Competition or cooperation ??

In a previous post, I have discussed the characteristic roles of three innovation protagonists: societies, organisations, and entrepreneurs. Each have their strengths and weaknesses. And all of them interact with one another. But how do those interactions work? More like competition? More like cooperation? Let’s find out and investigate the different actions they might take to succeed in the innovation landscape.

In the long run, and from a macro perspective, societies are the main beneficiaries of innovation: it is only through innovation that they get their problems solved. Innovation is the means for fostering human well-being, economic prosperity, and technological progress, innovation thus generates value for societies. Yet regardless of the importance of innovation, societies rarely take part in it directly. Rather, they indirectly influence the innovation capacity they have access to by defining the rules for the functioning of society. These institutions, whether generically applicable to the whole society or specifically tailored to innovation itself, will set the conditions for innovation to occur. And they will have global effects across the entire innovation landscape. Thus, by shaping their institutions, societies compete with one another for the best way to cultivate innovation.

In addition, societies have a direct way of affecting innovation: they can establish organisations to fulfil specific purposes, which will become regional actors in the innovation landscape. They will pursue their defined purpose, within their defined business model, and within the given institutions. Usually, organisations are shorter-lived than societies; organisations’ time counts in decades rather than centuries.

Organisations are likely to compete with other organisations, e.g., in a business context. But they have a number of different ways of acting; they could:

• seek to increase their innovation capacity by acquiring or retaining an entrepreneurial mindset ;
• spin-off an additional organisation, thus creating an actor for a dedicated sub-purpose ;
• seek to change existing institutions (e.g., through lobbying) to shape a more favourable environment for their activities ; or
• use their mobility to move to other institutions, e.g., by entering into a market that is governed by a different, more favourable set of rules.

Despite this range of options, organisations’ flexibility, and their ability to respond to or even anticipate challenges is limited by their tendency to become sclerotic and preserve the status-quo. This inclination explains both, organisations’ need for an entrepreneurial approach and their inability to actually maintain it. For organisations, innovation and the resulting change is of value only as long as they are young, i.e., when they are in the process of being established. During that period, innovation is a key tool for any fledgling organisation to build, defend, and fortify its position. As soon as an organisation is established as a dominant actor in its specific domain, further change threatens to undermine or even destroy that position. Hence innovation, the former bliss, turns into an undesirable curse.

Entrepreneurs are local actors following their own guide star and vocation, and innovation is their driving force. For them, time counts in months to years, making them far more agile than societies or even organisations. Still, entrepreneurs act within the given rules of the game, as defined by the existing institutions.

In pursuing their own objectives, they might compete with other entrepreneurs or even challenge existing organisations. In order to succeed, they will usually seek to exploit their characteristic agility. In addition, they could:

• shift to other institutions with more favourable conditions ; or
• create a dedicated organisation to support their objectives.

In general, the interactions between the protagonists will at all times be a combination of behaviours: some will be proactive (first movers), while others will prefer to stay reactive (maybe as fast followers, maybe even as laggards). What we observe as competition is horizontal interaction (societies with societies, organisations with organisations, entrepreneurs with entrepreneurs). And this is complemented with vertical interactions (across societies, organisations, and entrepreneurs), which opens the path to cooperation. Horizontal and vertical interactions, when combined, allow for fairly complex patterns of behaviour, such as co-opetition (part competition, part cooperation), which have the potential to combine the different strengths of all protagonists to achieve a common goal.

It is important to acknowledge that neither societies nor organisations nor entrepreneurs can deliver required innovation out of thin air or just by themselves:

While the largest volume of innovation is executed by organisations,
only societies can change the institutions that shape the conditions for successful innovation, and
only entrepreneurs can act fast enough to respond to rapid challenges.

Organisations and entrepreneurs are mobile, they have the flexibility to “move to a better place” with more favourable conditions for successful innovation. Societies do not have that luxury, they are stuck with the conditions they created themselves. Institutions thus are key tools for a society to shape an attractive innovation environment. An environment that attracts organisations and entrepreneurs to help solve the problems at hand. Regarding horizontal interactions, institutions become a competitive advantage. But looking at the vertical interactions, institutions stimulate a fruitful symbiosis across all protagonists, combining their strengths and adding value for each of them.

I’m curious to learn your thoughts.