Understanding the diverse demands placed on corporations and supply chains by customers in today’s hyper-competitive global marketplace helps shed light on the challenges and opportunities to growth and innovation. Gartner continues to contribute key research to understanding this concept and offers insights that help corporations turn concepts into actionable strategic visions and opportunities. As the industry continues to contend with slower volume and revenue growth, the ability to leverage partnerships and improve agility is critical.
Gartner Research Director Virginia Howard spoke at length with EPSNews recently and shared critical insights for supply chain professionals. Gartner’s understanding of ‘bimodality’ in concert with their mapping of federated innovation ecosystems offers operational models that highlight pathways for companies to leverage opportunities. One of the central drivers or enablers of the changes happening in the high tech and electronics industry is the impact of digital business and the maturing IT infrastructures that are promoting new, deeper partnership ecosystems. It is within these ecosystems, as Howard points out, that real innovation is happening.
Disruption is part and parcel of the electronics and high tech industry, after all. But how companies view, understand, and position themselves in relationship to the continuous disruptive events and models in our industry is a critical differentiator. Howard offered a key understanding of Gartner’s concept of bimodal as it relates to innovation, improvement, and disruption along supply chains:
When we think about bimodal, we think of having two modes of operation, each designed to address different business goals with the duality of simultaneously sprinting forward while maintaining a marathon pace. […] Innovation, at its core, is more of a disruptor element emphasizing big step changes in capability than continuous improvement, which at its core is a process of tweaking for improvement.
[…] to address the need for operational efficiency and systematically promote differentiation and innovation, organizations need to be bimodal. Importantly though, this innovative focus doesn’t mean throwing out continuous improvement. Rather balancing both is essential: continually improve in your day-to-day business processes, and compliment these efficiencies with sustainable innovation. The concept of disruption, therefore, can be understood as more of a change to what a company is doing – that is, doing different things differently. There is a logical extension inherent to this concept […], innovation isn’t replacement, it is an integration modality; the integration, of continuous improvement and sustainable innovation.
The successful adoption and integration of innovation and improvement within an enterprise and outward to the supply chain, to partners, and to leveraging respective capabilities, is the path toward maturing organizations and the path toward acting upon the opportunities afforded by forming and participating in innovation ecosystems.
Another point that warrants mention is the internal and the external strategic work that must be overtly considered, analyzed, and then appropriate choices made by management teams for the organization. Important to note, as Howard underscores, successfully being aware of and evaluating choices is related to the maturity of the organization.
Additionally, as Howard notes, there are levels of maturity both within corporations and within ecosystems. To get to the point of being able to truly engage with, let alone act as a key orchestrator of federated innovation ecosystems, the corporation needs to have reached a maturation level itself wherein the tension of innovation and improvement, of disruptor and disrupted, of change and efficiency are embraced. Arriving at this moment does not mean that the tensions are evenly balanced; rather, there is a recognition of the inherent dichotomy, the bimodality, of growth and efficiency, of innovation and improvement goals and strategies that are part of our globally, hyper-competitive marketplace.
Considering the opportunities afforded by collaborative ecosystems of corporations coming together to leverage their respective strengths and innovate to provide unique solutions that would not be possible singly, the adoption or participation in these federated innovation ecosystems looks truly powerful. Yet, across the industry, there is an ongoing M&A wave, which is truly a more traditional, ownership hierarchy, not a federated collaborative system. Howard shed light on this tension and highlight important and sometimes difficult to understand aspects of bimodality and orchestrating innovation ecosystems:
[…] Orchestration – the concept of sharing value, risks, and rewards – we talk about it as a journey, and as exhibited though a level of business maturity. Importantly, we should not take this to mean that those companies not acting as an orchestrator are not yet mature enough; in a real sense it is not simply the company, but rather the ecosystem that has not yet matured. Orchestrating innovation ecosystems are definitely a departure from more traditional, linear, hierarchical business models. We can understand these emergent leadership roles, that is, orchestration, as viable alternative to M&A for companies, particularly for those with advanced digital assets, which is indigenous to many high tech companies.
[…] In understanding weighing M&A options and innovation ecosystems, it really depends on where [companies] want to invest, what they see as strategic and where they feel ownership control is the better strategy. Alternatively, companies will balance whether the goals are to gain a certain customer profile, a certain market, or a certain kind of opportunity. […] The concept of these innovation ecosystems is interesting in that corporation’s roles tend blur and the fluidity of shifting between being a customer, supplier, service provider, and competitor is supported. After all, even along traditional supply chains we see companies playing each of these roles, respectively, relative to each other, in the ecosystem model the fluidity is simply more embedded in the model itself. It is important to understand that M&A and federated ecosystems are not mutually exclusive models; I think that they can be complimentary and can provide important alternatives depending on the business models and goals. This is not a departure from what we traditionally see; we still see different business models for different business units or for serving different customer demands.
Clearly, the competitive landscape has many challenges bringing many new and greater demands on organizations. The solutions and opportunities are equally many but are importantly not to be found solely within organizations or solely through M&A. The growth of federated innovation ecosystems present very real supply chain opportunities wherein partners have the opportunity to leverage core capabilities, skills, and market reach to realize very unique and agile solution designs.
There are real risks and rewards inherent to these ecosystems, but the advantages for companies who are well positioned internally and globally to participate, the rewards in agility and market leadership as well as the opportunity to truly be part of real innovation and the disruptors who will positively change and grow, are tremendous.