Evolution ofinnovationmanagement palgravemacmillan-201302-ramoncosta-thecaseofflexibleworking


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Evolution of Innovation Management - Palgrave Mc Millan - 2013, with contribution of Ramon Costa: "The Case of Flexible Working"

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Evolution ofinnovationmanagement palgravemacmillan-201302-ramoncosta-thecaseofflexibleworking

  1. 1. ContentsList of Figures viiList of Tables ixPreface xAcknowledgments xvContributors xvi1 Symbiotic Innovation: Getting the Most Out of Collaboration 1 Robert J. Thomas and Yoram (Jerry) Wind2 Performance Assessment of Co-creation Initiatives: A Conceptual Framework for Measuring the Value of Idea Contests 32 Volker Bilgram3 Measuring the Success of Open Innovation 52 Erik Brau, Ronny Reinhardt, and Sebastian Gurtner4 Can SMEs in Traditional Industries Be Creative? 75 Jon Mikel Zabala-Iturriagagoitia5 Scenario-based Learning for Innovation Communication and Management 95 Nicole Pfeffermann and Henning Breuer6 Social Network Analysis: An Important Tool for Innovation Management 115 Gerhard Drexler and Bernard Janse7 The Evolution of Mobile Social Networks through Technological Innovation 132 Vanessa Ratten8 Exploring the Role of Early Adopters in the Commercialization of Innovation 151 Federico Frattini, Gabriele Colombo, and Claudio Dell’Era9 Managing Communities of Practice to Support Innovation 182 Stefano Borzillo and Renata Kaminska v
  2. 2. vi Contents10 Joining Innovation Efforts Using Both Feed-forward and Feedback Learning: The Case of Japanese and Korean Universities 208 Ingyu Oh11 Innovation Management Reflections: A Brazilian Market Perspective 236 Fabian Ariel Salum, Rosana Silveira Reis, and Hugo Ferreira Braga Tadeu12 The Global Importance of Innovation Champions: Insights from China 268 Anton Kriz, Courtney Molloy, and Bonnie Denness13 The “Frugal” in Frugal Innovation 290 Preeta M. Banerjee14. Flexible Working, Mobility and IT Innovation, and ICT in 2012: The Case of Flexible Working 311 Ramon Costa-i-Pujol15 Creating an Environment for Successful Innovation: A Management Consultant’s Perspective 327 Koen Klokgieters and Robin ChuConclusion 348Alexander Brem and Éric ViardotIndex 355
  3. 3. 1Symbiotic Innovation: Getting theMost Out of CollaborationRobert J. Thomas and Yoram (Jerry) Wind1 IntroductionDuring 2010 and 2011, IBM conducted research globally on the challengesfacing over 3000 chief executives and chief marketing officers. The mainfinding of these studies was that these leaders believed themselves to be ina world that was substantially more volatile, uncertain, and complex thananything they had seen before (IBM, 2010, 2011). This finding was some-what expected; what was surprising was that these executives revealed theywere not at all prepared to cope with this rapidly changing environment.The study concluded that to make any progress whatsoever, a new kindof creative leadership was needed to develop breakthrough thinking thatencouraged experimentation and innovation. The studies also revealed that the survival path to innovation in anincreasingly complex world involved intimately engaging with and empow-ering consumers as never before. It was clear that organizations could nolonger succeed alone when faced with the complexity of an unstable worldsystem of customers, markets, governments, and institutions; collabora-tion with consumers and with a variety of strategic partners in some formof symbiotic relationship would be required. For example, in 1999 Nikedeveloped an online service called NikeiD (www. nike.com), which offeredindividuals the opportunity to personally design and purchase their ownclothing and shoes. Using the increasing availability and sophistication ofonline communications, consumers interacted with Nike by selecting froma variety of shapes, colors, and materials, much as they had with traditionalbespoke cobblers and tailors – however, with a much larger selection ofoptions. Nike’s online success (Brohan, 2010) eventually led to the devel-opment of in-store design studios, which created additional intimacy withconsumers. Early applications, such as Nike’s experiment, demonstrated the impor-tance of collaboration, especially with consumers, and revealed that itcan be strategically sustainable over time. The literature in the fields of 1
  4. 4. 2 Robert J. Thomas and Yoram (Jerry) Windmarketing, strategy, and innovation reflect this growing importance and hasbegun recommending some form of collaboration or interaction betweenand among a firm, its consumers, and other stakeholders. Consider theemerging lexicon of terms and concepts such as co-creation (Prahaladad andRamaswamy, 2000), open innovation (Chesbrough, 2003), open source (vonHippel and Krogh, 2003), service-dominant logic (Vargo and Lusch, 2004), andnetworked innovation (Nambisan and Sawhney, 2007). As might be expected,these concepts build on earlier ones, including lead-users (von Hippel,1986), one-to-one marketing (Peppers and Rogers, 1993), and customer-centricmarketing (Sheth et al., 2000), to name a few. To help cope with this multiplicity of innovation-based concepts and putthe chapter into focus, we consider the following central question: if organi-zations are facing highly complex and unstable environments, how can theymore effectively use collaboration to develop and manage innovation? Weexplore collaboration through the concept of symbiosis,1 which recognizesthat different organisms can form persistent associations, or collaborations,that benefit those involved to varying degrees. We use a model of symbiosisto help understand how the dynamic balance among the participants maycontribute to different kinds of innovation. We then recognize that thismodel can exist at the core of many different types of collaboration thatmay be important for the development of innovation. In the context of business, we consider five types of collaboration, whichwe propose must be orchestrated properly to contribute to innovation. Thefirst type, internal collaboration, is at the core of an organization’s abilityto function with multiple units in order to facilitate innovation. Differentindividuals and/or functions within the firm, such as research and devel-opment, marketing, and operations must interact and collaborate to inno-vate, whether for new products or for other business activities.2 To furtherfacilitate the process of innovation, marketing and other functions withinthe organization may also seek targeted interaction with external partnersoutside the firm. The most important type of external collaboration is with consumers.Most successful innovations eventually involve some form of consumercollaboration, if not to generate new ideas, at least to refine them into newofferings. A third type of collaboration involves the value network whichrequires a firm to engage trade partners, suppliers, and other value chainpartners to increase the chance of innovation success with consumers.Subsequently, with the help of Internet access many firms and market stake-holders have realized that innovation might be sparked from a more opencollaboration involving anyone, even crowds, to generate ideas and othersources of value. Ultimately, the realization that the potential for innova-tion can occur beyond specific individuals or organizations recognizes theimportance of ecological collaboration, which includes structured communi-ties and their environmental surroundings.
