Ecosystems as the new locus of innovation

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LITERATURE REVIEW

Introduction

Our focus is on the relationship between the ecosystem and the multi-partners’ project in the context of systemic disruptive innovation dynamics. How to manage innovation and align partners in such contexts of stakeholders’ action and users’ perspective? It questions the linkages between ecosystem, innovation management and individuals taking part to the innovation process. The research question aims at clarifying how project partners achieve alignment in such a context and how such projects nurture the organization strategy through eventually participating in the ecosystem’s structuring.
This chapter is dedicated to reviewing the relevant literature related to this question. The question is a social, management and design inquiry at the same time. It is interdisciplinary by the very depth of its location in the realm of situated problems.
As per the elements assessed on the empirical context, it appeared that one single discipline would not provide models paradigms to answer our research question, and therefore we selected the three disciplinary fields which we considered as complementary in giving the thoroughness of analysis.
Based on the selection of literature fields relevant to our research question, we elaborated a plan in order to systematically conduct the literature exploration.
In a first phase, the analysis of the innovation management literature began with a “firm-centric” and “new product development focus”, and progressively extended into two directions (i) extending the scope of players involved, however disregarding the “ecosystem” perimeter (ii) and pointing to the necessity to take into account not only the product but also the multi-product underlying asset dynamic.
This calls for investigating the strategic literature as a second step. We will tell a story of this field of literature, showing its extension (i) from a firm centric approach to a value chain scope, and then to an ecosystem focus (ii) from a relatively defensive “competitive advantage” paradigm to an “innovation based competition” paradigm, where speed of learning and absorptive capacity are key.
Because of the disruptive aspect of the innovation, elements from the literature regarding the value proposition definition and desirability toward users were included in our theoretical exploration.
As we are projecting ourselves into the unknown to be designed and collectively accepted, our literature review journey will include a third step as a deep dive into the arena design and innovation sociology, in order to add inputs on (i) individual and (ii) collective cognitive and (iii) artefacts contributing to the alignment of the partners. Such process will lead us to include the logic of individual and collective exploration of unknown into an ecosystem-structuring perspective (fourth step).
The plan of literature review we designed and complied with is presented here below, with areas of main interests according to the literature identified as follows:
• Red: design and innovation sociology
• Blue: Innovation management
• Green: strategy perspective, ecosystem and platform
• t: time as diagonal dimension
The path followed while analyzing the literature is explained by the need of deeply understanding the obstacles and the opportunities behind the action in the ecosystem and the innovation locus of relevant strategic considerations. We progressively analyzed each discipline from the narrower scope of analysis in terms of the innovation paradigm and the context of action, toward the most challenging one, described by the higher level of complexity of the context of action (heterogeneous partners engaged in an ecosystem dynamics), and the higher level of disruption in the context of use (toward the unknown realm).
In this chapter, the reader will find the introduction to the three disciplinary fields and the literature review focused on the inputs academics provided from each angle to contribute to answer the research question.
We conclude the chapter with the results we found from the literature investigation and the highlights of the gap we identified and we aimed to fill through our work.

Innovation management: perspectives from firm to ecosystem

In the aim of exploring the phase of emergence of ecosystem in case of systemic and disruptive innovation, our literature review naturally evolved to the detailed analysis of the available findings
on how organizations deal with innovation challenges from firm to ecosystem level. Competitive 39
advantage seems unreachable if not coupled with a high level of digital technology, but technology per se does not drive to such advantage if is not transformed into valuable deliverable for the users. Strategic decision on value creation toward organization’s sustainability is also a matter of effective management of the exploration and deployment processes. Which are the factors beyond technology relevant to and which are the processes enabling the capture of such dynamic context? Let’s explore what has been said so far by academics.

Innovation management at firm level

Firms challenge for detaining a competitive advantage is related to their capacity to differentiate from competitors by repeatedly introducing innovation. Innovation sought by firms is nowadays performant if deployed at fast pace and if it generates destabilization of objects identity and of dominant design (Hatchuel et al., 2002; Le Masson et al., 2006). We are in the arena of intensive innovation, output of firms activities must be renewed fast and firms can create value only by innovation.

