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Dual Innovation Ecosystem Strategy
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When new technologies and competitors disrupt markets, many enduring organizations exert to keep going. Possible reasons for disruption may be multiple but one of them is inadequate preparation to develop new products and services during uncertain times.
In order to manage disruptions some businesses partner with others. Productive partnerships comprise of having the right people, processes, and organizational backing—simply put—a whole ecosystem.
Creating an appropriate type of Innovation Ecosystem is crucial for guaranteeing success and to identify and manage sources of conflict.
Conventional Innovation Management is unable to sustain itself in the face of contemporary needs. Dual Innovation has become a necessity for businesses to survive intense competition in today’s markets.
Dual Innovation refers to extending current Business Models in new directions, as well as creating completely novel Business Models at the same time. For such ambidexterity, organizations ought to have an Innovation Management Model that can aid them in innovating more effectively and viably.
Contemporary method of Dual Innovation is founded on 3 fields of Innovation and 2 strategic Directions of Action.
The 2 strategic Directions of Action are:
- Adapt—Modification of current core business or Operating Models.
- Scale—Ramping-up of authenticated, sweeping or even disruptive Innovation ideas, to convert them into substantial business impact.
The 3 Fields of Innovation have been dubbed as Playing Fields, each with its unique conditions:
- Playing Field 1—Optimize the Core.
- Playing Field 2—Reshape the Core.
- Playing Field 3—Create the New.
The 3 Playing Fields of Innovation are a result of relationship and impact of Innovation with the core business. Proximities of the Playing Fields to the core business—the reason for their uniqueness—are with regard to:
- Business Model.
- Technological capabilities, and
- Implicitly, to time scale.
Other factors for the peculiarity of each Playing Field relate to accounting, metrics, methods, tools, as well as organizational and personal needs. Each Playing Field requires dedicated leadership and management for it to be successful.
The 3 Playing Fields of Innovation differ from each other in the following ways:
- Playing Field 1—Optimize the Core—involves a Centralized Ecosystem Strategy, key characteristics of which include precise and distinct problems/solutions, partners with linkups to prevailing Business Model, emphasis on securing value, and a steady industry.
- Playing Field 2—Reshape the Core—depends on a mixed Ecosystem Strategy i.e., following both Centralized and/or Adaptive strategies simultaneously or successively.
- Playing Field 3—Create the New—comprises of Adaptive Ecosystem Strategy, main conditions for which include partners with different competences, emphasis on value formation, and flexibility in terms of relatedness of industry.
The 2 Innovation streams—i.e. Playing Field 1 and 3—feed Playing Field 2 (Reshape the Core).
Choosing the correct partner Ecosystem to prosper is necessary for the Innovation endeavors across the 3 Playing Fields. Adaptive Ecosystems are fit for evolving industries where there are substantial vagueness and the overall conditions are not yet definite. Centralized Ecosystems are effective in developed industries and steady settings.
Linking the distinctive scopes and rationales of the Playing Fields to the traits of the 2 Ecosystem types is how the right partner Ecosystem is adopted.
Such linking up gives us the following 3 Models for Dual Innovation Ecosystem Management:
- Model 1—where both Business Unit and Corporate Focus result in combined Ecosystem.
- Model 2—where Corporate Focus is only required since it is a Centralized Ecosystem.
- Model 3—where Business Unit specific focus is needed to Explore new ideas.
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To be competitive and sustain growth, we need to constantly develop new products, services, processes, technologies, and business models. In other words, we need to constantly innovate.
Ironically, the more we grow, the harder it becomes to innovate. Large organizations tend to be far better executors than they are innovators. To effectively manage the Innovation process, we need to master both the art and science of Innovation. Only then can we leverage Innovation as a Competitive Advantage, instead of viewing Innovation as a potential disruptive threat.
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About Mark BridgesMark Bridges is a Senior Director of Strategy at Flevy. Flevy is your go-to resource for best practices in business management, covering management topics from Strategic Planning to Operational Excellence to Digital Transformation (view full list here). Learn how the Fortune 100 and global consulting firms do it. Improve the growth and efficiency of your organization by leveraging Flevy's library of best practice methodologies and templates. Prior to Flevy, Mark worked as an Associate at McKinsey & Co. and holds an MBA from the Booth School of Business at the University of Chicago. You can connect with Mark on LinkedIn here.
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