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The innovation ecosystem: why collaboration is key

Author: ICAEW Insights

Published: 15 Dec 2021

Two heads are better than one, or so the saying goes. And a collaborative or ecosystem approach to innovation can open up new avenues for growth and fresh ways of working, and stands to make organisations more competitive.

Dr Chris Ford FCA, a lecturer in accounting and management at Lancaster University Management School, has undertaken extensive field research into ecosystems approaches, and has shown that they can accelerate innovation among SMEs, help them more quickly find solutions to shared problems and turn bold government policy statements on trade into reality. 

Ford, who is also a Cabinet Office Policy Fellow and was the academic Board Member for the ICAEW Business & Management Faculty, says action on climate change is a case in point, presenting organisations with new business challenges but also opportunities. “It’s about how we shift businesses on an innovation pathway that turns climate action from first being about costs to then being about cost-saving, to then being about new products, then about entirely new, collaborative business model design,” Ford explains. 

While governments make bold policy statements to solve big problems, it’s business ecosystems that make things happen effectively and at scale, Ford says. “To me, it’s the big hole in government and economic policy. Policy can set a roadmap but it doesn’t make change happen. Translating policy into action involves thinking about the ecosystem level; identifying a group of organisations that are motivated to collaborate based on the place, the sector and the problem being addressed, and then implementing policy in a collective way that is much stickier and drives change.” 

Ford, who has spent the last decade researching how an ecosystem approach to innovation could work across sectors as diverse as advanced manufacturing, education, biotech, health and farming, now runs an innovation lab at the University of Lancaster that brings like-minded organisations together with policymakers and funders to solve common problems and stimulate ideas that benefit the ecosystem at large. “I bring an accountant’s mindset to innovation research,” Ford explains. “I want to know what drives performance, and how and when it’s evaluated, so we can build a multi-industry picture of how to drive sustainable growth through deliberate, place-based collaboration.”

More than just networking, this is about persistent collaboration and holding groups together for long enough that they start to create and test solutions and share their insights for enduring change.

“Communities coming into one of our ‘Innovation Catalysts’ need to be similar enough that they talk the same language and share a purpose and ideas, but different enough that new ideas emerge and lead to valuable innovation”. Ford explains. Programmes should involve senior-level participants – ideally CEO – to make change happen in real-time. “Invariably these people are well connected and will make change happen through their supply chain, so they become a catalyst that drives impact across an ever-widening network of trading partners.”

Ford points to the Stevenage Bioscience Catalyst created by GlaxoSmithKline, which has generated £2.3bn in equity investment, IPO/FPO, grants and acquisitions since its launch in 2012. Of the total, more than 64% has been in companies with a focus on cell and gene technologies: “This is where my ecosystems work began, supporting the biotech incubator as it experimented with its business model, while also researching the changes it was making. It was these insights that made us useful to the Cabinet Office when their Open Innovation Team was starting up, kickstarting a fascinating two-year research project with them.”

A portfolio approach to innovation, where some ideas are riskier than others, also helps organisations ascertain their appetite for risk. “This is a new way of tackling issues – working collectively at an ecosystem level – that may or may not work, so you have to build it into a bigger system of change,” Ford says. 

Evaluation is a challenge, but also an exciting project for accountants to get their teeth into, Ford believes. For that reason, CFOs have a critical role to play in programmes. “The role of the accountant has been evolving rapidly in recent years, as we manage non-financial performance metrics and increasingly complex sustainability ambitions. For me the next step is to more deliberately evaluate our ecosystemic performance – each firm’s specific contribution to local, regional or national eco-socio-economic value creation,” Ford says. 

Pivotal to the innovation catalyst approach that Ford proposes is someone who can facilitate collective intervention. “Part of the challenge is deciding who has the capability to convene the right groups of organisations, find the right issue, and the right moment to make change happen. It’s about knowing when to open it up, when to close it down and focus on what needs to happen next to result in action.” Universities are a good starting point, Ford believes, particularly those, like Lancaster, that are signed up to the Civic Universities Charter. But it could also be a chamber of commerce or something facilitated by a Business Improvement District (BID) or an industry group. 

“You need an organisation in a community that knows enough about who might connect with who and is non-competitive. Universities are well placed to do that. It is an unfolding process and we choreograph meetings so the right things are talked about, the right ideas are shared, and when we recognise new knowledge is needed, we bring new experts on board or draw in teams of students to offer a completely fresh perspective.”

Collaboration encourages diversity of thought and by sharing the failures as well as the successes of the ideas sparked, it means other organisations in the ecosystem don’t repeat mistakes. But Ford admits that a certain amount of competitive tension is inevitable. “There are common problems that challenge multiple organisations in a sector and if they have an appetite to solve those problems together, you can collectively grow the pie. But there will be moments when you’re fighting over your individual slices of that pie.” This, he suggests, is one of the great successes of the work they are doing – helping firms to figure out what they can achieve together, while also protecting their own futures as part of a more dynamic, faster-growing regional or national economy.

Find out more about open innovation in our guide for CFOs. Details of the research and innovation catalyst projects currently managed by Dr Ford are available through his university profile page.

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Clean growth and the application of major emerging technologies to existing sectors are two key characteristics of trade in 2022. Add to these levelling up supported by foreign direct investment, and there are exciting future prospects for business and the prosperity of communities globally.

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