In the new world of innovation ecosystems, our ability to execute on our initiatives no longer determines our success. Traditional concerns about our competencies, consumers, and rivals are still critical, but now our strategies and actions must also account for interdependence. Those who master its principles will capture outsize gains. Those who ignore its implications will be penalized with greater inefficiencies, lags, and disappointments.
The tools introduced in this book will give you a wide lens through which to assess your strategies and with which to guide your actions and commitments. Using them actively will help ensure that you see the entire ecosystem on which your success depends. And, having exposed your issues before they become problems, the tools will allow you to make better decisions and more effective investments.
STEP 1
Begin by gaining a clear view of your Value Blueprint. This is a crucial first step in winning the ecosystem game. Drawing your blueprint will help you and your team articulate a shared vision not only of your value proposition but also of the way to bring it about. It will reveal hidden Co-innovation Risks and Adoption Chain Risks. It will surface missing pieces and mismatched assumptions and help you strategize your role, your timing, and your approach to creating advantage.
Mapping your ecosystem will force you to be explicit about the links and dependencies that you are building into your plans. There is nothing inherently wrong with dependence, as long as you know it is there from the start. Drawing a clear blueprint will encourage you and your team to formulate a plan for dealing with problematic elements proactively, at the start of your journey. It will help you avoid the familiar improvisation of tactical adjustments that is the hallmark of incomplete strategy.
With your blueprint clearly articulated, you are in a position to ask key questions about which role you want to play and when you want to make your move. Using the Leadership Prism to assess the distribution of expected surplus will help you identify who the natural ecosystem leadership candidates are, and whether you are among them. Using the First-mover Matrix will help you determine your ideal timing, letting you see whether the structure of interdependence is likely to reward early movers or hold them at the starting line waiting for the race to start.
STEP 3
The way in which you bring the necessary elements together can be a source of enormous advantage in a world of interdependence. Exploring alternative blueprints using the Five Levers of Ecosystem Reconfiguration will help you arrive at a plan that can accept the constraints of your ecosystem and still deliver a complete value proposition. And coupling this exercise with the principles of the Minimum Viable Ecosystem, Staged Expansion, and Ecosystem Carryover will help you identify the best sequence to follow in building toward your value proposition, and then leverage this achievement to extend your advantage to additional opportunities.
These tools are meant to be used iteratively, to help you and your team converge on the best strategy you can create. Use them when you start a new initiative, but also at different stages of its deployment, as a way of making sure that the full ecosystem is on track and to continuously seek more advantageous pathways to success.
The wide-lens tool kit will expose your blind spots and let you see problems before they arise. Part of what this means, however, is that you will see more problems. The unproductive reaction is to feel disempowered because recognizing all the new sources of failure can sap the will for action. The productive reaction, in contrast, is to embrace this wider view, accept the world for what it is—a challenging place in which to succeed—and find your best path to success. The purpose of this book is not for you to close these pages and say, “Innovation is a high-risk game, and therefore I shouldn’t play.” Instead, my hope is that you conclude, “Innovation is a high-risk game, but now that I see where the risks lie, and know how to mitigate them, I feel more confident in choosing the surest path toward success.”
Knowing the Risks and Multiplying the Odds
At the heart of this book is a simple suggestion: before diving too deeply into a new initiative, make sure you understand the ecosystem into which you will need to integrate for your efforts to even have a chance at success. If you begin the innovation process by looking at the innovation ecosystem, and your place in it, it is possible to avoid investing time and resources in endeavors that were doomed from the beginning. Developing a better understanding of the odds is the key to making better bets.
Consider an industry where innovation success rates are low—assume 10 percent. (If you’re in services, your natural odds are much higher; if you’re in pharmaceuticals, they are much lower—but regardless of your industry, the logic will be the same.) With firms putting out their best efforts, doing their traditional due diligence, and focusing on execution, ten out of a hundred innovation efforts meet their expectations and succeed. Ninety out of the hundred fail. These are the unadulterated odds. This is why we talk about innovation as a high-risk activity. The good news, of course, is that if 10 percent is the industry norm, then that’s all we need to stay in the game.
What we want, however, is to thrive in the game. And this requires doing better than the benchmark. The standard approach to improving innovation is to exhort managers to execute better, teams to be more effective, marketers to be more creative (all, of course, while staying within budget). Let’s assume it works: through sheer force of will, the organization is able to deliver twice as many successful innovations as before.
Notice two characteristics of this approach. First, if it works, our chances double to 20 percent—we still lose on eighty out of the hundred innovation initiatives. Second, it requires a miracle.
The wide-lens tools offer an alternative approach, one that will first help us make better choices and then better manage the initiatives we choose to pursue. In looking at the hundred initiatives the organization has decided to pursue, it is clear that all are promising ideas, appealing to consumers and pursued by motivated teams (if this were not the case, we would not be investing in them). But it is impossible to tell which ten will succeed. When we use a wide lens to examine these initiatives and take their ecosystems into consideration, an amazing thing happens. We still cannot tell which ten will succeed—we cannot escape the role of luck as the arbiter of winners. But we can make some pretty strong predictions about which fifty will lose. Not because they are bad ideas, or are being managed by bad teams, but because, from the start, the structure of their ecosystems is set to undermine their success. Their value blueprints are clogged with red and yellow lights that will keep them from having a chance to win regardless of how well you execute your part.
Wherever we see these flagrant ecosystem obstacles, we can avoid the bet. We are still left with the ten winners but need not waste our scarce resources on the fifty initiatives that were doomed from the start: we avoid the predictable failures and make only the top fifty bets. Ten out of fifty brings us to 20 percent without the need for a miracle.
Making only half the bets means freeing up resources that we can now allocate to the top fifty. Within the original resource budget, we can double management focus. We can double the marketing spend. With twice the resources on every initiative, combined with more time and attention to crafting a robust value blueprint and nurturing the ecosystem, we don’t need a miracle to double the wins. At twenty out of fifty we are at 40 percent in a realistic way—and four times more effective than the benchmark.
This is the path: eliminate avoidable failure; strategize more robust success.
A Closing Wish
Eliminating the blind spots of interdependence is everybody’s problem. Whether you are a CEO, an investor, or project team member; in a large multinational or an emergent start-up; in the corporate sector or at a nonprofit: if you are contributing to a collaborative effort, then your success depends not just on your own efforts but also on your partners’ ability, willingness, and likelihood to succeed.
Each of us is an investor, responsible for allocating our own time and effort across multiple opportunities and competing demands. Many of us are further responsible for allocating other people’s resources as well—their labor, their capital, and their attention. With every new undertaking, every new initiative, we are taking risks with these resources. Our goal is to make the best possible choices across a portfolio of opportunities that leave us—and those who depend on us—better off.
My hope is that this book offers you a broad perspective to help you navigate the new and changing world of interdependence. By applying the wide-lens principles, you will be better able to expose the hidden sources of dependence that lurk beneath the surface of a strategy and be better equipped to manage them proactively and productively. You will construct better plans, and then deploy them with teams that share a more coherent vision of where they are trying to go and how they are going to get there.
Luck will always play a role in driving outcomes. In this spirit, I wish you, first, good luck. And second, that the wise application of the wide-lens principles means you will need less of it.
Figure 9.1: The Wide Lens.
