Innovation ecosystems: the value of data-led co-innovation

The emerging ecosystem economy

Innovation ecosystem sounds like a buzzword, but let’s be clear: ecosystems are not new. For decades, organisations have partnered across borders to co-create better solutions. Even the humble computer mouse was conceived by bringing together diverse capabilities, processes, and products from hundreds of parties.

What’s new is that the ecosystem business model is becoming data empowered. This changes the game entirely.  

Because when you enrich a cross-border partnership with a standardised data exchange (or data ecosystem), it opens the door to next-level agility and scale – and solutions that weren’t previously possible. 

And businesses are taking note. More than half of the S&P Global 100 are already engaged in a ecosystem model, according to BCG Henderson Institute. BCG also found that 90% of organisations in a recent study plan to ramp up their ecosystem activities. And that 23% of new ‘unicorns’ launched between 2015 and 2021 are ecosystem orchestrators. 

This shift towards data-empowered innovation ecosystems is reshaping value chains, industries, and the economy at large. McKinsey, for example, estimates that 30% of the world's expected $190 trillion revenue turnover is set to be redistributed across existing industry boundaries.  

Ecosystem innovation is no buzzword or fad. It’s the future of business innovation. Here’s why... 

Why co-innovation is replacing closed innovation 

The challenge with traditional innovation systems is that they tend to be inward-looking – driven by existing tech solutions, organisational silos, and ring-fenced knowledge. The result? Siloed applications and disconnected experiences that fail to serve real customer journeys and evolving needs. 

That's why businesses are fundamentally changing the way they collaborate, compete, and create value. They’re ditching closed innovation for data-led co-innovation, which is more agile, scalable, and customer-centric. 

You can’t create radically new value inside old silos – around your data, capabilities, systems, and tech platforms. 

To seize the opportunities afforded us by rapid tech advances and explosive data growth, we must innovate beyond company and industry borders, joining the dots between our data, capabilities, and services to create new value at scale.  

So what does data-led co-innovation actually entail? And how can it create sustainable value for you and your customers? 

What is an innovation ecosystem? 

An innovation ecosystem is a group of diverse organisations working together towards a shared goal, connected by a standardised data exchange or data ecosystem. 

These ecosystem players exchange complementary data, capabilities, and assets, innovating beyond company and industry borders to co-create new solutions that deliver a better customer value proposition.  

When you co-innovate with diverse partners, you create something better than your organisation could ever do alone. An ecosystem brings diverse players together to create greater value than the sum of its parts. 

For customers, this means innovative products and services that better meet their diverse and changing needs. For organisations, ecosystem innovation enables you to create new value at a scale that's not possible with a closed, siloed, and inwards-looking approach to innovation. 

The business benefits of an innovation ecosystem 

Becoming an effective ecosystem player gives you the agility and scale to respond better and faster to changing customer needs and market dynamics. By augmenting your data, knowledge, and capabilities, you’re able to identity and focus on the right problems to solve, accelerating ideation and time to value. Cost and risk is shared, and value creation is multiplied. 

Core business benefits include: 

Greater value to your customers  

Customers don’t think and act in the same silos that solution providers have dictated. To create truly holistic solutions, along real and evolving customer journeys, you need to innovate beyond company, data, and even industry borders. Ecosystems help you address changing customer needs more effectively, efficiently, and intelligently – whether your objective is to innovate your core offering, scale a new venture, transform your business model, or uncover new problems to solve.  

Expand into new or adjacent markets 

Ecosystem partners act as a springboard, helping you diversify, add revenue streams, accelerate learning, and drive financial returns. That’s the benefit of teaming up with organisations that bring diverse and complementary data, experience, and knowledge to the table. 

Protect your core business against ecosystems 

Data-led collaboration is a competitive advantage. Your greatest competition is ultimately not another company or rival product. It’s an entire ecosystem of data-connected partners, working together to deliver the best value proposition – at a speed and scale you can’t match as a solo player. Becoming an ecosystem player empowers you to share risk, co-create value, and protect your organisation against threats from adjacent ecosystems.  

