“This is a very important book on a very important topic by two of the world’s foremost authorities in innovation. It bears the hallmark of great business writing. The authors do not sell a one-size fits-all prescription for every company’s innovation problems. Rather, they offer different roadmaps that can be tailored to each company’s situation. This is what makes their work so broadly useful.”
Clayton M. Christensen, Harvard Business School
That’s a pretty good plug from a pretty credible source of management innovation. If we as associations hope to be around in a significant way for the future of our members, we need to understand how “open innovation” can be practiced within our current business models, operating cultures, and the means we use to deliver value to our stakeholders. os.a is pleased to welcome Dr. Satish Nambisan, Associate Professor, Technology Management & Strategy, Lally School of Management & Technology. An acclaimed researcher, thought-leader, and consultant his work encompasses the fields of technology and innovation management, and includes technology strategy, product development, strategic alliances, and inter-firm networks. Through his articles in publications such as Harvard Business Review, MIT Sloan Management Review, Academy of Management Review, and Management Science, he continues to influence both research and practice in the above areas. He has been recognized for his research with awards and grants from several organizations including the IBM Center for Business of Government, Ernst & Young, and the National Science Foundation.
Together with his colleague Mohanbir Sawhney, McCormick Tribune Professor of Technology and the Director of the Center for Research in Technology & Innovation at the Kellogg School of Management, Northwestern University, they co-wrote a fascinating look at network-centric innovation networks and how to create them entitled “The Global Brain.”
A Conversation with Satish Nambisan
os.a:
Satish, thank you for taking the time to visit with me today. Please share what motivated you to write this book and the previous research you have done on open innovation practices.
Satish:
In the last few years, much has been written about the need for organizations to open up their innovation processes and to ‘look outside’ for innovation. However, despite all the hype, most companies don’t seem to have any clue how to actually go about it – except perhaps to imitate the much-touted examples of a P&G or an IBM. There’s an enormous gap between awareness and execution as far as external sourcing of innovation is concerned. And, my goal in this book has been to help companies close that gap.
In this book, I argue that a ‘one size fits all’ approach’ is not going to work – every firm needs to find its own roadmap for harnessing the “Global Brain” – the creative potential of the world outside its four walls. There are many different approaches and models for network-centric innovation. We show how large firms can bring a method to the madness by identifying four very different models for network-centric innovation, and by identifying the approaches that work best for a specific firm, based on its business context.
os.a:
You mention in your book that the Global Brain “reflects both the global scope and the inter-connectedness of a company’s external innovation partners” who contribute both industry or subject matter expertise and creativity. You go on to say, “to innovate more effectively, you must harness powerful new sources of creativity from both inside and outside your company.”
How would the four defining principles of network-centric innovation in your book (shared goals, shared “world-view”, social knowledge creation, and architecture of participation) help associations adapt their closed models to become more open and innovative?
Satish:
Well, in the context of associations, the primary network partners for innovation are their members themselves. So associations, first, need to develop a shared set of innovation goals and objectives with their membership – establishing such a shared innovation agenda will be a gradual process. They also need to ensure that there is shared situational awareness – everybody needs to be able to see the same picture and this requires a good communication infrastructure. Innovation or new knowledge is created through interactions, i.e. the social aspect of knowledge creation. So associations need to facilitate continued dialog among their members – such dialog becomes the context for ideas to emerge and evolve. Finally, how will the members share in the rewards from contributing their innovative ideas? – So associations need to specify mechanisms for the entire community to benefit from the innovation.
os.a:
In my own studies, I know of only one association (Australian Industry Group) that developed a member service based on an open business model or another (American Health Information Management Association) that created a massive communities of practice that drives substantial member value.
Has your research ever studied any associations who developed a successful network-centric strategy? Why do you think companies (who until recently never felt the need for creating and promoting community as a system for product or service management) have suddenly leapfrogged associations to create vibrant, even passionate communities?
Satish:
I have not studied associations per se. However, I have examined service-based companies, some of which have very similar business models. And much of the concepts discussed in my book apply very well to the association context.
