TML reviews an article by Ron Adner, which mapped out the world of innovation in the Harvard Business Review. We find that it’s the key to making sure that your products aren’t left on the shelf.

The fax machine was invented in the 19th century, but it took the best part of a century to take off.  It had to wait for the world’s telephone infrastructure to be widespread and cheap to access.  Ron Adner’s article in the Harvard Business Review about innovation in ecosystems has lots more examples of good inventions stuck in the waiting room – including high-definition television, third generation wireless networks and Michelin’s run-flat tyre.

Innovative companies usually have robust new product development processes that will identify if the technology infrastructure to support a new invention is not in place.  Waiting for the infrastructure to happen is one option, but shareholders will not be impressed if a company they invest in waits too long and loses competitive advantage.  So what are the chances of making something happen?  Haven’t we heard that in the 21st century it is supply chains that compete, rather than individual companies?

Adner’s article maps out the new world of innovation – innovation in “ecosystems”, and offers some food for thought about how to make them work.  Just like ecosystems in the natural world, business ecosystems are delicate.  If one critical food source falters, the whole system may be threatened. The innovation doesn’t necessarily fail, but it probably takes longer, with more hassling factors. 

He describes the risk analysis necessary prior to strategy formulation:

We are all familiar with initiative risks, in which a company explores the feasibility of the proposed new product, the benefit to customers, its capabilities to deliver it and the likely competition.  Some books on innovation suggest that companies need a high quantity of ideas, perhaps as many as sixty, before a really promising invention emerges.  But consider Michelin’s invention of a tyre that can run when it is damaged, which they started to develop in 1992.  Drivers would love to be spared the inconvenience of flat tyres and the worry of blow-outs at high speed. But very few car models in 2007 have the electronic systems to support run-flat tyres. 

This is the minefield of interdependent risks.  What complementary innovations have to take place to support your innovation?  What are the chances of working with the manufacturers of complementary products and services to accelerate mutual advantage through delivering innovation to the end-customer?  Theoretically, they should be quite high; we all like the opportunity to leverage a great idea.  But as the number of  “partners” involved in the ecosystem increases, so does the probability that everyone’s investment will stall.

If those additional risks in the development cycle were not enough, Adner also explores the risk in extended sales cycles, which he calls integration risks.  Are your distributors and resellers going to rush out and sell your new product?  Probably not, unless you provide the money to train their staff, upgrade their systems and provide joint marketing funds.  You have to coax them through adoption of the new solution or it will never get to the end-customer.

It will be no great surprise to marketers working in companies focused on innovation that working with supply chain partners is critical to overall success.  Nevertheless, Adner’s analysis and recommendations are thought-provoking and worth a read.

“Match your innovation strategy to your innovation eco-system”, by Ron Adner, Associate Professor of Strategy and Management at INSEAD, appeared in Harvard Business Review.

Email: beth.rogers@ports.ac.uk