Network Organization: The best tool to enable Open Innovation?

May 15, 2020
Network Organization

Guest post by: Parth Gandhi ǀ Innovation Consultant ǀ Open Innovation ǀ eMobility

The world is changing at a rate faster than ever before. We are witnessing a global transformation. Transformation in each and every aspect of life. Be it personal or professional. The biggest driving force of this transformation is the technological advancement of the last three decades. The global event which is happening right now due to the Coronavirus pandemic is forcing humans to stay at home. Countries and governments around the world are facing new challenges, forcing them to take strict measures such as lockdown or forced quarantine as we all know. A full lockdown of a metropolitan city, state or countries such as Italy, Spain and India has affected everybody’s life. One of the changes it has brought into people’s lives is how one is doing his or her job. As we are progressing in the direction of being digital, many of us are working to make it a reality. This means millions of people are being forced to work from home during this quarantine. Meanwhile, organizations are required to be ready to cope up with the new transformation in order to keep the daily business running. In this article I will try to provide answers to help organization understand the importance of innovation and to sustain their businesses in the digital revolution.  

The starter: Open Innovation

The original concept of Open Innovation (OI) was first coined by Henry Chesbrough back in the year 2003. Since then the new paradigm has gained a lot of interest among researchers and innovation managers across various industries. In 21st century the competition between organizations, to be more innovative, has become extremely difficult. Therefore, the idea of OI is getting popular with every new day. The organizations, regardless of their size, want to take maximum advantage of this brand new innovation paradigm. Companies are facing a new set of challenges in order to strengthen their market position and ultimately become the market leader. These new set of challenges includes a series of prerequisites to build OI teams, to find out and collaborate with the right stakeholders (internal and external), to design and develop the future proof strategies and finally to implement those strategies across different business units to create digital products and services. Here, the main goal is to introduce the cutting-edge technology first in the market to gain maximum profits. However, the basic and the most important questions are how to work with the concept of OI? What are the tools to use? And what are the success factors to look out for in order to measure the success of an enterprise’s OI.

During my master thesis research in the field of OI for the high-tech Electro-Mobility (eMobility) domain in Germany, I did an exploratory research in the German Automotive industry. The research was based on strong academic findings across various industries in number of companies, worldwide. Subsequently, applying those findings in the context of German Automotive OEMs working in the eMobility sector. During the project I had conducted series of semi-structured interviews with innovation managers, project managers, university professors, innovation consultancy firms, independent advisors, social research institutes and government departments for the Smart City Berlin. All the interviewees are working or have been working on various international innovation projects for a long time, in particular OI for eMobility products, services and to develop government policies for the future of mobility.

The appetizers: OI tools and the success factors

The main goal, here, was to explore, understand and ultimately find out the opportunities, challenges and the success factors to implement OI strategies. Also it was important to know what the different tools to ensure the OI success are. After combining the academic findings and interviewees’ inputs, I found that 1) Open Communication Cultural, 2) Availability of Know-How and 3) Availability of Intellectual Capital are the most critical success factors along with other factors for OI success. Now, the question is how to achieve those factors of success to accomplish maximum out of your OI team? The answer is to use industry approved tools to enable OI processes in your organization. There are many such tools based on the type and size of a firm. However, some of those basic tools that every company can use are: i) Networking, ii) Co-creation, iii) Cultural Transformation. The research findings provide enough evidences that these are highly effective and virtually vital tools for an organization to be more innovative, agile and ultimately be more successful. However, at times, businesses often fail to use one of these tools or a combination of it. Therefore, the idea of Network Organization (NO) becomes crucial to foolproof company’s OI success. Simply put, NO is the best tool to enable OI.

But how? Let’s find out.

The main course: Network Organization  

The world’s most powerful economies are strongly backed by the industries with the most innovative products and services. Organizations require to put customer first with constant communication and faster response to their needs in the most creative and unique way. Therefore, it becomes increasingly important for top management to empower its people by implementing necessary changes in the organization’s structure and culture. A BCG report highlight the short-comings of a traditional organization, at the same time recognizing the benefits of a network organization. These benefits are, extraordinary flexibility to reshape firms and shifting authority to people with information AKA front-line managers.

