Creating 21st Century Capable Innovation Systems

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Creating 21st Century Capable Innovation Systems

Created	August 2004
Location	Creating 21st Century Capable Innovation Systems
Authors	Larry Quick
Copyright	Larry Quick and Associates
License	CC Attribution-Noncommercial-Share Alike 2.5 Australia
Purpose	Think 21CC Series Discussion

Unleashing Creativity through Open Platform Innovation

1 Introduction
2 Background to Contemporary Innovation Systems
3 Conventional Innovation Systems – Breakthrough or Breakdown?
4 Open Platform Innovation
5 A Changing Role for Institutional Policy and Strategy Makers
- 5.1 No Clear Answers, Creativity Required!
- 5.2 Institutional R&D
6 Conclusions
7 References

Introduction

The Emergence of the Creative Economy

Whilst it is certain that knowledge is a fundamental capital and capability for community wealth in the 21st century, it is not the having of knowledge that is the only key part of the wealth equation. The other key part is based on the individual creativity of people within groups and communities in how they develop and leverage existing, new and original knowledge.

As Charles Leadbetter states:

‘In the 21st century, the engine for growth will be the process through which an economy creates, applies and extracts value from knowledge’.

Like knowledge economy, creative economy has emerged as a metaphor and a highly valuable lens from which to understand, gauge and create the shift in the primary means of wealth creation well into the early part of the 21st century.

Figure 1 below places creativity as yet another string to the economic and social strategist’s bow in transforming organizations and economies for social and economic advantage.

In its ‘rawest’ form, creative capability combined with knowledge capability provides two fundamental capabilities for the social and economic development of any community (community of organization, interest, practice or location).

In its most organised form creativity is both the backbone of competitive and sustainable industry, and the primary output of entire industries in itself.

Today there is a premium on creativity. We have evolved from a world where prosperity depended on natural advantage (access to more plentiful and cheap natural resources and labour than other organisations and countries), to a world where prosperity depends on creative advantage – the capability to use creativity to innovate in areas of specialised capability more effectively than other organisations or countries, and to develop and leverage unique and highly valued people, cultures, products, services, processes and places – for the greater good of the community.

Definitions of Creativity and Innovation

Since humankind first walked the earth creativity has been a fundamental capability that has separated people from other species, and has been the key catalyst in the growth in sophistication of human lifestyles and livelihoods.

Given the ‘heritage’ of creativity, and the problems in contextualising a wide range of ‘creative’ definitions that qualify a range of new concepts, it is more useful to rely on the current dictionary definition for a reliable shared understanding of creativity.

Based on definitions provided by Websters Dictionary, the Oxford Dictionary, and the American heritage Dictionary of English Language, the following is the definition used in this document:

Create: To bring somebody or something into existence; To use imagination to invent things or produce works of art
Creative: Able to create things; Using the imagination to create new ideas or things; Making imaginative use of the limited resources available
Creativity: The quality of being creative; The ability to use imagination to develop new & original ideas or things & people

The above dictionary definitions provide a nomenclature that illustrates a set of capabilities, and a continuous process based on imagination, ideas, invention, bringing forth, development, production, new and original things, new and original people, works of art, and bringing things into existence, with the use of the limited resources available – and critically, the positioning of creativity as a quality.

Such definition and nomenclature asserts that creativity isn’t just about having ideas or just talent. Whilst ideas and talent are obviously critical components, creative thinking and behaviour it is more complex and requiring many capabilities that provide an environment for idea generation, the ability to design, and action for realisation.

As innovation in its dictionary definition defines innovation as being closely aligned, if nor exactly the same - the act of introducing something; something newly introduced – in this document we the use both words in meaning the same thing.

Definition of Community, or Creative Community

When using the term ‘community’ or ‘creative community’ in this paper we refer to community in its broadest possible interpretation to cover:

'A group of people who are linked together in a network and participating in or sharing the same locality, interests, practices, organisation, or culture. They apply their knowledge and creativity to inspire people, to share information, ply their creativity, create and exchange ideas, and solve problems and create opportunity within their, and other’s communities – in order to bring into existence a thing, or people in a way that will develop and advantage their community'.

In doing so, a Creative Community may take on many different forms. They may be a Creative Community based on:

Location: Tampa Bay, Melbourne, Oxford, Brunswick, Rhode Island, Broome
Practice: Doctors, artists, engineers, economic development
Interest theme: Politics, history, astronomy
Cultural group: Italian community, Buddhist community
Organisation: Corporation, school, agency, small to medium business, department, unit
Cluster: A group of interdependent organizations acting together for their common good

Placing a Premium on Creativity

In most of the developed world and in many developing countries the emphasis and investment in creativity, and in placing a premium on creative thinking, drivers, workers, industries, economies and communities, is growing in precedence. The evidence is very strong and growing daily of all significant and developing economies and societies either preparing to make or making this shift. This includes the USA, the EU as a whole, Ireland, China, Taiwan, India, Canada, New Zealand, and Australia to name a few.

In recent times not all countries, or states or regions of countries, have exhibited a strong track record in this area. This is evidenced by their slow pace to adopt and implement knowledge economy strategies, their low priority on embracing creative economy thinking, and the ‘leakage’ of creative industries and talent to other countries.

Whilst there is urgency required in addressing such lag, it is important to stress that the game is just beginning, and that coming to terms with the need to shift priorities is a challenge for most governments, businesses and communities. As Richard Florida and Irene Tinagli assert in their Demos paper “Europe in the Creative Age” (February 2004):

‘Global competition in the creative economy is a wide-open game. While many assume that the United States has an unbeatable edge, its position is more tenuous than commonly thought. The United States certainly has many assets with which to compete. Over the past century, it built the most powerful and dynamic economy in the world. It did so by fostering entirely new industrial sectors, by maintaining a free and open society, by investing in scientific and cultural creativity, and most of all by drawing energetic and intelligent people from all over to its shores. But economies are fluid — people move, leads are easily gained or lost — and creativity is an asset that has to be constantly cultivated and renewed. Even before the stock-market crash — in 1999, at the height of the boom, when it seemed that American high-tech ruled the world — the U.S. Council on Competitiveness issued a report warning that we were letting our “innovation infrastructure” decay, while “other nations are accelerating their own efforts.” Since then the creativity gap has closed even further’.

