"Types of Collaboration for Innovation: Which One is Best for Us?".
Hugo Cespedes A.
Entrepreneur, Adviser (Innovation, Entrepreneurship, Technology, Strategy, Collaboration); Start-up Mentor; former Professor; MBA; MBEvolution
The Internet has changed the workplace forever. We now have a digital workplace and technology that can help us do our jobs, something that simply did not exist a generation ago. However, the emphasis on developing new technologies has not eliminated the need for humans to interact with each other. We still need to collaborate to accomplish a variety of tasks. What is Collaboration in the Workplace? Types of Collaborative Work? How to choose the best Collaboration methods? And for Innovation, what Collaboration methods do we need?
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Workplace Collaboration is when people work together to achieve a goal. It is another way of looking at teamwork. The team can use many different ways to work together depending on the project they are working on. Sharing ideas and discussing the approach the group will take is a great way to make the process work much more smoothly for everyone.
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This style of working was officially recognized in the 1950s. At that time, changes were taking place in project management. Up until that time, projects were planned using a Gantt chart and could be overseen by a single manager. As the digital revolution was emphasized, collaboration between team members became much more common in the workplace.
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The Internet set the stage for employees to share information with each other easily and conveniently, whether they work in the same physical location or are located halfway around the world from each other. A digital workplace means that employees don’t have to deal with traditional communication barriers. Instead, employees can focus on working together efficiently in an environment that promotes Innovation and Company Growth.
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"Collaboration is a Strategy" that can be used in any type of workplace, including non-profit organizations, corporations, government agencies, vendors and employees of the organization (and even between companies) can benefit from learning about the different types of Collaboration.
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TYPES OF COLLABORATION.
1. TEAM COLLABORATION: This is one of the most common types of Business Collaboration in the workplace. In that version, all the members of the group know each other. Each person knows what their role is in the team and how it affects the other team members. There are set deadlines to complete tasks within a certain time to achieve the team's goals.
With this type of Collaboration, there is often a team leader who is in charge of supervising the other team members. Team members Collaborate on an equal footing to complete their tasks. Once the tasks are completed as set out at the beginning of the project, the entire team usually receives equal recognition for achieving the stated goal.
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2. COMMUNITY COLLABORATION: In a Community Collaboration, participants share an interest. The goal is often to share knowledge and learn, rather than to complete a task together. Community members can share concerns by asking questions and receiving advice. Once the advice is received, members return to their offices and share it with their teams. This practice is continuous..
In this type of Business Collaboration model, members may be at the same level. However, experienced members of the group may have a higher status than the younger members. Group members are expected to help each other, but there is not necessarily a reciprocation of one-on-one advice between members. The idea is that over time, all members of the group will benefit from their association with each other.
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3. NETWORK COLLABORATION: Network Collaboration differs from the types of Business Collaboration mentioned above. It starts with individual people taking action in their own interest. They start contributing to the network to make themselves and their area of expertise known to other members. Probably not all members of the network know each other. They rely on referrals to find out who they should collaborate with among the network members.
Social media tools are an example of Network Collaboration, where network members Collaborate Virtually without necessarily meeting each other in person. Members can post links to websites they find useful using a social bookmarking tool. This information can be useful to network members who are looking for information on the same topic. As that team works on the topic, they can post links to websites useful to other network members who may need them later.
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4. CLOUD COLLABORATION: A list of the different types of Collaboration tools would be incomplete without mentioning Cloud Collaboration. This method of Collaboration allows more than one user to access, read, and edit documents in real-time. With documents stored in the cloud, all users with access see the latest version and can view changes as they are made.
Cloud Collaboration can be used in organizations where teams are expected to collaborate remotely, such as a company with one or more satellite offices. Remote employees working on the same documents can easily share them without having to worry about whether they are looking at the latest version.
The cloud is an especially effective method to use with large files. Email servers are only designed to handle documents that are a few MB (megabytes) in size. Once an attachment exceeds that size, the email program will refuse to send it. A cloud-based Collaboration tool does not have the same limitations and can accept these large files for transfer.