The seminal “school of thought”

The discipline of Management emerged from the needs expressed by companies. Taylor and Fayol, concerned by low productivity of the factories and bureaucratic heaviness, they theorized principles from practice in order to serve their role as leading managers and other managers who encountered similar problems. Then the management research focused on case studies as the best method to train leaders (Jolly, 1933). Only later, between 1950 and 1960, the specialization of functions drove to the need of a set of techniques and of tools to be applied in a systematic way. One thus attends the constitution of management like engineering, seen like the continuous improvement of techniques (Hatchuel, 2000).
Literature in management has tackled group dynamics (Lewin, 1951), hierarchical control (Weber, 2009), political games (Crozier and Friedberg, 1977) and employees decision making. From the consideration of employees as “automats”, authors moved toward employees guided by “bounded” rationality, involving that they make decisions on the basis of a simple and individually-understandable model of reality (Simon, 1983), using only partially satisfying but accessible solutions (Cohen et al., 1972), and relying on external judgements and evaluation (Riveline, 1991) or “invisible technologies” (Berry, 1983).
Innovation management emerged in the 1960 as a way to optimize R&D expenditures. It was born in a context where R&D investments became increasingly legitimate in big companies, relying on compatible economic paradigms (Solow, 1974). Innovation management first appeared as forms of R&D (Roussel et al., 1991), then authors progressively shifted their lenses to more focused approaches. The New product development (NPD) paradigm has dominated the literature from the 1980s to the years 2000s. It put the emphasis on team coordination and optimization of resource allocations and investments toward defined goals of time-to-market and cost reduction.
Historically, innovation management has been focusing on new product development. Scholars and companies have been wondering about how to improve quality, cost and lead times of development projects (Clark & Wheelwright, 1993; Clark & Fujimoto, 1991; Midler, 1995).
This contributed to dramatically improve theories and methods, theorizing and implementing concurrent engineering, multi-project rationalization through platform strategies (Cusumano and Nobeoka, 1998), frontloading approaches (Thomke and Fujimoto, 2000), fuzzy-front-end and advanced engineering management (Khurana and Rosenthal, 1997).
In order to achieve the target of development time reduction, concurrent engineering implies management principles such as: (1) to have the finality of the project as a collective first-ranking priority and not only as a consequence of functional units roadmaps (2) to install an heavyweight project manager as a transversal coordinator, who might be heard from the hierarchy and be legitimate, (3) to foster the ability to intersect feasible sets of design spaces (Sobek II et al., 1999) (4) to have experts not only give opinions or “best effort” but rather making them commit on expected results (5) to have a framework for the design process management, in which tasks are evaluated depending on their impact on the development cycle and convergence problems be addressed (Eppinger, 1991; Yassine and Braha, 2003).
Firms performing in cost reduction while introducing innovation historically were linked to multi-project rationalization through platform strategies, developing platform for one product and quickly transfer it to other products, coupling this with a new organizational structure.
Product development cost reduction has been positively correlated to the interplay between new and current technology, highlighted as a key factor in performance of Problem Identification and solving anticipation to the very early stage of product development (Thomke and Fujimoto, 2000).
As interrelationships of components of a strategy have been proved to be among the drivers of the strategy performance, product strategy and project portfolio plan must be considered simultaneously in order to provide overall coherence to advanced engineering management (Khurana and Rosenthal, 1997).
The diffusion of these theories allowed increasing the pace of new product launches maintaining R&D costs under control.
While assessing the evolution of the NPD studies, we noted that a paradox appears between new product management, and innovation management, as innovation based competition (Brown & Eisenhardt, 1997; Midler, Benghozi, & Charue-Duboc, 2000) got increasingly tough, differentiating on ever more fast-moving markets called for ever more innovative products, while streamlined product development processes can only deliver products in line with the dominant design (Abernathy & Utterback, 1978; Leonard-Barton, 1992). This stands as a great paradox since project management initially ambitioned to manage innovation (Lenfle & Loch, 2010).
As open innovation kicked in, involving the commercialization of innovations from other firms and the deployment of pathways outside their current businesses to bring new concepts to market (Chesbrough, 2003), firm’s formal engagements as technology alliances among firms to support individual innovation initiatives by technological resources’ combination (Deeds and Rothaermel, 2003; Dittrich and Duysters, 2007; Hagedoorn, 2002; Poot et al., 2009) must evolve in order to increasingly consider external players not only as classical “suppliers” or “partners”, but rather as “complementors” (Yoffie and Kwak, 2006) which have to co-invest upfront with the focal innovating firm. Each has to develop complementary assets and offers (Teece, 1996, 1986).

