Building the Right Ecosystem for Innovation

As companies grapple with uncertainty and change, they must collaborate in new ways with unlikely partners.

When markets become disrupted by new technologies and competitors, many legacy companies struggle to keep up. They are often simply ill-prepared to develop new products and services in the midst of the uncertainty. Rather than attempting to go it alone in such circumstances, some companies reach out to partners with an eye toward building a broader ecosystem that will boost their competitive strength. But what types of ecosystems will work best in a dynamic environment?

Perhaps the most common forms of ecosystems are centralized, where the company functions as the “hub.” These tend to work well in stable environments where the key issues have already been worked out. In Amazon.com Inc.’s ecosystem for ebooks, for example, the online retailer works with the maker of its Kindle tablets and an array of book publishers but keeps the respective partners separate from one another.

However, in many settings today, the requirements are fluid and the objectives less defined. What’s needed, therefore, isn’t a broker or intermediary to link the various partners but an orchestrator who can find connections among different partners and encourage them to work directly with one another to identify new or nascent opportunities. Rather than building a centralized ecosystem, the orchestrator’s job is to create what we call an adaptive ecosystem, where partners develop significant projects or innovations together.1 For companies, this requires both imagination and flexibility.

Driving Innovation

In our most recent research on how organizations generate value from their corporate alliances and partnerships, we’ve studied how certain companies, including Samsung, Mastercard, Lowe’s, and Cisco Systems, have used adaptive ecosystems to define new offerings (see “About the Research”). Unlike traditional, centralized ecosystems, which tend to rely on partners that have fairly obvious tie-ins to the existing business model (as Amazon had with the Kindle maker and book publishers), companies using adaptive ecosystems frequently work with partners with less conventional capabilities.2 For this reason, we refer to them as “uncommon partners.” (See “Centralized vs. Adaptive Ecosystem Strategies.”)

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