  5. 5. Symbiotic Innovation 3 Given the five types of collaboration noted above and the recognition thatsome form of symbiosis may exist among collaborating participants, severalimportant questions emerge around how best to develop and manage inno-vation, especially when breakthroughs are needed more and more in busi-ness and society. To address these questions, we propose a network-basedmodel of symbiotic innovation that begins with collaboration from theinternal perspective of the firm and then expands to include other forms ofcollaboration and ultimately a more encompassing ecological collaboration.This sets the stage for a discussion of the needed network orchestration toimplement and manage this kind of symbiotic innovation. The summarymodel of symbiotic innovation we propose has five key components: (1)stay focused on the consumer, (2) employ all five types of collaboration,recognizing various symbiotic relationships within each, (3) design thenetwork orchestration and select the orchestrator, (4) design and imple-ment the organizational and network architecture to support the orchestra-tion, and (5) use adaptive experimentation to define the best collaborationapproaches.2 SymbiosisTo better understand how participants might collaborate for innovation,we borrow the concept of symbiosis from biology. According to Douglas(2010), biologist Heinrich Anton de Bary is credited with coining the term“symbiosis” in 1879 to describe any association between different species.He suggested that not all of these associations were positive, and Douglasrefines this view by arguing that it is a matter of degree. That is, the focus ofa symbiotic relationship should be on the benefits derived by each partici-pant, and that these benefits can be subject to variation. Variation can occurfrom the nature of the participants, their history, their relationship, and/or to environmental factors. Such relationships can sustain imbalances orconflict in the benefits received by each party, but if too severe, imbalancesand conflicts can lead to dissolution of the relationship. Douglas (2010, p. 1)therefore defines symbiosis in its broadest context as relationships in which“individuals of different species form persistent associations from whichthey all benefit.” Figure 1.1 provides an illustration of how biologists view symbiosis interms of interaction patterns between participants, which we show withpossible relationships between a firm and a consumer. As Douglas (2010)notes, the core motivating principle of biological symbiosis, and the collab-oration within it, is reciprocity. The costs to provide a service and the bene-fits gained to each participant can be illustrated in terms of arbitrary units.For example if each party gives 10 units of service and receives 30 units inreturn, each has mutually benefited in the same magnitude, or a net gain of20 units by each.3 When both participants realize a positive and near equal
  6. 6. 4 Robert J. Thomas and Yoram (Jerry) Windbenefit from a persistent relationship, it is considered to be symbiotic mutu-alism in biological terminology. Mutualism is the most frequently interpreted meaning of a symbioticrelationship. For example, when consumers go online to customize a wrist-watch, pet food, shoes, cereal or some other offering, they are co-creatingor innovating with a firm. If a transaction occurs, each potentially derivesa benefit. However, if one participant gains more than the other, then inbiological terms a condition of commensalism may exist. Commensalism is arelationship among participants with an imbalance in the benefits realizedin the relationship. More specifically, as shown in Figure 1.1, the benefitscan become negative for one party or the other. Either participant may gainat the expense of the other, but depending on the knowledge and severityof the difference or imbalance in benefits, the relationship may continuebecause the entire relationship still benefits from the collaboration. In a simple example, when a consumer purchases a needed product orservice and believes he or she is paying more for it than believed to be itsworth (i.e., the transaction is in the negative benefit zone), and the firmbelieves it is benefitting more than consumers, they are in a state of imbal-ance that is firm-beneficial. Alternatively, if the consumer believes he or sheis getting more value for the money paid, and the firm believes it is gettingless, it is consumer-beneficial. Notably, as transparency between the partici-pants increases, especially in terms of consumers empowered with searchengines and comparative shopping tools (especially on their smart phones),they have more information about the products and services they areconsidering, including prices. The greater this transparency for a consumer,the higher the likelihood of an imbalanced relationship with a firm. Onehas only to consider the airline industry, in which consumers have access + Firm-beneficial Balanced collaboration collaboration (Commensalism) (Mutualism) Firm benefit 0 Consumer- Disintegrating beneficial collaboration collaboration (Antagonism) (Commensalism) – 0 + Consumer benefitFigure 1.1 Symbiotic interaction patterns and collaboration
  7. 7. Symbiotic Innovation 5to a variety of information tools to obtain the best price for a specific flight.For a firm to prevent this imbalance or reinstate a balanced situation, it mayneed to offer a truly win-win offering to consumers. Depending on the extent and variability of the benefits gained or lost,any symbiotic relationship can degenerate into one of antagonism, in whichthe benefits from the relationship for each participant begins to deteriorate.Unless there is a compelling reason for the participants to remain together,the relationship may be on a path to disintegration. The outcome of antago-nistic relations can be a struggle to regain a mutually beneficial relation-ship with the same partner or, alternatively, it may lead to completely newpartnerships and benefits being formed – in either case it can be a source ofinnovation. As one example, consider the business-to-business customer relation-ship between Apple and Samsung, in which Apple purchased phone andcomputer components from Samsung. In April 2010, Apple launched itsiPad tablet computer. In September 2010 Samsung launched its Galaxy Tabtablet computer, a competitor with similar characteristics to Apple’s iPad.In April 2011, Apple sued Samsung for violation of certain patents relatedto the Apple’s innovative iPad tablet (Apple Inc. v. Samsung Electronics Co.,Ltd. 2012). Clearly, this is a pattern of antagonistic actions by each party.However, as Barrett (2012) reports, during 2011 Apple purchased some $7billion for components made by Samsung, which represents 7.6 percentof Samsung’s 2011 revenue. Despite their antagonisms, they are deeplyinvolved in a symbiotic relationship in which each depends on the other. At issue is how the various relationships in Figure 1.1 might lead to innova-tion. As to the first issue, biologists generally agree that symbiosis is relatedto innovation. According to Douglas (2010, p. 24), “the symbiotic habit isa significant source of evolutionary innovation and is ecologically impor-tant.” Similarly, Sapp (2009, p. 115) considers symbiosis to be “a means ofevolutionary innovation.” While there are many ways in which innova-tion might occur in this context, one way to visualize it is to begin witha relationship that is mutually beneficial to both participants. Assuming arelatively steady state, one can imagine that a mutually beneficial relation-ship would continue, but with perhaps minor reason to innovate. In thecontext of Robertson’s (1967) classification, these might be considered asrather “continuous” or incremental innovations, with little disruption ofestablished patterns of behavior. However, biologists believe environmental turbulence, random or other-wise (as well as the behavior of a specific organism), can put sufficientstress on a relationship of mutualism to push it out of a balanced state intocommensalism or even into antagonism. Depending on the benefit balancein the commensal relationship, either participant may work to regainbalance, thereby requiring some form of innovation to change the directionof the imbalance. In Robertson’s terminology, innovation arising in these
  8. 8. 6 Robert J. Thomas and Yoram (Jerry) Windconditions may be termed dynamically continuous, or may be the outcomeof somewhat disruptive behavior, revealed by or a result of the imbalancein the benefits. A collaborative relationship that is in, or moving into, a state of antago-nism reveals more disruptive behaviors which can potentially lead to discon-tinuous innovation, in Robertson’s classification. As noted in the Appleexample discussed above, the collaboration is evident from their buyer-sellerrelationship, but the intensity of the disruptive behavior may lead to eitheror both parties seeking an innovative resolution. For example, Apple maydecide to innovate its next generation iPad with non-Samsung components,thereby leaving the relationship – or Apple may depend on its attorneys todevelop a legal innovation that returns both parties to a collaborative rela-tionship that is beneficial to both. Of course, there are other possibilitiesfrom Samsung’s perspective, as well as other options for each. The point isthat the state of collaborative antagonism may lead to completely discon-tinuous innovation that returns the relationship to a balanced state or onethat involves leaving the relationship entirely (e.g., seeking a new partner). To summarize, when one thinks of “symbiosis” one imagines a collabo-ration in which both partners benefit in relatively balanced amounts; i.e.,mutualism in biological terms. Ironically, as discussed above, it is possiblethat partnerships in balance may not produce significant innovation, butonly minor or incremental improvements, because they are largely bene-fiting from the harmony of their existing relationship. However whencollaboration becomes imbalanced in terms of benefits to each participant(commensalism), one or both parties may engage in a variety of innovativeactions to regain balance or may possibly leave the collaboration for otheroptions. Finally, when the collaboration finds both parties with negativebenefits (antagonism), the drive for innovation to regain a more beneficialand balanced state may become more intense, or the parties may completelyabandon the collaboration for other options. As becomes apparent, there are a variety of symbioses that may work indifferent ways to produce different types of innovation outcomes. As biolo-gists note, several factors may influence the symbiosis and the dynamicrelationship within it. For example, they note factors such as the historicalrelationship of the collaborators, their pre-existing capabilities, the internalor external drivers of variation in their makeup, how they address conflicts,how they select future collaborators, how they network, and their persistencein the face of environmental risk – factors that can occur in any businessor market relationship. Consequently the types and structure of collabora-tors and collaborations involved, the factors that drive them, as well as theability of someone or some entity to orchestrate them are central to betterunderstanding how symbiotic innovation may be managed in a productiveway – topics we turn to in the next sections.