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5. VIDEO COLLABORATION: Video Collaboration is one of the most common types of online collaboration tools in use today. Cloud-based services, such as Microsoft 365 or Google Workspace , have virtual conference rooms where meetings are held. Guests receive invitations to join the meeting using their desktop or laptop computers. They can also join the meeting using a mobile device. Most cloud-based services give guests the option to join the call through their web browser – no software download required.
Participants in a Video Collaboration can be located in the same office, across the street, in a different region, or on the other side of the world. Team members can talk in real time, see the same computer screen as a colleague, and ask questions over the phone, chat, or through a specialized headset.
6. INTERNAL COLLABORATION: Internal Collaboration can include various types of collaborative strategies, depending on what your medium or large company wants to achieve.
Discussion forums (or bulletin boards as they are sometimes known) have been around for some time. They remain an effective way to share ideas on a particular topic. The downside to forums is that they can be difficult to search when a participant is looking for specific information.
Microblogging can be an effective strategy for sharing messages within the company. This can be compared to the internal use of Twitter (currently “X”). It is not intended for complicated discussions, but should be reserved for short messages. Team members can start and participate in discussions by expressing their views quickly.
A Wiki can be developed to manage information within the company. Various participants can contribute to articles and keep them up to date. These types of server programs will likely need someone to ensure that the information is accurate.
7. EXTERNAL COLLABORATION: When thinking about types of Collaboration space, don’t forget about External Collaboration. This term covers knowledge sharing that happens outside of the company. An example of External Collaboration is the interaction between a brand and its social media presence. The brand collaborates with social media users when it asks for feedback and comments through questionnaires or discussions. The responses are analyzed and ultimately used to decide whether the brand is engaging well with its audience or needs to tweak its message.
A blog is a way for your company to have a “face”. Customers may find it easier to ask questions and make comments in that space than to contact the company’s head office directly. These questions and comments are powerful. Take note of what people are saying and apply the messages when you can. Customers share what they think, what they want, and how your company can keep their business.
8. STRATEGIC ALLIANCE: A Strategic Alliance is a common form of collaboration between companies. These agreements are normally made between two or three companies in which they agree to combine their efforts and resources temporarily to achieve certain common objectives. They usually have a certain duration and clearly establish the contribution and benefit of each company within the agreement. In reality, it is like a Collaboration Contract, so it covers an infinite number of types. Within this category, the type of agreement between the parties can be of any type: commercial, manufacturing, marketing, R&D...
These types of business strategies can work quite well. Companies that participate in the Strategic Alliance will bring something to the table that the others don't have. For example, a company may be looking for help in reaching new markets or with customer service. In that case, it will look for a company with experience in those areas.
For example, a solar panel manufacturer and a tracker manufacturer share the same target audience. They can establish a Strategic Commercial Alliance to offer a complete product (panel + tracker) together. In this way, they can go to the market with a more complete offer. Even if they are in different market areas, they can exchange clients, and thus each company can address a market that it did not have before.
Strategic alliances are also common in the field of Distribution. This involves sharing the distribution network of a company with others. The company that owns the network gains volume and the others gain market presence. For example, Correos and Amazon have a strategic agreement for the Spanish company to deliver the North American company's parcels. A winning alliance.
Another example is an alliance for the launch of a new product. There is the example of Dunkin Coffee and Oreo, who designed a new coffee flavour with the well-known American cookies. They combine the power of two very well-known brands in a very striking joint action.
Companies that can manage these types of relationships successfully will be considered “partners of choice” by more companies looking to develop similar relationships in business. In all good relationships, it is important to set clear goals, practice good communication skills, and be respectful of others. The best Strategic Alliance partners also invest in the people, tools, and processes necessary to achieve the stated goals.
9. CONSORTIUMS: This involves the creation of a company in which several firms participate with the aim of tackling a project that, due to its complexity, cost or transnational dimension, exceeds the capabilities of a single organization in isolation. It has a certain duration, set by the project in question, and the participation of each company is specified in detail in the project planning. The best-known example here is the Airbus Consortium, dedicated to the design and manufacture of civil and military aircraft, in which firms from the sector from several countries participate. This is a case in which your organization is probably not involved.
