In their book Frugal Innovation, Navi Radjou and Jaideep Prabhu list six ways in which hypercollaborative companies can work with more efficiency
Olaf Groth, a professor at Hult International Business School in San Francisco, notes that businesses across industries in the developed world are now facing “wicked” problems, which by their very nature are complex and protracted. These wicked problems are both social and economic. For instance, medical-device-makers and big pharma companies are being asked by the US and European Governments to deliver high-quality health care to ever more people while reducing prices. Against the backdrop of rapid urbanisation and dwindling natural resources, city planners are calling on the construction industry to build smart, comfortable, energy-efficient cities. With an ageing industrial workforce and escalating raw materials costs, manufacturers — especially in Japan and Germany — are being asked to cut staff, increase productivity and produce affordable, eco-friendly products. Businesses cannot solve these complex problems alone. It is no longer the case that knowledge is power; now sharing knowledge is power.
Sceptical readers might ask: What’s newIJ For at least a decade, businesses have embraced open innovation: The practice of opening up and networking R&D operations with external partners. By 2010, more than half of Fortune 500 companies had an open innovation strategy. In 2013 alone, many Fortune 500 companies launched innovation centres and immersive accelerator programmes in Silicon Valley to give their business managers the opportunity to “open up” and learn from nimble entrepreneurs. Which Western CEOs do not proudly talk about how their company is building “open innovation networks” and “partner ecosystems” to better serve their customersIJ However, the truth is that their innovation networks are not that open, and their partner ecosystems do not really serve customers.
First, when companies seek external know-how, they are disposed towards knowledge that reinforces rather than challenges their worldview. As Socrates pointed out, wisdom is about knowing that you don’t know, not about believing that you know when you don’t. He argued that wisdom could be cultivated by merely being curious: An unexamined life is not worth living. Sadly, as Tod Martin, CEO of Unboundary, an “intentionally small” consulting firm that advises Fortune 500 firms such as Coca-Cola, IBM and FedEx, points out: “Curiosity is stifled in most large organisations, which tend to live by the proverb “Curiosity killed the cat”. They prevent their own people from looking up and out and making sense of the world”.
He adds, “They are open to new ideas as long as these come from others who resemble them. But they are not open to new perspectives, especially from those who are very different from them”. The unexamined life which these uncurious organisations lead abruptly ends when the world suddenly and unexpectedly shifts. In other words, companies practise open innovation today mainly to become more efficient — by doing better what they already do — rather than to become more adaptable and agile — by unlearning what they already know and learning how to do new things. Unfortunately, only the most adaptable not the most efficient — species survive. Indeed, organisations are dying earlier: The average lifespan of a company in Standard & Poor’s 500 Index (the 500 leading publicly-traded firms in the US) shrank from 61 years in 1958 to 18 years in 2011, and will shrink further in the foreseeable future.
Second, when companies claim to be building partner ecosystems, they are doing little more than finding new ways to lock customers into their brands. They are replacing vertical integration with a vertical ecosystem. But a brand-specific approach is becoming irrelevant, even counterproductive, as customers are themselves able to create the products they want, independent of established brands. Instead, companies need to build horizontal ecosystems that integrate their brands with those of other firms — including their rivals — to provide customers with the rich choice and highly personalised experiences that they expect.
This new consumer-centric approach has been dubbed “MEcosystems”. And although it threatens traditional bricks-and-mortar organisations such as GM and Bank of America, it is a boon for the GAFAs. indeed, while GM is assembling a vertical partner ecosystem to build connected cars that run like “iPhones on wheels”, Apple and Google are investing in a horizontal ecosystem to provide customers with seamless experiences across multiple devices, whether they are at home, at work, or driving between the two. Similarly, while Bank of America is busy beefing up its mobile banking capabilities Google is attempting to become a virtual bank by filling its Google Wallet with plastic debit cards.
To win in this new context, companies must practise hypercollaboration; that is, they must increase the breadth and depth of their partnerships in order to understand the real nature of so-called wicked problems and solutions. Hyper-collaboration will enhance companies’ adaptability and resilience to better serve the MEcosystems. In doing so, they might foster truly open innovation ecosystems in which, as Groth puts it, “diverse sets of talents are induced to think like da Vinci, across disciplines”IJ
So how can business executives engage “Renaissance” thinkers and doers for an increasingly dynamic and unpredictable business environmentIJ
Six ways to hyper-collaborate
Hyper-collaborative companies must make use of an eclectic group of partners to challenge senior management thinking and encourage a continuous process of unlearning and relearning. This can be done in the following ways:
As strategy consultants to large companies for a number of years, this book’s authors have often informed senior executives about a breakthrough technology or solution developed by their suppliers.
In developed economies, cost-conscious and eco-aware customers are assembling different products and services to meet their individual needs. Typically, these customers do not care if these products and services are branded. So companies must work with others in their sector (for example, carmakers, railways and airlines from the transport sector) to integrate their respective capabilities and provide their common clients with seamless experiences.
Firms that hyper-collaborate pay heed to Sun Thu’s advice: “Keep your Mends close but your enemies closer.” This competition among rival companies is a frugal strategy because by jointly investing in a high-risk/high-reward innovation project driven by a big hairy audacious goal (BHAG), they collectively reduce their risk exposure. Similarly, by working together they can help establish — and accelerate the adoption of — a new industry standard that could benefit them all.
Industrial firms should together implement the sharing and circular economy in two important ways. First, they should integrate their own value chain with those of other manufacturers, as often in business “one man’s trash is another man’s treasure”. Second, they should monetise under-utilised assets by sharing them with companies that need them more. This dual strategy allows manufacturers to slash costs, maximise efficiency and generate new revenue streams.
Sharing waste is only half the story
Companies can also share underused assets and resources. FlOOW2 is a business-to-business marketplace that enables companies to share and exchange under-utilised equipment, services, skills and knowledge. By tightly integrating their supply chains, companies can keep their fixed assets fully utilised and also save on costly raw materials and energy.
large companies are facing growing pressure from governments, customers and employees to act as responsible corporate citizens by solving pressing social issues such as health-care access and financial exclusion, it is too often assumed that corporations are just profit-hungry monsters that ignore social problems. In fact many of them do care, but they lack the knowledge, skills, resources, or the right business model to tackle social challenges systematically and profitably. They may even be too proud to admit their ignorance or inexperience.
Airbnb, an online short-let rental company, was launched in 2008 by Brian Chesky and Joe Gebbia, two young people with no experience of the hotel industry. By 2014, Airbnb had become the fifth largest hotel chain in the world, filling more room nights than all the Hilton hotels put together (and Hilton began in 1919). Similarly, in 2006 Frédéric Mazzella and Nicolas Brusson founded BlaBla Car which, by 2014, had emerged as Europe’s largest car-sharing firm.
BlaBla Car now transports over 1 million passengers a month, which is more than Eurostar, a high-speed railway service connecting london with Paris and Brussels. The same applies to Uber, a mobile service directly connecting passengers with drivers for hire. co-founded in 2009 by Garrett camp and Travis Kalanick, Uber has disrupted the traditional taxi industry. In 2014 it was valued at $18.2 billion.
Excerpt taken from Frugal Innovation, Hachette, Rs599