Creation Nets

The McKinsey Quarterly has just published "Creation Nets: Getting the Most from Open Innovation", an article that JSB and I wrote.  We’re excited about it because it represents an opening salvo in a new wave of research we’re pursuing into methods for organizing innovation activity beyond existing institutional boundaries.

Innovation is back in force as a topic on senior management agendas.  Unfortunately, that means there is also a lot of loose writing about the topic as the media and pundits of all stripes seek to whet the appetite of executives trying to figure out how to become more innovative.

In this article we try to do three things.  First, we tackle the popular topic of open innovation. Unfortunately, this term has been so broadly used that it encompasses everything from a one-off licensing deal to massive networks of participants collaborating on innovation initiatives.  We narrow the focus in our article to creation nets - forms of open innovation that involve sustained relationships across large numbers of participants collaborating together to create new knowledge across traditional institutional boundaries.  These are much more demanding forms of open innovation, but they offer much greater potential for both rapid incremental innovation and breakthrough innovation than the more limited forms of open innovation that seem to be the focus of much media and pundit attention.

Second, while narrowing the focus on one dimension, we broaden it on another.  Serious analysts of open innovation generally tend to focus on one specific slice of open innovation.  Rich discussions of open source software initiatives, for example, tend to restrict their scope to that one domain of collaboration. We found deep insights on creation nets in such diverse domains as software, consumer electronics hardware, motorcycles, apparel, astronomy and big wave surfing.  Few, if any of these analyses betrayed any awareness of, much less interest in, similar initiatives in other domains. We identify the patterns that are emerging across diverse domains in terms of how to organize creation nets.

Third, we focus specifically on the institutional mechanisms required to catalyze and focus innovation initiatives within these creation nets.  Unfortunately, much of the coverage of open innovation tends to emphasize self-organizing and emergent behavior, leaving executives with the impression that there is nothing that can be done to shape or focus efforts in this arena.  While creation nets critically depend on emergent practices for their success, we found that these creation nets display an interesting blend of managed and emergent activity.  By understanding the management techniques that contribute to the success of creation nets, executives in fact can shape the direction of creation nets and generate and capture more value from these networks.

There’s a lot of talk about product innovation and there is some attention to process innovation and business model innovation.  But most executives do not fully understand the institutional innovation that explains the emergence and growth of creation nets.  We hope that our article will make a contribution to building that understanding.  As usual, we have developed a more detailed working paper that amplifies the themes introduced in the article.

We’ll no doubt encounter some criticism for introducing a new label – creation nets – when there are already a lot of buzz words competing for attention – innovation networks, innovation ecosystems, open innovation, value networks, social networks, etc.  We hesitated to introduce yet another term to the innovation brew, but we became convinced that the other terms have been used too broadly and too loosely to be helpful in focusing on the elements that have greatest potential to drive innovation – sustained and rich relationships, large numbers of participants across traditional institutional boundaries and distinctive governance mechanisms to focus and integrate diverse innovation initiatives.

As I indicated, JSB and I are in early stages of research in this area. This is one element of a broader research agenda that includes our earlier work on push versus pull approaches to mobilizing resources (the McKinsey Quarterly article “Push to Pull: The Next Frontier of Innovation” is available here and the more detailed working paper is available here.  As our work progresses, we will connect the dots between these two arenas as well as a number of other arenas where profound changes are also unfolding.

Comments

[Will]

I thoroughly enjoyed both the McKinsey article and the working paper.

However, I think you have made a fundamental causal error. I think openness leads to rapid knowledge development and change rather than being more appropriate and necessary during times of rapid change.

Openness always has value but is more evident, because it is a key participant, in times of rapid change.

I find your discussion a bit fuzzy on the distinction between exploration activities, problem-solving activities and exploitation activites.

Knowledge-development begings with an interest, a curiosity, a passion -- exploration, not with a problem. We have to do a lot of poking around a domain before we begin to conceptualize problems.

Having identified key problems, we need to work toward their resolution.

Based on our growing understanding of the domain and of the various problem resolutions, we can exploit them in terms of product and process innovation.

I think the exploration stage is more self-organizing at the periphery and things become more structured as the focus becomes more specific.

I continue to be stimulated by your thoughts. Thanks for he open sharing.

[John T. Maloney]

John + John --

Great thought leadership. Thanks.

We've also been pursuing these transorganizational creation networks for about a decade.

The main exponent is the concept and model of value networks and value network analysis.

These rapidly developing open content offerings are under the aegis of the Value Network Clusters. See:

http://www.vnclusters.com/

Today, the VN Clusters are leading the worldwide conversations concerning creation and innovation nets through its distributed action/research network. All are welcome. The European Value Networks Summit in Amsterdam was recently concluded. Other distributed events may be found at the website.

Cordially,

John
http://kmblogs.com/

[Charlie Wood]

I think the link to your new article is wrong. I was able to find it at http://www.mckinseyquarterly.com/article_abstract_visitor.aspx?ar=1766&L2=21&L3=35.