Vision has been a hot button in management theory for a number of years, with much lip service being given to the imperatives of managing for the long term. Is managing for the long haul enough to remain competitive in an increasingly interdependent marketplace?
Depth of vision is well and good, but breadth of vision is equally important, says Ron Adner, a professor of strategy at Dartmouth's Tuck School of Business and a long-time student of the root causes of innovation success and failure.
As our world becomes ever more interdependent, commercial success depends not only on a company's own innovation, but also on the success of the partners within that innovation ecosystem — suppliers, complementors, distributors, retailers and others. For an innovation's value proposition to succeed, he writes in his new book on ecosystem strategy, "The Wide Lens: A New Strategy for Innovation " (Portfolio, 2012), everyone must win.
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He recently shared his thoughts about the wide-lens perspective and how businesses can use it to gain competitive advantage.
BusinessNewsDaily: What is the wide-lens perspective?
Ron Adner: The Wide Lens is a collection of insights, tools and frameworks that I’ve developed and tested over the past decade. It is a structured approach to uncovering the hidden sources of dependence that can undermine your efforts, and for identifying strategies to overcome them successfully.
BND: You talk about the need to understand dependencies in your innovation ecosystem. What are they?
RA: There are two fundamentally different kinds of risk that arise in an ecosystem. They come about because success requires partners that are both able and willing to participate in your solution.
First is Co-innovation Risk — who else needs to innovate for my innovation to matter. For example, being first to market with a high-definition television doesn’t matter if there isn’t any high-definition content available to watch.
Second is Adoption Chain Risk — who else needs to adopt my innovation before the end customer has a chance to decide whether they want to adopt it or not. For example, if a new kind of wall insulation offers huge energy savings to home buyers but is a nightmare to install, contractors will never present it as an option to their clients, and the customer will never have a chance to decide whether they want it or not.
If you don’t have the tool in place to see these risks, you are driving partially blind. This is why you need a wider lens.
BND: What steps do you need to take to implement a wide-lens perspective? Can you imbed it in an organization's culture? How? Where do you begin?
RA: The first step is to recognize that you need to look beyond your own organization and your customers. You have to assess your idea through the lenses of Co-Innovation Risk and Adoption Chain Risk. A key tool for doing is this mapping your Value Blueprint. Once you develop a holistic view of the system, you can figure out how to mitigate your risks.
The big organizational change is to be willing to confront the risks at the outset of a project. Sometimes this is hard, but it is always enormously valuable. If you let momentum to carry you forward you will end up running into the very same problems, but adjustments at that point are a lot more expensive and harder to make.
BND: What is a value blueprint?
RA: The Value Blueprint is a mapping tool that I have developed to help teams locate and identify the different sources of risk that lie outside of their project. It lets you understand your position within the ecosystem and then coordinate your way around the obstacles that stand between you and success.
BND: What is the innovator's blind spot and why is it important?
RA: Great companies obsess over execution. But often this focus leads them to neglect, or assume away, critical dependencies in their innovation ecosystem. This focus leads to what I call “The Innovator’s Blind Spot.” It happens because the tools we use to understand and strategize in a world of products offer too narrow a view in a world of solutions.
BND: Why is the ability to execute on initiatives no longer a guarantee of success?
RA: More and more, companies are shifting their focus from standalone products to integrated solutions. We see this in manufacturing, in financial services, in retailing, in health care. But when you combine the efforts of multiple partners to deliver new value, what this means is that the effort of any one partner doesn’t stand alone. Executing brilliantly on your initiative doesn’t matter if the partners you depend on stumble. In this world of innovation ecosystems, great execution is still necessary — but it is no longer sufficient for success.
BND: What has become of the old corporate mantra for success — put the customer first, deliver on your promise and outperform the competition?
RA: Customers matter — always. But they are no longer the only ones that matter. You might have a beautiful innovation whose promise customers love. But if you haven’t managed to align your critical partners, all you have is a single piece of the larger puzzle. To complete the puzzle, and unlock the value, you now need to compete for the right partners as hard — as sometimes harder — than you do for the right customers.