The Big Ideas
Ecosystem Innovation: A Powerful Innovation Practice for Complex Challenges
What is Ecosystem Innovation?
And Why Does it Matter So Much Today?
Why do we need a more powerful form of innovation? This is a unique moment in history where we need exceptional innovation tools to confront a host of important challenges. Our global world presents a flood of disruptive threats and game changing opportunities, that have the potential to transform the life of individuals, organizations, and entire societies. Ecosystem Innovation offers the new tools that we need to thrive in this age of change.
Ecosystem Innovation matters because we find ourselves in an age of unprecedented change facing exceptional challenges. According to World Economic Forum chair Klaus Schwab, “We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before.” (i). He goes on to say that these changes are “disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance."
These changes are deeply disruptive, but also offer hope and opportunity. Businesses, institutions, and communities, must all rise to large-scale challenges ranging from pandemics and climate change, to a historic urban migration and a massive restructuring of job opportunities. For many, these changes seem deeply disruptive and disturbingly fast moving. Yet this same turmoil creates huge opportunities to claim new roles and create a better world.
Industry analyst and innovation strategy author Larry Downes warns that “every industry is now at risk from competitors that enter the market simultaneously better and cheaper.” (ii). The bulldozers of change aren’t lumbering slowly forward. Downes says “where disruptive innovation may have once taken a decade or more to transform the affected industries, our research shows that time frame has compressed to half that time - and continues to shrink.”
Today, it is shocking how quickly even transformative changes can happen. During the early part of the Covid19 pandemic the use of telemedicine exploded, growing by 50 to 175 times in just six months (iii). That’s an entire industry being redefined in less time than it takes most sports teams to play out a season.
But it doesn't take a global crisis to drive rapid and disruptive change. Across every sector, long stable businesses are being transformed within a few years. Famously, Uber and other ride share companies were able to up-end the hundred year old business model of taxi companies with shocking speed, outpacing iconic taxi cabs in New York City within thirty six months of their introduction in the city (iv).
Our Exceptionally Creative World
Sceptical observers might justifiably ask whether these over-the-top claims of revolutionary change are anything new. Is this moment in history is really any different than periods of change in the past? They could make the case that while some transformation is always needed, embracing too much disruptive change is bad for business and upsetting to a well-regulated life.
Yet there are good reasons to believe that the need for change and innovation is truly greater than it has been in the past. As Oxford professor Ian Goldin observes, it is the conceit of each generation to think that they have been born into a historic moment, ‘but this time it's true.’
The foundation of this age of disruption is a global explosion of new capabilities. Educational access and achievement from primary school to college has seen a generational transformation. This is true across genders and in countries across the world. ‘Scientists alive today outnumber all the scientists that have lived up to 1980’ according to Goldin.
Ironically the labor disruption of the Covid19 pandemic has helped draw this global creative force closer together. Technologies that support collaboration across time zones and cultures have made it possible to build dynamic creative teams from talent anywhere in the world. Goldin sees ‘a new layer of group intelligence’ which makes it possible to ‘convene, sense, speak, and act as groups with greater ease, power and speed. (v)’
According to Klaus Schwab, “The possibilities of billions of people connected by mobile devices, with unprecedented processing power, storage capacity, and access to knowledge, are unlimited. And these possibilities will be multiplied by emerging technology breakthroughs in fields such as artificial intelligence, robotics, the Internet of Things, autonomous vehicles, 3-D printing, nanotechnology, biotechnology, materials science, energy storage, and quantum computing.” (vi)
This global host of creative minds draws upon a revolutionary technical toolkit. Fourth industrial revolution technologies such as remote sensors (called the Internet of Things), big data, artificial intelligence, and robotics all work together to push the boundaries of tech’s role. Autonomous self-driving vehicles, smart cities, and robotic capabilities sophisticated enough to perform dental surgery are becoming a practical reality. These digital technologies don’t stand alone. There are similar revolutions underway in high impact fields such as genomics, materials science, space flight, and energy.
This unprecedented growth in creative capability isn’t a temporary wave that will eventually pass and allow a return to more stable conditions. The global creative engine will continue to grow in its reach and power. This will drive the need for ever more frequent innovation.
In the past, a successful innovator could count on the ability to harvest the rewards of their creative thinking over a long period of time. Today because ideas are being conceived and developed at an ever increasing pace, others can rush in to offer better alternatives. This ‘obsolescence squeeze’ forces organizations and their innovators to embrace shorter repeated cycles of innovation.
A Different Type of Innovation for Today's Real World Challenges (and Opportunities)
Faced with this urgent need for creative change, it should be easy to make the case for investments in support of innovation. And yet, for many, the enthusiasm for more innovation is fading. Consider the discussion at an international conference on aid sector innovation where the mood in the (virtual) meeting room was decidedly ill-tempered.
