In our most recent Master Class, Andy Michuda of Sopheon, Shannon Lucas of Ericsson, and Michael Britt of Southern Company discussed best practices for ecosystem development. Other topics of discussion included:
Michuda is the CEO and president of Sopheon, a provider of software and services for enterprise innovation management. Lucas is the Vice President and Head of Emerging Business and Global Customer Unit at Ericsson. She has over 20 years of experience in entrepreneurship, working with startups, and driving innovation inside large companies. Michael Britt is the Vice President of Southern Company’s Energy Innovation Center. Britt oversees the center, which focuses on the future of the energy industry.
Read highlights from the call below or download a PDF of the slide deck.
In a recent survey that was part of our 2019 report on co-creation and ecosystems, Innovation Leader asked 257 innovation and R&D executives about their level of experience with co-creation. The overwhelming majority – 92 percent – said that they had either extensive or some experience co-creating at their companies.
“People can’t [innovate] alone anymore,” said Michuda. “Most CEOs of companies recognize external markets are moving faster than they are. So [they ask]…’How I can reach out with someone who can add value with that ambition in the market?'”
However, the path to meaningful ecosystem development includes many obstacles, including finding the right partners. According to Lucas, the best partners are “domain experts” and can provide potential routes to market for new ideas. She says that co-creation also requires commitment from both parties.
“There’s also those subtle queues. … Do they have the largest market dominance? Maybe they’re the No. 3 player but they’re the easiest to work with, and I think that those things are hard to quantify, but almost always the biggest determinants of success,” Lucas says.
Navigating legal obligations and intellectual property can also create challenges for companies. Britt’s team oversees IP for Southern Company Innovation initiatives. He says that having dedicated members of the legal team helps innovators move fast when working with partners.
“We have specified members of the legal team that are dedicated to us…not on a full-time basis, but there’s one person in legal that we go to,” Britt says. “It allows us to move much more quickly. [Keeping the IP function] inside innovation allows [the innovation team] to handle the IP hurdles, and we control those flows.”
Michuda also recommends drafting an NDA early on and clearly understanding what each party contributes to a project. He says: “[W]hat becomes more important than getting a bunch of lawyers at the table is if there’s up front agreement on who’s got what and brings that to the table, and secondly there’s agreement on the go-forward process [for an initiative].”
In our 2019 survey, 58 percent of respondents said they co-create with their customers or users. According to Lucas, end users should be involved throughout the innovation process to ensure that new initiatives solve real-world, customer pain points.
“If the end users can’t use it, don’t find value in it, don’t see it working in that world, it’s really irrelevant,” she says. “So at the beginning middle and end, we always bring in the end users into the room as we’re scoping out what the problem statement…might be.”
Britt says that Southern Company “always starts” with a customer-centric approach. His team also runs a Customer Prototype Lab, where innovators can see how end users interact with their products.
“It’s very easy for corporates internally, or even in co-creation with other corporates, to imagine what the customer might want,” Britt says. “[W]e always innovate from a position of empathy. … If you’re not solving a customer’s pain point, a part of friction in doing business then your likelihood of success is pretty low.”
Innovation teams may also co-create with startups in their ecosystems.
“Startups are really positive in that they generally offer speed, a freshness of view. … Optimism is really a strength of working with a startup and they normally bring to the table a unique perspective, domain knowledge,” Michuda said. “[But] you need to apply a different level of rigor as you go down a path with those organizations so that you leverage that strength, but also there some caution to balance out some of the areas of risk that you don’t have with a trusted distribution [center] or existing client partner.”
Lucas added that corporate partners may “unintentionally abuse startups” by moving at a slower pace and failing to recognize the startups needs.
“Enterprises might take a while to do their due diligence…and at the same time that can kill startups. And startups get excited about having these big potential channels, or co-investors or all the different things that the enterprises could potentially present for them,” she said. “So we just need to, as responsible corporate citizens that want to partner meaningfully with the startup community, start with a level of awareness…”
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