Some companies use their innovation system to renew existing core products and services. Others see its purpose as limited to developing new products and services. Some companies include merger and acquisitions efforts in their innovation system, others don’t. Some see innovating as marketing’s job, while others see it as a shared responsibility between R&D and market development.
While differences among companies regarding the purpose and scope of their innovation system can make comparisons and generalizations between them difficult, one perspective is to view the purpose of an innovation system as a means through which a company adapts itself to its surrounding environment. Without some type of adaptive capability, changes occurring in the business ecology in which customers, technologies and competitors interact go undetected until it is too late; mistakes are more probable, and sooner or later the company will find itself “behind the curve.”
Viewed as the ability of a company to sense, respond and adapt, a company’s innovation system must simultaneously enable responsiveness to external changes while furthering the host company’s interests.
Think of an innovation system like a porch on a house. When you are on the porch you are neither completely inside nor completely outside. Similarly, as an adaptive capability, a company’s innovation system must necessarily be located in between. The system must stretch into the surrounding ecology if it is to have an accurate sense of what is going on, but also attach to the “proprietary” boundaries of the company’s house, real or imagined. Staying inside the boundaries of a company ignores the new realities enumerated by Henry Chesbrough in his book Open Innovation. Viewing a company’s innovation system as entirely outside a company’s boundaries will create overwhelming not-invented-here antibodies, killing most innovating efforts before they are carried to term.
Anyone interested in building and improving such an adaptive capability–or innovation system–must align the system with two fundamental coordinates. One is the nature, character and relative flexibility of the host company’s business. David Teece, Chesbrough and others have described this and the importance of a company’s willingness to reconfigure its way of producing profitable value for customers. The other coordinate is the relative position the company chooses to take in its surrounding ecology.
In his thesis "Motors of Sustainable Innovation: Towards a theory of the dynamics of technological innovation systems" (2009), Roald A. A. Suurs, suggests that within their own external ecology, companies are either enactors or selectors of technologies, the former being more willing to develop whereas the latter are more ready to “buy” technology developed by another. A company willing to play an enactor role will have an innovation system with a very different profile than a company that sees itself as a selector. The enactor will place bets on certain technologies to invest in and develop themselves, whereas the selector will remain more agnostic to technology, looking rather to their own ability to quickly choose and commercialize what others have developed.
One approach is not necessarily better or worse than the other. Some companies choose to do both. Being clear about what position the company chooses to take will make a significant difference in how its innovation system is designed, organized and resourced.
This article was originally published in Innovating Perspectives in March 2011. For this and other back issues of our newsletter, please visit our website at innovationsthatwork.com or call (415) 387-1270.