collaborative entrepreneurship 08282013

Collaborative Entrepreneurship

HOW

Raymond E. Miles + Grant Miles + Charles C. Snow Stanford University Press, 2005

First Light L.L.C. [email protected] March 15, 2007 2

COMMUNITIES OF

NETWORKEDFIRMS

USE

CONTINUOUS INNOVATION

TO CREATE

ECONOMIC WEALTH

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HOW

OPEN WINDOW

Member FirmsAffiliated Firms

Project Management &Accounting Infrastructure

Continuing Education

Central Services

Innovation Catalogue

Venturing

Advisor Council

Leader Council

FacilitatorsInnovation Teams



First Light L.L.C. [email protected]

Open W

indow

March 15, 2007 4

Open Window as a whole does not have clearly defined product or service lines (though its individualmember firms do), and it has even more vaguelydefined industries and markets.

Open Window is a theoretical concept that will intime redefine the concept of the firm. For now, think of Open Window as a company of companies based on the idea of continuous entrepreneurship as a deliberate strategy.

Open Window cannot be centrally directed orcontrolled. It depends on the widespread abilityto collaborate – vertically and laterally within aparticular firm and horizontally across firms in the Open Window network.


Open W

indow

5

Open Window cannot support its business strategyof market exploration with a traditional structure. Instead, the widespread use of collaborationrequires a self-managing organization that relies heavily on the competence of member firms as well as ad hoc organization structures specificallydeveloped for each entrepreneurial initiative.

The basic notion that Open Window member firms are willing to share their ideas freely in an effort to generate new knowledge and products without carefully calculating in advance the distribution of returns is contrary to the motivational assumptions of existing economic and management theory.


March 15, 2007 First Light L.L.C. [email protected] 6

Meta

-Capability

Each time in business history that a truly new strategy has been invented, it has required a new structure and a new capability essential to its operation.

The Open Window model requires appropriate investments in collaborative capability at several levels – within the firm, within the network of member firms, and even in society itself.

As we know from earlier meta-capabilities, the wealth creating impact of each new capability is multiplied as it pervades firms and economies. We foresee a meta-capability of collaboration – a widely distributed social asset that will drive continuous innovation.

OPEN WINDOW




Central Services


Venturing

Advisor Council

Leader Council





Bu

siness M

od

els

Relationship to Market

Penetrate or Segment

Explore

Type of Innovation Planned, Periodic Planned/Unplanned, Continuous

Growth Direction Vertically, Laterally Horizontal

(within a given industry) (across several industries)

Old Models New Model



Org

an

izatio

n M

od

els

Type of Structure Functional, Matrix, Divisional

Network

Number of Associated Firms

One or Few Several or Many

Management System Hierarchical Self-Managed(rules, planning, control) (based on market factors,

protocols)




Bu

siness S

trate

gie

s

Market Penetration

MarketSegmentation

Market Exploration

Coordination Delegation Collaboration

•Forecasting•Planning•Budgeting•Controlling

•Joint Goal Setting•Decentralization•Employee Development

• Trust Building• Protocol Building• Project Team Development




Com

petitiv

e S

tan

dard

s

Open Window member firms share informationand knowledge that may be used by any other member firm without specific permission, and theyoften commit resources to inter-firm projects whosefull returns cannot be calculated until after the fact.

This is not how most managers have been taughtto behave, either in their formal educations or in their everyday experience.



Know

ledg

e-S

harin

g Po

tentia

l

Competition

Cooperation

Coopetition

Collaboration

low high

low

high

Motivation

Trust



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o Open Window Transparencyo Market Exploration Workshopso Pay for Timeo Competence and Trustworthinesso Continuous Stream of Innovative

Products and Serviceso Open Ended vs. Special Purposeo Provider Equity and Satisfaction




Com

mu

nity

of C

reatio

n

o A common interesto A sense of belongingo An explicit economic purposeo A sponsoro A shared languageo Ground rules for participationo Mechanisms to manage intellectual

property rightso Physical support of the sponsoro Cooperation as a

key success factorCONTINUOUS INNOVATION

A WORKABLE BALANCE BETWEEN ORDER

AND CHAOS

OPEN WINDOW

OPEN WINDOW




Central Services


Venturing

Advisor Council

Leader Council





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o Central Services• Continuing Education

• Collaborative skills• Collaborative process• Inter-firm collaboration• Continuing process analysis• Write-up of successes and failures

• Innovation Catalogue• Usable ideas, processes, products,

templates• Electronic Project Management

• Linking a virtual community that crosses company lines



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o Central Services• Accounting Infrastructure

• Linking a virtual community that crosses company lines

• Venturing• Finding companies• Acquiring capital• Venture process• Venture education

o Input like Cisco• Search for Innovative Firms

o Output like Intel• Search for Innovative Applications



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o Operating Protocols• Like Johnson & Johnson “Credo”• Like Ritz Carleton “Gold Standard”• Demonstrate trust by immediately

sharing something valuable.• Stimulate equitable reciprocity by

volunteering a generous distribution of jointly created returns.

