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Collaboration is key to innovation


In an ever more digital and connected world, business leaders must collaborate to innovate.

In their Harvard Business Review article, Nathan Furr, Kate O’Keefe and Jeffrey H. Dyer explain Cisco’s four-phase process to ecosystem innovation.

California-based networking and technology company Cisco’s ‘ecosystem innovation’ process differs from a more traditional form of collaboration between companies. Instead of research and development alliances Cisco’s process is designed to explore opportunities and develop and test solutions with end users in a short space of time. It involves no elaborate contracts and it focuses on carrying innovations through to commercialisation.

“We believe that no one company can deliver the full breadth of technology solutions that customers need at the pace the market requires”, says Cisco CEO Chuck Robbins. This was the thinking behind Living Labs: 2-day sessions where established companies with similar interests are brought together to collaborate, develop and commercialise new concepts.

1) Foundations. The first step is to look at your business strategy and identify areas of opportunity. Cisco calls these ‘Focus zones’. To take full advantage in your chosen area, you may need a partner. When choosing a collaborator, Cisco uses three criteria: innovation capacity; internal innovation process; and experience of working with other companies or investing in startups. Collaborators don’t have to be in the same industry, but all partners should be able to benefit from the innovation effort.

Collaborating businesses should be willing to send senior executives with the power to make things happen, take on board feedback from potential customers, and commit adequate resources to the process. To avoid legal wrangling, talk to each other’s legal teams and create a simple agreement stating that all collaborators are free to use what is created in the session and that no collaborator has claims over Intellectual Property.

2) Research. Before the innovation process begins in earnest, spend several months talking to your collaborators, industry experts, potential customers and end users about the problems that need solving within the area of opportunity you have identified. At the end of this process you should have chosen one area to tackle that connects your business strategy to your collaborators’ business plans. This is your joint ‘ambition’.

Now that you have defined the problem, you need to try and solve it and understand its root causes. Define a series of ‘opportunity areas’ and set specific challenges to be tackled in phase three.

3) Collaboration. To ensure you make the most out of your Living Lab, you have to create an environment conducive to creativity and cooperation.

  • Start each day with mindfulness exercises and interactive presentations by successful innovators.
  • End each day with a communal meal where participants are encouraged to reflect on the day’s work and question whether they are headed in the right direction.
  • Group executives into teams of four or five. Each team should then complete a cycle of innovation: develop a hypothesis (30 minutes); develop a solution and build a prototype (30 minutes); and show the prototype to end users (30 minutes).
  • Refine solutions based on feedback. Early prototypes can be simple drawings, storyboards or cardboard cutouts, but at the end of the Living Lab teams will have created more complex prototypes (physical mockups or digital interfaces). The aim is for each team to repeat the cycle five times over the 2 days, constantly refining.
  • Support the process by providing experts to guide and assist the teams.

Cisco provides a five-person support team: a guide to shepherd the team through the process; a historian to keep track of the process (i.e. hypotheses and end user feedback); a designer; a builder; and a hacker to produce prototypes. Cisco also invites business analysts to assist the teams with their business models and the potential value of the product (i.e. new revenue or savings).

4) Solutions. At the end of the second day of your Living Lab each team should pitch their solutions to a panel of senior executives from the participating companies. Executives who want to invest in a solution must commit immediately. This will create excitement and ensure the process maintains momentum.

Following-up is important. Cisco provides the participants with what it calls a ‘build archetype’: a summary of the Living Lab including a business model and a 6-month plan of action. The company encourages the participants to take things to the next level, but leaves the responsibility for crafting a development agreement with the participating executives.

Commercialising an innovation in this way produces three types of value:

  • Launch value. The profit, revenue or enhanced reputation resulting from the commercialisation of the innovation. Approximately 75% of innovations resulting from Cisco’s Living Lab events have been funded and are on their way to being commercialised.
  • Strategic value. The value derived from the relationships participants build during Living Lab events.
  • Exit value. Knowledge gained by participants during Living Lab events that, whether innovations are commercialised or not, can be utilised in the future.

Ecosystem innovation is not a panacea, but it is one answer to the challenge of finding new ways to grow profits. The system is designed to solve problems quickly and will help your company build innovation capabilities and learn to collaborate: both essential skills for future success.

Source Article: Managing Multiparty Innovation
Author(s): Nathan Furr, Kate O’Keefe and Jeffrey H. Dyer