The document discusses the concept of innovation ecosystems and their advantages over traditional innovation systems. It provides examples from several academic papers on how firms can benefit from understanding the ecosystem they operate in and coevolving with other actors in the ecosystem. Specifically, it discusses how ecosystems allow for disruptions no single firm can create alone, and how firms must work with others in the ecosystem to jointly evolve their capabilities. The document advocates that firms embrace the collective properties of their ecosystem rather than solely focusing on internal capabilities.

1. VTT TECHNICAL RESEARCH CENTRE OF FINLAND LTD
Innovation studies and
ecosystems
PORIMINISEMI 2016
Dr. Arho Suominen,
VTT Technical Research Centre (Finland)

2. 220/04/2016 2
“What is gained from adding ‘eco-’ to our treatment of national
and regional innovation systems?”
- Oh et al. (2016)
Oh, D. S., Phillips, F., Park, S., & Lee, E. (2016). Innovation
ecosystems: A critical examination. Technovation.

3. 320/04/2016 3
“Very little, and the risks outweigh the benefits.”
- Oh et al. (2016)
Oh, D. S., Phillips, F., Park, S., & Lee, E. (2016). Innovation
ecosystems: A critical examination. Technovation.

4. 420/04/2016 4
Some wordplay
innovation, n
/ɪnəʊˈveɪʃən/
A change made in the nature or fashion of anything
system, n
Brit. /ˈsɪstᵻm/ , U.S. /ˈsɪstᵻm/
A group or set of related or associated things perceived or
thought of as a unity or complex whole.
ecosystem, n
Brit. /ˈiːkəʊˌsɪstᵻm/, /ˈɛkəʊˌsɪstᵻm/, U.S. /ˈɛkoʊˌsɪstəm/, /ˈikoʊˌsɪstəm/
A biological system composed of all the organisms found
in a particular physical environment, interacting with it and
with each other.

5. 520/04/2016 5
Some wordplay
Innovation system
A complex whole making changes in the nature of anything.
Innovation ecosystem
A complex system, in a particular environment, interacting with it
and with each other to make changes in the nature of anything.

6. 620/04/2016 6
LET ME ELABORATE
 We have a strong well-established chain of thought analyzing:
 The role and structure of a innovation system e.g. Lundvall, Nelson
Freeman and Edquist
 The competitive forces of companies in a value chain, value
network or some other structure e.g. Porter and Chesbrough
 The system of creating new technology e.g. Carlsson, Hekkert and
Markard
 Then something emerges…

7. INNOVATION SYSTEMS
REGIONS
TECHNOLOGIES
SOMETHING ELSEECOSYSTEMS…
COMPETITION

8. 820/04/2016 8
Adner on Match Your Innovation Strategy to
Your Innovation Ecosystem
 “High-definition televisions should, by now, be a huge success. Philips,
Sony, and Thompson invested billions of dollars to develop TV sets
with astonishingly high picture quality. From a technology perspective,
they succeeded: Console manufacturers have been ready for the mass
market since the early 1990s. Yet the category has been an
unmitigated failure, not because the consoles are deficient, but
because critical complements such as studio production equipment,
signal compression technologies, and broadcasting standards were not
developed or adopted in time.”
 When they work, ecosystems allow firms to create value that no single
firm could have created alone. The benefits of these systems—
discussed under such labels as platform leadership, keystone
strategies, open innovation, value networks, and hyperlinked
organizations—are real and well publicized.
Adner, R. (2006). Match your innovation strategy to your
innovation ecosystem. Harvard business review, 84(4),
98.

9. 920/04/2016 9
Adner on Match Your Innovation Strategy to
Your Innovation Ecosystem
 “High-definition televisions should, by now, be a huge success. Philips,
Sony, and Thompson invested billions of dollars to develop TV sets
with astonishingly high picture quality. From a technology perspective,
they succeeded: Console manufacturers have been ready for the mass
market since the early 1990s. Yet the category has been an
unmitigated failure, not because the consoles are deficient, but
because critical complements such as studio production equipment,
signal compression technologies, and broadcasting standards were not
developed or adopted in time.”
 When they work, ecosystems allow firms to create value that no single
firm could have created alone. The benefits of these systems—
discussed under such labels as platform leadership, keystone
strategies, open innovation, value networks, and hyperlinked
organizations—are real and well publicized.
 “High-definition televisions should, by now, be a huge success. Philips,
Sony, and Thompson invested billions of dollars to develop TV sets
with astonishingly high picture quality. From a technological
success: Console manufacturers have been ready for the mass
market since the early 1990s. Yet the category has been an
market failure, not because the consoles are deficient, but because
missed complements such as studio production equipment, signal
compression technologies, and broadcasting standards were not
developed or adopted in time.”
 When they work, ecosystems allow firms to create value no single
firm could have created alone. The benefits of these systems—
discussed under such labels as platform leadership, keystone
strategies, open innovation, value networks, and hyperlinked
organizations—are real and well publicized.
Adner, R. (2006). Match your innovation strategy to your
innovation ecosystem. Harvard business review, 84(4),
98.

