June 24, 2020

Innovation ecosystems

We firmly believe that building an innovation ecosystem is the best way to increase a company's innovative power and efficiency. The many new possibilities and interfaces created will fundamentally change the way companies interact with their environment. In essence, it is a promise of the company to open up, to establish closer relationships both internally and externally, to promote collaboration and to implement a new corporate culture.

The question now is: which connections should be particularly promoted and put into action first? What do we mean by an ecosystem for innovation? And what challenges can be solved with it?

Innovation ecosystems - a definition

Let's start with the central question. What is an innovation ecosystem anyway? Here is a definitive approximation:

An innovation ecosystem is a collaborative network that connects organizations, stakeholders, users and other relevant target groups. It extends across all phases of the value chain in order to drive innovation for the benefit of all involved through a targeted flow of information, ideas, data and knowledge.

An innovation ecosystem is therefore largely based on the principle of permeability. This means that ideas and solutions can move freely between the different parts of the company and its network. For example, concepts that result from working with customers can be continued directly as innovation projects with suppliers. In the best case, the ecosystem ultimately covers the entire value chain and integrates stakeholders in innovation initiatives that were previously outside their sphere of action.

The idea of ​​an innovation ecosystem thus also implies that the concept of strictly separate units along the value chain blocks the development of innovative solutions. The great achievement of an ecosystem lies in bridging precisely these blockages and unleashing new potential. Innovation should therefore always be a joint effort of all actors along the value chain - regardless of how big their contribution is and whether they play a role at the beginning or only towards the end.

This is where a second fundamental principle comes into play, which we support with our technology. Namely, the determination that every person, regardless of their position and role, can have good ideas, valuable knowledge, or the skills needed to solve a specific problem. Of course, the collaboration of directly neighboring actors along the value chain is the first logical step. In the long term, however, the flow of relevant information and data should be possible across all interfaces.

Take, for example, the development of a new electric car. The classic separation of functions positions automobile manufacturers between suppliers and customers. Even if the suppliers contribute important technological advances such as long-life batteries or light materials, they rarely have direct contact with the end users during their development process.

Interactions between suppliers and their own network take place according to the same logic. For example, with the manufacturers of raw materials for these batteries or relevant research organizations  - they too are often isolated from the subsequent units along the value chain.

If an ecosystem now exists that connects all the players with one another, the battery suppliers can interact directly with the customers of the car manufacturer in order to better understand their needs. Analogously, researchers working for a raw material manufacturer can help to solve the challenges of the automobile manufacturer. Ideally, such interactions relate not only to technical or product-related questions, but also to other areas such as business models or process innovations.

What are the benefits of building an ecosystem for innovations?

If you had to summarize all the challenges that companies face due to the digital transformation with one word, this would be complexity. Almost without exception, products, services or the processes by which they are marketed are more complex than just a few years ago. Not only from a technical point of view, but also in terms of how they influence and depend on each other. As a result, it is becoming increasingly difficult, as well as time and cost intensive, to develop all the necessary skills within the company itself. 

Overcoming this challenge and shifting the role of the company from a reactive element to a driving force in competition requires, above all, a change of perspective. The pursuit of internal answers and competencies is not only an avoidable bottleneck, but also carries a considerable risk in an environment in which fast and unpredictable changes can occur at any time. Wouldn't it be easier to open up your own company boundaries and bundle existing potential in the network? Wouldn't it be easier to work with external experts and specialists than being under constant pressure to keep up with the latest developments?

We firmly believe that overcoming complexity is not a question of internal competencies, but is crucially dependent on the extensive and strategic use of an ecosystem. The aforementioned change of perspective consequently favors the self-image of companies as a central, closely connected hub within a large network of stakeholders, all of whom can make a positive contribution to increasing innovative strength with specific knowledge or skills.

Which actors are essential for my ecosystem?

Customers, suppliers and employees are the most obvious stakeholders that should be involved in a powerful innovation ecosystem. Apart from these three main groups, however, there are many other stakeholders and sources of information - often even beyond the current reach and possible contact points of the organization. Researchers at universities or other institutions come to mind. Startups in relevant areas can also provide the missing impetus for urgently needed innovations. The same applies to existing online communities of experts or thought leaders.

But it doesn't always have to be specific target groups - it can also be data. For example databases on patents or trends. Because they are equally part of an innovation ecosystem. Integrating and analyzing the right sources of information can make all the difference in the struggle for competitive advantages - and ultimately even help expand the network by identifying the sources behind relevant content and then becoming part of the ecosystem.

And that brings us back to the original idea of ​​an innovation ecosystem. Searching, finding and networking relevant information, people and skills. What distinguishes innovative companies from their competitors here is the fact that their ecosystem not only draws their attention to changes, but also proactively develops solutions for new products, services or business models in order to be successful on the market quickly.

 

Philipp Jeltsch
Philipp Jeltsch

Philipp is Marketing Manager at innosabi. He follows the proposition that innovation is nothing abstract, but the tangible result of the human urge for progress and wisdom. Therefore, Philipp is driven to support bright minds and their ideas by promoting the tools and methods required for sustainable success.