Birkinshaw SSE Group 2

1. Finding, Forming, and Performing: Creating Networks For Discontinuous Innovation Magnus Karlsson Robin Hesselstad Cecilia Nessen YasharMansoori

2. Introduction Many industries today face a discontinuous technological and market change, in which companies that emerge have completely different competencies than their predecessors.

4. Building Networks for Discontinuous Innovation The process of building networks for this continuous innovation can be divided into three activities: finding, forming, performing. Finding: refers essentially to the breadth of search that is conducted. It can be hindered by geographical, technological and industrial barriers. Forming: refers to the attitude of prospective partners towards your firm. The obstacles are ideological, demographical, and ethnic problems.

6. 1- Creating New Networks in Proximate Areas Barriers Even though the actors in question may be well known to the firm and are keen to become involved, the decision to invest in relationships with them is likely to have an uncertain and perhaps long-term payoff. Examples - Lego’s development of the second version of the next generation of toys they had to out-source the internal software of the new robot called “Mindstorm NXT” because they needed a more intuitive software. - In 1999, Ericsson sought ways to improve the quality of its access to university-based research. Rather than sponsor research studies, as they had done in the past, they designated key individuals to cooperate directly with sponsored faculty.

7. Recommendations Approach the potential new partners directly. Structure the relationship carefully to overcome the institutional or demographic differences that separate you and try to understand how to motivate and excite your partner. Build personal relationships at the interfaces with partners to ensure that knowledge transfer occurs.

8. 2-Seeking Out New Networks in Distant Areas Barriers The barriers here are typically geographical, ethnic, and institutional. Examples BT (British Telecom) established a four-man team to scout for interesting companies with the interesting technologies to cooperate with, which was established in Silicon Valley.

9. Recommendation Employ boundary spanners or scouts who specialize in building and maintaining relationships with many people. Be prepared to accept redundancy or duplication in the networks that you create. Do not underestimate the difficulty of absorbing the insights gained from these distant networks; give specific individuals direct responsibility for internalizing and applying the knowledge gained from new partners.

10. 3-Building Relationships with Unusual Partners Barriers Ideological reasons, institutional or demo graphic barriers between you and your potential partners are the dominant barriers. Challenges of building a relationship with such prospective partners is very different to the challenge of seeking out new partners in distant areas. Examples Novo Nordisk. As a commercial organization selling insulin and other diabetes-related therapies did not find it easy to build deep relationships with specialists, nurses, and health insurers. In 2003, the company helped set up the Oxford Health Alliance, a non-profit collaborative entity which goal was nothing less than the prevention or cure of diabetes—which potentially could kill off the company’s main line of business.

11. Recommendations Focus on the higher-order purpose or issue that transcends your differences. Be prepared for a lengthy dialogue. Try to identify cross-over individuals who have switched allegiance from the world of the prospective partner to your world.

13. Recommendations A combination of the tactics that scenario two and three suggests. Work with specialist network builders and develop a reason for the potential partners to work with you

15. Building trust and reciprocity across the network: Larger firms could be very selective about what information to share with their partners. Partnerships rely on the precepts of trust and reciprocity to be effective, and increasingly firms are realizing that the more they give away, the more they get back in return.

16. Understanding your own position in the network: It is tempting for large firms to see themselves as network “orchestrators” who achieve some level of control by virtue of their central position in the network. While this can be beneficial it can also be misguided, because the network may become more valuable if it is given the opportunity to develop its own dynamic. It is an important reminder that business networks, like ecosystems, cannot be controlled by any single player in them.

18. Where the challenges in finding and forming relationships are relatively low, approach potential new partners directly, and structure the relationship to minimize whatever obstacles separate you.

19. Where the challenge is mostly around finding new partners, approach them through boundary spanners or scouts who specialize in such activities, and work very hard on building the capability to absorb insights from these partners.

20. Where the challenge is mostly around forming new relationships with prospective partners, focus on the higher-order purpose that transcends your ideological differences, and try to identify cross-over individuals who can link the two sides.

21. Where the challenge involves finding and forming new networks, be prepared to work with specialist and independent network-builders to bridge the gap, and look for ways of gradually breaking down barriers to enable some of the approaches identified above to work.