Collaborative entrepreneurship 08282013

Collaborative Entrepreneurship
HOW

Raymond E. Miles + Grant Miles + Charles C. Snow Stanford University Press, 2005
March 15, 2007 First Light L.L.C. jgillis767@aol.com 2
COMMUNITIES OF
NETWORKED
FIRMS
USE
CONTINUOUS INNOVATION
TO CREATE
ECONOMIC WEALTH
CollaborativeEntrepreneurship
HOW

OPEN WINDOW
Member Firms
Affiliated Firms
Project Management &
Accounting Infrastructure
Continuing Education
Central Services
Innovation Catalogue
Venturing
Advisor Council
Leader Council
Facilitators
Innovation Teams

OpenWindow
Open Window as a whole does not have clearly
defined product or service lines (though its individual
member firms do), and it has even more vaguely
defined industries and markets.
Open Window is a theoretical concept that will in
time redefine the concept of the firm. For now,
think of Open Window as a company of companies
based on the idea of continuous entrepreneurship
as a deliberate strategy.
Open Window cannot be centrally directed or
controlled. It depends on the widespread ability
to collaborate – vertically and laterally within a
particular firm and horizontally across firms in the
Open Window network.

OpenWindow
5
Open Window cannot support its business strategy
of market exploration with a traditional structure.
Instead, the widespread use of collaboration
requires a self-managing organization that relies
heavily on the competence of member firms as
well as ad hoc organization structures specifically
developed for each entrepreneurial initiative.
The basic notion that Open Window member firms
are willing to share their ideas freely in an effort to
generate new knowledge and products without
carefully calculating in advance the distribution of
returns is contrary to the motivational assumptions
of existing economic and management theory.

March 15, 2007 First Light L.L.C. jgillis767@aol.com
6
Meta-Capability
Each time in business history that a truly new
strategy has been invented, it has required a
new structure and a new capability essential to
its operation.
The Open Window model requires appropriate
investments in collaborative capability at several
levels – within the firm, within the network of member
firms, and even in society itself.
As we know from earlier meta-capabilities, the
wealth creating impact of each new capability is
multiplied as it pervades firms and economies. We
foresee a meta-capability of collaboration – a widely
distributed social asset that will drive continuous
innovation.

BusinessModels
Relationship to
Market
Penetrate or
Segment
Explore
Type of Innovation Planned, Periodic Planned/Unplanned,
Continuous
Growth Direction Vertically, Laterally Horizontal
(within a given industry) (across several industries)
Old Models New Model

OrganizationModels
Type of Structure Functional, Matrix,
Divisional
Network
Number of
Associated Firms
One or Few Several or Many
Management System Hierarchical Self-Managed
(rules, planning, control) (based on market factors,
protocols)

BusinessStrategies
Market
Penetration
Market
Segmentation
Market
Exploration
Coordination Delegation Collaboration
•Forecasting
•Planning
•Budgeting
•Controlling
•Joint Goal Setting
•Decentralization
•Employee
Development
• Trust Building
• Protocol Building
• Project Team
Development

11
CompetitiveStandards
Open Window member firms share information
and knowledge that may be used by any other
member firm without specific permission, and they
often commit resources to inter-firm projects whose
full returns cannot be calculated until after the fact.
This is not how most managers have been taught
to behave, either in their formal educations or in
their everyday experience.

Knowledge-SharingPotential
Competition
Cooperation
Coopetition
Collaboration
low high
low
high
Motivation
Trust

o Open Window Transparency
o Market Exploration Workshops
o Pay for Time
o Competence and Trustworthiness
o Continuous Stream of Innovative
Products and Services
o Open Ended vs. Special Purpose
o Provider Equity and Satisfaction

CommunityofCreation
o A common interest
o A sense of belonging
o An explicit economic purpose
o A sponsor
o A shared language
o Ground rules for participation
o Mechanisms to manage intellectual
property rights
o Physical support of the sponsor
o Cooperation as a
key success factor CONTINUOUS INNOVATION
A WORKABLE
BALANCE BETWEEN ORDER
AND CHAOS
OPEN WINDOW

o Central Services
• Continuing Education
• Collaborative skills
• Collaborative process
• Inter-firm collaboration
• Continuing process analysis
• Write-up of successes and failures
• Innovation Catalogue
• Usable ideas, processes, products,
templates
• Electronic Project Management
• Linking a virtual community that crosses
company lines

o Central Services
• Accounting Infrastructure
• Linking a virtual community that crosses
company lines
• Venturing
• Finding companies
• Acquiring capital
• Venture process
• Venture education
o Input like Cisco
• Search for Innovative Firms
o Output like Intel
• Search for Innovative Applications

