8/4/14

1

1

Innovation Ecosystems: Benefits, Challenges, and Structures

Discussion August 5, 2014

Joel West Professor, Innovation & Entrepreneurship School of Applied Life Sciences

2

Innovation Ecosystems

• Interdependence between firms •  Joint need for ecosystem health • Work cooperatively to create value •  Specialization and niche finding

• Often lead by dominant firm •  Firm success depends on ecosystem management skills •  Importance of building healthy and complete ecosystem

Moore 1993, Iansiti & Levien, 2004, Adner, 2012

8/4/14

2

3

Users

Smartphone Ecosystems

West & Wood, Advances in Strategic Management (2013)

4

Networks, Communities

• Networks link multiple organizations via transactions or ongoing ties

•  Powell, 1990; Gomes-Casseres, 1996; Staudenmayer et al, 2000 • Communities add shared identity and governance

•  Markus, 2007; von Hippel, 2007; O’Mahony & Lakhani, 2011 • Ecosystems link firms that provide complementary

goods and services •  Moore, 1993; Iansiti & Levien, 2004; Adner & Kapoor, 2010

• Platforms combine a technical compatibility architecture with an ecosystem

•  Gawer & Cusumano, 2002; West, 2003; Eisenmann, 2008

See West, New Frontiers in Open Innovation (2013)

8/4/14

3

5

Marengo: Platforms

• Interdependence and complementarity of ecosystems

• Particular interest in platforms • Complex systems • Mutual interest in platform success • Need to evolve ecosystem and its outputs

• Studied via a model

6

Marengo: Further Research

• Opportunity to generalize insights on dynamic platform competition

• Examine competing platforms • Four basic types of platform contests (Gallagher &

West, 2009): • Static (VCR) • Episodic (early videogames) • Linked (cellphones, current videogames) • Continuous (smartphones, social media)

8/4/14

4

7

Miles: Communities

• We know collaboration is important • What are the barriers between firms? • What are the barriers within firms? •  Is it driven by firm (or societal) norms? • How can we change things?

• Direct links to cumulative innovation • Allen, 1983; Nuvolari, 2004; Scotchmer, 2004; Murray

& O’Mahony, 2007; also von Hippel, 2005

8

Miles: Further Research

• Many firms compete w/o cooperating • Rarer are examples of firm cooperation

•  Inventors of the airplane (Meyer, 2013) • Standardization communities (Axelrod et al, 1995;

Leiponen, 2008; Simcoe, 2012) • Open source software (West, 2003; Stam, 2009;

Spaeth et al, 2010) • Are differences attitudinal or strategic?

• An open empirical questions

8/4/14

5

9

Snow: Communities

• Multi-firm innovation ecosystems • How can firms best collaborate? • What are the rules? • What benefits can be realized?

See Fjelstad et al (2012), Moore (1993)

10

Snow: Further Research

• We have examples of the architecture of interfirm collaboration

• West & O’Mahony, 2008; Fjeldstad et al, 2012 • But need a more general solution

• What are the fundamental axioms? • Moderators? •  Contracts and property rights?

• Other research designs (experiments, simulations, ethnographic, etc.)

•  Cf. O’Mahony & Ferraro, 2007; Terwiesch & Xu 2008

8/4/14

6

11

Teece & Leih: Local Ecosystems

• What is the proper role for a university in the local innovation ecosystem?

• How can it be made more effective? • What are the needs of new firms? • How can both parties benefit? • Will this corrupt the university?

12

Teece & Leih: Further Research

• Some of this is well-trodden • Universities as seeds of local industry

clusters (cf. Kenney & Mowery 2014) • University tech transfer

• University-firm open system • Measuring ongoing flows (both ways) • Measuring simultaneous ties • Role of boundary spanners

8/4/14

7

13

Final Thoughts

• Ecosystems are increasingly recognized as important to firm success

•  Important to theory and practice

• An opportunity for future research • Considerable research on ICT and other digital goods • How do these ideas extend beyond ICT?

• E.g. Kim et al 2014 study of Chez Panisse • Clearly delineate overlap with other constructs