Most companies have discovered that their customers are perhaps their best innovators. Companies such as Ducati, Microsoft, Sony, etc. have all established customer communities and implemented network-centric innovation initiatives to source innovative ideas from their customers. I have a new article forthcoming in the MIT Sloan Management Review (Winter 2008 issue) on the topic of customer communities for innovation.
os.a:
Associations play a critical role in our society. But we seem stuck in old ways. What can you suggest to association executives on how to develop their own network-centric innovation networks? Of the four major approaches you discuss, is there a model that might fit associations better?
Satish:
I am not quite ready to state that any one model would be most appropriate for all associations. Given that different associations would have different goals and different governance structures, one needs to carefully examine the contextual characteristics before deciding on a network-centric approach. Indeed, that is central message from my book – one size doesn’t fit all. And, I bet that is true for associations as it is true in the cost of most other industries and companies.
os.a : In your book you talk about the “execution gap.” What do you mean?
Satish:
To be successful in network-centric innovation, one need to get beyond just awareness of concepts like open market innovation, crowdsourcing, etc. Companies need to be able to do three things: First, understand the landscape of network-centric innovation (what are the alternate models). Next, they need to situate themselves in that landscape – taking into consideration their particular industry/market/product/service characteristics – and decide which type of network model and which specific role is appropriate for them. Once you know the innovation role in the network, you can identify and build the capabilities or competencies that would be needed to execute that role.
os.a:
The cultures you mention in your book the “not-invented-here” (NIH) and the “we-know-everything” (WKE) syndrome is common among associations. How should associations manage the cultural shift needed to overcome this thinking among their volunteer leadership and staff? How to engage the great unwashed rank and file member or non member subject matter experts as one adapts existing peer review models?
Satish:
Such a cultural shift requires the commitment and continued support of the senior management. There is no easy way out here – it takes time, it takes resources, and it is bound to be painful to many. So one needs patience as well as a clear vision of the goals and of the potential benefits from the networked approach. Better alignment of the incentives of all the network partners (including the rank and file membership) can also help in this regard. Establishing online discussion forums and other open forums can enhance the transparency and thereby appeal to a wider set of the membership to get engaged in the collaborative innovation process.
os.a:
You talk about “developing a deeper understanding of the various innovation opportunities that exist and relating them to the firm’s own unique innovation context.” That resonates very much with me. I look at InnoCentive and contrast their model with a traditional hundred year old technical society. The former has created an open business model that let’s researchers around the world pursue their passion for chemistry and get paid for it while driving faster and cheaper product innovation. Meanwhile, the old traditional technical society focuses on the back end research – peer review publishing and misses the opportunity to expand the value chain of their members in the practice of doing the research.
How can associations avoid missing such opportunities for innovation?
Satish:
I hope my book will help in this regard! The key objective of the book is to help organizations – including associations – not miss such opportunities for innovation. A good understanding of the network-centric innovation landscape can help them evaluate the potential opportunities and implement the most appropriate approach.
os.a:
What are the organizational competencies needed to be successful in a network-centric world?
Satish:
I have described three broad categories of capabilities in my book. Good leadership is very important – leaders who can ‘build the faith’ of the organization in such network-centric initiatives. Equally important is a relevant set of mature processes to manage and coordinate the innovation and an appropriate technological infrastructure. You also need to be able to measure what you are achieving – so an appropriate portfolio of success metrics is also required.
os.a
This blog has featured InnoCentive, NineSigma, InnovationXchange, SellaBand, ArtistShare and others including companies who use online communities to drive innovative product design and delivery like Nike, Minnesota Public Radio, Gannett, and tiny Slim Devices. Do you have some favorites?
Satish:
I don’t have any favorites. I think at this stage many of the companies are still experimenting with the different approaches and models and finding out how they can use each of those innovation intermediaries that you mentioned.
os.a:
It seems like we are approaching a radical new age. One that will be driven by openness. What is the collective potential effect of open innovation?
Satish:
The ‘global brain’ presents a lot of innovation opportunities for companies. However, there are also contexts where such external collaboration may not be warranted. And so, the ‘local brain’ (internal R&D efforts) is also equally important. It complements the global brain – and together can drive innovation in radically new ways.