Also in the Demos paper Tom Bentley indicates that Europe is struggling:

‘In the midst of the dotcom boom European leaders signed up to the “Lisbon agenda”, committing their nations and the EU to the goal of becoming “the world’s most competitive and dynamic knowledge economy by 2010”. Four years on the agenda is struggling. A recent scorecard report by the Centre for European Reform showed that few countries are making the progress needed to fulfill their commitments, though Denmark and Finland have exceeded expectations’.

The above examples of lag and struggle should not be interpreted as a denial of the critical importance of the knowledge and creative economy. Such lag is more a lack of progress and an indication of the difficulties faced when reorienting economies, capabilities and competencies, ‘walking the talk’, providing adequate resources, and giving up the past to invent the new. That is why a sense of urgency and an appropriate strategic approach may provide smaller economies that are easier to shift a golden opportunity in the immediate future.

The size and lack of stealth of larger economies provides smaller economies, and in particular individual states or regions, with a unique advantage and opportunity to play a significant role in the Creative Economy given they are committed to placing the required investment in, and premium on, creativity.

Raising the ‘Creative Bar’

To escape the consequences of dwelling on past successes of the industrial economy, and to leverage the opportunity of the creative economy and beyond, requires communities to raise their standards of creative thinking, process and output.

Many organisations and governments have begun this process through increased investment and focus on innovation.

One strategy to achieve this has been the introduction of innovation systems into mainstream innovation strategy – in particular the National Innovation System.

Whilst early efforts have been a good first step, in this paper we look to provide a positive critique of such investment and provide an added creative approach to improve such investment.

Background to Contemporary Innovation Systems

Innovation systems involve a process of mapping, measuring, innovating and intervening inside a national or local economy/community. In their contemporary form they are designed to take a ‘whole systems view’ of innovation through understanding and acting on key issues like:

The type and strength of capability within the system,
The diversity and strength of connectivity of the ‘players’ involved (how they relate, ‘bond’, communicate, learn, share information and transact with each other),
Their understanding of the interdependency they have with each other and as a whole system,
The cohesiveness of their individual and joint strategies,
Their ability to adjust to change in conditions impacting their operating environment,
Their existing and required infrastructure and support structures,
Their capability to continuously innovate as a synergistic group, and critically,
Their systematic capability to flow and proliferate innovation from idea to end-user in the most optimal way to benefit the broadest range of stakeholders.

The Innovation Systems Research Network (ISRN) in Canada is a global research network specialising in the diffusion of innovation into economies and societies. They provide a very sound approach to innovation systems.

The ISRN view states that Canada's ability to adapt its resource-based traditional economy to a more knowledge-driven technology-based economy will play a key role in the maintenance of high living standards:

Success in the new knowledge-based economy increasingly depends on the ability to apply the results of innovation - a new, or significantly improved, service, product, production technique, or management method.

From a network or complex systems perspective the ISRN is very explicit in seeing the value of this thinking when approaching innovation systems:

Recent studies of the innovation process point towards the interdependence of economic, political, social and cultural factors in determining the relative degree of success enjoyed by individual nations and regions in the global and knowledge-based economy. These studies point the way towards a better understanding of the complex interdependencies between internal firm dynamics around the innovation process and the broader institutional setting within which the firms operate. Researchers have noted strong national, regional, or local components that influence the opportunities for science-based innovation and competitiveness of firms. The interaction of these components in geographic regions is termed the system of innovation. This includes the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies. The concept of the innovation system gives special prominence to local, regional, and national social and political institutions and mechanisms that support the innovation process. It moves the theory of industrial innovation from a simple description of the entrepreneur in an isolated firm to a consideration of how all the elements of society contribute to technological change. It encourages the examination of interactions and synergies which would not be visible in an analysis of individual firms or competition among firms.

The ISRN also points toward the inherent weakness of taking a purely hierarchical or global view of innovation, as opposed to treating innovation inside an interdependent and inter-networked system, or system of systems, that embraces both global and local need for innovation.

Of particular interest to, and relevance for, the work of ISRN is the regional (local) level of the innovation system. The geography of production in the new economy is marked by a 'paradoxical consequence of globalization' - the increasing importance of the locality as a site for innovation. The role of knowledge and creativity in this economy places a premium on the kind of localized, or regionally-based, innovation that is fostered by proximity. Innovative capabilities are frequently sustained through regional (local) communities that share a common knowledge base and interact through common institutions. The forms of collaboration and interaction which occur in these communities draw attention to the role that regional (local) institutions play in supporting innovation in a global economy. Distance is a critical variable which exerts a significant influence over the success with which new product innovations are transferred from the laboratory to commercial exploitation or process innovations are adopted and diffused across developers and users. This focus on the importance of the region as a site for innovation has led to a new emphasis on the importance and contribution of the regional (local) system of innovation.

Apart from a more complex systems approach, the ISRN also stresses the need for a diverse range of firms, organisations, industries and creative agents and partners to be involved in such an innovation system.

Both the broader systems of innovation approach and its regional application are of specific relevance to an economy with the breadth and diversity of Canada's. Attempts to understand the nature of the innovation process and to develop policy to support it solely at the national level may flounder on this problem of diversity. A regional (local) focus overcomes this problem and provides a better way to ground our understanding of the innovation process within the diverse realities that make up the national economy.

