Families schools and communities 7th edition

Business model ecosystems: beyond industries and clusters

MGT731 Corporate Entrepreneurship and Business Model Innovation

Course Coordinator: Dr Robert Ogulin

Course Facilitator: Prof Uwe Schulz PhD

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Content of Today

Open Innovation
Business Ecosystems
Wicked Problems
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Leveraging and learning from and with others

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Open Innovation

https://www.youtube.com/watch?v=GD2wCS2xwWQ

Open Innovation

Companies harnessing external ideas while leveraging their in-house R&D outside their current operations.

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Source: Henry W. Chesbrough (2003) The Era of Open Innovation, MIT Sloan Review

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Open Innovation Re-enforces a Fundamental Change in Business Model Strategies

New approach to strategy - “open strategy.”

A convergence of competencies attributable to

Individuals, companies, supply chains

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Communities, networks and ecosystems

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Co-creation

and their implications for competitive advantage (see workshop 1)

Value Creation and Capture in Open Networks

Knowledge: both the breadth and depth of aggregate knowledge can outstrip the knowledge endowment of an individual contributor.
Linux: https://www.youtube.com/watch?v=yVpbFMhOAwE
Ecosystem: open coordination leads to consensus building around issues such as technology standards that permit whole business ecosystems to flourish.
IBM’s decision to open up its personal computer (PC) architecture
Open Innovation: the role of innovation communities and ecosystems is in fringe businesses, e.g. snowboard, windsurfing, and skateboarding.
However corporations have been slower to adopt.
The Open Innovation Revolution

Open innovation – “a firm is not solely reliant upon its own innovative resources for new technology, product, or business development purposes. Rather, the firm accesses, acquires and shares critical inputs to innovation from and with outside sources.”
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The Open Innovation Revolution

Four reasons companies are increasingly choosing to pursue open innovation models:

1.) Importing new ideas is a good way to multiply the building blocks of innovation

2.) Exporting ideas is a good way to raise cash and keep talent

3.) Exporting ideas gives companies a way to measure an innovation’s real value and to ascertain whether further investment is warranted

4.) Exporting and importing ideas helps companies clarify what they do best

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Open Innovation Enabled, and Accelerated, by

Internet as a global information-sharing network;
Networked enterprises
Social technologies
Digitisable, knowledge-based products and services, e.g.
Crowdfunding
Crowdsourcing
Analytics going through ever increasing volumes of data being generated, processed, and stored by a wide range of enterprises.
Open Innovation Process

Case example: Samsung

In contrast to Apple, Samsung is more active and open about their efforts on building their external innovation capabilities. The below snippets are from an interview with Vice-President of Samsung’s Open Innovation Center, Marc Shedroff, in which the journalist would like to find out more about the ways Samsung wants to innovate like a startup.
“OIC has four legs to it, and it’s sort of the continuum of how you would partner with talented entrepreneurs. The first is a partnerships team — think of commercial partnerships between us and a third party. The second is a ventures group, that is, R&D investments in startups. The third is an M&A team; we think there’s an opportunity to acquire small teams, fit them into Samsung, and have them build products as part of the company. The fourth involves accelerators, which we have opened in Palo Alto and New York City.”
“We can take a group of five or six people per team and give them the benefits of a small company, which is autonomy, nimbleness, and the freedom to build the product they want without going through the approval process. Then we give them the benefits of a big company, which provides financial support, extensive distribution, and other resources. After all, we sell 450 million phones a year and 50 million TVs. The end result, we hope, will be game-changing software products that can connect all of our devices.”
Companies can target different kind of “value pools” i.e. groups of external partners for their open innovation efforts. This includes suppliers, universities, consumers/users and startups.
The latter has become the hottest area of collaboration for many industries and this example of Samsung is just one of many in which companies work to develop better co-innovation capabilities with startups and SME’s.
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Case example: Procter and Gamble

“The biggest decision we made was to move to an open innovation platform,” Lafley says. “The problem at P&G in 2000 was not that we weren’t inventive. The problem with us was that we weren’t turning that invention into innovation that created customers, that benefitted customers, that created value for customers or a better experience for customers, and that’s all I wanted to do.

Watch the video and discuss: What did P&G do to move to an open innovation environment?

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Beyond Companies, Industries: Exploring Emerging Business Model Ecosystems

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https://www.youtube.com/watch?v=-nl7RnfB2GM

Definitions

Business Ecosystems are dynamic and co-evolving communities of diverse actors who create and capture new value through increasingly sophisticated models of both collaboration and competition.

Ecosystems enable and encourage the participation of a diverse range of (large and small) organizations, and often individuals, who together can create, scale, and serve markets beyond the capabilities of any single organization.

Participating actors interact and co-create in increasingly sophisticated ways that would historically have been hard to formally coordinate in a “top-down” manner, by deploying technologies and tools of connectivity and collaboration that are still proliferating and disseminating.

Participants—often including customers—are bonded by some combination of shared interests, purpose, and values.

Adapted from: http://dupress.com/articles/business-ecosystems-come-of-age-business-trends/

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http://dupress.com/articles/business-ecosystems-come-of-age-business-trends/

Business Ecosystems - an Opportunity for Creating New Competitive Advantage?

Businesses are moving beyond traditional industry silos and coalescing into richly networked ecosystems, creating new opportunities for innovation alongside new challenges for many incumbent enterprises.

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Business Ecosystems - an Opportunity for Creating New Competitive Advantage

Successful businesses are those that evolve rapidly and effectively. Yet innovative businesses can’t evolve in a vacuum.

They must attract resources e.g. capital, partners, suppliers, and customers to create cooperative networks. . . .
Companies not a member of a single industry anymore, but rather part of a business ecosystem that crosses a variety of industries.