10. CLUSTERS: These are groups of companies from the same or related sectors that share common objectives. The purpose of the Clusters is above all the joint capacity to tackle innovation projects that are beneficial for all the members. Each company contributes its specific knowledge in a specific area and adds it to the rest of the organizations in specific projects. They also fulfill a training function for all the partners and the dissemination of their work throughout society. An example of a Cluster is the automotive cluster in La Rioja, which aims to engage all the actors operating in the automotive and auxiliary sector of La Rioja to promote it as a center of excellence within the market and contribute to the promotion of research, development and innovation in the automotive sector and, ultimately, to the promotion of the economic, social and technological development of La Rioja.
For many SMEs, belonging to a Cluster means having access to innovative projects that would have previously been out of their reach, as well as to a broad knowledge base of the sector that undoubtedly results in strengthening their business muscle. It is a first-rate collaborative alternative.
11. ASSOCIATIONS: This type of grouping is usually created to defend the common interests of the members before the Administration or other organizations. Sometimes they also carry out promotional actions and usually have shared common services (group purchases, consultancies, etc.). It is considered an example of Collaboration because it really has that function, although it does not have a strategic value for the member company, unlike, for example, Clusters.
12. BENCHMARKING: Benchmarking is a form of cooperation between companies, each of which contributes the best practices in processes (innovation, product, manufacturing, distribution, etc.) and compares them with the references in its sector (although they may be from other sectors). The objective is to improve the quality of the parameters in which it is compared. Benchmarking can be carried out by one company (comparing itself with the references), or – by mutual agreement – by a group of them (collaborative benchmarking). In this case, the result of the project will benefit all participating companies. It is a tool similar to the Cluster, although in this case it is focused on very defined work areas. If you believe that things can be done better in your organization, it is always valuable to carry out a benchmarking process comparing your practices with those SMEs that you have as a reference, even if they are not in your sector.
For example, you can learn how a company like ZARA optimizes its distribution logistics to compare it with yours. Or look at the processes for creating new products in other companies and compare them with yours. Are they better? Often, this benchmarking work reveals unsuspected opportunities.
HOW TO CHOOSE BETWEEN THE BEST COLLABORATION METHODS?
The answer to the question How to choose the best type of Collaboration is a bit like asking How long is a piece of string? The short answer is “It depends”.
Before you can decide what types of Collaborative work will give you the best results, you'll need to consider what you want to accomplish by Collaborating with others (whether individuals or a company).
You should also make sure that everyone involved has the right tools. Your remote workers will find it difficult to participate in video conferences if the internet connection in their area is unreliable. If your team has access to a reliable internet connection, then using video conferencing can be a great option to stay in touch with team members working in your office and in other locations.
Ultimately, the choice of which methods to use when collaborating with employees will depend on the organization and its culture.
Ultimately, the choice of methods to use when Collaborating with employees will depend on the organization and its Culture. If employees are comfortable with new technologies, this can be expected to play a major role when managers suggest the best types of Collaboration. In a situation where your team members have not fully embraced the Digital Age (yet), Collaborating with others provides them with the perfect opportunity to learn new tools.
And in this case, how can my company analyze a possible Collaboration strategy with others?
Based on the results of the above, you now know who you are, what you can offer and where you want to go in the future. From this point on, you can explore possible collaborations with other companies.
Keep in mind that any collaboration formula always involves some risk. It can go wrong for many reasons: excessive expectations, incompatibility of the business culture, lack of coordination or involvement. That is why prudence should always guide your decisions.
Clusters are often a good option for SMEs, as the transfer of knowledge always has a positive impact on their partners.
Strategic Alliances are also very interesting, as they are always tailored to the contracting partners and limit the scope of collaboration to avoid possible failures or problems in the organization as a whole. It is a good tool for SMEs that want to do something different to achieve objectives through paths that have not been explored, and which may hold many positive surprises.
WHAT ABOUT COLLABORATION FOR INNOVATION?
Clearly, no one innovates alone these days. Organizations partner with a variety of partners in a wide variety of ways to create new technologies, products, services. But what is the best way to harness the Power of Collaboration – Collective Intelligence?
Pisano and Verganti (2008) developed a simple framework focused on two questions: given your strategy, How open or closed should your Collaborators network be? And who should decide which problems to address and which solutions to adopt?
