Building External Innovation Networks

In the following blog post from June 24, 2009 in Knowledge@Wharton, the author says enterprises should look outside for innovation via networks. The following warning for why external networks fail is also pertinent to why Advisory Boards for emerging media companies often fail: The founders do not listen to the advisors, spending too much effort on their core beliefs:

'Despite their importance, alliances between companies only succeed about 40% of the time, said Wharton management professor Harbir Singh, a conference organizer and Mack Center co-director. "Why is the success rate not higher?" Singh asked. "How do we improve performance above 40%?"

Organizations grapple with how to build external networks -- what Singh calls "the extended enterprise" -- without shifting too much focus away from the core needs of the firm. "In order to be successful in the extended enterprise world, you have to invest in alliances and network capabilities," Singh said. "But from a 'focused firm' approach, you would say that alliance and network capability is secondary to the core focus of the firm.... Really, what it comes down to is the tension between creating shared resources versus protecting one's own resources."

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