  9. 9. Symbiotic Innovation 73 Structuring collaboration for innovationThere are many paths to innovation, all of which eventually require someform of collaboration, especially with consumers. Even the hero image of thelone genius working in solitude to create an invention ultimately requirescollaboration to bring the invention to market (Cain, 2012). ConsiderSteve Jobs and his legendary status as the genius behind the many prod-ucts driving Apple’s success (Isaacson, 2011): suppliers, retailers, applicationproviders, and a host of partners were necessary for the innovations to occur.In contrast, the early and frequently cited example of Dell Computer’s 1997innovative business model of engaging customers in the design of their ownpersonal computers (within a set of practical parameters) demonstrated thatindividuals and organizations could collaborate more directly to meet theirneeds (Magretta, 1998). Dell referred to this as a type of “virtual integration”that brought together several collaborators, including suppliers, assemblers,customers, delivery firms, and service organizations to create value for allinvolved. Although the logic of collaborating with consumers and other partnersto create value and otherwise innovate is not particularly new (Alderson,1957), the impact of information technology on innovation and collabora-tion and the way it empowers consumers is new. It has enabled all partici-pants in an exchange to more effectively communicate virtually anytime,anywhere globally over a much broader set of options than has ever beenavailable. It is part of the sea change in marketing that Wind et al. (2001)have described as “convergence marketing,” based on empowered “hybrid”consumers who exhibit five key needs, briefly described here:● “Customerization,” or the consumer’s need for uniqueness, personaliza- tion, and “it’s made for me” products, services, and messages● Community, or the desire for social interaction in a variety of real and virtual groups;● Convenient access, or the need to seamlessly interact with firms through multiple channels to obtain the goods, services, and experiences consumers want● Competitive value, or the desire to meet ones needs at the best price● Choice, or the desire to have the tools to make better-informed decisionsWhat is evident from these needs is that convergence is not only appli-cable to consumers, but also to other potential collaborators. Whether theyare suppliers, assemblers, channel partners, crowds, communities, or otherstakeholders, the impact of converging technologies on the potential needsand behaviors of individuals and organizations creates opportunities forfirms to engage collaborators in pursuing new business models, products
  10. 10. 8 Robert J. Thomas and Yoram (Jerry) Windand services, and marketing approaches. The message for innovation isstraightforward: firms can no longer view consumers and other partners aspassive sources of needs and information – traditional marketing researchis not enough. Firms must learn how to better collaborate and interact withconsumers to drive innovation. We propose a model of symbiotic innovation with five types of collabo-ration as a basis for orchestrating a network of collaborators in rapidlychanging and complex global environments. The diagram in Figure 1.2provides a structure with which to envision the five types of collabora-tion. More specifically, we identify interactive sets of potential collabora-tors that must function together in some symbiotic way for innovationto occur – in much the same way that multiple cells function togethersymbiotically in a biological context to support the proper functioning ofan organism. In subsequent sections, each type of collaboration is briefly reviewed, withexamples to reveal their interconnectedness for innovation. The key pointof Figure 1.2, which is necessarily a simplified depiction of reality, is thatall potential collaborations must be orchestrated in a network to create thegreatest opportunity to develop the type of innovation desired. Althoughwe focus on the firm as the core unit of analysis, our discussion easily Ecological collaboration Participating with structured communities in their environment Open collaboration Inviting any participant into the collaboration Value network collaboration Coordinating with value creation and delivery stakeholders Consumer collaboration Co-creating with consumers Internal collaboration Coordinating internal functions such as R&D, marketing, operationsFigure 1.2 Network orchestration to achieve collaboration for innovation
  11. 11. Symbiotic Innovation 9extends to business and revenue models and other forms of organizationsand institutions in society, including nonprofits, social enterprises, andgovernments.Internal collaborationThe origins of innovation are ideas that can emerge anytime fromanywhere – by accident (Austin et al., 2012) or purposively (for example,through research and development competence, Prahalad and Hamel,1990). More typically however, ideas that arise from within a firm and leadto innovation are a combination of purposive search, sometimes instigatedby creativity or by chance, and are nurtured by the internal collaboration ofvarious functions within the organization (Wind, 1982). For example, therelationship between marketing and R&D, though traditionally an area ofconflict (Gupta et al., 1986), has increasingly benefited from the collabora-tive practices of cross-functional teams, as recommended in the literature(Slotegraaf and Atuahene-Gima, 2011). Consider Visteon Corporation, which produces electronics, lighting, andother solutions for car interiors purchased by the major automotive manu-facturers. According to Tim Yerdon, Visteon’s global director of innovationand design, developing a culture of collaboration was most responsible fortransforming Visteon’s innovation capabilities (Jaruzelski et al., 2011). Heattributes the collaboration that takes place across functions, geographies,and joint-venture partners as a key driver of the firm’s innovation perform-ance. In his view, the ways in which their customers manufacture cars asintegrated systems have made Visteon’s own internal collaboration a neces-sary capability to succeed. As Wind (1981) has described in detail, the interaction of marketing withother business functions is, and should be, extensive across a number ofareas for innovation, especially in new product development. Consider thedevelopment of DuPont’s aramid fiber, branded as Kevlar, which began as akind of accident that was part of an experimental process. Because the fiberexhibited properties making it five times stronger than steel when woveninto fabric or mixed into a composite, it was believed that there might be avariety of uses for it. Consequently, several teams were assigned to identifyapplications. Customer visits and a variety of marketing research methodswere employed to generate a prioritized set of opportunities. Several organi-zational functions, including marketing, R&D, finance, manufacturing,accounting, sales, customer service, and human resources, were required tocollaborate to implement the prioritized development projects. The eventualdesign and development of manufacturing facilities, product formulations,the creation of sales and marketing communication messages, the establish-ment of pricing guidelines, implementing customer service, and developingaggressive launch plans required a significant amount of internal collabo-ration. The outcomes were several successful launches, including products
  12. 12. 10 Robert J. Thomas and Yoram (Jerry) Windsuch as tires, bulletproof vests and helmets, cable and rope, and sportsequipment. The Kevlar example is product-focused, but internal collaboration canalso lead to innovation in marketing, operations, human resources, financeand other business functions where new approaches can lead to competitiveadvantage. Part of the success of internal collaboration depends not onlyon cross-functional teams, who may operate globally, but also on how wellvarious tools are used to acquire relevant market knowledge for internaluse. This may include traditional marketing research, conjoint analysisto measure consumer preferences (Green and Wind, 1975), the “voice ofthe customer” (Griffin and Hauser, 1993), lead user studies (von Hippel,1986), and newer approaches such as text mining and related data analyticapproaches. It can also include information about new technologies, newfinancing arrangements, and market trends. In many cases this kind of information can facilitate internal collabo-ration; however, such collaboration is not always easy to achieve withinorganizations. For example, many firms often have multiple market unitsand divisions addressing the same customer base. The patient with a diseaseor health concern is often required to visit several specialists for differentindications; what he really wants is an integrated solution or treatmentprogram. Similarly, a pharmaceutical company often calls on the samedoctor with different sales people, who represent different drugs from thesame firm, when the doctor would really like one sales call about the variousdrugs from the same firm, or even one call about similar drugs from differentfirms, to save time and gain more relevant information. Unfortunately, when managers vie for their brands or product categorieswithin the same company, these silos prevent integration at the consumerlevel. For example a major personal care company has a manager for its facecare range of products, a different one for its body care range, yet anotherfor its deodorant range, and one for its hair care, even though all these prod-ucts may potentially be applied on the same consumer. Without some formof internal collaboration, the result can be a lower share of the consumer’swallet for the firm. One cannot ignore that a primary reason for organizations to form inthe first place is to bring structure to the complexity of their various func-tions and operations. However, without careful management, this processof specialization can give way to the silo mentality, which often has to bebridged or broken for the organization to work more effectively. The tradi-tional product development process, which normally begins with ideasturned into concepts, and eventually gets to launched products, illustrateshow organizations try to manage innovation internally to bring the differentfunctions together. Bridging these silos with some form of collaboration(which might vary from mutualism to commensalism in biological terms)is imperative for innovation to emerge from an organization, and it may be
  13. 13. Symbiotic Innovation 11a necessary condition to deeply engage more effectively with other marketparticipants in developing opportunities for innovation.Consumer collaborationThe second inner circle in the Figure 1.2 represents consumer collaboration,an organization’s ability to deeply engage with and empower consumersin its markets for purposes of innovation. These consumers with accessto new communication technologies from almost anywhere in the world,have become primary drivers of market collaboration. As Wind (2008, p.22) summarized from his earlier work on convergence marketing (Windet al., 2001), this type of collaboration is characterized by “empoweredconsumers” who have “become co-inventors, co-producers and evenco-marketers.” Consider the Build-A-Bear Workshop retail and onlineenterprise (www.buildabear.com), which allows consumers the opportunityto create their own teddy bear in an interactive, playful themed environ-ment. The process begins with choosing a basic bear, then moving fromstation to station in the store, adding various options, such as prerecordedinternal sounds, stuffing (even a heart), stitching (with a unique barcodeidentifier), clothing, naming, and certification (birth certificate). There areonline opportunities for consumers to continue their interaction throughthe purchase of additional accessories and to engage in games and otheractivities. The most frequently cited term to define this process has beenco-creation between a firm and its consumers. As described by Prahaladadand Ramaswamy (2004), it involves four factors: (1) a deep dialogue withcustomers that involves interactivity, engagement, and a propensity to acton both sides, (2) access to tools and information needed to create, (3) riskassessment that leads to informed choice, especially by consumers, and (4)transparency of information on both sides. The authors argue that combiningthese four factors in creative ways can lead to new forms of value. The example of NikeiD presented earlier illustrates this kind of marketcollaboration between a firm and its consumers. However there are otherexamples permeating the landscape of consumer-based innovation.Consider mymuesli.com (www.mymuesli.com), founded in Germany in2007 as a website where consumers can mix and name their own organicmuesli online and have it shipped directly to their homes. Given a choiceof over 75 ingredients, it is possible for consumers to create some 566quadrillion individual muesli mixes! In 2009 Coca-Cola began offeringconsumers its Freestyle vending machine, which is a soda fountain acces-sible by touch screen that lets consumer create their own soft drinks fromover 125 custom flavors. Or consider redmoonpetfood.com (www.redmoon-petfood.com), which offers pet owners the opportunity to select ingredientsto create their own customized pet food using fresh produce, meat, andvarious supplements.
