated and ensured. The common objectives should be defined and agreed with all actors as early as possible, a common platform for collaboration should be established and a steering committee should be formed.
In summary, it is advisable to specify an ecosystem innovation collaboration based on the following aspects and questions as discussed in Frow et al. (2015), Managing Co- creation Design: A Strategic Approach to Innovation:
- Actors’ involvement and role: Which actors are involved and what role do the individual actors have?
Actors’ motives: What is the overall motive and each actor’s own motive for the collaboration?
- Form and context of collaboration: In what way and context does the collaboration take place? Is the form and context of the collaboration transparent and clear?
Level of commitment and transparent expectation management: What level of participation is expected from the actors? Who contributes what?
- Duration of commitment: How long does the collaboration last? Defined period vs. undefined timeframe.
Goal of collaboration: What is the common goal of collaboration?
- General conditions: What are the conditions of the collaboration?
Engagement: How do the teams from different companies work together and how is the team formation facilitated? What platform(s) will be made available to facilitate collaboration?
- Steering Committee: Has a steering committee been created? What is their role and in what frequency does the committee meet? What decisions are made by the steering committee?
Essentials for Ecosystem Innovation Collaborations
The most important prerequisite is trust. The basis for trust is an understanding of the involved parties, their collaboration conditions, their objectives as well as awareness and transparent communication of the individual agendas. If every partner agrees on the bigger picture and the directly relevant goals, the first step towards a solid foundation for the collaboration has been made. A clear process to make decisions; the definition of goals, deliverables and deadlines: and pre-determined physical appointments with the team and the steering committee (to make key decisions when complications occur) are key to success. It is crucial that an established trust is cultivated by all actors and that an open and trustful communication amongst the team members is nourished. If trust amongst the actors is broken, the collaboration is at risk.
Measuring Ecosystem Innovation Collaborations
Measuring overall success of ecosystem innovation collaboration is always relative to individual perspectives and rather complicated. In general, measures need to be derived from the goals of the collaboration. Often these goals focus on market, business, product/process potentials which in
consequence ensures that new opportunities can be evaluated according to their feasibility, impact and potential. When defining KPIs (Key Performance Indicators) for ecosystem innovation collaborations, the key building blocks are summarized in the following paragraph.
The measurement of successful ecosystem innovation collaborations highly depends on the common goals and framework. However, if the definition of measures at an early stage can be realized, the common goals become more crisp. For example, the financial aspects can be measured by defining planned revenues, margins and costs which are measured at a defined point in time and compared to the plan. For technology, the realized vs. the planned features or the quality of these features can be an indicator of the technological maturity. Market figures can provide insights for the success in the market in terms of own acquisition power and success. The number of existing and new customers as well as the long-term (revenue) potentials coming with the number of customers can be used as an indicator to measure long-term success. Furthermore, the effects of the ecosystem collaboration shall lead to a knowledge expansion or knowledge build-up and may increase the relevant number of partners in the ecosystem. These are “soft indicators” which are usually difficult to measure but can be judged in a qualitative way. All in all, decisive for the measurement of successful ecosystem innovations is the early definition and measurement of projected figures for a defined point in time and eventually their achievement or deviation.
by Angela Beckenbauer, Matthias Filser, and Kathrin Hoesli