There are Four Basic Modes of Collaboration, the authors say.
An “Elite Circle” is a closed network with hierarchical governance: a company selects participants, defines the problem, and chooses the solution. For example, a home products company invites 200 external experts in postmodern architecture to contribute ideas for new home product designs.
An “Innovation Mall” is hierarchical but open: anyone can post a problem or propose solutions there, but the company posting the problem chooses the solution. For example, InnoCentive (now Wazoku Crowd) was an eBay-like site where companies posted scientific challenges.
An “Innovation Community” is open and decentralized: anyone can propose problems, offer solutions, and decide which ideas to use, as happens in the Linux open source software community.
A “Consortium” is a private group of participants who cooperate as equals and jointly select problems, decide how to do the work, and choose solutions. IBM has created several consortia with other companies to develop next-generation semiconductor technologies.
“No one approach is superior” – each involves strategic trade-offs. When choosing between modes, companies must weigh their advantages and challenges, and assess which will work best with their strategy, capabilities, structure and assets.
That’s right, in an age when great ideas can emerge from any corner of the world and information technology has dramatically reduced the cost of accessing them, it is now a widely held belief that virtually no company should innovate on its own. The good news is that both potential partners and the “ways to collaborate” with them have greatly expanded in number. The bad news is that greater variety has made the perennial management challenge of selecting the best options much more difficult. Should you open up and share your intellectual property with the community? Should you foster collaborative relationships with a few carefully selected partners? Should you tap into the “wisdom of crowds”? Despite the fervor around Open Collaboration Models like Crowdsourcing, there is no single best approach to harnessing the power of outsiders. “Different modes of collaboration imply different strategic trade-offs”. Companies that choose the wrong mode risk falling behind in the relentless race to develop new technologies, designs, products, and services.
Too often, companies jump into relationships without considering their organizational structure and principles – what is referred to as the “Collaborative Architecture”. To help senior managers make better decisions about the types of Collaboration their companies adopt, the following relatively simple framework has been developed. The product of years of research and consulting in this area, it focuses on two basic questions: given your strategy, how open or closed should your company’s network of Collaborators be? And, who should decide what problems the network will address and what solutions will be adopted?
Collaboration Networks differ significantly in the degree to which membership is open to anyone who wants to join. In fully open Collaboration, or Crowdsourcing, everyone (suppliers, customers, designers, research institutions, inventors, students, hobbyists, and even competitors) can participate. A sponsor makes a problem public and then essentially seeks support from an unlimited number of problem solvers, who can contribute if they believe they have capabilities and assets to offer. Open source software projects such as Linux , Apache , and Mozilla are examples of such networks. Closed networks, on the other hand, are like private clubs. In this case, the problem is tackled with one or more parties who are selected because they are seen to have capabilities and assets crucial to the innovation sought.
Collaborative Networks also differ fundamentally in their form of governance. In some, the power to decide which problems are most important, how they will be solved, what constitutes an acceptable solution, and which solutions should be implemented, is entirely in the hands of one company in the network: the “kingpin.” These networks are hierarchical. Other networks are flat: participants are equal partners in the process and share the power to decide on key issues.
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Discussions of Collaborative Innovation, both in academic journals and in popular media, often wrongly link “openness” only with “flatness”, and even suggest that open and flat approaches are always superior. However, the notion is deeply flawed.
As the attached figure below (“The Four Ways to Collaborate”) shows, there are four basic modes of Collaboration: a closed and hierarchical network (an Elite Center), an open and hierarchical network (an Innovation Center), an open and flat network (an Innovation Community), and a closed and flat network (a Consortium).
There are four basic questions that executives must consider when deciding how to collaborate on a given innovation project: Should membership in a network be open or closed? And should the network's governance structure for selecting problems and solutions be flat or hierarchical? This framework reveals "four basic modes of collaboration".
To determine “which modality is most appropriate for a given innovation initiative”, a company “must consider the advantages and disadvantages of each, weighing the advantages of each modality against the associated challenges and assessing the capabilities, structure, and organizational assets needed to manage those challenges” (see “How to Choose the Best Collaboration Modality” below). Its executives must then “choose the modality that best fits the company’s strategy”.