Embedded in the ISRN approach are some key principles that ensures that innovation system thinking provides a robust model for national, regional and community creativity:

a. Innovation Systems focus on a diverse range of outputs. The outcomes of innovation are diverse and may include ‘a new, or significantly improved, service, product, production technique, or management method’. Anything is possible!

b. Optimal innovation outputs are dependent upon the inclusion of a diverse range of ‘creative agents’ at an economic, cultural and social level – a ‘whole community ‘ approach.

Outcomes rely on understanding that it is a diverse range of interdependent creative agents in a community (community of organization, interest, practice or location) that ensure an innovation system works. Recent studies of the innovation process point towards the ‘the interdependence of economic, political, social and cultural factors in determining the relative degree of success enjoyed by individual nations and regions in the global and knowledge-based economy'.

Hence, it is critical to understand ‘the complex interdependencies between internal firm dynamics around the innovation process and the broader institutional setting within which the firms operate’.

c. Localisation is as critical as globalization

Localisation and globalization are two critical elements of innovation and economic growth. "The geography of production in the new economy is marked by a 'paradoxical consequence of globalization" - the increasing importance of the locality as a site for innovation. The role of knowledge and creativity in this economy places a premium on the kind of localized, or regionally-based, innovation that is fostered by proximity. Innovative capabilities are frequently sustained through regional communities that share a common knowledge base and interact through common institutions. The forms of collaboration and interaction which occur in these communities draw attention to the role that regional institutions play in supporting innovation in a global economy. This focus on the importance of the region as a site for innovation has led to a new emphasis on the importance and contribution of the regional system of innovation’.

d. A purely centralized approach to innovation will not create optimal results

A centralized focus to creativity, from the view of location, discipline and stakeholder will not produce optimum results. Viewing the innovation system in a complex and diverse manner is critical in applying innovation systems thinking. Such diversity must include a range of stakeholders, and a macro and micro approach to application. ‘Attempts to understand the nature of the innovation process and to develop policy to support it solely at the national level may flounder on this problem of diversity. A regional focus overcomes this problem and provides a better way to ground our understanding of the innovation process within the diverse realities that make up the national economy.’

Conventional Innovation Systems – Breakthrough or Breakdown?

Decision-making in National Innovation Systems

Decision-making in a current National Innovation System (NIS) thinking is biased toward national macro-economic policy formulated by large institutionalised policy and strategy makers. National policy tends to be biased toward a globalised view of the world, and deals with the ‘big picture’ issues in a ‘broad brush’ manner.

The process of creativity and knowledge leverage is generally isolated to the domain of institutional R&D organisations, academic or very large organisations. Their focus is often biased toward pure research with a very strong science and technology focus. And the environment is highly managed and ‘strategically’ driven.

The process of commercialisation is one of business planning, patents and copyrights, and accessing capital.

The flexibility to change is limited by size and bureaucratic tendencies of medium to large organisations. Hence innovation within NIS’s tends to be slow or incremental, less immediate to market demand, more keen on ‘borrowed innovation’ that is easier to implement, and focused on longer-term outcomes. In short they are relatively slow to change, and slow in creating change and adapting to dynamic shifts in conditions.

For some large institutions their powers of creativity or adaptation are severely hampered through their years of ‘addiction’ to industrial thinking, and mechanistic action. As Frank Lekanne Deprez & René Tissen highlight in Zero Space: Moving Beyond Organizational Limits:

“The organizations we created have become tyrants. They have taken control, holding us fettered, creating barriers that hinder rather than help our businesses. The lines that we drew on our neat organizational diagrams have turned into walls that no one can scale or penetrate or even peer over.”

Similar thinking to that posed for the behaviour of NIS’s may be applied to large corporations or organizations. Corporations can tend toward exhibiting similar behaviour when they adopt a centralist view of innovation in setting up a "department for innovation" that is intended to be the primary point of imagination, research, development and proliferation of innovation throughout the organization.

Decision-making in a Local Innovation System

Local Innovation Systems (LIS) tend to be informal, and decision making is biased toward micro-application formulated by ‘at the coalface’, ‘on the job’, practical need. The bias is to the local view and deals with an immediate need in a very resource intensive manner.

The process of creativity and knowledge leverage is based on a broad range of industry and community knowledge through community, peer, partner, customer, supplier or other market inputs, and it is applied at times of practical need in a manner far removed from the ‘scientific method’. And the environment is more loosely managed and is socially driven.

The process of commercialisation is not a separate action as it is generally the primary driver for taking the action in the first place – commercial survival or competitive advantage. This type of activity is rarely noted or written down, let alone patented. The law of the ‘business jungle’ usually takes precedent: in a fast changing and dynamic market place, those who innovate for efficiency and effectiveness the fastest survive, those that don’t, die!

The level of flexibility to change is generally correlated to small to medium enterprises coming to terms with commercial reality in the short-term. If needed and resourced, change happens in a more immediate to market demand manner. Change is more ‘tactical’ than it is ‘strategic’ with innovation generally occurring through a ‘must do, and must do it now’ motive.

The opportunity through LIS’s is not all positive. The tactical almost ‘classical conditioning’ of many organizations and communities to act in non-strategic and ‘ad-hoc’ ways can negate their more flexible potential for change. There is also a severe lack of coordination and resources to drive systemic problems in the community.

In summary, the NIS is driven by institutionalised ‘policy pundits’ leveraging sophisticated institutionalised R&D, whereas in an LIS decision-making is at a more informal, unsophisticated ‘grassroots’ level driven by industry and local community knowledge and local ‘movers and shakers’. Generally where the two innovation systems ‘meet or miss’ is in the ‘trickle down’ effect of a ‘global’ policy, and the ‘bubble up’ effect of local, grass roots’ need.