10. 1020/04/2016 10
Moore on Death of Competition
 “Innovation usually requires that other organizations evolve their
product in concert with yours. You must convince others to dream with
you and work at your side. Embracing this challenge changes how you
think about your company, your career, your community and your
competition…The Death of Competition, even though I know that
competition is intensifying.”
 “Intel coevolves with these firms. That is, it seeks ways to work with
this web of companies to upgrade everyone’s abilities. …Coevolution
as a strategic concept is not just for high-tech companies or large ones.
A magazine must coevolve with its advertisers, readers, contributors
and delivery system.”
Moore, J. F. (1996). The death of competition: leadership and
strategy in the age of business ecosystems. HarperCollins
Publishers.

11. 1120/04/2016 11
Moore on Death of Competition
 “Innovation usually requires that other organizations evolution their
product in concert with yours. You must convince others to dream
with you and work at your side. Embracing this challenge changes
how you think about your company, your career, your community and
your competition…The Death of Competition, even though I know
that competition is intensifying.”
 “Intel coevolves with these firms. That is, it seeks ways to work with
this web of companies to upgrade everyone’s abilities. …Coevolution
as a strategic concept is not just for high-tech companies or large ones.
A magazine must coevolve with its advertisers, readers, contributors
and delivery system.”
Moore, J. F. (1996). The death of competition: leadership and
strategy in the age of business ecosystems. HarperCollins
Publishers.

12. 1220/04/2016 12
Iansiti on the Keystone Advantage
 “In essence, both of these firms [Wal-Mart and Microsoft] understand
that their fate is shared with that of the other members in their business
networks. Rather than focusing primarily on their internal capabilities
(as many of their competitors did), they emphasize the collective
properties of the business networks in which they participate, and treat
these more like organic ecosystems than traditional supply chain
partners.”
 “Ultimately Wal-Mart and Microsoft were successful because they
played the role of a keystone in their respective ecosystems. Drawn
from biology, the term describes a pattern of behavior that improves
the performance of an ecosystem and, in doing so, improves the
performance.”
Iansiti, M., & Levien, R. (2004). The keystone advantage: what the
new dynamics of business ecosystems mean for strategy,
innovation, and sustainability. Harvard Business Press.

13. 1320/04/2016 13
Iansiti on the Keystone Advantage
 “In essence, both of these firms [Wal-Mart and Microsoft] understand
that their shared fate with that of the other members in their business
networks. Rather than focusing on their internal capabilities (as
many of their competitors), they emphasize the collective properties
of the business networks in which they participate, and treat these
more like organic ecosystems than traditional supply chain partners.”
 “Ultimately Wal-Mart and Microsoft were successful because they
played the role of a keystone in their respective ecosystems. Drawn
from biology, the term describes a pattern of behavior that improves
the performance of an ecosystem and, in doing so, improves the
performance.”
Iansiti, M., & Levien, R. (2004). The keystone advantage: what the
new dynamics of business ecosystems mean for strategy,
innovation, and sustainability. Harvard Business Press.

14. 1420/04/2016 14
Teece on Dynamic Capabilities
 ”For open economies exposed to rapid technological change,
the dynamic capabilities framework highlights organizational and
(strategic) managerial competences that can enable an
enterprise to achieve competitive advantage, and then
semicontinuously morph as to maintain it”
 ”Implicit in the dynamic capabilities framework is the recognition
that relatively open regimes of free trade and investment, global
dispersion in the sources of new knowledge and the multi-
invention or system character of such innovation have ’upped
the ante’ for modern management”
Teece, D. J. (2007). Explicating dynamic capabilities: the nature and
microfoundations of (sustainable) enterprise performance. Strategic
management journal, 28(13), 1319-1350.

15. 1520/04/2016 15
Teece on Dynamic Capabilities
 ”For open economies exposed to rapid technological change,
the dynamic capabilities framework highlights organizational
and (strategic) managerial competences that can enable an
enterprise to achieve competitive advantage, and then
semicontinuously morph as to maintain it”
 ”Implicit in the dynamic capabilities framework is the recognition
that relatively open regimes of free trade and investment,
global dispersion in the sources of new knowledge and the
multi-invention or system character of such innovation have
’upped the ante’ for modern management”
Teece, D. J. (2007). Explicating dynamic capabilities: the nature and
microfoundations of (sustainable) enterprise performance. Strategic
management journal, 28(13), 1319-1350.

16. 1620/04/2016 16
RECAP
 Ecosystems allow for disruptions larger than any single
organization could create.
 Innovation requires evolution. Organizations in the ecosystem
are required to coevolve to enhance each others capabilities.
 Capabilities, specifically internal, need to been dynamic enabling
semicontinuos metamorphosis of the company.
 But rather than focusing on internal, companies embrace the
dispersion of knowledge and collective properties of their
ecosystem.

17. ARENA
SYSTEM
EXTERNALENVIRONMENT
DIGITAL
PLATFORM
LEGISLATION OVERSIGHT
INFLUENCER
AUTONOMOUS
VEHICLE
RESEARCH
R&D FUNDING
VEHICLE
FINANCING
VEHICLE
FINANCING
VEHICLE
FINANCING
VEHICLE
FINANCING
VEHICLE
FINANCING
VEHICLE
MANUFACTURER
VEHICLE
FINANCING
VEHICLE
FINANCING
VEHICLE
OPERATOR

18. TECHNOLOGY FOR BUSINESS