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Successful innovation networks need social capital convergence

Innovation and collaborative innovation networks also need the essential ingredient of 'social capital'.

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Kodak engineer Steve Sasson approached the management in 1975 with his new discovery – the first digital camera. But while Kodak’s researchers were expanding the boundaries of the technology, the management remained passive.

NEVER underestimate the importance of a good first date. Especially as you get older, you come to realise that compatibility matters. As such, the goal of your first date is usually to explore whether or not you are compatible and whether or not you might have a future together.

Similarly, an initial collaboration between two companies is like a first date. It should start with a minimum viable pilot where the goal of the pilot is not to commit to collaboration for the long-term or to generate immediate ROI. Rather, the goal is for the two companies to learn as fast as possible whether long-term collaboration is actually possible. The same idea applies to multiple companies or organisations who seek to build their "collaborative innovation networks".

WHAT ARE COLLABORATIVE INNOVATION NETWORKS?

Collaborative innovation networks are built on the premise that multiple actors need to contribute towards creating and developing new methods, ideas, products, services, and businesses. This is particularly important because innovation is built on understanding and crafting a problem statement collectively, from every angle. No single actor can solve every problem, especially the increasingly complex problems faced by most large organisations. Collaborative innovation networks are thus crucial.

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For the past two decades, most large organisations have made substantial investments in building collaborative innovation networks.

For example, they have built specialised innovation centres equipped with all the necessary ingredients including the best people (human capital), funding (financial capital), intellectual property (intellectual capital), and corporate startup engagement programmes to lure startups and other innovation catalysers to collaborate. However, the innovation success of these centres is spotty.

To borrow from Simon Sinek's seminal book, Start With Why, every network needs to exist around a "why". Moreover, every actor in the network needs to also bear a part of the "why", which means showing its "relevance" in the network. In short, what is generally missing in addition to simple networks or connections is "relevance", which we hereafter refer to as "social capital".

Today, many companies are making a classic mistake. They collect business requirements and look for startups to solve them perfectly. They are like a person approaching every first date with a checklist. We suggest that rather than focus on what capabilities the startup offers, the company should ask the bigger question of what is the startup's relevance to its customers' problems.

The story of Kodak has been told and retold over the last few decades from numerous perspectives. "Kodak moments", the once iconic catchphrase of one of the world's most valuable brands, now serves as a stark reminder to warn businesses of what not to do.

The popular explanation that Kodak missed the memo when it came to the digital era of photography does not really stand as we know that Kodak actually invented the first digital camera back in 1975. Kodak was on a road to success. However, its management consistently took the wrong turns. In his book, The Decision Loom, former Kodak executive Vince Barabba recounts the time when Steve Sasson, a Kodak engineer, approached the management in 1975 with his new discovery - the first digital camera.

Yet it was filmless photography, so the management's reaction was, "that's cute - but don't tell anyone about it" (The New York Times, 2008) . While Kodak researchers were expanding the boundaries of the technology, the management remained passive. The focus here seemed to be about ensuring that their financial capital source did not erode.

If only their focus was about enhancing their relevance or social capital with their customers and the ecosystem in which they operated, then isn't it safe to assume that Kodak would have embraced this hard change and remained relevant until today?

SOCIAL CAPITAL - THE MISSING VECTOR

The Social Capital Institute defines social capital as an intersection of two factors: (1) the connections an individual actor has to others and (2) the relevance to those connections. An ideal innovation "initiative", whether it is a collaborative innovation network, a business unit chartered with responsibility for innovation, or even a community committed to developing innovative ideas, should empower actors with "relevance".

Relevance is about providing the parties with the right context where they fit in, which is their "social capital". This might mean starting with a clear problem statement and then assembling the ingredients chosen purposefully because of their relevance to the problem.

A classic example of this approach is the collab programme, run by LumenLab, MetLife Asia's Singapore-based innovation centre. "Collab" is an open innovation programme inviting insurtech startups to compete for a US$100,000 contract with MetLife to develop and pilot new solutions across the insurance value chain in areas including customer engagement, sales, and operations.

The programme starts by identifying the problems which are relevant to certain MetLife countries and their customers, and then providing an opportunity for startups to bring their relevance to bear on solving the problem by engaging (1) a MetLife leadership team who owns the problem and budget; (2) internal employee champions who provide guidance to external solution providers; and (3) startups globally who can bring their technological solutions, to collaboratively solve the problems.

The beauty of this programme is that "innovation" is a lever, "social capital" - connections and relevance - provide the glue, and the "problem" is what is being solved. Social capital provides the right currency for organisations to have meaningful conversations and engagements with the right actors.

Innovation and collaborative innovation networks are bound to fail if they do not have the essential ingredient of "social capital" - connections and relevance - to make initiatives successful.

An ideal starting point for any such initiative is to follow these three steps:

  • Define the "problem" or "premise" as the primary vector.
  • Once that is established, assemble actors with social capital to solve the problem at hand - these can include business leaders who want to challenge the status quo, employees who feel the pain, and startups who are trying to provide innovative solutions.
  • Eradicate the excess, irrelevant issues, in order to reduce complexity. The measure of success of the initiative should include "social capital" in addition to financial impact, intellectual capital, and other traditional metrics.
     
  • Arun Sundar is the founding chairman of The Social Capital Institute and Chief Strategy Officer of TrustSphere. Zia Zaman is Chief Executive Officer of LumenLab and Chief Innovation Officer of MetLife Asia.