The Breakdown in the Current Approach to Innovation Systems

The primary reason why innovation systems don’t work or are sub-optimal is that they are not currently really treated as systems, and definitely not complex adaptive systems. Hence they are not diverse enough in the number, connectivity and scale of the interdependent organisations or agents involved. The following diagram assists in subjectively mapping the bias and disconnection of innovation systems at a national and local or community level:

In the preceding diagram the horizontal axis indicates the range of innovation activity on one side by institutional R&D organisations (eg. Formal R&D institutions, universities), and on the other side by localised community based knowledge and creativity (eg. Informally biased creativity by entrepreneurs, community groups, firms and SME’s). The vertical axis indicates the range of strategic and policy initiatives and action driven from ‘the top’ by institutionalised ‘policy pundits’ (eg. Formal strategy formulation by government agencies, head offices of large organisations), and from the ‘bottom up’ by informal grass roots movements (eg. Community groups, entrepreneurs, SME’s, and business units).

The top left quadrant comprising the combination of ‘Institutionalised Policy Pundits’ with ‘Institutionalised R&D’ is generally the primary approach adopted by government and large corporations to R&D within the current Innovation System. The bottom right quadrant comprising the combination of ‘Localised Community Knowledge and Creativity’ with ‘Informal Grassroots Movements’ is rarely considered as a primary element of the current Innovation System. And the other remaining quadrants - ‘Institutionalised Policy Pundits’ combining with ‘Localised Community Knowledge and Creativity’, and ‘Institutionalised R&D’ combining with ‘Informal Grassroots Movements’ are an all too rare event and if they occur tend to occur in ad hoc ways, rather than as a matter of strategic process within the National Innovation System.

The effect of this duality of institutional NIS and informal LIS creative strategy and action is generally experienced as a ‘trickle down from the top’, and a ‘bubble up’ from the bottom - both hopefully to meet in a meaningful manner that satisfies the requirements of all parties – and progresses the local and national effort.

In reality this is not usually the case – and definitely not the case in terms of the knowledge and creative economy. As the red bursts in the diagram indicate, major disconnects occur between local community based innovation, and institutionalised R&D. More often than not, ‘trickle down’ and ‘bubble up’ do not meet or when they do there is a clash with the needs of the individual parties, and local needs are not part of the national innovation plan, or what is in such plans appears alien to the needs of the community.

Though it is almost impossible to measure the comparison in current investment between the institutional and informal biases, intuitively most observers would agree that ‘on the job’ or community based creativity by grassroots movers and shakers far outstrips institutionalised R&D in creating meaningful innovation at a industry, economic, social and community level.

As the diagram illustrates (and has been previously stated in this section), the disconnections are more disturbing when taking into account that the amount of innovation in the local community at an informal grass roots manner relative to the total innovation in most countries, communities and organisations is far higher than that performed through formal R&D policy in R&D institutions.

Institutional R&D is Not All Bad

It is important to record in the strongest terms that the work of institutional R&D is, in most cases, of the highest standard that meets or is over global standards, and is largely directed toward meaningful outcomes. It is NOT the quality of work that is at issue in the NIS approach. What is at issue is:

The ‘closed system’ of the current innovation system disconnects and excludes the grassroots local communities from the innovation system,
The limiting of the type of innovation that is in focus, and that in most cases doesn’t suit immediate or long term local need,
The inability for most of the community to experience and learn from involvement in an innovation model, environment and program.
The use of an approach to innovation that is from the industrial era that does not meet 21st century capability needs (eg. slow, costly, not originating enough knowledge and creative economy based ideas and innovations),
The sub-optimal value the whole community gets from the innovation investment, and,
The loss of opportunity, and creative and competitive advantage.

The problem isn’t necessarily with the institutions. It is with the system that they and the NIS operates within.

Real Economic and Social Growth Happens in a Bottom Up Manner!

Most economic and social commentators would agree, that whether it is a matter of community adaptation or creativity, real economic and social impetus and development happens in a ‘bottom-up, grass-roots manner’.

Richard Florida argues that:

‘Real economic development is people-oriented, organic, and community based. While certain initiatives may help to encourage [creativity’s] emergence, and others will certainly squelch it, the development of environments cannot be planned from above.”^[1]

Add to this the fact that most innovation occurs at the point where it creates value and you have a recipe for changing the way that innovation is structures and managed.

What is required is the adoption of an integrated, interactive method, or more desirable still, a self-mobilising method by the community, using their own structures, resources and culture to guide them in consultations with governing bodies and private sector participants – in an organic, and strategic and cohesive manner.

Such a model also requires a solution to the disconnection and gap between institutional ‘policy pundits’ leveraging institutionalised R&D, and the informal ‘grassroots’ movements driven by local community knowledge.

In dynamic, fast changing environments the conventional ‘trickle down’ effect of a ‘global’ policy hopefully connecting with the ‘bubble up’ effect of local need will not provide a sound and capable approach to industry innovation or community creativity, let alone provide a substantive strategic base for success in a knowledge and creative economy – and what is to follow in the future.

The adoption of this type of strategy is reinforced in the pamphlet - The Adaptive State – Strategies for personalising the public realm (Demos 2003):

‘The choice between localism and central control is a false on. Successful reform will require greater adaptive capacity at every level’.^[1]

A more holistic, ‘whole systems’ approach that has the goal of ‘systemic creativity’ – at all levels – through optimally leveraging creativity in the entire community, must be taken that integrates national and regional creativity – open platform innovation is one approach worthy of consideration.

Open Platform Innovation

New Thinking in Innovation Systems

Early indicators and concepts of the types of innovation system models more applicable to the demands of the innovation environment of the 21st century can be drawn from the IT industries.

Annabelle Gawer and Michael A. Cusamano ‘Platform Leadership – How Intel, Microsoft, and Cisco Drive Industry Innovation’ 2002 (Harvard Business School Press), Henry Chesborough ‘Open Innovation - The New Imperative for Creating and Profiting from Technology’ 2003 (Harvard Business School Press), and Charles Leadbetter in various Demos publications, show how the IT sector has embraced open source and platform thinking when approaching innovation. Although in their early stages, and applied specifically to the IT industry, this thinking does provide insight into what may be possible in the broader innovation context.

