Dialogical strategies for orchestrating strategic innovation networks: The case of the Internet of Things
Introduction
“A world, where everything that moves can talk to everyone, everywhere, all the time”
(RFID Conference Presentation)
This is a vision which started in the early 2000s and has become commonly known as ‘The Internet of Things’. Essentially, it reframed the Internet as not just connecting computers but envisioned a future where everyday objects would become part of computer networks. The RFID-based innovation was perceived to create novel and unprecedented forms of value by making fundamental changes to the way companies and industries operate, along with potentially significant impact on wider society. Such innovations constitute what is often referred to as strategic innovation, which is focused on capturing high growth and generating significant value through the redefinition of markets, customers, and business and operating models (Govindaraian & Trimble, 2012). However, the strategic innovation literature has traditionally focused solely on the organisational level as to how leaders and managers develop new strategic initiatives to gain new markets and beat competitors (c.f. Teece, 2009, Teece et al., 1997, Schlegelmilch et al., 2003, Sillince et al., 2012). This leaves a gap in our understanding of how wider innovation networks might work together to develop novel strategic directions, whilst remaining in formal competition with each other.
In this paper we seek to understand how such strategic innovations are brought about through the collaborative efforts of an innovation network guided by a hub organisation. In developing our understanding of collaborative strategic innovation, we draw on our longitudinal in-depth case study of the PhysNet innovation network to examine the underlying dynamics of a network brought together to create an ‘Internet of Things’. Whilst earlier work has tended to focus on the types and structures of these networks, the factors that affect successful innovation, and the benefits they bring about (e.g. Kastelle and Steen, 2010, Klincewicz, 2009, O'Shea et al., 2005, Steiner et al., 2010, Williams, 2005), our particular emphasis on dialogical strategies builds on the less developed research on the processes of innovation within technology innovation networks (Swan & Scarbrough, 2005), particularly around the achievement of strategic innovation (Grant & Marshak, 2011).
Recent work (Heracleous, 2002, Jacobs and Heracleous, 2005) has highlighted the role of dialogue as an enabler of strategic innovation, particularly in the reframing of mental models. Dialogue enables the critical review of existing mental models and an opportunity for new mental models to be formed (Ford and Ford, 1995, Gergen et al., 2004) with potential for fostering the fundamental changes needed for strategic innovation. Furthermore, dialogue, which draws on stakeholders' diverse values and interests, can expose assumptions and (re)shape values and interests, enabling innovation and knowledge creation (Tsoukas, 2009). It can reveal the differences between stakeholders, including variances in values and interests, facilitating mutual challenges to perspectives and consensual legitimation (Calton & Kurland, 1996, p. 170), particularly relevant in strategic innovation networks made up of heterogeneous actors.
Additionally, dialogue can legitimate management practices enabling leaders and managers to reasonably pursue particular valued goals (Green, 2004 cf. Abrahamson & Fairchild, 1999). As highlighted by Garud and Rappa (1994), ‘without legitimacy, it is difficult to attract others to participate in developing the technology to a more advanced state. Thus, a new technology is in a precarious state during its early stages of conception’ (p. 358). An important challenge then for innovation networks, and specifically those leading the innovation process, is to establish a degree of legitimacy, since it may be difficult to attract others to participate in its development (Birkinshaw et al., 2008, Schilling, 2005, Stjernberg and Philips, 1993).
Our paper focuses on how leading actors within innovation networks coordinate, direct and influence the network members (Nambisan & Sawhney, 2011) through, for example, facilitating knowledge flows and stabilising the network (Dhanaraj & Parkhe, 2006) in establishing legitimacy. The specific research question is: How does a hub actor orchestrate a strategic innovation network and what is the role of dialogue in such an orchestration?
Our findings reveal three dialogical strategies used by the hub actor responsible for assembling and orchestrating the innovation network, as well as for excluding some actors from participating in the development of strategic value. In so doing, we contribute novel insights on the dialogical strategies facilitating and constraining strategic innovation within innovation networks.
Section snippets
Strategic innovation and innovation networks
Strategic innovation is concerned with fundamental changes to the way organisations operate (Hamel, 1998). Given that maintaining competitive advantage is transitory (Ghemawat, 2002, Markides, 1999), strategic innovation can aid continuous innovation, avoiding the danger of going along with what may appear to be best practices but offer no sustainable uniqueness because all competitors are similarly engaged (Jacobs & Heracleous, 2005). In their review, Schlegelmilch et al. (2003) offer the
Facilitating dialogue in strategic innovation networks
Dialogue has been shown to be an important facilitator of strategic innovation by enabling existing mental models to be questioned, and shaping their emergence which can lead to a shift in mental models and a revision of strategic paradigms. This, in turn, may result in the fundamental changes and radical advances in the value of a strategic innovation initiative (Jacobs & Heracleous, 2005). The strategy innovation process is particularly effective when it is supported by dialogue that
Research methodology
The research conducted a two year longitudinal in-depth case study based on an interpretive methodology (Walsham, 1995). A particular aim is to gain an understanding of the innovation process in its natural setting, which “involves getting inside the world of those generating it” (Rosen, 1991:8). As researchers we attempt to construct interpretations that explain the subjective meanings created and sustained as part of these social processes, by exposing how meanings and practices are formed
Case description
The ConnectNet Centre was founded by a group consisting of a renowned university, two global standards bodies, and two global fast moving consumer goods companies, as a central organisation to coordinate the development of a new innovation, the PhysNet as an innovation enabling the Internet of Things aimed at radically transforming their industries. In the four years of its operation the ConnectNet Centre grew and changed significantly, expanding from one university-based research centre to six
Creating a strategic innovation network
An early challenge in orchestrating the innovation network was to attract support for the innovation process. Creating a network was key if the innovation was to enable significant change for individual companies as well as the wider industry ecosystem. In order to do so, the Centre focused on creating and communicating the strategy underpinning the innovation which would capture the attention of the intended audience.
Nobody has ever been able to draw such a massive attention to the technology
Discussion
Our empirical case study provides insight as to how a hub actor orchestrates a strategic innovation network composed of a diverse group of actors, and in so doing responds to Dhanaraj and Parkhe's (2006) call to examine the individual actions of hub actors in creating, forming and developing effective innovation networks.
Building on Dhanaraj and Parkhe's (2006) research, we found a need for the hub entity to orchestrate network formation and coordination and to integrate knowledge across
Conclusion
This paper brings together the strategic innovation literature and the network innovation literatures to develop new thinking in the area of strategic innovation networks. In particular, we consider the role of the hub entity in orchestrating this network. In so doing we make two contributions to the literature. First we contribute to literature on collaborative innovation networks, through our example of achieving strategic innovation amongst stakeholders in a network having competing values
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