One speaker described the hard-won portfolio of inventions from a major international innovation lab as ‘a cabinet of broken dreams’, while others complained that a host of new technology innovations were just ‘digital litter’. The temper in corporate board rooms is often equally grim. Despite years of investment in high profile innovation initiatives, there are growing doubts that once popular programs like innovation labs and high energy hackathons actually deliver impactful ideas at scale.
Simply doing more programs that (1) produce small innovations or (2) invest in huge big bang projects that take years to finish won’t address the underlying difficulty. The issue is not how much innovation is being done, but rather, the type of innovation being done. Today there are over a million apps in each of the major App stores. If sheer quantity was the measure of innovation success, then mobile software would have risen to the challenge.
And yet, as physician and public health strategist Hans Rosling pointed out, the Ebola response “had hundreds of health-care workers from across the world flying in to take action, and software developers constantly coming up with new, pointless Ebola apps… apps were their hammers and they were desperate for Ebola to be their nail.” (vii) It’s almost a certain truth that another mobile app won’t save the world.
Responding to innovation’s shortfalls requires a better understanding of the unique nature of today’s challenges. The problems that innovators face today, are not the same type of challenges that defined the 20th century and the 21st century. Today’s most important problems and opportunities are woven into complex systems of people, organizations and resources. If innovators seek to make truly impactful change they need to see and work with (3) fast changing complexity.
Ecosystem innovators seek to rise to this challenge. They don’t simply improve an existing process or replicate a proven solution. Instead, they step back and think about how to change the connections and collaborations that define how things work. They take a big picture view of the whole challenge and give themselves permission to redefine goals, change processes, build new collaborations, and use technology in original ways.
In short, their innovation is an ecosystem. It's not just one piece of technology, or one isolated change. They envision a new ecosystem of actors and resources that can pursue boldly creative opportunities and break rules that constrain the ability to act.
This lets them build impressively ambitious solutions to hard problems. They have a chance to tackle challenges that would be impossible to address by simply making smaller more focused improvements.
Ecosystems Are All Around Us
Admittedly, the word ‘ecosystems’ might seem a bit intimidating and off-putting. This is unfortunate, because in practice the concept of ecosystem is far more intuitive and familiar that it might seem. At their heart, real world ecosystems are simply collections of people, organizations, technology, and resources that interact with each other to do something worthwhile. These real world ecosystems surround us every day, making up the fabric of our lives, organizations, and society.
Consider a small local bakery. It is a real world system of people who each voluntarily play a particular role and receive a reward for their efforts. There is a hired baker who makes bread, earning a paycheck and getting professional satisfaction from their work. Customers arrive seeking food for their family and offer money to pay for it. They are served by a shop owner who conducts the sale and hopes to make a profit from the store. Note how each participant in the ecosystem is different and yet everyone benefits from their shared interaction.
Real world ecosystems like this don’t have neat edges or clear boundaries. The bakery’s ecosystem doesn’t end at the front door of the shop. Before the baker can begin baking, someone must deliver the flour to the shop. Zoom further out and the ecosystem could include a farmer who grows the grain and the miller who grinds the flour.
When changes are made in a real world ecosystem like this, the effects pour over to affect other participants and activities. For example, imagine the bakery installs a new automated breadmaker that saves money by reducing the hours needed for the baker to do their work, but also lowers the quality of the bread. The impact isn’t only in the kitchen. Some customers may choose to go elsewhere to get the higher quality they want, while others may be attracted to the lower prices. The baker may decide to get a different job where they can get more hours, and the owner might take advantage of the increased automation to open a second store.
Once you start looking at the world this way, it becomes clear that ecosystems that weave together people, organizations and technology, are everywhere and come in all types and sizes. If you work in the real world you can't avoid then.
This is even true for other more conventional innovators. The flashy technology inventions that often get lots of press almost always sit at the centre of a much bigger, and messier, real world ecosystem. Consider a new digital tool that might be used to enhance both classroom and at home learning. It might be cutting edge tech, but all by itself it is hardly a revolution in education.
To create a new learning experience the ecosystem of teachers, class room practices, parents, and more will need to be reimagined too. This is why so many promising investments in silver bullet technology solutions end up be 'digital litter' sitting at the back of classrooms, offices, and homes. Actual success and impact depends on a whole ecosystem working together, not just the sudden appearance of a clever bit of technology.
Claiming the Opportunity for Ecosystem Change
Ecosystem Innovation intentionally reshapes the way people, organizations, and technology work together. This might be an ecosystem found within a local bakery or a global ecosystem of organizations that are at the heart of a major international crisis. While each ecosystems operates at very different scales, ecosystems innovators can approach these challenges with a common practices.
They step back and take a big picture view of how people, organizations, and technology work together and then intentionally reshape the systems that connect them.
This can be challenging work, but it comes with amazing creative power. An ecosystems innovator can invite new people and organizations into a shared effort. In a fast changing world they can bring these new actors and tools into the ecosystem, reimagining what is possible with a collective effort. And because they are redefining ways of working, they can break the old rules that prevented change.