Charles Leadbetter identified ‘promising solutions to the conundrum emerging from communities of innovation in high technology industries, the most famous of which is the Linux open source software programming unit’:

‘Linux started when Linus Torvalds, a Finnish programmer, posted the core to his proposed computer operating system on the internet, inviting other programmers to make improvements. Hundreds of programmers began to join in, proposing amendments, additions and deletions. Together they created a community of innovation, around the Linux programme, which is now so robust that it is used widely in business.

Annabelle Gawer defines a platform and outlines platform thinking (when applied to the IT industry) as:

‘A system made of inter-dependent products or components’.^[1]

‘A set of different sums that make a product. Each of them fit as a component in a larger system or larger platform’.^[1]

‘We now live in a world where many people can innovate. You don't have to be a big firm to have good ideas and be able to develop a product or distribute it with powerful software and communications over the Internet. It's very important to realize the power of innovation that can exist outside of your own turf. In an old system, people in companies that wanted to invest in innovation were very secretive about what they did so that they could reap the benefits of their own innovation. But today, if you think about it, one of the reasons you want to buy a Windows operating system is because there are so many applications that are compatible to it. The value of the product depends upon the creativity of many developers that are outside Microsoft’.^[1]

‘It increases tremendously innovation that complements what was previously written. The old school of thought about innovation was that you had to protect everything in order to prevent substitute innovation. If you protect your innovation by a patent, it becomes unlawful to come up with a substitute during the time of the patent. The idea is a fundamental insight of economics, which is that you should protect the incentives of the innovator, because it's very hard work to innovate. There's a lot of trial and error, but once you're done it's easy for someone else to imitate you. If there were no protection then the innovators would stop trying to innovate because they would not have economic benefit. This philosophy underlies our whole patent system. Now, what the Linux story uncovers in a blatant way is that there are other kinds of incentives to innovate. It shows that you can open things up and not stop innovation. It might stop competitive innovation, but it doesn't stop collaborative innovation’.^[1]

The idea of open source, platforms and innovation, when applied to ‘general’ innovation systems and in particular community innovation, provides access to a new model for organising and implementing innovation strategy – Open Platform Innovation Systems.

Open Platform Innovation Systems provide communities with a framework to embrace innovation across a variety of dimensions that allows a wide cross-section of institutions and groups to participate at a global and local level in innovation input and output. A key outcome being to allow institutional R&D, government policy makers and industry and business strategy makers to combine with local knowledge and creativity and grass roots movements in the creation of social and economic initiatives and innovation that will have direct and immediate impact.

The five key concepts and characteristics central to the idea of Open Platform Innovation are found in how the innovating entities organise themselves, the type of innovation strategy formulated, how innovation is deployed, who owns the intellectual property, and what outcomes are possible.

How Open Platforms Organise Themselves

The first characteristic of Platform Innovation relates to how innovating entities organise themselves. From an organisational perspective, Platforms recognise that:

Closed innovation systems tend to treat the community as ‘silos’ of activity, and have very weak or no connection to the individual elements of the community.
Closed innovation systems have a bias toward creating their own need for research, or take their instructions from the macro view of institutional policy makers with limited reference to the broader community.

Hence the innovation experience, the skills and knowledge developed, the creative input and output are only available to a limited closed group – and contribute little to the creative consciousness, experience and capability of the broader community.
The utilisation of the piece of creative work is also left to the ‘trickle down’ effect to integrate into the wider creative community. It also tends to be fortuitous if the ‘bubble up’ of grass roots need meets and is integrated into such ‘trickle down’.
Added to this is that the focus of most closed innovation is on one area of outcome. A single objective that responds to perhaps funding or policy requirements. Whether the innovation is proven and applied or not, the closed system may not provide for consideration of the unlimited potential of spin-off ideas that maybe aren’t part of the researchers direct brief, but may be of interest to other creative agents in the community. A very costly, but also creative example of this is the huge amount of innovation (the computer GUI, the mouse etc) that was designed in Xerox PARC, but only got out to the private sector and the community through the creativity of the researchers who left Xerox, as the innovations didn’t meet the strategy requirements of Xerox at the time.
The relative diversity of stakeholders in most closed systems is very, if not extremely, limited. At times it is lucky if it includes customers, let alone a broader church of key stakeholders – especially including those who must be involved in a ‘whole of life journey from idea to end-user’. Key stakeholders like customers, intermediaries, funding sources, governance agencies and value adding product and service providers are rarely involved in the innovation process from the start. They are generally bundled into the ‘brick wall’ that innovation must break through on the way to market, and eventual profit, jobs and decent incomes.
The question of what areas of innovation should be the focus provides another problem for closed systems. Generally speaking they focus on the ideas of government agencies, academia, R&D institutions or corporate head offices -usually removed from the real ‘cut and thrust’ of economic, social, or business action. Or they emerge from the demands of large corporations or NGO’s with a specific personal bias to pursue. Very few times are ideas taken from a diverse and complex cluster of interdependent organisations (at the coalface) comprising small and large business, industry associations, community groups, etc who have specific problems demanding innovation, that they don’t have the knowledge or resources to fix – a critical problem given the role they play economically and socially! It is little wonder why these groups are so cynical about the benefit that most institutional R&D really delivers to communities.
Innovation that can be designed and deployed in time with changing environments doesn’t come from a place; it comes from the creativity of a wide and varied group of individuals and groups – especially those close to the point of the problem, opportunity and deployment.
An open system of innovation that invites participants in to contribute to a central core of ideas is more effective creatively, more able to leverage capability, and can contribute more to communities than a closed system that tries to do it all, and own it all.
From a whole of life journey from idea to end user the real cost of innovation may be higher in closed systems compared to open systems as the cost and benefit is usually bared by a few. And given the limited reach of the innovation experience and consequent knowledge development, and loss of spin-off, does not provide optimal return on investment fro the broader community. Closed systems by their nature also load the back-end of the journey to market with the real cost of intervention into markets – the cost of commercialisation and market entry. This loading at the back end also dramatically increases the risk that the innovation will not make it through the perils of market intervention and entry.
Closed systems commence the innovation journey with a bias toward a ‘prescriptive possibility’. That is a specific problem to solve or opportunity to create – and through a process of research, reduction and development they find THE solutions. Whilst open innovation may have the same or similar beginnings, inherent in the entire process is the questioning of what is possible, by a range of participants and agendas – the outcome being the application of a richer creative pool of thought, a more diverse range of contexts bought to bare on what is possible, and ultimately, a far greater potential for high leverage spin-offs.
Real community innovation thrives on ‘leakage to market’. Closed systems are usually ‘well sealed’ pipes that ‘do little to water or rain on the community garden’. As proven by Linux, Open Platforms have the potential to create a ‘storm’ across global communities!
Closed Innovation relies on push to market to gain entry. The bias of Open Platform Innovation is on market pull from the diverse range of Platform stakeholders.
Open Platform thinking organises the community as a network of nodes or entities (organisations, groups, individuals), all connected, and all dependent upon each other for the collective capability of the whole system, and critically, to the input and output of their creativity.
Open Platforms include all key community capability and creative catalysts including R&D organisations, industry, corporations, SME’s, government, education, VET, financial resources and community groups.
Openness provides the stakeholders and capability; and the Platform Innovation binds the community stakeholders together in pursuing common and individual goals.

