Match Your Innovation Strategy to Your Innovation Ecosystem

What happened with Philips, Sony, and Thompson in the HDTV market?

They achieved technical success with high-definition TVs, but experienced market failure due to missing complementary elements in the ecosystem.

What is an innovation ecosystem?

Collaborative arrangements, often enabled by IT, that are central to growth strategies across industries.

What are the benefits and risks of innovation ecosystems?

They can create value but introduce new risks, such as dependencies on partners.

Why is timing important in an innovation ecosystem?

Getting to market early is only valuable if partners and complementors are ready.

How can resource allocation affect innovation success?

Allocating resources externally to partners may be more effective when bottlenecks exist outside the firm.

Why is traditional due diligence insufficient in ecosystem-based innovation?

Because ecosystem-based value creation involves interdependencies and risks that traditional checks do not capture.

What are initiative risks in innovation ecosystems?

Familiar project delivery challenges, including evaluating product feasibility, customer benefit, competition, supply chain, and team quality.

What are interdependence risks?

Risks arising from dependence on partners; the success of one innovation depends on the success of others.

How is the probability of joint success calculated in an ecosystem?

By multiplying the individual probabilities of each partner’s success.

What are some strategies to mitigate interdependence risks?

Find new partners, move upstream in the value chain, create licensing deals, and design flexible interfaces.

What are integration risks in innovation ecosystems?

Risks from intermediaries in the value chain that increase uncertainty about market success.

What does the Michelin "run-flat tire" example illustrate?

The impact of long adoption cycles and the uncertainty intermediaries introduce.

How can delays in an ecosystem be calculated?

By adding the adoption cycles of intermediaries to estimate total delays.

What is the cost-benefit assessment for intermediaries?

Intermediaries will adopt innovations only if benefits exceed costs; government intervention can help mitigate barriers.

What is a downside of delays in innovation?

Missed opportunities due to substitutes emerging while waiting.

What is a potential upside of delays?

Letting the ecosystem catch up so that a firm’s early position turns into a strategic advantage.

How does ecosystem risk vary by market?

Different target markets, such as photovoltaic technologies, have different internal and external risks.

What trade-offs are highlighted in pen-based computing?

Choosing between a large market opportunity with lower likelihood of success or a smaller market with higher success likelihood.

How should firms decide where to compete in an ecosystem?

By assessing both project-specific and system-wide risks; high ecosystem risks make markets uncertain.

How should firms decide when to compete in an ecosystem?

First-mover advantage may be limited if complementors are not ready; firms may delay to conserve resources.

How should firms decide how to compete in an ecosystem?

They can take an active or passive role in guiding ecosystem development; active leadership requires significant resources.

What is a limitation of using frameworks in innovation strategy?

Frameworks rarely change managers’ initial intuition.

What is the main value of frameworks in ecosystems?

They help structure debates and clarify issues among managers with differing instinct