“How to Choose the Best Collaboration Method?”
When selecting a mode of "collaborative innovation", executives should consider the distinct strategic advantages and disadvantages of each. Below are some important advantages and challenges of different collaboration approaches, and examples of capabilities, assets, processes, and types of problems that facilitate the implementation of each.
OPEN OR CLOSED NETWORK?
The costs of searching, filtering, and selecting Collaborators increase as the network grows larger and can become prohibitive. Therefore, it is crucial to understand when a small or large number of problem solvers are needed. Closed Modes obviously tend to be much smaller than open ones.
When you use a closed mode, you make two implicit bets: “that you have identified the domain of knowledge from which the best solution to a problem will emerge” and that “you can choose the right Collaborators in that field”. Alessi , an Italian company famous for the postmodern design of its home products, bet that postmodern architecture would be a fruitful domain for generating interesting product ideas and that it could find the best people in that field to work with. It invited over 200 Collaborators in that domain to propose product designs. If you don’t know where to look for solutions or who the key players are (and you have no way of finding out), a closed mode like Alessi’s Elite Circle is a dangerous blind bet.
The great advantage of an Open Network is its potential to attract an extremely large number of problem solvers, and therefore a large number of ideas. There is no need to identify the best domains of knowledge or the most suitable experts in those domains. It is like organizing an open house party. Just make it known that you are organizing a party and offer the right incentives, and – hopefully – the right people will show up.
With open participation, you don’t have to know your Contributors. In fact, not knowing them can be particularly valuable; interesting innovative solutions can emerge from people or organizations you might never have imagined would have something to contribute. That’s the concept behind Threadless.com , a primarily online T-shirt retailer whose designs come from the masses. By running an innovation mall where 600,000 members submit proposals for some 800 new designs each week, Threadless gets a steady stream of unusual and unique ideas (mall members and website visitors vote on the designs, but Threadless staff make the final decision on which ones to produce and reward their creators).
However, open modes have their “disadvantages”. In particular, they are not as effective as closed approaches in identifying and attracting top players. This is because as the number of participants increases, the probability of a participant’s solution being selected decreases (especially for an ambiguous problem). Therefore, the best parties prefer to engage in closed relationships. Open modes work best when the difference between the ideal solution and the average solution is not large and the consequences of missing out on a much better solution from an elite player are small.
“Open collaboration works best when the consequences of missing out on a much better solution from an elite actor are small”.
Open modes are effective only under certain conditions:
Consider the following simple but scary example. We have a serious illness and we want to find the best possible treatment. Using an open-source approach, we post our problem on the Internet, ask for advice, and get 50 ideas that seem interesting. But we immediately face two problems. The first is what statisticians call a sample selection problem: are these the 50 best ideas out there? Perhaps the most experienced doctors are so busy treating patients that they don't participate in these forums, and only doctors who have free time respond (a bad sign, indeed!). The second problem is that it takes a lot of time and resources to evaluate all 50 ideas (visiting doctors, etc.). But even then, you may only get one chance to get the right treatment (are you really going to "try" more than one surgery?). So when you're faced with a medical problem, you might do some research to identify elite specialists, choose one, and then seek a second opinion from one or two others.
Alessi is in a similar situation. Given its large population of designers, it could easily launch an open design contest for, say, a corkscrew on its website. With its high standing in the design world, the firm would likely attract many submissions. However, it does not pose technical problems that have one or more optimal solutions that can be clearly defined, allowing entrants to examine many of its ideas for themselves. Alessi looks for concepts whose value is based on intangible properties such as aesthetics and emotional and symbolic content. Because there is no clear answer, Alessi could receive thousands of submissions, placing a huge evaluation burden on the firm. And because the firm’s strategy is to offer products with radical designs that anticipate market needs, its offerings often initially confuse consumers. So it cannot shift the evaluation burden to customers by asking them which designs they prefer, as Threadless does. So Alessi has to make sure it receives a few good ideas from a handful of Contributors.