The Platform, as discussed later, comprises the ‘kernel’ of strategy, measures, standards, IP ownership rules & contracts.
Open Platforms may be created from within organisations or community groups who recognise that broader good is not created by single individuals, teams, departments or organisations, or private and public sector acting alone, but through forming alliances for change, which mobilise local partners, constituents, and community groups. In doing so they create a platform on which other players can add their own complementary creative investment, and gain their own rewards.
Government services, education institutions, R&D organisations, individual businesses, or clusters may instigate platforms.
Platforms may also emerge in the form of think tanks and foresight groups as a way of pursuing early stage new ideas..
Platforms are a form of plexus. The term plexus refers to structure in the form of a network. The ability for a community to manage the plexus of innovation platforms that may exist in the overall community plexus will play a major part in how well the community deploys and owns its creativity.

As Charles Leadbetter notes, Linux represents a new model for open, networked innovation:

‘Open communities of innovation like Linux seem to combine many ingredients that are traditionally kept separate, or at least prove difficult to combine. There is healthy competition within community but also cooperation and sharing; it thrives on masses of individual initiative but is founded on a public good. The open source code left on the Internet; the community is highly distributed and virtual, yet hierarchical, with a single authority at its heart. As a result, decentralised efforts at innovation are also integrated at the core. A cacophony of localised innovation cumulates to create system-wide change’.

The Type of Strategy Formulated within an Open Platform

The second characteristic of Platform Innovation relates to the type of strategy formulated within a platform.

Platform innovation strategy is formulated in an inclusive manner that allows a core of key stakeholders to engage in the process of strategy formulation. Within this interaction, feed-in and feedback occurs in a dynamic manner that accounts for a variety of views consistent with the needs of the platform being created. For instance, if a training institution were instigating an innovation platform for an industry it would include a variety of stakeholders both within the industry, and also other entities that the industry is dependent on. For example if they were instigating an open innovation platform for the energy industry, they would include other stakeholders like transport, local and state government, and the environmental movement.

In developing innovation strategy the Platform stakeholders own and are responsible for creating the central ‘kernel’ of the strategy – the key elements of the innovation strategy – for example the environmental analysis, direction setting, capability focus and strategic priorities. They are also responsible for the standards and measures on which the strategy will be developed and judged. The strategy is designed to act as an umbrella for the creation of strategic modules that allow the broader platform stakeholders (industry, business, government, education and training, and community groups) to align with and integrate into their strategies and to work in ‘concert’ with the platform strategy.

Critically the key platform stakeholders create the platform IP ownership rules, and negotiate compliance to the rules with all other parties involved in the platform. The IP ownership issue is covered in more detail later.

The approach by the technology industries to open source and platform innovation strategy is very useful. As Leadbetter once again notes:

Linux represents a new model for open, networked innovation, which combines three ingredients:
Modularity
The programme could be broken down into sub-systems, so that innovators could focus on particular modules without having to change the entire system. That allowed multiple and parallel efforts at innovation to take place simultaneously.
Open Standards
Torvalds set clear standards against which proposed innovation could be judged. The source code for the programme was left open for innovators to examine and modify. This meant that information could be readily shared among many developers, but their efforts could be fairly judged against a publicly visible yardstick.
Central design authority
Torvalds kept control of the kernel of the Linux programme and was the final arbiter of changes to the kernel. The community had an authorative leader.

How is Open Platform Innovation Strategy Deployed?

The third characteristic of Open Platform Innovation relates to how innovation strategy is deployed.

Once the kernel or umbrella strategy is complete, the strategy is taken out to a broader group of potential platform stakeholders for their input and feedback. An inclusive approach is used to gain their engagement, alignment and commitment to the strategy. It is also at this time that modifications may be made to the strategy to include specific needs of the broader group. The objective is to have commitment that shows up in action by all parties, and not words alone.

In particular, the group must commit to the strategic modules designed for specific group involvement.

Once commitment is achieved, the innovation strategy is deployed.

The following diagrams explain the key difference between closed system strategy deployment and open platform innovation deployment.

In a closed innovation system the whole of life journey to market is biased to being linear and highly ‘sealed’ allowing little leakage of input and output – with generally no strategic leakage.

The source of strategy is of a single view provided by government, corporate or academic R&D policy. Relatively speaking little input is taken from the overall range of whole of life stakeholders, and there may be no or only small windows for them to integrate the strategy into their strategies.