  14. 14. 12 Robert J. Thomas and Yoram (Jerry) Wind While several examples of successful co-creative consumer collaborationsare available, Echeverri and Skalén (2011) proposed that value co-creationhas not been well documented by research, and there may even be a poten-tial dark side they term value co-destruction. More specifically, through astudy of transportation services, they find that value co-creation doesoccur between providers and customers, but so too does value destruc-tion, or more precisely the diminishment of value that takes place whenthe customer better understands and even uses the product or service. Adistinction should be made between real value loss from usage and psycho-logical value loss due to deeper learning about the product or service underdevelopment (e.g., “It’s not what I thought it was supposed to be!”). Thelatter type of loss can actually come into conflict with the value co-creationprocess and therefore must be carefully managed in the context of inno-vation. The authors offer five interaction value practices that can be usedto better manage the co-creation process: informing, greeting, delivering,charging, and helping. The underlying message is that co-creation is a rela-tively novel process itself, and therefore requires additional research, under-standing, and guidelines for practice. Füller (2010) also sheds light on the complexity of the co-creation processin his findings that show that consumers’ motivations can determine theirexpectations towards a virtual co-creation design; i.e., when you engagethe consumer, you engage an entire range of possible behaviors. There isalso the manufacturer’s side of the co-creation process. The implication thatco-creation is a move toward the one-to-one future espoused by Peppers andRogers (1993) may lead to a greater need for some form of mass customiza-tion (Pine, 1993). The mass customization of products and services can becostly, and therefore not profitable; further, in some cases it may not even bepossible with current technology, nor does it seriously consider the consumer.Wind and Rangaswamy (2001) propose “customerization” as an alternativeand an enhanced approach that is more about customizing marketing tomeet consumer needs than customizing manufacturing. As they point out,manufacturing can even be outsourced if it better supports the creation ofvalue with consumers. The key point is that consumer collaboration, mostclosely associated with value co-creation, is a process like internal collabo-ration that is required for innovation, but must be thoughtfully developedand carefully managed to achieve it.Value network collaborationThe third inner circle in the Figure 1.2 represents value network collaboration,or an organization’s ability to develop platforms that deeply engage targetedparticipants in its markets for purposes of innovation. These participantscan be distributors, suppliers, or other relevant market stakeholders locatedanywhere in the world, all of whom may define a network that are part ofthe process required to generate and deliver value to consumers. A good
  15. 15. Symbiotic Innovation 13example of this is the Starbucks Coffee Company (www.starbucks.com). Todeliver the coffee experience they enjoy to consumers, the company mustbring together a network of coffee and tea growers located in many coun-tries, coffee roasters, dairy farmers, various suppliers of food, and over15,000 retail stores throughout the world, each with a trained staff. The value network also includes participants who recognize that theirown business-to-business collaborations can improve each other’s inno-vation performance. Consider the case of Moleskine (www.moleskine.com), an Italian manufacturer of classic notebooks for writers and artists.Traditionally their notebooks had solid black covers and are sold throughretailers. To grow their business, Moleskine began collaborating more inter-actively with retail stores, such as Bloomingdales, inviting them to designnew platforms on which to offer their products to shoppers. These platformsnot only included customized designs with and for retailers, but creativedisplays and promotions that both parties found innovative and of value(Schmidt, 2011). Moleskine has also partnered with Lego to create booksthat included a Lego brick inserted in the cover as a foundation for Legoconstructions, as well as Lego bookmarks and stickers. The distinguishing factor about participants in the value network is thatthey are primarily involved in business-to-business relationships. Such rela-tionships are complex and involve understanding organizational buyingbehavior and buying centers within each organization that may havedifferent needs and require their own internal collaboration, as well ascollaboration with others in their network constellation. Wind and Thomas(2010) explore this complexity as well as the consequences of such an inter-dependent network of organizations in terms of five key drivers: acceleratingglobalization, flattening networks of organizations, disrupting value chains,intensifying government involvement, and continuously fragmentingcustomer needs. These drivers create both opportunities and problems forfirms that desire to collaborate for innovation, but also open possibilities forideas and solutions beyond the value network into more open spaces.Open collaborationThe fourth circle in Figure 1.2 is open collaboration, or going beyond thefirm, its consumers, and its value network to invite virtually anyone intothe process of innovation. This type of collaboration can range from partieswho know each other face-to-face to parties who may interact in a virtualcollaboration mode, perhaps even indirectly. One of the earlier forms of opencollaboration for purposes of value creation was the type associated withopen-source software development (e.g., Linux), Internet-based communi-ties of software developers who voluntarily collaborate to develop softwarethat they or their organizations need. As von Hippel and Krogh (2003) note,Richard Stallman drove the development of open source software code inresponse to the Massachusetts Institute of Technology’s action to license
  16. 16. 14 Robert J. Thomas and Yoram (Jerry) Windsome of the code created by its “hacker employees” to a commercial firm.The source code was no longer accessible to these “hackers,” who were nottechnically MIT employees. Stallman set about creating a legal process thatwould enable software coders who chose to allow anyone to use their codeto do so, thereby creating a new concept of openness. In effect, the objective of the open-source movement was not necessarilyto develop innovation that enabled the capture of value, but rather to morefundamentally create value without necessarily capturing it. With increasingonline access, this model was readily extended to a variety of potentialvirtual collaborators, who could contribute to innovation in a variety ofcontexts, including products, services, advertising, and general problemsolving. Another classic example of this is Wikipedia (www.wikipedia.com),a collaborative Internet encyclopedia, which reports that it contains over20 million articles written collaboratively by 100,000 contributors fromaround the world. Several versions of open collaboration have developed in recent years.Chesbrough (2003) describes it through the traditional product developmentprocess from ideas to launch. In his view, the boundaries of the process arepermeable and ideas can seep in and out at various stages of development.He contrasts this with earlier models of innovation, which are more or less“closed.” He cites Procter & Gamble’s (P&G’s) 2001 “Connect and Develop”program as an example of the effectiveness of opening opportunities forinnovation outside the firm. The original goal of delivering 50 percent ofthe company’s innovation through external collaboration was met in 2005,two years ahead of schedule (Drummond, 2011). The program has grown insize and value and according to Drummond (2011), P&G says its Connectand Develop is “about collaborating for mutual value creation with anyone,anywhere to accelerate P&G’s innovation and deliver growth goals.” Whereas Chesbrough’s view of open innovation originally implied a fairlystructured approach to selecting the sources of ideas in collaboration withorganizational partners, others have invited just about anyone to the tableto provide ideas, not just for innovation, but for any productive activitythat can be outsourced to anyone. Howe (2006) originally defined this as“crowdsourcing,” or “the act of taking a job traditionally performed by adesignated agent (usually an employee) and outsourcing it to an undefined,generally large group of people in the form of an open call,” or more briefly,applying open-source principles to fields outside of software, a view of opencollaboration that can take many forms. Based on the idea of the “wisdom of crowds,” Surowiecki (2004) proposedthat an aggregation or averaging of individuals in a group can produce abetter decision than any single person in the group, even a group containingexperts. One form of aggregated crowdsourcing based on wisdom is theprediction market, in which participants trade in contracts with payoffsthat depend on unknown future events, and the market price is the best