Innovation Management from the viewpoint of the firm

A relevant evolution of this stream of literature is therefore linked to the innovation embracing as a key element to competitive advantage building.
The first element of such evolution is the consideration of innovation models emergence and selection. Once organizations embark in the journey of competition based in innovation, how do they should get organized in order to manage performance in innovation projects?
The linear model of innovation management (Kline and Rosenberg, 1986) seems not applicable in cases of innovation requiring a considerable amount of knowledge creation (Charue-Duboc, 2007; Charue-Duboc and Midler, 2002).
Furthermore innovation perturbs established firm’s systems of production and marketing at different scale, depending on the distance to current technological competences and linkages to market and customers (Abernathy and Clark, 1985).
Exploration through multi-project lineage management has been highlighted as effective for the innovation performance of a firm (Maniak and Midler, 2014). Such approach to innovation might lead the firm to build innovation capabilities if the innovation portfolio is managed with political astuteness and learning perspective (Börjesson et al., 2014), as well as to enhance value capturing through the re-evaluation of the opportunities and the assets built during each exploration project (Maniak et al., 2014).
As further element to give guidance to the exploration process, scholars identified a new type of 42
project called “exploration project”, which aims to explore promising value arenas, discovering and adjusting along the project its specifications, strategic impact, required partners, etc., and by applying the expansive logic (Lenfle, 2016, 2008). The management of such projects requires shifting from a “cost-quality-lead time” control perspective to a learning-based project management perspective.
Performance of exploration accomplished by teams appears to be linked to the consideration of the Full Value of an innovation integrated in a system, and to the Full-Value-guided project governance steering upfront the exploration process itself toward a coherent alignment with the firm strategy (Maniak, 2010; Midler et al., 2012).
This implies to manage and evaluate in parallel the triple impact of the project: (1) on direct profit, since the disruptive offer can eventually be a successful “blue ocean” market success (Kim & Mauborgne, 2004) (2) on firm resource and competences, since the project can be a commercial failure but provide a critical update on firm competitive advantage (Brady & Davies, 2004; Maidique & Zirger, 1985; Maniak & Midler, 2014) (3) on new exploration path discovery as project can be seen as transitory frame fostering competences redeployment (Charue-Duboc, 2007). Another issue with performance in innovation management refers to the paradox of local/global horizons of exploitation and exploration. Certain sustainable, disruptive and systemic innovations have local explorations, but for the firms they should be part of a global-scale deployment. A potential solution to such paradox has been suggested in the case of the EV, by embarking simultaneous explorations, in order to build different scenarios and drive a successful deployment by unexpected combinations (Charue-Duboc and Midler, 2011).
The above peculiarities of innovation management impacts also the processes of business model design, which must orchestrate firm’s action toward successful innovation deployment, and are per se an object of innovation. Business models can nowadays be perceived as “schemas that organize managerial understandings about the design of firms’ value-creating activities and exchanges”(Martins et al., 2015), and in the dynamics perspective of a trial and error process, they can enable knowledge transfer mechanisms from individuals to the organization (Sosna et al., 2010).
A second important element of the evolution of this stream of research is the increasing consideration of external players not only as classical “suppliers” or “partners”, but rather as “complementors” (Yoffie & Kwak, 2006) which have to co-invest upfront with the focal innovating firm. Each has to develop complementary assets and offers (Teece, 1986, 1996) so that the final offer takes benefits from various contributions. The focal firm can leverage both its existing assets and lines of products, incorporating ideas and expertise coming from a wide range of external contributors rather than only on internal forces (Chesbrough, 2003). It can also integrate a selected pool of contributors deeply and early in a given development project to incorporate their inputs in the DNA of a given project (Appleyard, 2003; Bidault, Despres, & Butler, 1998; Lamming, 1993). The relevance of external players in shaping production and strategic decision-making, drives to the criticity of the support mobilization within mitigated boundaries among them. The use of discoursive resources to achieve this goal in presence of such “political coalition” has been identified as key in the process of shaping players interests in the coalition driven by a multinational company (Whitford & Zirpoli 2016). The relevance of such resources, such as the creation of interlanguage among partners, is also recognized as key coordination factors through local sense-making generation in large scale innovative projects LSIP (Lenfle and Söderlund, 2018).
Engagement dynamics must consider that each organization involved in such partnership-driven project, has a dual agenda which keeps it onboard and investing: (1) feed its own strategic roadmaps & assets to exploit after / aside the collective project (2) contribute to the collective project in order to really build a successful and profitable common offer (Maniak & Midler, 2008; Segrestin, 2003). It also appears that such systemic and disruptive innovation projects might involve industry transition and they challenge the alignment partners developed internally, but which is very often withholding the effective challenge of new technology or competition. How can the exploration and deployment of an innovation be harmonized? Ambidexterity as the ability to operationalize exploration and exploitation (Birkinshaw and Gupta, 2013; Duncan, 1976; Gibson and Birkinshaw, 2004; Tushman et al., 2010; Tushman and O’Reilly III, 1996) has been an answer to such challenge, although exploration coherence within large groups, evolution between exploration and deployment and governance still question academics. The ambidextrous ability to implement incremental and revolutionary changes praised by the literature had been studied considering one actor entering an industry but not in the perspective of ecosystem structuring.
From the perspective of the firm, it appears that innovation execution is more effective in organizational ambidexterity organizations, although the harmonization of exploration and exploitation appears to be linked to the locus of integration and the degree of structural differentiation (Tushman et al., 2010). Nevertheless, the capacity of building dynamic capabilities innovative features deployment on several product, it has been linked not only to the creation of Advanced Engineering units, but also to the fostering of coordination patterns through resources sharing between them and other units of the firm (Maniak et al., 2014).
Although positive links between ambidexterity and innovation performance have been extensively described in the literature, organizational ambidexterity has been found as inadequate in considering unexpected utilities emerging in specific situations such as contextual ambidexterity (Le Glatin et al., 2018).
Knowledge in unknown situations is a factor of success of innovation management as it might contribute to reduce risks and selection bias in the decision-making process, reducing the gap to the optimal choice (Le Masson et al., 2018). How can knowledge be better managed in a firm to foster innovation capabilities?
As far as the firm performance in case of radical innovation, knowledge enabling radical innovation can be fostered by internal corporate ventures for incumbent in mature markets (Maine, 2008), but if we focus in disruption consequences on innovation management, peculiar mechanisms to insure knowledge transfer from corporate venturing are needed (Stringer, 2000). But collaboration fostering among teams in the realm of unknown is a more complex problem.
The emergence of a proto-epistemic societies of experts within a firm has been observed as a governance of the co-extension of expertise fields to increase innovation potential toward disruptive innovation (Cabanes, 2017), and the lack of common area of knowledge among them has been linked to a deep re-organization of existing knowledge structures.