Ideas and innovations - represented initially as red in early conception, growing through orange to end product green - happen as a matter of closed input from the organising institution or institutions.

The end output then has to ‘squeeze’ through a series of hurdles (existing attitudes, investments, standards, pre-conceptions) to then push itself on its end-user market.

Value is created across a lineal series of steps, and realised at the completion of the journey.

Market intervention feedback may also be late in the innovation investment cycle, and may be weak, as the market has not been involved in the journey, do not understand the innovation and have little commitment or ownership of it.

Open Platforms operate through non-linear behaviour and have a high amount of ‘strategic leakage’ from the central innovation theme through the range of stakeholders who are involved in the platform. From the outset a diverse range of creative agents have been involved and bought into the strategy investing their time and resources in ‘pulling’ something out of it for themselves.

The Open Platform strategy is deployed with a central strategy and a range of strategic modules that allow broader stakeholders to have a direct and practical involvement.

Ideas are shared, and as it is open, stakeholders can contribute, invest in or take equity in a broad range of innovations. The core stakeholders achieve what they want, and can also play a part in spin-off innovation. In fact, entrepreneurial approaches throughout the process are encouraged – anything that will further the platform, the strategy and innovation is ok.

The stakeholders that drive the innovation are committed to pull it through to market – hence lowering the risk and cost of deployment.

Feedback is potentially instantaneous, as is the potential for utilisation of the experience and new knowledge.

There is also a significantly higher probability for spin-off ideas and innovations to flow from the cumulative platform investment.

As a principle of innovation, real innovation occurs where it is most valued, or value is created and realised. Value inside Open Platform Innovation is dynamic and potentially created across a lateral range of actions, and realised over multiple paths and points on the journey.

Who Owns the Intellectual Property (IP)?

The fourth characteristic - who owns the intellectual property – is obviously a highly critical and contentious area. Like all business models in the knowledge and creative economy the IP ownership rules are not as yet set in clay. The paradigm is new, and unlike the industrial economy the rules are still catching up with the innovation.

Having said this, most open source or platform innovation is based on three types of IP arrangements: free to use, shared use amongst a community, or owned and accessed through rights, licences, partnering agreements and contracts.

Much like any industrial innovation, those involved in the Platform establish the IP rules. In the case of a Platform instigated by a corporation, the kernel IP may be owned and protected by the corporation with other stakeholders given certain rights to access and develop from that IP. Where a Government body instigates the Platform, the IP may be owned by the State and open access given to all whom the State believes could provide a benefit to the community through accessing the platform and IP.

What Outcomes are Possible?

‘Boiled down’, the primary ‘end game’ of innovation is either one of, a combination of, or the synergy of six primary factors:

Raising the creative temperature: Increasing the creative capability of a community to innovate for change to create or meet shifts in conditions – as a teaching and learning process that increases the ‘creative temperature’ of communities,
Exploring possibility: Stretching the boundaries of the practical and the possible through enquiring into and discovering ‘what is possible’? – in a way that creates opportunity and solves problems,
People, product, service, process or capability improvement: Improving or creating new and novelle people, capabilities, things and ways of operating,
People and community development: Shifting paradigms – as a way of teaching and learning for changing habits, rules, cultures, and social and economic norms, states and social identities,
Proliferation: Spreading ideas, capabilities, processes, products, services or people – as way of achieving fastest to market’, or best still – ‘immediacy to market demand’ – by matching the innovation with what markets value, in a timely manner, and last but not least,
Equity and prosperity: Ensuring all stakeholders achieve a’ win win’ outcome – as a way of growing and sharing social and economic wealth – improving livelihood and lifestyle of all.

From an a National Innovation System perspective, if any one of these factors is missing, or if all are not highly contributing in a synergistic manner, it may be strongly argued that the stakeholders (nation, state, R&D institutions, organization and specifically the broader community) are not getting optimum return on their investment.

On all six counts, it is hard to argue that closed systems compete well with open systems when applied to national and local innovation systems. Open Platforms are inherently designed around all six of the above outcomes. Without the deep integration of the four, it would be questionable that a system could even be called an Open Platform.

Warning: Management of Complexity and Creative Tension is Critical!

Given that open systems are complex, and there is a much larger range of creative agents involved, unique leadership and management (at the core) is also required for platforms to be successful.

Where there is a spark, expect friction!

The platform leadership and management team must adopt a new style of leadership away from industrial 20th century command and control styles. With innovation leadership comes a new open leadership style based on creating environments for creativity, balanced with creating design and development structures to ensure the innovation investment is realised. For more information on recommended approaches see the 21C Capability Paper: ‘Fourteen Principles for the Creative Workforce’.

Open Platform Innovation is an Innovation in Itself

The idea of Platform Innovation is new, and needs to be treated with an innovators creativity and caution. Early indications of results when this type of thinking is applied to the technology industries clearly shows that it has become a standard and highly effective and efficient form of innovation for the technology communities.

The fact that it is new, and that creativity and caution is required when applying it, is a huge opportunity to those communities looking for a better way of operating in the knowledge and creative economy.

A Changing Role for Institutional Policy and Strategy Makers

No Clear Answers, Creativity Required!

Though there are very firm indicators of the emerging creative economy, and some global rules and roles that policy and strategy makers should adhere to, it is far too soon to be prescriptive as to the exact role government may play. It will require policy and strategy makers themselves to be creative in serving a community’s specific needs in step with the unique set of conditions that impact at a local level.

The more global ‘rules’ tend to paint a role for policy and strategy makers that sees them shifting from doing it for the community, to becoming catalysts for community creativity through creating the space for the community to create it for itself. In doing so it will have to engage with communities and gain alignment and commitment to this new role. Such a role will also mean creative challenges for the people within these institutions to develop new capabilities, and ‘retire’ some old capabilities.

