Networks of innovation

Ran across an interesting report by John Hagel, III and John Seely Brown— who both have an affiliation with the Deloitte Center for Edge Innovation. The two argue that most Western companies are not yet truly harnessing the power of locales in emerging markets with specialized high-tech expertise (e.g. Bangalore, Shanghai, etc.);  they call such regions  of high-tech specialization “spikes.”

Hagel and Brown maintain that, to truly leverage the power of collaboration across various geographical “spikes” around the globe, companies need to have less of a transactional mentality — and think instead of managing a loosely coupled network of individual companies. They cite Li  & Fung as an example of this approach.

Developing that kind of network, according to Hagel and Brown, can lead to the next step: what they call “creation networks”  — where companies from “spikes” all over the globe that participate in the network not only work together but also learn and innovate together and  “get better faster.” The idea is that collaboration can help the companies create new value together.  Hagel and Brown write:

By connecting capabilities across spikes, network organizers can provide a powerful platform for innovation and learning across spikes as participants with diverse specializations learn from each other in order to deliver more value to the market.

The authors’ paper, “From Transactional Markets to Relational Networks: Amplifying the Innovation Potential of High-Tech Regions,” is available for download.