  17. 17. Symbiotic Innovation 15predictor of the event (Wolfers and Zitzewitz, 2004). Applications includepredicting election outcomes, movies, new product forecasts, and even thelikelihood that regulators would approve new pharmaceuticals. Anotherform of aggregated crowdsourcing is the tournament as described byTerwiesch and Ulrich’s (2009), which involves a competition among a largeset of opportunities that are voted down to the few winning ones selectedby the “crowd.” For example, Walkers of the United Kingdom (www.walkers.com), a snack food manufacturer owned by Frito-Lay, regularly conductstournaments to name a flavor or find the best new flavor for one or more ofits chips or snack foods. Yet another approach of crowdsourcing is broadcasting a problem tothe largest audience possible, usually online, and finding a solution. Forexample, InnoCentive (www.innocentive.com) provides an online platformthat presents problems to a diverse crowd of more than 250,000 problemsolvers from some 200 countries. Winners are selected from what are essen-tially prize-based competitions. The value of this approach to innovationis more than just the number of people who work on the challenges theyaccept, but their diversity (Page, 2007). According to Lakhani et al. (2007),who analyzed 166 problems processed through InnoCentive: “We founda positive and significant correlation between the self-assessed distancebetween the problem field and the solver’s expertise and the probability ofbeing a winning solver. The further the focal problem was from the solvers’field of expertise, the more likely they were to solve it.” A typical example experienced by Roche on a pharmaceutical challengeusing this type of open collaboration with InnoCentive is reported byBirkinshaw and Crainer (2009). Roche struggled for over 15 years to improvethe quality and volume measurement of a clinical specimen as it is passedthrough chemistry analyzers. They defined this problem as a challengefor InnoCentive and in two months they had some 1,000 unique solverscommitting to the project, and eventually got 113 proposals from them.Roche not only solved their problem from these proposals, but in reviewingthe submitted solutions, they realized that all the solutions they had triedover 15 years were also submitted! Notably, open collaboration activities for innovation extend beyondproduct development and can include piecework. In this approach, small“intelligence” tasks are farmed out to anyone anywhere for a fee at Amazon’sMechanical Turk (www.mturk.com). Financial investing opportunities canbe found at kickstarter.com (www.kickstarter.com), and problem solving atIBM Jams (www.collaborationjam.com). As an example of open collaborationin the area of marketing communication, consider the Victors & Spoils adagency (www.victorsandspoils.com), or V&S. When Harley Davidson splitfrom its ad agency, the CEO of newly formed victorsandspoils.com agency,Jon Winsor, used his online team of over 6,000 creative people to provideunsolicited ideas to Harley for a campaign. Compensation to the creative
  18. 18. 16 Robert J. Thomas and Yoram (Jerry) Windpeople depended on ideas selected by the agency and the client. The V&SCEO sent a selection of ideas to Harley CEO via Twitter. Ultimately, Harleyselected V&S as their agency of choice and aired their “Cages” campaign in2011. In every other respect the agency is traditional; however, by using its“crowd” of creative people it was able to provide a broader pool of innova-tive ideas to meet the communication challenges and win the business. Finally we consider how open collaboration supports customized innova-tion in services. Consider the consumer who intends to purchase a tattoo.He or she may seek out a local tattooist who may offer a variety of options,or, alternatively, he may consider the online offering called Createmytattoo.com (www.createmytattoo.com), which provides the opportunity to beconnected online with over 3500 tattoo designers. The consumer providesan initial idea to these designers and receives in return at least 10 designsfrom different tattooists. The consumer can then interact further with oneor more of the designers to obtain the final design prior to implementa-tion at a local tattooist’s shop, who may be part of the Createmytattoo.comcommunity. In their book, The Global Brain, Nambisan and Sawhney (2007) providestructure to open collaboration to address the challenge of managing inno-vation. They propose two core dimensions to the problem: the structure ofthe players involved (centralized management vs. diffused communities)and the nature of the innovation problem (defined or structured vs. emer-gent or really new). This supports four different models of collaboration forinnovation: the orchestra (centralized/defined), the creative bazaar (central-ized/emergent), the mod station (diffused/defined), and jam central (diffused/emergent). The latter two models are most consistent with open collabora-tion in that they are relatively open, less visible, and informal compared tothe more centralized models. Victors & Spoils and InnoCentive are exam-ples of either mod station or jam central, depending on the problem defini-tion. Clearly, open collaboration can be productive for innovation, but itrequires some thought to managing it for success. The increasing popularity of open collaboration has been evident for sometime, as described in a lead Business Week magazine article entitled “ThePower of Us” in 2005. It can come in many forms, from real to virtual, fromsingle participant to many, and from direct to indirect, where parties maynever know each other. Nevertheless, there can be difficulties in establishingthis capability. Should open collaboration involve anyone and everyone, orshould targeted communities be the source of ideas? Is there a risk of “groupthink” – will like-minded people online eventually lead to mediocre inno-vations? In addition, how does one establish screens to filter hundreds andpossibly thousands of ideas? Does failure of idea acceptance diminish thechance that a participant will submit future ideas? Who will own the intel-lectual property rights? How important is security of the outcomes and howwill it be managed? While there are such concerns, preliminary case study
  19. 19. Symbiotic Innovation 17research on open collaboration via crowdsourcing has shown that it canfavorably complement traditional internal idea generation methods (Poetzand Schreier, 2012). This suggests that it should be required as part of theinnovation process, but also carefully managed to create opportunities forsuccess.Ecological collaborationThe encompassing fifth circle in Figure 1.2 is ecological collaboration. In thecontext of collaborative innovation we define “ecology” as a community ofparticipants who assemble to meet their needs, and who can influence andbe influenced by their environment. Consider an industry association, anacademic community focused on a particular area of knowledge, or productusers who communicate to solve problems and otherwise collaborate to meettheir needs. The interaction of firms, their markets of suppliers, distribu-tors, customers, and regulators, and other open sources of collaborators cancreate an ecology that generates the knowledge needed for substantial valuecreation and innovation (Dougherty and Dunne, 2011). In many cases these ecologies are equivalent to structured communitiesthat are sometimes driven by their environment, but must be controlled tosucceed. An early example was the so-called “Wintel” community, whichinvolved Microsoft Windows, Intel, and scores of software and hardwarefirms that formed an ecological system with common standards to meet thecomputing needs of individual and organizational users. Consider the caseof Tiger21 (www.tiger21.com), which defines itself as a peer-to-peer learninggroup for high-net-worth investors (Hawthorne, 2010). The groups are madeup of 12 people. They meet for a day once a month for an annual fee of$30,000 to discuss their financial problems and opportunities. In some wayit can be likened to a support group that exists because the surroundingfinancial environment has created sufficient turbulence to create the needfor knowledge, which the collaboration provides. What is unusual aboutthese small ecologies of investors is that the members admit that theydiscuss issues in the group that they cannot discuss with anyone else, noteven their close friends. The ecological collaboration spurred by Apple, Inc. from its products suchas iPhone (Laugesen and Yuan, 2010) provides a well-defined example ofthe formation of such ecologies. The phone was developed from internalcollaboration, announced in January 2007, and was launched in June 2007.By December 2009, some 42 million iPhones had been sold. To facilitatethis success, Apple had to create consumer collaborations through its ownstores and phone retailers (such as AT&T) to educate consumers on productuse. In July 2008, Apple launched its App Store, based on open collaborationwith thousands of independent third party software suppliers who coulddesign and create a variety of software applications for iPhone users, albeitwithin certain parameters. Consumers could then purchase and download
  20. 20. 18 Robert J. Thomas and Yoram (Jerry) Windthe applications of their choice from the App Store. Similarly, Apple devel-oped its iTunes site, which is a collaboration of music artists, publishers,and other related content producers (movies, TV shows, podcasts, etc.). Thiscollaboration supports the iPod, and other Apple devices as well, includingthe iPhone and iPad. The symbiotic aspects of Apple’s innovation process should be evidentin this basic relationship: the application developers are highly dependenton Apple for their success, and in turn, Apple’s continued success with theiPhone and related devices is dependent on the relationship it has with itsapplication developers. With their own retail stores to both sell productsand directly support consumers, Apple has created a complete ecologicalcollaboration to support innovation from product idea, to design and devel-opment, to manufacture, to software applications, to marketing and sales,and to solution of consumer problems. Whereas competitors can essentiallyduplicate the basic iPhone, Apple’s advantage derives from the strength ofits ecological collaboration. For the iPod, iPad, or whatever Apple’s nextnew product might be, there is an ecological collaboration encompassingits success (iTunes, the App Store, iCloud). The outcome of the process is thecreation of considerable value, not only for Apple and its developers, butalso for business and consumer users of the phones and related devices. There are also other communities that reveal the universality of theecological collaboration experience. Consider Facebook, Twitter, Google,Wikipedia, LinkedIn, Groupon, and Amazon: all are online-based commu-nities that exist to serve the needs of their various partners, whetherconsumers, advertisers, manufacturers, retailers, or even regulatory groups.Some communities are more loosely organized than others, but all exist tosupport the needs of participants. In terms of innovation, the value createdfrom the knowledge gained, shared, or otherwise exchanged from thecollaboration drives the continued survival of these ecologies. Google is a primary example of an ecological community that representsa collaboration based on a fundamental human need – the search for infor-mation. Google has its own internal collaboration of software developerswho work to improve its search engine and develop other offerings. Itsnew offerings are made available to consumers in beta-test format, a typeof consumer collaboration that engages and empowers Google’s visitors/consumers. The sources of revenue for Google depend primarily on its valuenetwork, which includes advertisers, advertising agencies, and researchfirms who collaborate to create innovative ways to gain the attention ofconsumers (“the number of eyeballs”) for their own products and services.Google frequently uses open collaboration for special projects, such as its“Project 10 to the 100,” which presented a problem to the virtual worldvia Google and screened the ideas to fund solutions. In other ways Googlehas to carefully manage its citizenship in the global community of govern-ments, regulators, and special interest groups concerned about privacy