What are the most common innovation ecosystem models?

An innovation ecosystem typically falls into one of two groups: 

1. Transactional or platform ecosystems 

The purpose of these ecosystems is usually to create a digital marketplace or platform that connects two or more sides of a market together for a superior customer value proposition. 

2. Solutions ecosystems 

Solutions ecosystems usually aim to create an entirely new innovation, solution, or value proposition that serves an unmet or underserved customer need. 

What does an innovation ecosystem look like? 

By nature, an ecosystem is hyper collaborative, data-empowered, and outcomes-driven. Just like ecosystems in the natural world, they’re fluid, living things. An organisation’s role within the ecosystem can change, but the following comes as standard: 

A common goal  

Ecosystems are a means, not an end. The purpose is to address a specific customer need through an innovative solution (or solutions) that each ecosystem player could not create on their own. 

Multilateral collaboration  

A diverse range of partners collaborates and complements each other, sharing data and resources across seemingly disparate bodies and industries to yield incredible results. 

Alignment  

Ecosystem players are independent bodies, but they’re aligned and coordinated towards a common goal by an orchestrator, which typically owns the platform or common standards. 

Shared risk, shared reward 

Innovation is always an unknown quantity. So partners must be aligned in terms of how they fund projects and solutions, how profit will be shared, and who will pay for failures. 

Trust  

Openly sharing data, resources, and even trade secrets can seem counter-intuitive to many businesses, but ecosystem innovation relies on transparency and trust for the greater good. Co-created solutions need to be handled with care to ensure that everything from security to IP law is discussed and well planned out. 

Five innovation ecosystem examples 

Here are a few examples of today’s diverse innovation ecosystems. Some are helping to tackle the big issues of our time, like climate change. Others are simply focused on innovating a better customer value proposition. 

1. The Electric Vehicle (EV) Infrastructure Investor App 

The team here at Zühlke connected data across transport, geographical, meteorological, and energy bodies, enabling the creation of a proof-of-concept tool that predicts electric vehicle charging infrastructure needs. The EV infrastructure app made possible through this collaborative innovation helps illustrate why ecosystem innovation will be essential as we tackle the big issues of our time. 

2. Amazon 

Amazon is a textbook example of a transactional or platform ecosystem, wherein shared resources and a robust platform allow buyers and sellers from around the world to connect. Here, an enormous ecosystem of global merchants is interconnected through the same marketplace acting as an orchestrator.  

3. The UK’s COVID-19 app 

The NHS COVID-19 app, which Zühlke designed, tested, and launched in just 12 weeks, was made possible through an innovation ecosystem including government, academia, science, big tech, and other diverse players. The app and supporting infrastructure helped prevent 1 million infections, 44,000 hospitalisations, and 9,600 deaths. 

4. DataConnect for farmers 

A group venture between 365FarmNet, CLAAS, and John Deere, DataConnect is an industry-wide, manufacturer-agnostic solution that looks to solve interoperability problems in farming, by allowing real-time data exchanges for controlling and monitoring machinery fleets. 

5. Berlin Innovation Agency (BIA) Smart City Hub 

The BIA Smart City Hub is a group of startups, city officials, tech companies, and citizens that work together to share data and insights to tackle Berlin-wide initiatives – including ‘co-creation between corporates and startups to develop pilot projects’. 

Where will ecosystem innovation take your business? 

The innovation ecosystem model is set to redefine the way we do business, boost efficiency, and solve complex problems.  

Now is the time to start preparing your organisation to drive ongoing value in this changing business environment. This means rethinking your innovation strategy and closing the gaps between your strategic ambition, tech implementation, and operational models. 

In a separate article, we’ll look at the different roles your organisation can play within an ecosystem, the strategic journey you need to go on to become an ecosystem player, and how to define and execute the right ecosystem strategy.