o Operating Protocols
• Like Johnson & Johnson “Credo”
• Like Ritz Carleton “Gold Standard”
• Demonstrate trust by immediately
sharing something valuable.
• Stimulate equitable reciprocity by
volunteering a generous distribution
of jointly created returns.
• Publicly give credit to collaborators
for their contributions to innovative
projects.
• Positive (Principles) vs. Negative (Rules)

o Advisor Council
• Twelve members
• Two-year staggered terms
• Approval of all practices
• Represent all services (for firm approval)
• Represent all systems (for firm approval)
• Positive (principles) vs. negative (rules)
• Operating protocol principle
• Minimal organization principle
• Self-management principle

o Leader Council
• Works for its member firms, not the other
way around.
• Executive level
• Appointed by Advisor Council
• Technical / market knowledge
• Collaborative skills
• Meets periodically
• Assess all ongoing projects
• Offer assistance as appropriate
• Informed by Facilitators of progress, spin-off
ventures, needs

o Facilitators
• Middle-level managers at member firms
• Facilitate operations
• Assess their projects
• Inform Leader council of project progress
• Work with Innovation Teams
• Enter materials in the Innovation Catalog
• Offer assistance as appropriate
• Participate in innovation discussions
with facilitators of other Innovation
teams

o Innovation Teams
• Self-managing work teams, across firms and with
customers and suppliers
• Maintain customer satisfaction data
• Record all costs
• Maintain minimum profit margin of 12%
• Think about member firms as they develop their own
technologies, products, or markets
• Self-schedule to customer needs
• Their various bosses assist them in meeting their own
goals and objectives.

BARRIERS

This sounds good, but it won’t work. First you’re going to
have to write another book to explain how to put this thing
together legally. Second, it’s way too complex. How can
anyone manage an organization like this? Putting together
even a temporary alliance with two or three firms requires
an huge amount of effort and usually doesn’t generate
much in the way of results.
At least one of the firms will try to take advantage of you.
When you keep innovation inside your own firm, you can
control the process, prevent information leaks and make
certain that any returns go straight to your own bottom line.
Even if, as you claim, firms waste as much as 80% of their
potential to innovate, I still say a firm should go it alone.
In fact, I’d rather waste the 80% than run the risk that
someone else will take advantage of me or my firm.

o Organizational Barriers
• Tight departmentalization
• Unit boundaries
• Information flows
• Performance evaluations
• Reward allocation
• Existing leadership & planning
• Control & reward systems
• Decision-making processes

o Institutional Barriers
• Current accounting conventions
• G & A tight controls / cost reduction
• Lack of investment in collaborative
capabilities and trust-building activities
• Lack of knowledge-management
systems
• Lack of valuing and accounting for
intellectual capital
• Lack of sharing of knowledge assets
• Common ownership and commitment
of key resources to joint activities

o Societal Barriers
• Childhood education and training
• Large and continuing investments
• Collective will
• Change traditional economic measures
• Wealth generated from innovation
• Knowledge and learning skills
• Measures of human capital
• Benchmarks of meta-capability
• Internal (corporate governance) and
external (stock ownership) opportunism

o Philosophical Barriers
• Self-determination and self-reliance
• Free markets and liberal individualism
• How wealth is created and allocated
• Focus on distribution of societal wealth
vs. generation of societal wealth
• Legal concept of ownership rights vs.
common ownership of key resources
• Commitment without precise prior
agreement
• State ownership and control of infra-
structure mechanisms

o Conceptual Barriers
• Familiar components / Unfamiliar
package
• No critical mass conception or
justification
• Organization = many independent firms
vs. organization = one firm
• Nonstop product and service innovation
• Open sharing of information
• Self-management governance vs.
hierarchy and control
• Non-traditional theory
• No “practice-to-theory-and-back-to-practice”

BUT THEN…

31
The old theory of the firm focuses on the behavior
of a single firm rather than groups of firms.
The new strategy of continuous innovation relies
on resources and capabilities jointly owned by
multiple firms.
The theory of the firm needs to mentally expand its
unit of analysis to incorporate joint ownership of
assets and resources.

32
Given that the current concept of the firm is that
of a mechanism for accumulating and employing
commonly held resources, the idea of extending
this view to include networks of independent firms
sharing a common resource would seem to be a
logical extension.

33
In a trust-supported organization of independent
firms, one could expect knowledge resources to be
exchanged with low cost and high returns.

34
End of
Part I

BusinessIntelligence
highlow
highAdvantage
Intelligence
Standard Reports
Ad Hoc Reports
Queries
Alerts
Statistical Analysis
Forecasting/Extrapolation
Predictive modeling
Optimization
Thomas H. Davenport + Jeanne G. Harris Competing on Analytics – Harvard Business School Press, 2007
What’s the best that can happen?
What will happen next?
What if these trends continue?
Why is this happening?
What actions are needed?
Where exactly is the problem?
How many, how often, where?
What happened?

Veritas
36

Collaborative entrepreneurship 08282013

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Editor's Notes