• Publicly give credit to collaborators for their contributions to innovative projects.

• Positive (Principles) vs. Negative (Rules)



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o Advisor Council• Twelve members• Two-year staggered terms• Approval of all practices• Represent all services (for firm approval)• Represent all systems (for firm approval)• Positive (principles) vs. negative (rules)• Operating protocol principle• Minimal organization principle• Self-management principle



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o Leader Council• Works for its member firms, not the other

way around.• Executive level• Appointed by Advisor Council

• Technical / market knowledge• Collaborative skills

• Meets periodically• Assess all ongoing projects• Offer assistance as appropriate• Informed by Facilitators of progress, spin-off ventures,

needs



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o Facilitators • Middle-level managers at member firms• Facilitate operations• Assess their projects• Inform Leader council of project progress• Work with Innovation Teams• Enter materials in the Innovation Catalog• Offer assistance as appropriate• Participate in innovation discussions

with facilitators of other Innovation teams



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o Innovation Teams • Self-managing work teams, across firms and with

customers and suppliers• Maintain customer satisfaction data• Record all costs• Maintain minimum profit margin of 12%• Think about member firms as they develop their own

technologies, products, or markets• Self-schedule to customer needs• Their various bosses assist them in meeting their own

goals and objectives.


BARRIERS


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This sounds good, but it won’t work. First you’re going to have to write another book to explain how to put this thing together legally. Second, it’s way too complex. How can anyone manage an organization like this? Putting together even a temporary alliance with two or three firms requires an huge amount of effort and usually doesn’t generate much in the way of results.

At least one of the firms will try to take advantage of you.When you keep innovation inside your own firm, you can control the process, prevent information leaks and make certain that any returns go straight to your own bottom line.

Even if, as you claim, firms waste as much as 80% of theirpotential to innovate, I still say a firm should go it alone. In fact, I’d rather waste the 80% than run the risk thatsomeone else will take advantage of me or my firm.



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o Organizational Barriers• Tight departmentalization• Unit boundaries• Information flows• Performance evaluations• Reward allocation• Existing leadership & planning• Control & reward systems• Decision-making processes



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o Institutional Barriers• Current accounting conventions• G & A tight controls / cost reduction• Lack of investment in collaborative

capabilities and trust-building activities• Lack of knowledge-management

systems• Lack of valuing and accounting for

intellectual capital• Lack of sharing of knowledge assets• Common ownership and commitment

of key resources to joint activities



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o Societal Barriers• Childhood education and training• Large and continuing investments• Collective will• Change traditional economic measures

• Wealth generated from innovation• Knowledge and learning skills• Measures of human capital• Benchmarks of meta-capability

• Internal (corporate governance) and external (stock ownership) opportunism



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o Philosophical Barriers• Self-determination and self-reliance• Free markets and liberal individualism• How wealth is created and allocated• Focus on distribution of societal wealth

vs. generation of societal wealth• Legal concept of ownership rights vs.

common ownership of key resources• Commitment without precise prior

agreement • State ownership and control of infra-

structure mechanisms



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o Conceptual Barriers• Familiar components / Unfamiliar

package• No critical mass conception or

justification• Organization = many independent firms

vs. organization = one firm• Nonstop product and service innovation• Open sharing of information• Self-management governance vs.

hierarchy and control• Non-traditional theory

• No “practice-to-theory-and-back-to-practice”


BUT THEN…



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The old theory of the firm focuses on the behavior of a single firm rather than groups of firms. The new strategy of continuous innovation relies on resources and capabilities jointly owned by multiple firms.

The theory of the firm needs to mentally expand itsunit of analysis to incorporate joint ownership of assets and resources.



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Given that the current concept of the firm is that of a mechanism for accumulating and employing commonly held resources, the idea of extending this view to include networks of independent firms sharing a common resource would seem to be a logical extension.



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In a trust-supported organization of independent firms, one could expect knowledge resources to be exchanged with low cost and high returns.



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End ofPart I



Bu

siness In

tellig

ence

highlow

highA

dvan

tag

e

Intelligence

Standard Reports

Ad Hoc Reports

Queries

Alerts

Statistical Analysis

Forecasting/Extrapolation

Predictive modeling

Optimization

Thomas H. Davenport + Jeanne G. Harris Competing on Analytics – Harvard Business School Press, 2007

What’s the best that can happen?What will happen next?What if these trends continue?Why is this happening?

What actions are needed?Where exactly is the problem?How many, how often, where?What happened?

Veritas

March 15, 2007 First Light L.L.C. [email protected]