Of course, not every problem can be broken down into small, discrete parts. For example, developing radically new product concepts or architectures is a comprehensive task that must be tackled in its entirety. In such cases, closed modes must be employed that provide an environment in which Collaborators can closely interact. This is what led IBM to invite a handful of select partners (including Siemens, Samsung, Freescale, Infineon, and STMicroelectronics) to join its Microelectronics Join Development Alliance consortia to develop semiconductor technologies such as memory, silicon-on-insulator components, and chip manufacturing processes.
FLAT OR HIERARCHICAL GOVERNANCE?
As discussed above, the main distinction between a hierarchical and a flat form of governance is who defines the problem and chooses the solution. In the hierarchical form, a specific organization has this authority, which gives it the advantage of being able to control the direction of innovation efforts and capture more of the value of innovation. In the flat form, these decisions are decentralized or made jointly by some or all of the Collaborators. The advantage here is the ability to share the costs, risks, and technical challenges of innovation with others.
Hierarchical governance is desirable when “your organization has the capabilities and knowledge to define the problem and evaluate proposed solutions”. Consider the companies that post scientific problems on the InnoCentive.com Innovation Mall. Problems are typically smaller parts of sponsors’ much larger R&D programs. These leaders have a clear understanding of the relevant technologies and markets (user needs and functional requirements) and can define the system configuration and coordinate the work of multiple Collaborators.
In contrast, flat modes work well “when no organization has the breadth of perspective or capabilities needed”. Look again at open source software projects. These typically develop very specific code modules to address problems that users have encountered (a bug in an existing piece of code, or a need for a specific hardware driver). In this case, users are better positioned to devise and test solutions because they are closest to the problem. In fact, they are usually the ones who discovered it in the first place. Or take IBM’s microelectronics consortia. Since semiconductor companies other than IBM possessed critical knowledge, skills, and assets needed for microprocessor design, a hierarchical structure would not have made sense.
Flat modes are also appropriate “when all Collaborators have a vested interest in how a particular problem is solved and will participate only if they have a say in the decisions”. For example, all members of IBM’s consortia formed over the years have hoped to use the technologies they develop Collaboratively in their own factories and product lines. For this reason, IBM and its partners chose a governance structure that would give each a strong voice in how the technology is developed.
“Designing incentives, both financial and non-financial, that attract external collaborators is crucial in any of the four modes of collaboration”.
Designing incentives, both financial and non-financial, that attract external Collaborators is crucial in any of the four Collaboration modes. Non-financial rewards, such as high visibility in the job market, a better reputation among a peer group, the psychological satisfaction of pursuing a strong interest, and the opportunity to use solutions in one's own business, can replace or complement monetary rewards. There are no hard-and-fast rules about which incentives work best with particular forms of Collaboration. Although people often associate psychological satisfaction with Innovation Communities, it can be a powerful incentive in the other modes as well. For example, Alessi not only shares royalties from sales with designers in its elite circle, but also includes their names in product marketing and offers them a high degree of freedom in the design process.
A MATTER OF STRATEGY.
Choosing a Collaboration Mode involves more than just understanding the trade-offs. A company must consider its strategy for Creating and Capturing Value. And as the strategy evolves, the right Collaboration Mode may change as well.
Consider the approach Apple used to develop software for the iPhone, and how it changed over time. A key part of Apple’s business strategy (across all of its products) has been to maintain the integrity of its systems. In fact, one of the advantages (and therefore differentiating factors) of an Apple product is that everything—the machine’s hardware, software, and peripherals—seems to work together seamlessly. Historically, this kept Apple more oriented toward closed modes, where it could better control the components that influenced the user experience. The company took that approach when developing the first generations of the iPhone as well, and relied on elite circles to develop the first apps for it.
However, once the iPhone was established, Apple was faced with the challenge of adding software functionality and applications that would drive further growth. This post helps outline the various options that Apple had. It could define applications that it thought would be useful (for example, a way to sync the iPhone with various mobile banking systems) and then hire the best software designers to develop them (again, the Elite Circle mode). It could break down the development of particular applications into simple chunks and then go to a bazaar like TopCoder.com and hire hordes of software developers to write code for each chunk (the Innovation Mall mode). It could release a development package to outside developers and let them define and create applications that would be useful (the Innovation Community mode). Or Apple could work in conjunction with a company like Intuit to create mobile banking software (the Consortium mode). Each of these modes could spawn new applications, but each would have a very different impact on the iPhone platform.
