Beyond the Sundowner: How do intermediaries facilitate open innovation in business networks?
Open innovation presents an attractive idea to many firms, whereby they can reach out to outsiders to help solve ambitious challenges. This prospect faces immediate challenges in practice however, as firms must recognize value before being willing to openly collaborate, yet opportunities typically cannot be realized without active engagement. This lack of openness is particularly problematic in immature innovation ecosystems or networks without a powerful central actor pulling the strings (think Google, Amazon etc.). Enter: innovation intermediaries who are popping up everywhere and seeking to overcome this dilemma through strategic activities targeted at different network levels and stages of the innovation process. However apart from hosting sundowners with free booze, what do they really contribute? Our recent paper has identified the various activities they perform and how they all work together to promote innovation collaboration among large corporates, start-ups and everyone in between.
Our longitudinal study followed the journey of Perth-based CORE Innovation Hub, from when it founded in 2016. Unlike other sector-agnostic intermediaries, CORE focused on the resources and energy sectors, which aligns perfectly with Western Australia’s economy yet presented numerous industry-specific innovation challenges around openness and risk appetite. Another unique aspect of their approach was launching without a prescriptive plan for how they will support/manage the ecosystem, instead having two simple overarching themes of improving culture and increasing proximity, which would guide later activities. This flexibility allowed them to be market-led based on member needs and integrate the innovation activities of various stakeholders, enabling them to play a central connecting role within the local ecosystem.
After collecting and analysing data from member/manager interviews, observation at events, emails, media etc. we identified numerous activities run by or within CORE and began to organise them based on how they supported open innovation. These were then aligned with various intermediary practices and so called ‘orchestration mechanisms’ which are used to manage a network by way of influence rather than control. Interestingly, we determined these mechanisms to focus on three separate yet interrelated levels within the network, depending on whether they targeted the broader industry, members or specific projects. In order to keep this post brief, I won’t break down each level or mechanism here, however the full paper describes each in more detail and provides relevant quotes. I will however give a quick overview of how, through orchestration at each level, intermediaries can generate member buy-in and sustain industry interest, critical to addressing the dilemma mentioned at the start.
Starting from scratch, the intermediary has to initially present a vision of how open innovation can benefit firms and engage stakeholders to offer a taste of the potential opportunities. These Industry level activities tend to be run and funded mostly by the intermediary but are essential to achieving buy-in and convincing others to believe in their approach. This is an ongoing process for a healthy innovation ecosystem which relies on new firms and resources entering.
At the Member Network level, the intermediary plays an important role in eliciting contributions from members, mobilising resources to be shared and coordinating member interactions to increase awareness of potential innovation partners or projects. A lot of the focus at this level lies in trying to encourage greater openness between members, because only once particular operational challenges and emerging technologies are understood, can meaningful connections take hold. In line with this, the intermediary still drives many activities at this level but in collaboration with their member firms, with members often initiating activities based on their needs or new opportunities.
Finally, activities at the Project level are mostly driven by sub-groups of members themselves, once they have identified potential innovation opportunities to pursue further. The intermediary still has an important, albeit peripheral role to play here, in helping to scope project details and broker partnerships. This is harder than it sounds, particularly in immature innovation ecosystems where many large firms do not have processes established to effectively collaborate with start-ups or other external suppliers. Linking back to other levels, the intermediary must also promote the outcomes of these projects to members and the industry more broadly, to increase awareness of open innovation approaches and the tangible value of their activities.
The knowledge gained and relationships built through engaging with intermediary activities can prove critical to taking ideas from entrepreneurs’ kitchen tables or backyard sheds to solving real problems in the market. This interdependence is articulated clearly in a quote from one of the start-up members, which demonstrates their progression from participating in a hackathon, to becoming a member and then working with potential clients to commercialise their product:
“That was the first Hackathon that I was ever involved in with and went along without really knowing what to expect, but it sounded interesting because you get to work on real world problems. The long story short is that we were actually lucky enough to win that Hackathon and we’re started to try to commercialize that idea. We made it onto the vendor lists. We’ve been taken up to site, liaising with the people on site to find out the right place to do it”
While this is only one case study, it adds to what we know about the intermediary’s role in creating value for members in innovation networks, by breaking down how orchestration mechanisms are used simultaneously at different levels. Therefore, all activities have their place (including sundowner drinks!) by fulfilling unique parts of the innovation process. Importantly, this case presents a model for those interested in supporting innovation ecosystems without being one of the firms directly gaining from commercial outcomes.
If this work is of interest to you, feel free to get in touch via daniel.schepis@uwa.edu.au or LinkedIn. Thanks to my colleagues Sharon Purchase at UWA and Bella Butler at Curtin, as well as everyone at CORE.