Institutional R&D

To take full advantage of the Knowledge and Creative Economies, institutionalised R&D will be required to consider new concepts such as:

Reorienting current approaches to innovation institutions.
Playing a vital role as a catalyst creator and motivator for Open Platform Innovation within government, industry, education and community.
Decentralising its innovation efforts to become part of a dynamic, creative innovation system that includes industry, education and community.
Creating an environment that inspires and unleashes knowledge and creative capability.
Identifying ways to increase support for entrepreneurial efforts that may be high risk.

Conclusions

Like knowledge economy, creative economy has emerged as a metaphor and a highly valuable lens from which to understand, gauge and create the shift in the primary means of wealth creation well into the early part of the 21st century.
Today there is a premium on creativity. We have evolved from a world where prosperity depended on natural advantage (arising from access to more plentiful and cheap natural resources and labour than other countries) to a world where prosperity depends on creative advantage, arising from being able to use creativity to innovate in areas of specialised capability more effectively than other countries.
In most of the developed world and in many developing countries the emphasis and investment in creativity, and in placing a premium on creative thinking, drivers, workers, industries, economies and communities, is growing in precedence. The evidence is very strong and growing daily of all significant and developing economies and societies making this shift. This includes the USA, the EU as a whole, Ireland, China, Taiwan, India, Canada, New Zealand, and Australia to name a few.
In recent times a lot of countries have not exhibited a similar track record in this area evidenced by their slow pace to adopt and implement knowledge economy strategies, its low priority on embracing creative economy thinking, and the ‘leakage’ of creative industries and talent to other countries.
To escape the consequences of dwelling on past successes of the industrial economy, and to leverage the opportunity of the creative economy and beyond, requires communities to raise their standards of creative thinking, process and output.
Many organisations and governments have begun this process through increased investment and focus on innovation.
One strategy to achieve this has been the introduction of innovation systems into mainstream innovation strategy – in particular the National Innovation System.
A systems approach to creativity and innovation is an emerging theme and recommendation within key elements of the creativity movement.
A systems approach to creativity and innovation is not new.
The Innovation Systems Research Network (ISRN) in Canada provides a concise approach to the utilisation of complex systems thinking as applied to innovation systems. Embedded in the ISRN approach are some key principles that ensures that innovation system thinking provides a robust model for national and regional creativity:
1. Innovation Systems focus on a diverse range of outputs
2. Optimal innovation outputs are dependent upon the inclusion of a diverse range of ‘creative agents’ at an economic, cultural and social level – a ‘whole community ‘ approach
3. Localisation is as critical as globalisation
4. A purely centralized approach to innovation will not create optimal results
The current approach to many innovation systems is not producing optimal results – especially in regard to assisting and preparing for the knowledge and creative economy.
The key reason for this is that most innovation systems are not approached from a complex adaptive systems view.
Conventional innovation systems tend to be:
- Too hierarchically driven from the top by institutional policy makers and formal R&D institutions
- Doing little to embrace local grass roots movements and local creativity and knowledge
- Disconnected from matching global and local needs – especially in regard to the knowledge and creative economy
- Not returning optimal return on investment
This is very disturbing when taking into account that the amount of innovation in the local community at an informal grass roots manner relative to the total innovation in most communities is far higher than that performed through formal R&D policy in R&D institutions. And, when understanding that real economic and social growth is driven from the bottom up.
What is required is the adoption of an integrated, interactive method, or more desirable still, a self-mobilising method by the community, using their own structures, resources and culture to guide them in consultations with governing bodies and private sector participants – in an organic, and strategic and cohesive manner.
A more holistic, ‘whole systems’ approach that has the goal of ‘systemic creativity’ – at all levels – through optimally leveraging creativity in the entire community, must be taken that integrates national and regional creativity.
One way of approaching a more holistic, ‘whole systems’ approach is through the adoption of Open Platform Innovation. Open Platform Innovation provides the potential for new and more effective and efficient ways for industry, government and community to take a more ‘holistic’ and meaningful approach to innovation.
The idea of Open Source and Platforms is new, and needs to be treated with an innovators creativity and caution. Early indications of results when this type of thinking is applied to the technology industries clearly shows that it has become a standard and highly effective and efficient form of innovation for the technology communities.
The fact that it is new, and that creativity and caution is required when applying it, is a huge opportunity to those communities looking for a better way of operating in the knowledge and creative economy.
Inherent in Open Platform Innovation are six primary factors which determine the possible outcomes it application looks to achieve:

Raising the creative temperature: Increasing the creative capability of a community to innovate for change to create or meet shifts in conditions – as a teaching and learning process that increases the ‘creative temperature’ of communities,
Exploring possibility: Stretching the boundaries of the practical and the possible through enquiring into and discovering ‘what is possible’? – in a way that creates opportunity and solves problems,
People, product, service, process or capability improvement: Improving or creating new and novelle people, capabilities, things and ways of operating,
People and community development: Shifting paradigms – as a way of teaching and learning for changing habits, rules, cultures, and social and economic norms, states and social identities,
Proliferation: Spreading ideas, capabilities, processes, products, services or people – as way of achieving fastest to market’, or best still – ‘immediacy to market demand’ – by matching the innovation with what markets value, in a timely manner, and last but not least,
Equity and prosperity: Ensuring all stakeholders achieve a’ win win’ outcome – as a way of growing and sharing social and economic wealth – improving livelihood and lifestyle of all.

To take full advantage of the Knowledge and Creative Economies, institutionalised R&D will be required to consider new concepts such as:
- Reorienting current approaches to innovation institutions.
- Playing a vital role as a catalyst creator and motivator for Open Platform Innovation within government, industry, education and community.
- Decentralising its innovation efforts to become part of a dynamic, creative innovation system that includes industry, education and community.
- Creating an environment that inspires and unleashes knowledge and creative capability.
- Identifying ways to increase support for entrepreneurial efforts that may be high risk.