To continue the Elite Circle approach, Apple needed to feel confident that it knew what applications customers would want and could identify the best partners to create them. Faced with the enormous variety of potential applications, Apple realized that there was no way it, alone or with a small group of Contributors, could anticipate all the applications that an iPhone owner might find useful or just plain fun. So it opted to encourage a thousand flowers to bloom and let the market decide which ones should be chosen. This reasoning excluded the Elite Circle, the Consortium, and the Innovation Mall. Accordingly, Apple introduced in March 2008 a kit that allows a community of third-party developers to create applications based on the iPhone OS platform and offer them to users directly through the iPhone (if an application is not free, the developers keep 70% of its revenue and Apple gets 30%).
“Apple chose to let a thousand flowers bloom and let the market decide which ones should be picked”.
The launch of mobile phones running Android, Google ’s operating system, could prompt Apple to adopt a “two-way collaboration strategy”. Because Android is open source software, it can attract an even larger community of developers than the iPhone does. Apple might therefore decide to complement third-party applications with proprietary hardware features conceived by its own staff and created with the help of select circles of hardware manufacturers. This illustrates another important point: companies can use a combination of collaboration modes simultaneously to support their strategies.
IBM's successful use of an Innovation Community and Consortia to support the strategy of its mainframe and server businesses is an excellent real-world example. IBM's strategy is to compete on the basis of hardware differentiation and service. To that end, the company has strived to commoditize operating systems by embracing Linux and actively participating in the Open Source Community, being one of the first major computer manufacturers to do so. But to continue to differentiate its hardware, IBM needed to stay at the forefront of microprocessor technology. In view of the increasing scale required to keep up with companies like Intel, IBM turned to its Consortia of semiconductor companies, which share development costs. This combination of Innovation approaches has enabled IBM to gain market share in an intensely competitive and dynamic market.
As IBM illustrates, a key component of strategy is to exploit a company's unique assets and capabilities. Therefore, when choosing one or more modes of collaboration, a company's senior managers. Therefore, when choosing one or more modes of collaboration, a company's senior managers should ask themselves: Which of our unique assets and capabilities are we trying to enhance? And how can we best enhance them?
A company's Collaboration capabilities can be exploited for profit. InnoCentive.com , for example, is a spin-off of an Innovation Center developed by Eli Lilly for internal purposes. Alessi now leverages the value of its connections with over 200 designers (in 2008) by helping companies in other industries with product design. Alessi helps them identify the designers (usually from its own network) who can best address their specific needs. In return, Alessi receives royalties on sales of the resulting products, which now account for nearly 30% of its revenue.
A NEW SOURCE OF ADVANTAGES.
As with any strategic variable, Collaborative Approaches to Innovation offer a variety of options and complex trade-offs. As the examples described suggest, each approach can be highly effective under the right conditions. Senior managers should be wary of the idea that one type of collaboration is superior to others. Open Collaboration is not always better than demand, and Flat Collaboration is not always better than hierarchical.
To develop an effective approach to Collaboration, you need to start by understanding your company's strategy. What is the business problem you want to solve with Innovation? Are you (like Alessi) trying to create a distinctive, barrier-breaking product? Are you (like IBM) trying to keep up with larger rivals (like Intel and Taiwan Semiconductor) in an intense technology race? Or are you (like Apple) looking to broadly expand the applications of your product?
Companies should also ask themselves what unique capabilities they bring to the Collaborative Process. Companies with deep relationships in a space, for example, are much better positioned to exploit an elite circle mode than a newcomer.
It is not surprising, then, that differences in strategy and capabilities can lead to different types of collaboration networks competing with each other in the same sector. The task of senior managers in innovation has therefore expanded and become truly strategic. It is no longer just about recruiting the most talented and creative people or creating the right internal environment for innovation. The new Leaders in Innovation will be those who know how to design collaboration networks and how to harness their potential.
NOTE: If you want to learn more about “Collaboration” and “Innovation”, I recommend other related articles I have posted, as well as tools and more:
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