  21. 21. Symbiotic Innovation 19and other aspects of Google’s ubiquity. It is evident that Google is in everyway its own ecological system of collaborators that can interact with otherecological systems. Not all such communities thrive. MySpace is an example of an early leaderin the social community world that fell on hard times. While there aremany reasons for its decline, one involved how MySpace chose to developnew offerings and services compared to their main competitor, Facebook.Facebook embraced a more ecological collaboration perspective thanMySpace. As noted in a Business Week cover story (Gillette, 2011): “WhileFacebook focused on creating a robust platform that allowed outside devel-opers to build new applications, MySpace did everything itself.” The risks oflimiting innovation to only internal collaboration in highly complex andturbulent markets highlights the need to better orchestrate potential collab-oration for innovation.4 Network orchestration for symbiotic innovationTaken together, the five types of collaboration presented in Figure 1.2 repre-sent a challenge to develop breakthrough innovation. The challenge is thatall five types of collaboration are required and each entails some form ofsymbiotic relationship, but it is difficult for most firms to control them. Funget al. (2007) describe this requirement for control as network orchestration. Itis not enough to collaborate internally, with your market, with open crowds,or in an ecological community; these collaborations must be orchestratedto compete more effectively through innovation. Organizations such asMySpace, cited above, that do not understand that competition is “networkagainst network” run the risk of damaging their relationships with potentialpartner organizations and can miss opportunities for breakthrough innova-tion. These potential partners may join with other networks and abandona working relationship with an organization that fails to integrate, therebyputting the organization at risk to capture value in its markets. Firms cantherefore become locked in to or locked out of networks, with considerableimpact on their performance. To orchestrate a network for innovation is therefore critical, but noteasy. It takes considerable management skill, because it is not the same asmanaging internal collaboration, the most common form managers havefound. Instead, it requires a more fluid approach that empowers partners,employees, customers, distributors, and other stakeholders, while also main-taining control. It is akin to assembling the musical composition (possiblybeing the composer), the orchestra of musicians, the conductor, the concerthall, and the communications and practice required to deliver an experi-ence to the audience. An example of creating and orchestrating such a network is GE Healthcare’sHealthymagination effort (www.healthymagination.com). In September 2011,
  22. 22. 20 Robert J. Thomas and Yoram (Jerry) WindGE committed $100 million to fund innovation in combating breast cancer,orchestrating a variety of participants. In addition to its own organization,GE, in cooperation with venture partners, announced an open call to actionfor oncology researchers and healthcare innovators seeking ideas to accel-erate innovation for solutions to breast cancer. In less than two months,its first challenge involved some 4,000 people, who submitted over 500ideas. Numerous other challenges are planned to fund advances that willempower doctors and patients and enable more personalized treatment forwomen worldwide. This effort clearly involved a well-orchestrated networkof players for each type of collaboration in Figure 1.2. They are usinginternal collaboration (their own management structure) and consumercollaboration with patients in mind; they value network collaboration withdoctors, hospitals, and other healthcare institutions as well as open collabo-ration (inviting research ideas from a broad array of external sources in themedical and scientific fields); and they use an ecological collaboration withvarious medical and cancer-concerned communities. All five types of collaboration are essential to create significant innovationoutcomes. Further, a network must be designed and orchestrated to producebreakthrough ideas, whether for products, services, communications, busi-ness processes, or other areas in need of innovation. To make this happen, anetwork orchestrator must be designated who has the responsibility to under-stand the type of innovation sought (incremental vs. breakthrough), thevarious collaborators and collaborations required to achieve it, and the kindand balance of symbiotic relationships within the collaboration necessaryto bring about the desired outcome. The network orchestrator has three critical roles to succeed (Fung et al.,2007). First, the network has to be designed and managed in a different waythan a firm is managed. The firm must be considered, but in the context ofthe various types of collaborators and collaborations described in precedingsections. Second, the orchestrator must recognize the need to empower thevarious collaborators in the network. This is a different kind of incentivestructure and motivation than happens within the firm. Here it becomescritical to truly understand if the collaborators are in mutually beneficialrelationships, or are going into them, or are in ones that are imbalanced andneed rebalancing. Finally, value does not necessarily come from internalcompetencies; it comes from integration, bridging borders, and from lever-aging the company’s value and intellectual property across the network.Successful network orchestration also gives a firm the needed dexterity andflexibility to operate in a dynamic and uncertain world. For example, ifthere is a crisis in one country or part of the world, the firm can readily shiftR&D, people, or production capability to other countries. Returning to the GE Healthymagination example, all three roles ofthe network orchestrator were evident: (1) the network was designed andmanaged not as a GE business unit, but as a network of multiple participants.
  23. 23. Symbiotic Innovation 21orchestrated to develop innovations for breast cancer cure; (2) control throughempowerment is clearly evident to encourage external researchers to submitideas, but it is flexible enough to allow an evaluation and ranking of ideasgenerated; and (3) there is creation of value through the integration of allparties by capturing the best ideas before competition and beginning deepresearch on the winning ones. Bringing all the pieces of a network together isnot an easy task, but one that is essential to realize symbiotic innovation.5 Implementing a model of symbiotic innovationWe are proposing a significant undertaking for firms who want to achieve aportfolio of innovations, from incremental to breakthrough in scope, whichcan be product and/or process in substance, and which can stretch beyondproduct to include innovations in other aspects of the business, such asnew models of business and revenue, creative marketing approaches, andcomprehensive networks of collaborators that will make a difference in theirbusiness growth and profitability, as well as contributions to society. Wecannot present all the detailed steps necessary to implement this approach,but we provide a model of symbiotic innovation in Figure 1.3 to help rethinkcurrent innovation practices. We briefly review each of the five componentsof the model in the following sections. Stay focused on the consumer Employ all five types Use adaptive of collaboration experimentation to recognizing various define best symbiotic collaboration relationships within approaches each Design and implement the Design the network organizational and orchestration and network architecture select the to support the orchestrator orchestrationFigure 1.3 A model of symbiotic innovation
