How Innovation Ecosystems Turn Outsiders into Collaborators3 June, 2015 / Articles
Running a truly innovative company means constantly improving your innovation culture and process. Running a successful innovation ecosystem, however, demands more. Successful innovation ecosystems make people outside the company measurably smarter, richer, and more innovative. Biologically speaking, innovation ecosystems invest in symbiosis, not parasitism. Growth isn’t zero-sum.
Jeff Bezos knows. So do Larry Page and new Microsoft CEO Satya Nadella. Mark Zuckerberg, Reed Hastings, Marissa Mayer, and Haier CEO Zhang Ruimin similarly grasp the strategic, operational, and cultural distinction. They’re leaders and entrepreneurs who are publicly committed to creating better ecosystems, not just better products.
While successful innovators reap new profits from new products and services, successful innovation ecosystems cultivate profitability by encouraging others to create valuable new offerings. Their financial futures depend on how innovative they make their customers, clients, channels, and partners. Truly effective ecosystems manage to turn outsiders into de facto collaborators. Enabling external innovation becomes as important as improving one’s own. In fact, successful innovation ecosystems create virtuous cycles of external creativity, which drives internal adaptation. In turn, internal innovation enables and inspires external investment.
Ecosystem innovators like Bezos and Hastings are constantly asking, “Who are we making richer? Who are we making more innovative? Who’s on both those lists?” The answers say everything about the future they’re trying to create.
This is beautifully highlighted by Flipboard cofounder and CEO Mike McCue’s recent comment about how empowering users to create their own “virtual magazines” redefined the reader experience. “It was totally transformative,” he observed. “There are over 7 million magazines that people made in the nine or 10 months since we launched it. It’s awesome.” These customers are now creating virtual magazines, not just reading them. And Flipboard is learning and adapting thanks to their expressive ingenuity.
This is the real IP — not “Intellectual Property” but “Innovation Partnerships.” Look at Amazon Web Services, GitHub, Toyota and YouTube’s investments in suppliers, and Apple’s App Store. Or consider Netflix’s efforts to procure binge-able viewing: With Netflix’s new commissions of series like House of Cards and Orange Is the New Black, creative people are now producing for a Netflix audience the way they once did for syndication, cable, and HBO. The common denominator for all these companies isn’t simply an exchange of value, but offering new opportunities for collaboration. Success comes from exploring how to make one’s partners more valuable innovators.
Dramatically boosting an innovation ecosystem isn’t inherently expensive; a new API, a simulation tool, a training methodology, or slightly greater access to customer data are frequently all that’s necessary to seed mutual growth opportunities. But just as management isn’t leadership, innovation process improvement isn’t innovation ecosystem stewardship. Fostering an innovation ecosystem does require a culture and competence of stewardship — making the kinds of investments and improvements that aren’t just opportunistic, but reflect and respect the core values you want to endure.
How does your organization invite innovation partnerships? How do you recognize and reward innovation partners? (Of course, your answers matter less than their answers.) Similarly, how is your innovation ecosystem making participatory innovation possible?
It’s tempting, often irresistibly so, for stewards of innovation ecosystems to want to compete against customers, channels, and suppliers when lush new savannas of profitability and growth materialize. The strategic challenge becomes resisting the urge to gobble up that opportunity, and instead identifying the partnerships that would expand it even more. Indeed, innovation ecosystems triumph over innovative companies if and when the benefits of mutual value creation outweigh the costs. That, in no small part, is why Google acquired Nest and why its ecosystem is broader and deeper than Microsoft’s or Yahoo’s. In other words, if you’re not making your innovation partners richer in some measurable way, you’re simply running an innovation factory, not an ecosystem.
Again, the Googles, the Amazons, the Toyotas, and the LinkedIns know this. But does your organization mind and measure who it’s making richer and more innovative? If it doesn’t, it may not be your innovation ecosystem for long.