Adner (2006) Match Your Innovation Strategy to Your Innovation Ecosystem Flashcards
What is innovation ecosystem?
the collaborative arrangements through which firms combine their individual offerings into a coherent, customer-facing solution
What do ecosystems allow firms to create?
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
Why has for many companies the attempt at ecosystem innovation been a costly falure?
For many companies, however, the attempt at ecosystem innovation has been a costly failure. This is because, along with new opportunities, innovation ecosystems also present a new set of risks – new dependencies that
can brutally derail a firm’s best efforts.
a market may not emerge. Whether – and when – it emerges is determined as much by the firm’s partners as
by its own performance.
What are the strategic implivations when your own success depends on others?
Timing is nearly always affected: Getting to market ahead of your rivals is of value only if your partners are ready when you arrive.
Resource allocation is another strategic consideration: Because critical bottlenecks may reside outside your own organization, allocating resources externally – to partners – can be more effective than allocating resources internally, to your own project.
Yet the most important strategic im-
plication is that risk assessment changes dramatically
What is the key to succeeding in ecosystems?
Creating strategy that explicitly accounts for the delays and challenges that are inherent in collaborative networks is the
key to succeeding in ecosystems
How can you assess risks in a structured, systematic way?
A first step is to specify the different categories of risk that ecosystems present and to understand how they relate
to the markets you hope to serve
What are the three fundamental types of risks that characterize innovation ecosystems?
initiative risks – the familiar uncertainties of managing a project;
interdependence risks–the uncertainties of coordinating with complementary innovators; and
integration risks–the uncertainties presented by the adoption process
across the value chain
How to assess initiate risks?
the challenges of delivering a project on time and to specification are familiar to managers
Assessing such initiative risks requires evaluating the feasibility of the product itself, the likely benefit to customers, the relevant competition, the appropriateness of the supply chain, and the
quality of the project team
How do you assess interdependence risks?
if an innovation is a component of a larger solution that is itself under development, the innovation’s success depends not only on its own successful completion but on the successful development and deploy-
ment of all other components of the system.
Interdependence risk speaks to the joint probability that different partners will be able to satisfy their commit-
ments within a specific time frame.
The more dependent an innovation is on other developments, the less control it has over its own success
How should the probability of success be assessed?
Traditional due diligence–consulting with managers, doublechecking with suppliers, examining historical precedents–yields some confidence about a project’s successful completion (to spec, on time). Similar exercises can, and
should, be undertaken with all key partners
an analysis of interdependence risk can help managers identify the unintended
lags and set their expectations accordingly
What are the causes of interdependence risk?
Partners may be late because of internal development challenges, regulatory delays, incentive problems, financial difficulties, leadership crises–even their own interdepen-
dence with other parties.
How to assess integration risks?
in many ecosystems, intermediaries are positioned between the innovation and the final customer. The further up the value chain an innovation resides,
the larger the number of intermediaries that must adopt it before it can reach volume sales. As the number of intermediaries increases, so does the uncertainty surround-
ing market success.
Integration risk, in contrast, is assessed by adding adoption cycles to estimate delays caused by
intermediaries.
What is the cost-benefit assessment?
The wise analyst will carefully consider the costs and benefits of adoption for each intermediary along the chain. If benefits don’t exceed costs at every adoption step, intermediaries will not move your offering down the line,
and the end user will never have a chance to evaluate it.
What are the causes of integration risks?
The causes of integration risks are myriad and vary by setting. They are not, however, mysterious. Simply posing the question, “Where are we likely to face integration risks?”will uncover many of the critical challenges, which
will in turn suggest likely solutions.
What is the upside o delays?
The upside of delays, though, is that in cases where an innovative firm is far ahead of its ecosystem partners, the firm may benefit from slowing down to let the rest of the system catch up. These self-imposed delays go against the grain–rushing to market almost seems hardwired in businesspeople–but they can be the logical out-
growth of a systemic risk assessment.
