Tuesday, July 17, 2012

Successful Innovators Focus on the Ecosystem

My daughter's high school science book says that Edison is the Inventor of the Electric Bulb - but that's not true. When Edison started his research on the incandescent bulb, It was known for more than 60 years that passing a current through a filament will make it glow. It took a series of breakthrough inventions for Edison to demonstrate a bulb that could work for 100 hours. He applied for a patent as soon as he reached this milestone and got one. But he didn't stop here. After inventing the incandescent bulb, he asked what do my customers need to use this product - they need electricity - How do I generate and safely distribute Electricity (just like the way gas was distributed at that time) ? If he had not asked this critical question (though it may appear obvious now), the ecosystem would not have been ready to receive his innovation. Posterity would say that his innovation was ahead of its time. By thinking about the infrastructure that is needed for his invention to succeed, Edison became an Innovator. He is not the Inventor of the Electric bulb but he is the the Innovator of Electric Illumination.

It is important to think Innovation Ecosystem. We need to analyze at all three levels - system, sub-system and super system and ensure that the risks for failure are mitigated at all the levels. Many Innovators fail to appreciate the importance of thinking about Innovation at an ecosystem level.

In this context, I find Ron Adner's book "The Wide Lens" very insightful - I read the first chapter, liked his analysis very much and placed an order for the book right away (thanks to FlipKart). Prior to that I read Ron's article in Forbes India -  http://forbesindia.com/article/tuck-school-of-business/the-innovators-blind-spot/32800/1 - and got an overview of his thoughts.

The Wide Lens - A New Strategy for Innovation - by Ron Adner -

Ron Adner is a professor of strategy at the Tuck School of Business at Dartmouth College

Read the Introduction and the first chapter here - http://www.thewidelensbook.com/excerpt.html

The Wide Lens Cover
Ron Adner cites examples of Philips Electronics HDTV and Sony's e-Reader - instances where smart companies and talented managers invested, implemented, and succeeded in bringing genuinely brilliant innovations to market. But after the innovations launched, they failed. The companies understood how their success depends on meeting the needs of their end customers, delivering great innovation, and beating the competition. But they fell victim to the innovator's blind spot: failing to see how their success also depended on partners who themselves would need to innovate and agree to adapt in order for their efforts to succeed.

The success of a value proposition, in the case of HDTV and e-Reader, depends on creating an alignment of partners who must work together in order to transform a winning idea to a market success. If you fail to expand your focus to include your entire ecosystem, it will set you up for failure.
figure I.2
The book is designed to help managers, leaders, and everyone concerned with innovation see their hidden dependencies and understand how to develop robust strategies that are more likely to succeed. 

Most Innovators think only about Execution Risk. They need to consider two distinct types of risk that arise within ecosystems: 

Co-innovation Risk, the extent to which the success of your innovation depends on the successful commercialization of other innovations; and 
Adoption Chain Risk, the extent to which partners will need to adopt your innovation before end consumers have a chance to assess the full value proposition.
Choosing to focus on the ecosystem, rather than simply on the immediate environment of innovation, changes everything—from how you prioritize opportunities and threats, to how you think about market timing and positioning, to how you define and measure success. 
This new paradigm asks innovators to consider the entire ecosystem by broadening their lens to develop a clearer view of their full set of dependencies. 

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