Article from Harvard Business Review about our studies in how firms work in ecosystems to co-create new value.
By Andrew Shipilov, Nathan Furr, and Tobias Studer Andersson
The ability to identify and work with partners is a powerful source of competitive advantage, particularly when it comes to creating new growth products, solutions, and business models.
Finding the right partner can supercharge your company’s innovation. Sopra Steria, an IT consultancy specializing in digital transformation based in Paris, estimated that their efforts through Sopra Steria Scale up, an ecosystem-based innovation initiative (headed by one of the authors of this article, Tobias Studer Andersson), produced three times the innovation they developed internally one year.
But how do you identify who to partner with? And how do you get these new partnerships to work? We have been studying how firms work in ecosystems, including with both familiar and uncommon partners, to co-create new value. This experience helped us identify some best practices, particularly around how to identify uncommon partners, how to prepare them to work together, and how to make the collaboration last. Sopra Steria’s recent project in equipment risk assessment for Norway’s Sunnaas Rehabilitation Hospital (SRH) is one of several dozens of examples that we have studied that showcase some of these practices.
SRH had been a client of Sopra Steria for many years when it asked Sopra Steria to help streamline its security assessment of new medical equipment — scanners, testing platforms, automatic lung ventilators, and such. When this kind of equipment arrives at the hospital, its security advisors need to assess the risks associated with using it, including cybersecurity, compliance with privacy regulations (GDPR), and the equipment’s compatibility with the existing IT infrastructure. Normally, each individual assessment takes around 100 hours and is an unstructured manual process.
Sopra Steria did not have the capabilities internally to carry out this assignment on its own — and agreed with SRH that a third party should be recruited to work with Sopra Steria and SRH. Here’s how Sopra Steria Scale up set about creating the three-way partnership:
Step 1: Identify the most valuable problem to solve.
Successful ecosystem partnerships are based on deep understanding of the customer or partner problem to be solved, rather than just an assumption or after-the-fact rationalization for an ecosystem.
SRH determined that security assessment was an area where it was wasting valuable resources. Given the high healthcare standards in Norway and an expected wave of new medical equipment arriving to the hospitals, SRH determined that no off-the-shelf risk assessment tools were a good fit.
Responding to the customer’s need, Sopra Steria initiated a design exercise to understand SRH’s real needs. SRH broke down the process of its own risk assessment into a sequence of 40 different activities and highlighted pain points that it wanted solving. The two organizations then identified the top pain points that could unlock the most value, if solved. As a result, they determined that SRH needed a process tool to reduce assessment time as well as to enable collaboration across different hospitals.
Step 2: Make potential partners aware of the problem.
Always relying on known partners can provide suboptimal results, because these partners will only provide you with known capabilities. While relying on known capabilities is comforting, it will narrow your search space and prevent you from identifying non-obvious solutions.
When you add what we call uncommon partners, they bring the capabilities that you did not know you needed. The problem is uncommon partners might not know that you need them. So if you want your ecosystem to have a mix of common and uncommon partners, you need to have the uncommon partners find you.
For example, Sopra Steria did not have the internal capabilities to solve SRH’s problem itself. To identify a partner that did have these capabilities, it created an event called the Sopra Steria Scale up Challenge, which brought 30 start-ups together.
The start-ups self-selected by responding to an open call from Sopra Steria to come and help solve SRH’s challenge. The punchline of this call was “SRH has a problem in risk assessment: if you think you have a solution, or a part of a solution to streamline risk assessment, please come. Even if you never worked in healthcare.” Sopra Steria made the call through a variety of channels: directly to start-ups they already knew, indirectly through the newsletters of a number of accelerators and incubators, and through a 45 second movie addressing the SRH challenge that was posted on Sopra Steria’s social media channels.
A fourth way of spreading the word was actually by the ecosystem itself. Some startups encouraged other startups in their own networks to participate the Scale-up Challenge event.
At the event, the start-ups listened to SRH’s presentation that described in detail its pain points in the risk assessment process. Then they had 10 days to submit a short application that briefly described their capabilities, prior projects, and what they would need from Sopra Steria to help the client. Eight start-ups submitted applications, from which Sopra Steria selected three finalists.
Step 3: Match with partners ready to cross the divide.
One common mistake that partners make is assuming they will work well together based on the expected synergies, without fully considering cultural, operational, and knowledge divides that may be profound. Successful partnerships address not only the capability needs but also how to bridge their differences.
When looking for the winner among the three candidates, Sopra Steria Scale up evaluated both the start-ups’ technical solutions as well as their likely fit with SRH, an important factor given the inevitable differences in culture and workplace practices. SRH’s culture and workplace context, was evaluated through a “start-up readiness” questionnaire. Sopra Steria also assessed the “corporate readiness” of each of start-up applicants through the questionnaires and the interviews.
The winner, a start-up called “Nordic Analysis” stood out for two reasons. First it had the right expertise. It already developed a cloud-based solution for managing structured information from unstructured sources. Second, it gave an impression of being the most willing to adapt to the needs of the public sector client and bridge the organizational and cultural challenges.
Step 4: Contract for success.
Usually partners spend a long time devising complex contracts to guide collaboration. As they argue for splitting the value that is not yet created, they risk destroying trust and undermine the project.
In our case, the contract was developed in two steps. First, the partners developed a “simple initial contract” with the goal to deliver a minimum viable product (MVP). The contract defined the roles, partners’ contributions and project milestones; it specified that the business model and the sharing of future revenues would be decided later. The contract helped partners build trust because it described an equal three-way partnership where they each agreed to contribute a third of the time and cost.
Once the MVP was produced, the partners then expanded the simple initial contract by agreeing on the business model. They agreed to recoup their investment by selling licenses to other hospitals.
The resulting solution from this collaboration was a cloud-based structured process for medical equipment risk evaluation, which can link to existing processes in other healthcare centers. This means that if a security advisor in an SRH hospital wants to evaluate a lung ventilator that has already been evaluated by an advisor in a different SRH hospital, they can reuse parts of the other hospital’s assessments. The improved structuring of the risk assessment process plus the opportunity to share assessments speeded up the time needed to approve the use new equipment by an estimated 20-30%, which means that the equipment could be more quickly deployed.
The four-step approach that that we’ve described is replicable across many types of project, and each time a firm goes through the process it grows and strengthens its ecosystem.
This article was first published in the Harvard Business Review.