Consequently in a Network Organization teams are capable of making faster and customer focused decisions. Here flat hierarchy plays an important role. As we discussed before, the most frequently used three tools to enable Open Innovation are linked with Network Organization. All the basic three tools can be used in their most effective ways if we understand the importance of Network Organization. Let’s begin with …

  • Networking: It is an established fact and industry proven tool. It is, without a doubt, the basic and the most important tool for any OI team. If a company structure is transformed into a Network Organization then it becomes very convenient to build a network of people internally and with external partners. Because a Network Organization creates an atmosphere of transparency among the stakeholders, the team members do not feel isolated anymore. This has a direct impact on trust building. Once the trust has been established, the team will feel motivated and will deliver results that can easily outperform the specific goals and targets. Using networking skills, any organization will achieve open-communication culture and diversity within teams. In other words, Network Organization can use networking to its maximum capacity to achieve the critical success factors for implementing Open Innovation in a company.  

  • Co-creation: Let’s assume that, by now, an enterprise has been successful to establish a team with the network of team-members who have the highest motivation to deliver the best results. Now the company is required to further support such teams and to facilitate their co-creation abilities. In a Network Organization, each employee will take responsibilities beyond his or her specific job profile. This has direct effect on their creativeness. Because every team-member is now thinking broader for the whole company. Moreover, the staff will take new initiatives to cater for customer needs with better products and services. The crew feels responsible to be more creative and to think interdisciplinary. As a result, Network Organization will boost and further support its employees’ co-creation capabilities that in turn will help the company to increase the availability of its intellectual capital, which as you might have guessed, is a critical success factor for Open Innovation.

  • Cultural Transformation: For organizations it is becoming vital to move towards a more flexible, interconnected and decentralized structure. This transformation is now a new normal across many industries. Here, cultural transformation is at the center of this holistic idea. Company’s top management is now taking measures to ensure that strategic transformation of company culture is in line with their business goals. In order to be successful and not to lose the sight of firm’s different business units and its products and services, one should take the maximum advantage of Network Organization. It is because in a Network Organization people think about the benefits of customers. Therefore, the employees are required to have a growth mind-set. Here, teams need to think as one entity. They must think as we rather than me. It’s the successful managers’ mantra: leave me and think we. This will enable the manager and the teammates to create a loop of constant feedbacks for the best ideas to develop further. Also, it ensures participation from each and every team-members. Research shows that a team, which has developed a habit of continuous feedbacks can guarantee contribution from every employee. Moreover, constructive criticism often leads to inspire and motivate the team to do more, ultimately giving value to end-customers. This creates not only an environment of trust among team players to work efficiently but also helps them to build self-belief which is important for employees’ mental health. A Network Organization also makes sure a flat hierarchy in the entire enterprise. A flat hierarchy means any employee, regardless of his position in the team, is not afraid to speak to c-level managers. Further, there will not be any middle-man to slow down the project process. Thus, teams are now capable of taking faster and better decisions. This is directly related to the open communication culture in a company, which is one of the critical success factor for Open Innovation.

The dessert: Fresh taste of OI with assorted toppings of NO

So let us now try to form a conclusion by considering the various aspects of a Network Organization and its benefits. First of all we developed an understanding of Open Innovation and its direct relation with the company’s competitiveness in the market. It has been proven by organizations that having the OI capabilities and expertise are undeviating for its innovativeness. Secondly, the tools such as networking, co-creation and cultural transformation are extremely crucial and important for the organization’s OI strategy implementation. Also we now know the success factors that are essential and critical for OI process realization. Furthermore, we were able to establish the relation between the nature of those OI tools and Network Organization. Besides, it is safe to say that the dynamic nature of Network Organization can ensure organization’s cultural transformation. In a nutshell, Network Organization is vital for an organization to successfully transform its company culture to sustain its position in this digital revolution.

Do you and your team follow the network organization structure? Or do you want to establish one for your organization? What are the challenges you face in your company right now? And how network organization can help you? Let’s discuss, shall we?

About the author: I am on a mission to make our planet more safer and greener through my passion for innovation. Feel free to drop me a message on LinkedIn:

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