  24. 24. 22 Robert J. Thomas and Yoram (Jerry) WindStay focused on the consumerIt may sound basic, but in structuring a network of collaborators, consumersmust be at the center of activity. The next new wave that drives an economyis often a breakthrough innovation that benefits consumers and creates aninfrastructure of enterprises to support that demand. Consumers may not bethe inspiration for the next big innovative idea, but their ultimate purchaseand usage of it are at the core of its success. This means incorporating theconsumer not just at the stage of idea generation and concept development,but all through prototyping, product development, marketing, usage, andmodification. Whatever methods are used – traditional marketing research,lead user, voice of the customer, co-creation, or crowdsourcing – collabora-tion with and among consumers should be evident throughout all types ofcollaboration. The consumer must also be broadly defined to include his or her socialstructure. Couples, families, friends, acquaintances at work, participants insocial networks, and other social units the consumer interacts with definethe consumer outside the individual unit of analysis. How these significantothers affect consumers’ preferences and choices is central to innovation.For example, to drive down costs, hospitals recognize the need to movepatients home as quickly as possible. However, the availability of productsand services to assist families and others to care for the sick, or those recov-ering from surgery, is an important area for innovation that is yet to bedeveloped. Understanding a variety of collaborations with the consumer atthe center will be required.Employ all five types of collaborationIn the literature on innovation and new product development, the 1980s and1990s witnessed a focus on internal collaboration through integrated newproduct development processes. Beginning at the turn of the twenty-firstcentury, the role of market collaboration and co-creation became highlyrelevant and was made possible with the advent of more interactive commu-nication technologies. By the end of the first decade of the new century,it has become clear that open collaboration and embracing communi-ties of existing collaborators opens the door to more rapid and effectiveinnovation. In effect, it is not enough to innovate today with internal, consumer,and value network collaboration. Open and ecological collaboration mustbe engaged in and orchestrated to create significant innovation. Severalexamples of these new forms of collaborations exist; however, many firmsmay be reluctant to step out into these somewhat unchartered waters. Forexample, legal departments in organizations may battle against any formof collaboration for fear of losing ownership of patents or patented proc-esses. Rather than back away from such threats, new forms of patents and
  25. 25. Symbiotic Innovation 23intellectual property rights may need to be pursued. Similarly, marketingand manufacturing personnel in organizations may be unwilling to sharedata and information with collaborators; again, new ways of thinking thatit can be mutually beneficial to share information to speed the developmentof innovation can have financial benefits for all.Design the network orchestration and select the orchestratorDesigning a network for symbiotic innovation in any detail goes beyondthe limits of this chapter. However what is required may involve severalconsiderations. First, who are the potential collaborators one would desirein a network for symbiotic innovation? What are their needs and poten-tial benefits that might make them dependent on each other for successfulinnovation? If there is no basis for reciprocal collaboration, then it will bedifficult to sustain the network. Second, what are the roles and expectationsfor the various collaborators? What is each expected to contribute? How willtheir roles be communicated and learned, if necessary? Third, what are thestrengths and weaknesses, or unique competencies of each collaborator andhow do they contribute to a competitive advantage for the network? Theseare questions that cannot be answered quickly, but require some study ofpotential collaborators, including their history, their likelihood of cooper-ating, and other factors. Once potential collaborators are identified, the critical flows among themmust be identified and mapped. Will it be primarily information flows, orwill there be physical flows, financial flows, and/or workflows involved?Understanding these flows and how collaborators manage them will becentral to defining the network. Finally, the collaboration outcome mustbe defined, if not in detail, at least in terms of the general objectives. Forexample, if the required outcome is a creative communication approach,then a communication brief describing the situation and the problem to beaddressed must be written and communicated. Similarly, if a new productis the desired outcome, then an innovation brief or similar documentshould be prepared to describe the situation and general type of innovationrequired, perhaps from an incremental innovation to a major breakthroughor even a completely disruptive innovation. Achieving the above tasks will require the work of a network orchestrator.In addition to defining the characteristics of such a person, recruiting,motivating, and empowering him or her to carry out the requirements ofeffective network structure will be a challenge. Recall the three key roles acollaborator must play, defined by Fung et al. (2007). First, the person mustbe network-centric, not firm or market-centric. Once the entire networkis identified and understood, potential innovation collaborators within itcan be identified and approached. Second, the person must have a sense ofcontrol through empowerment. That is, networks can involve independentplayers whose cooperation is needed, and it may be that the only way to
  26. 26. 24 Robert J. Thomas and Yoram (Jerry) Windgain their cooperation is to empower them to collaborate for purposes ofinnovation; which may mean that the network orchestrator must get thevarious collaborators to see the value of the innovation. Trust, communica-tion, understanding, and other behavioral and social motivation may bemore important than financial remuneration in this type of empowerment.Third, the network orchestrator must be able to facilitate and incentivizethe creation of value through the collaboration. It is not enough to bringcollaborators in the network together; the orchestrator must have a clearvision of how an innovation can come about through carefully managingthe network and providing the necessary incentives. Finding and moti-vating such an orchestrator will not be a trivial task, but once found, thisperson should be strongly supported by the organization.Design and implement the organizational and networkarchitecture to support the orchestrationIf the leaders and managers in an organization decide that innovation isessential to grow and profit, if not survive, and that symbiotic innovationbased on a network model of collaboration is required to do so, then adifferent mental model of how the organization and network function willbe necessary to achieve the desired outcomes. Figure 1.4 provides a structureof how such an organizational and network architecture might be concep-tualized. At the top are the vision, objectives, and strategies of the organiza-tion as articulated by its leaders. However this articulation will reflect thenetwork of collaborators at its core (in the center of the chart). The networkorchestrator must then rally the organization and it leaders to rethink howinnovation can happen among the network participants. The right people,processes, facilities, and culture will be required to interact with, stimulate,and empower collaborators. In addition the organization’s technology, theproper allocation of resources, clear communication of performance meas-ures and incentives, and the organization’s basic structure and ownershipwill not only influence internal people and processes, but collaborators aswell. Achieving the architecture implied in Figure 1.4 is not something thatcan be accomplished overnight for an organization seeking to create theorganizational and network architecture among collaborators for purposesof innovation. It may take some years to achieve, depending on the currentsituation of an organization. Unfortunately, organizations that are quitesuccessful in terms of technology often have difficulty capitalizing on it.One is reminded of Kodak, which apparently had a difficult time in appre-ciating the need to respond to external threats from a constantly changingenvironment.4 For example, it was among the first to assemble the tech-nology for digital photography (beginning in 1975), and even partneredwith Kinko’s, Microsoft, IBM, and Hewlett Packard to bring it to market, butnot necessarily in a consumer-friendly form. Instead, Kodak chose to market
  27. 27. Symbiotic Innovation 25 Vision, objectives & strategies Organizational Performance culture & measures & incentives values The network of organizational stakeholders: Shareholders Ownership and Customers organizational Employees Technology structure “Partners” Distributors Suppliers Communities Government Processes Other Resources Physical People facilitiesFigure 1.4 Architecture of networked organizationits technology in many cases to niche applications, licensing or selling theirtechnology to other camera manufacturers. After mobile phones came equipped with excellent electronic cameras,the market for cameras changed forever. This occurred some ten yearsbefore Kodak went into bankruptcy on January 19, 2012. The implication isthat Kodak had time to do something about their situation, but apparentlywas unable to do so. While one may speculate on the reasons for this – theyare inside-out driven, or they are still locked in the mindset of images onpaper, etc. (Scheyder, 2012), the outcome is a threat to the existence of a130-year-old firm with a classic brand name. Would a different organiza-tional and network architecture have provided Kodak with the opportunityto survive with some form of symbiotic innovation, better capitalizing onits technology? While we won’t know the answer to this question, it is clearthat the way in which organizations respond to their environment influ-ences their need for innovation, and it follows that the very architecture oftheir organization and network will influence their ability to innovate, andperhaps, to survive.Use adaptive experimentation to define best collaboration approachesSerious managers will question the value of all the work required to achievesymbiotic innovation through multiple types of collaboration and networkorchestration – or will ask for the return on investment of such an approach.Ideally one would like to compare the kind of innovation that might come