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Table of contents :

1. INTRODUCTION
1.1 Empirical context
1.1.1 Ecosystems as the new locus of innovation
1.1.2 The mobility sector as a prominent example of on-going disruption
1.2 Theoretical context
1.3 Considerations on the literature review
1.4 Research question and PhD design
1.4.1 The research questions
1.4.2 Research Methodology
1.5 Results
1.6 Structure of the thesis
2 LITERATURE REVIEW
2.1 Introduction
2.2 Innovation management: perspectives from firm to ecosystem
2.2.1 Innovation management at firm level
2.2.2 Innovation management across the value chain
2.2.3 Ecosystem as the new locus for innovation management
2.3 Strategy: perspective from firm to ecosystem
2.3.1 Strategy at Firm level
2.3.2 Strategy from the firm to Value Chain perspective
2.2.3 Strategy from Value Chain to Ecosystem perspective
2.4 Design, Conception and Tools
2.4.1 A cognitive approach
2.4.2 The diffusion of innovation, a design and sociological view
2.5 Gap emerging from the literature review
3. METHODOLOGY
3.1 Epistemological Background
3.2 Research design
3.3 Research field choice
3.4 Research role in the projects
3.5Data collection
3.6 Data analysis
4. CASES DESCRIPTION
4.1 Structure of storytelling
4.1 CorriDoor- EV fast charging network infrastructure
4.2.1 The initial setting
4.2.2 From project funding approval to contract agreement: Early 2014 -February 2015
4.2.3 Resistance tempering by contract signature and regulation constraint: March 2015-August 2015
4.2.4 The epiphany of first users’ feedback: September 2015- end of project
4.2 Automat- The European car data Marketplace
4.3.1 Initial settings
4.3.2 Marketplace technical features: not an easy add-by-add process, but a shared decision making process: April 2015- October 2015
4.3.3 Defining-by-doing acceptance: November 2015-August 2016
4.3.4 Service provider partner replacement as a project performance enhancer: September 2016- March 2017
4.3.5 Use cases boosting by a partially renovated Consortium team to first data availability April 2017- September 2017
4.3.6 Service Providers interplay with the platform: the achievement of an horizon of concrete interest and reciprocal trust- October 2017- April 2018 end of project
4.3 Le Square- The vision of autonomous driving
4.4.1 Initial settings
4.4.2 The relevance of the perspective and the team composition: January 2017-February 2017
4.4.3 Discovering the augmented target: March- April 2017
4.4.4 The development of the two deliverables for a vision May 2017- Sept 2017
4.4.5 Project sense-making through internal and external communities October 2017-December 2017 end of participation
5. FINDINGS & DISCUSSION
5.1 Overall remarks
5.2 Project management issues in ecosystem structuring
5.2.1 Key Management challenges
5.2.2 The dynamics of the management challenges
5.2.3 Ecosystem innovation project management: a 4-step process
5.2.4 The moderating role of project management settings and partners’ alignment
5.3 Strategy issues on structuring ecosystem
5.3.1 Proto-ecosystem projects characteristics
5.3.2 The moderating role of knowledge management: the strategic perspective of absorptive capacity
6 CONCLUSIONS
6.1 Main results of the research
6.2 Theoretical contributions and managerial implications
6.3 Research Limitations and future perspectives
7 ANNEXES
7.1 List of Acronyms
7.2 Comparative table on systemic-ness, disruptiveness and digitalization
7.3 Coding framework
7.3 Absorptive Capacity Evaluation
8 LIST OF REFERENCES

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