Ideas for Leaders #357

Managing Cross-industry Innovation

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Key Concept

Cross-industry collaborations can combine and ‘re-configure’ existing technologies and lead to the development of new ‘applications’. Their success, however, depends on more than a culture of enterprise and a commitment to innovation at the ‘partnership’ companies. Procedural and organizational factors can make or break interindustry product development. 

Idea Summary

How do you combine previously unconnected technologies in an entirely new product ‘architecture’?

This is a particularly important question when the development project involves collaboration with other industries and companies — and between specialists who have different ways of doing things and haven’t worked together before. Recent research addresses it by analyzing and comparing three case studies from the mobile communications sector.

The three projects were similar in nature: all involved the development of applications for services that were already being provided by more traditional means. They differed significantly in terms of ‘set up’, however. The first, a mobile payment project, involved a start-up and its suppliers, the second, in mobile banking, a contractual alliance between a mobile network operator and a retail bank, while the third, the development of a mobile television application, consisted of a less formal arrangement between an information technology business, a TV producer and a communications equipment supplier. The structural and organizational differences allowed the researchers to ‘isolate’ or identify the management or procedural factors that contribute to high performance more reliably.

The study combined analysis of publicly available information and of primary data gathered by interviews. The results lay the foundation for a ‘configurational theory’ that should help leaders better understand the ‘optimal’ conditions for interindustry innovation. They point, in particular, to three essential elements in successful projects:

  • ‘Differentiation’: direct input from specialists from the different industries involved. (The start-up experienced serious difficulties as a result of the failure of operators and banks to participate fully.)
  • Integration: close and intense co-ordination between specialists to allow for ‘mutual adjustment’ and information exchange, and, crucially, the development of detailed knowledge of the different component technologies and how they are to be combined.
  • Timely decision-making and conflict resolution: a ‘consensus with qualification’ approach in which one specialist has the authority to make decisions and therefore the ability to prevent costly disputes and delays. (In the mobile banking example, the absence of clear project leadership delayed the project and contributed to the continuation of conflicts between the bank and the mobile operator.)

Importantly, the core principles outlined above can be applied to sectors outside the mobile communications industry — for example, medicine and healthcare, where development projects often lie at the intersection of traditional pharmaceuticals and biotechnology.

Combined, the three elements identified in the research form an ‘ideal-typical’ configuration for interindustry innovation.

Business Application

Cross-industry collaboration has led to the development of transformative innovations. Fibre optics, for example, were the result of the fusion of glass, cable and electronics technologies. It needs, however, to be actively and effectively managed.

The case studies suggest that a number of ‘mechanisms’ can be ‘designed in’. These include:

  • ‘Solution architects’: representatives from both or all ‘sides’ who liaise daily and meet frequently.
  • ‘Test managers’: people who provide detailed feedback to the solution architects and test changes and alternative solutions.
  • Steering committees: decision-making bodies made up of representatives from both/all companies and closely involved in the project.
  • Formal clarification of the roles and responsibilities of project team members. (This is particularly important where the collaboration is a joint venture of equal partners and no one party has obvious authority.) 
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Authors

Institutions

Source

Idea conceived

  • March 2012

Idea posted

  • April 2014

DOI number

10.13007/357

Subject

Real Time Analytics