Here's an example. Currently, when creating prosthetics for injured limbs, people living in areas with limited health care facilities are often poorly served. It's hard to access highly skilled doctors, who are typically needed to design good fitting prosthetics. Even when care is available, delays can be long and the most effective devices are typically manufactured elsewhere at high cost.
This ecosystem works fine in a country with a strong economy and robust health system. But it fails in many of the war torn parts of the world, where the need for prosthetics is often painfully high.
Imagine a new system that works quite differently. It begins by scanning patient measurements in a local community health centre. The data is then transmitted to a team of experts distributed around the world who draw on a digital library of designs. They can then send customized instructions for the new limb to a local computer driven manufacturing unit, which would ‘print’ the customized prosthetic onsite.
This could all happen within a week, delivering a better fit, and at lower cost than the original ecosystem of prosthetic care. The power of this new ecosystem lies in how it achieves a challenging goal by bringing together different capabilities from across the world.
This ability to intentionally reshape ecosystems is well suited to the challenges that organizations and communities face in today’s age of continuous change. In fact, ecosystem innovators can often take on challenges that other innovators struggle to address.
Reinventing Business Models: Entire industries are being transformed at an unprecedented pace. It’s possible to thrive in this tumultuous environment, but only if an organization can reinvent itself in ways that break with the status quo. This is a threat that often sneaks up on leaders. As Clayton Christenson points out “The leading firms in the established technology remain financially strong until the disruptive technology is, in fact, in the midst of their mainstream market.” Ecosystem innovators can offer leaders the courage to create an intentional strategy for bold reinvention of business models.
Making Good Ideas Scale: There are a lot of promising inventions and ideas that never manage to scale up and be sustained over time. This is a frustrating waste of resources and opportunity for an organization that is trying to navigate an age of change. Who can afford to throw ideas away? Ecosystem innovators can help organizations take the seeds of good idea and build an entire solution around it. With their big picture perspective, they can see the different people, organizations, and connections that need to be in place for an idea to really deliver value and achieve adoption.
Addressing Unsolved and Complex Problems: As a global community we a face a number of big complex challenges that don’t have easy or obvious solutions. A problem like climate change can’t be solved with a new piece of technology or even a new regulation. Addressing the challenge requires an integrated ecosystem that weaves together the work of different organizations and policies from across the world. Other challenges like growing economic inequality, responses to a global health crisis, or the challenge of urban growth and poverty are at their heart systems problems.
With this approach, substantial and fast moving change is not a catastrophe. Periods of change open doors to ambitious new ideas and game changing opportunities. Long standing problems that seemed to be unsolvable using current thinking, can often be unlocked in new and creative ways.
The door is open to those who are willing and able to build new opportunities. Commenting on the entertainment sector's disruption after the Covid19 pandemic, Hollywood producer Ava DuVernay said "It's not going to go back to the way it was, nor do we want it to. We want to move forward. I hear people saying that they can't wait to get back to normal. Well, I really resent that. Normal wasn't good enough. All this change in such a short amount of time really lays bare how shaky the ground was to begin with."
If you can rise to the creative challenges, this is an exciting world. Powerful ecosystem innovation and the ability to intentionally harness change will be a core skill for organizations, individuals, and society. Choosing not to act in this bold powerful way, risks being swept away by oncoming dangers or failing to grasp tomorrow’s opportunities.
Ecosystem Innovation: Practical and Powerful
Ecosystem Innovation has become a subject of intense interest across many different fields because it can rise to so many of the hard challenges faced in life, business, and community. It can be used by innovator in Kenya working on providing clean water for her village, or a global business leader seeking to reposition their organization in a market being disrupted by new competitors.
Ecosystem Innovation is a methodology that can be learned and applied to a wide range of challenges. It is built on thinking, techniques, and tools that can be mastered and applied wherever they are needed.
(i) Schwab K., “The Fourth Industrial Revolution.” Foreign Affairs, 26 Jan. 2016. Available here.
(ii) Downes, L. and Nunes, P., 2015. Big Bang Disruption. Penguin.
(iii) Bestsennyy, O., Gilbert, G., Harris, A. and Rost, J., 2020. Telehealth: A quarter-trillion-dollar post-COVID-19 reality?
(iv) Mckinsey, [online]. Available here.
(v) Goldin, I., and Kutarna, C., Age of Discovery: Navigating the Risks and Rewards of Our New Renaissance. Revised ed., Bloomsbury Business, 2017.
(vi) Schwab, K., 2016, The Fourth Industrial Revolution, Foreign Affairs [online]. Available here.
(vii) Rosling, H., 2020. Factfulness, Flatiron Books, Pg 235.
(viii) Christensen, C., 2006. The Innovator's Dilemma. New York, N.Y.: Collins Business Essentials.
(ix) Barnes, B., 2020, Hollywood’s Obituary, the Sequel. Now Streaming, The New York Times [online]. Available here.
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