  28. 28. 26 Robert J. Thomas and Yoram (Jerry) Windout of one or a few types of collaboration compared with that derived froma more comprehensive network orchestration. However this kind of formalexperimentation would be cost prohibitive, even if it were possible to designand implement. Instead, we recommend a more adaptive experimentationapproach in which different types of collaboration are compared individu-ally to each other or in combination, and the results tracked. For example, imagine the problem of creating a new approach to care forpostsurgical patients at home. After defining the problem as a challenge,one could imagine giving it to an internal team of collaborators to use brain-storming, morphological techniques, and other creative methods to developas many ideas as possible. The same could be done in terms of generatingideas from a co-creation process with actual consumers and their familiesresponsible for home care of patients. In addition, the problem could besent to a crowdsourcing venue (e.g., InnoCentive) to obtain their ideas.Using predefined metrics and screening criteria, the number and quality ofideas can be compared to estimate the value of each type of collaboration.Essentially, adaptive experimentation is a characteristic of learning organi-zations, and applying it to the process of symbiotic innovation via differenttypes of collaboration is a kind of learning that marks an organization asnot only as a learning one, but also as one that is dynamic and is more likelyto thrive in unstable environments than others are. Given the complexity and uncertainty facing firms, it should be evidentthat there is no single optimal solution for successful innovation, and theonly way to really succeed is to learn over time and acquire the knowledgenecessary for innovation by using adaptive experimentation. This processcan lead to breakthrough ideas, better decisions, faster learning, uncertaintyand confusion among competitors about a firm’s actions, and can signifi-cantly contribute to creating a culture of innovation.5 It achieves the latterby recognizing that failure is an inevitable outcome of experimentation,which in turn leads to acceptance of failure and the subsequent focus onlessons learned from failures.6 ConclusionsInnovation is not a local phenomenon. In 2012, PwC (PricewaterhouseCoopers) published a study of over 1250 CEOs about the challenges theyfaced. While their overall findings about the new world of uncertaintyand complexity were similar to those of IBM that were indicated at theoutset of this chapter, they also indicated that in response to complexrapidly changing environments CEOs were not just exporting their currentofferings to emerging markets; they were building entirely new busi-nesses and reconfiguring operations to meet local market needs to pursuegrowth (PwC, 2012). The CEO’s of reporting firms were (PwC, 2012, p.8) “ ... simultaneously building local capabilities in important markets,
  29. 29. Symbiotic Innovation 27extending operational footprints, building strategic alliances and creatingnew networks for new markets that include research and development(R&D), manufacturing and services support. They’re adapting how they goto market, reconfiguring processes and at times entire operating models.” The PwC study describes the need for the kind of symbiotic innovationand collaboration we have discussed in this chapter. It is not an easy processthat can be achieved in a stage-gate fashion, but rather a complex and clut-tered one with many participants with different objectives and goals whomust be orchestrated to achieve the harmony required for innovation toemerge. First it is essential to understand the various interaction patternsamong collaborators from a symbiotic perspective (see Figure 1.1). Withthis conceptualization, it can be used to more deeply study collaborationpatterns found in each of the five types of collaboration – from inside theinnovating firm to the ecological communities (see Figure 1.2). With aconcentrated focus on the consumer as a key beneficiary of innovation, allfive types of collaboration can be evaluated to design and implement thenetwork architecture that most efficiently and effectively defines the bestsymbiotic innovation process to achieve desired outcomes (see Figures 1.3and 1.4). Pursuing this kind of effort is substantial, and it leaves many unansweredquestions that can be pursued in future research by both academics andpractitioners. For example, which collaborators should be chosen, basedon which criteria in the situation faced by the innovating organization (orentrepreneur)? What is the appropriate balance of incentives and benefitsthat motivate each collaborator to work with others to innovate? Whatkinds of innovation will a balanced collaboration (mutualism) producerelative to a less balanced one (commensalism)? What are the criteria fordefining a successful network for collaborative symbiotic innovation andfor a successful network orchestrator? What are the best methods of commu-nication among network participants? What can go wrong in a symbioticcollaboration, such as poorly set expectations, environmental challenges,excessive delays, or parasitic partners? Knowledge from future researchamong academics, adaptive experimentation among practitioners, andreporting of successes and failures can help answer some of these questionsand drive the development of significant innovation for the future.Notes1. Symbiosis has been discussed in marketing literature (Adler, 1966, Varadarajan and Rajaratnam, 1986), in organizational literature (Haire, 1959), and in the liter- ature on industrial ecology (Chertow, 2007), but primarily in terms of strategic partnerships, not in terms of innovation.2. Throughout the chapter, although we often consider innovation in terms of an offering to consumers (product, service, etc.), we also see it as a more generalized opportunity to create something new in any context. New business models, new
  30. 30. 28 Robert J. Thomas and Yoram (Jerry) Wind forms of communication, new distribution options, new customer relationship management approaches, and new pricing paradigms illustrate the scope of inno- vation we recognize.3. The units of gain or loss can be defined by a number of benefits; for example, the reduction of risk in the relationship may be seen as a gain by one participant or the other, or by both.4. Valuable analyses supporting this discussion of Kodak are provided in Crook (2012) and Scheyder (2012).5. For a more detailed discussion of adaptive experimentation, see Wind (2011).ReferencesAdler, Lee (1966) Symbiotic Marketing, Harvard Business Review, 44, 59–71.Alderson, Wroe (1957) Marketing Behavior and Executive Action: A Functionalist Approach to Marketing Theory, Homewood, IL: Richard D. Irwin.Apple Inc. v. Samsung Electronics Co., Ltd. (2012) Retrieved from Wikipedia: http:// en.wikipedia.org/wiki/Apple_Inc._v._Samsung_Electronics_Co.,_Ltd.Austin, Robert D., Lee Devin, and Erin E. Sullivan (2012) Accidental Innovation: Supporting Valuable Unpredictability in the Creative Process, Organization Science, Forthcoming.Barrett, Paul M. (2012) Apples War on Android, Business Week, March 29, Retrieved from: http://www.businessweek.com/articles/2012–03–29/apple-s-war-on-android.Birkinshaw, Julian and Stuart Crainer (2009) Combine Harvesting, Lab Notes, London: London Business School, 12, 15–18.Brohan, Mark (2010) Nike’s Web Sales Flourish in Fiscal 2010, Internet Retailer, Retrieved from: http://www.internetretailer.com/2010/06/30/ nikes-web-sales-flourish-fiscal-2010.Business Week (2005) The Power of Us, June 20. Retrieved from http://www.business- week.com/magazine/content/05_25/b3938601.htm.Cain, Susan (2012) The Rise of the New Groupthink, New York Times, January 13, Retrieved from: http://www.nytimes.com/2012/01/15/opinion/sunday/the-rise-of- the-new-groupthink.html?_R=1.Chesbrough, H. (2003) Open Innovation: The New Imperative for Creating and Profiting from Technology, Boston, MA: Harvard Business School Press.Chertow, Marian R . (2007) “Uncovering” Industrial Symbiosis, Journal of Industrial Ecology, 11, 11–30.Crook, Jordan (2012) What Happened To Kodak’s Moment? TechCrunch, January 21, Retrieved from: http://techcrunch.com/2012/01/21/ what-happened-to-kodaks-moment/.Dougherty, Deborah and Danielle D. Dunne (2011) Organizing Ecologies of Complex Innovation, Organization Science, 22, 1214–1223.Douglas, Angela E . (2010) The Symbiotic Habit, Princeton: Princeton University Press.Drummond, Mike (2011) Unlocking Open Innovation, Inventors Digest, February, Retrieved at www.inventorsdigest.com/archives/5559.Echeverri, Per and Per Skalén (2011) Co-creation and Co-destruction: A Practice-Theory Based Study of Interactive Value Formation, Marketing Theory, 11, 351–373.Füller, Johann (2010) Refining Virtual Co-Creation from a Consumer Perspective, California Management Review, 52, 98–122.
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  34. 34. Index3C SCEBAL, 100–4, 111 internal, 23M, 32 market, 224I model, 211, 230 network model of, 24 open, 2, 13, 22absorptive capacity, 54, 58 collaborative R&D, 117, 126action research approach, 82 commensalism, 4adaptive experimentation, 25 communications markets, 101Alstom Group, 260–1 communities of practice, 182–201, 352Andreas Stihl & Co. KG, 299 community, 133Ansoff matrix, 342 competitive advantage, 151, 341Apple, 5–6, 327 concept of the third place, 318Azul Brazilian Airlines, 239–40 Confucianism, 278 conjoint analysis, 10balanced scorecard, 62 The Convergence 2020 Project, 106–11beta-test format, 18 convergence marketing, 7, 11blind spots, 104 core competencies, 292BMW Group, 32 culturebootlegging, 274 corporate, 55bricolage, 299, 306 of innovation, 26Build-a-Bear Workshop, 11 cost-to-market, 35business innovation pyramid, 329 country-of-origin effect, 337business model innovation, 327, 343–5 co-working, 314 creativecall for ideas, 33 gaps, 87–9Capgemini Consulting, 327–9 process, 83–4case study method, 105 creativity, 120Center of Innovation Research, 253 concepts of, 81champions of innovation, 272–3, 283 room, 86citation index, 213 cross-functional teams, 10closed innovation process, 52 crowdsourcing, 14cloud computing, 314, 325 Customer Active Paradigm, 32Coca-Cola, 11 customerization, 12co-creation, 11, 22, 32–46, 345 contest, 36 Dell, 7 framework, 38–40 delphi method, 179 initiatives, 42 discontinuous innovation, 6 process, 12, 26 disruptive behavior, 6co-destruction, 12 DoI theory, 156–8collaboration DuPont, 9 approaches, 25 consumer, 2, 11 early adopters, 151–74 customer, 343 Early Customer Engagement (ECE), 178 ecological, 2, 16, 22 Embraer, 248–9 external, 349 emic view, 276–8 355