Organizing Continuous Product Development and Commercialization: The Collaborative Community of Firms Model

The increased importance of knowledge creation and use to firms’ global competitiveness has spawned considerable experimentation with organizational designs for product development and commercialization over the last three decades. This paper discusses innovation-related organizational design developments during this period, showing how firms have moved from stand-alone organizations to multifirm network organizations to community-based organizational designs. The collaborative community of firms model, the most recent organizational design in this evolutionary process, is described in detail. Blade.org, a purposefully designed collaborative community of firms dedicated to the continuous development and commercialization of blade servers, a computer technology with large but unforeseeable market potential, is used as an illustrative case. Blade.org’s organizational design combines a community ‘‘commons’’ for the collective development and sharing of knowledge among member firms with explicit institutional mechanisms for the support of direct intermember collaboration. These design elements are used to overcome the challenges associated with (1) concurrent technological and market experimentation and (2) the dynamic coordination of a complex emergent system of hardware, software, and services provided by otherwise independent firms. To date, Blade.org has developed more than 60 new products, providing strong evidence of the innovation prowess of the collaborative community of firms organizational model. Based on an analysis of the evolution of organizational designs and the case of Blade.org, implications for innovation management theory and practice are derived.

[1]  James D. Thompson.  Organizations in Action , 1967 .

[2]  Mark S. Granovetter.  The Strength of Weak Ties , 1973, American Journal of Sociology.

[3]  H. Demsetz,et al.  Production, Information Costs, and Economic Organization , 1975, IEEE Engineering Management Review.

[4]  M. C. Jensen,et al.  Harvard Business School; SSRN; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Harvard University - Accounting & Control Unit , 1976 .

[5]  R E Miles,et al.  Organizational strategy, structure, and process. , 1978, Academy of management review. Academy of Management.

[6]  R. H. Waterman,et al.  In Search of Excellence , 1983 .

[7]  K. Provan.  The Federation as an Interorganizational Linkage Network , 1983 .

[8]  D. Hambrick.  Some tests of the effectiveness and functional attributes of Miles and Snow's strategic types. , 1983, Academy of Management journal. Academy of Management.

[9]  R. E. Miles,et al.  Fit, Failure and the Hall of Fame , 1984 .

[10]  Mark S. Granovetter.  Economic Action and Social Structure: The Problem of Embeddedness , 1985, American Journal of Sociology.

[11]  O. Williamson.  The economic institutions of capitalism , 1985 .

[12]  W. Diebold,et al.  The Second Industrial Divide , 1985 .

[13]  H. Thorelli.  Networks: Between Markets and Hierarchies , 1986 .

[14]  R. E. Miles,et al.  Organizations: New Concepts for New Forms , 1986 .

[15]  W. Brian Arthur,et al.  Path-dependent processes and the emergence of macro-structure , 1987 .

[16]  W. Dugger.  The Economic Institutions of Capitalism , 1987 .

[17]  Kathleen M. Eisenhardt,et al.  Making Fast Strategic Decisions In High-Velocity Environments , 1989 .

[18]  C. Handy.  The age of unreason , 1989 .

[19]  S. Shortell,et al.  Changing generic strategies: Likelihood, direction, and performance implications , 1989 .

[20]  Paul R. Milgrom,et al.  The role of institutions in the revival of trade: the law merchant , 1990 .

[21]  Shaker A. Zahra,et al.  Research Evidence On The Miles-Snow Typology , 1990 .

[22]  M. Porter,et al.  The Competitive Advantage of Nations. , 1990 .

[23]  J. Brown,et al.  Organizational Learning and Communities-of-Practice: Toward a Unified View of Working, Learning, and Innovation , 1991 .

[24]  Geoffrey A. Moore,et al.  Crossing the Chasm , 1991 .

[25]  Etienne Wenger,et al.  Situated Learning: Legitimate Peripheral Participation , 1991 .

[26]  E. Hippel,et al.  FROM EXPERIENCE: Developing New Product Concepts Via the Lead User Method: A Case Study in a “Low-Tech” Field , 1992 .

[27]  Terry Winograd,et al.  Usability - Turning Technologies into Tools , 1992 .

[28]  R. Hinde,et al.  Governing the Commons: The Evolution of Institutions for Governing the Commons: The Evolution of Institutions for Collective Action Collective Action , 2010 .

[29]  Steven B. Andrews,et al.  Structural Holes: The Social Structure of Competition , 1995, The SAGE Encyclopedia of Research Design.

[30]  Mark P. Sharfman,et al.  Industry variety and performance , 1993 .

[31]  J. Hagedoorn.  Understanding the rationale of strategic technology partnering: Nterorganizational modes of cooperation and sectoral differences , 1993 .

[32]  William E. Halal,et al.  Internal Markets: Bringing the Power of Free Enterprise Inside Your Organization , 1993 .

[33]  Michael Burda,et al.  Revolutionizing product development , 1993 .

[34]  G. Brady.  Governing the Commons: The Evolution of Institutions for Collective Action , 1993 .

[35]  A. Chandler,et al.  Regional Advantage: Culture and Competition in Silicon Valley and Route 128 , 1994 .

[36]  Charles C. Snow,et al.  Fit, failure, and the hall of fame : how companies succeed or fail , 1994 .

[37]  John C. Narver,et al.  Market Orientation and the Learning Organization , 1995 .

[38]  I. Cockburn,et al.  Scale, scope, and spillovers: the determinants of research productivity in drug discovery. , 1996, The Rand journal of economics.

[39]  M. Tushman,et al.  Ambidextrous Organizations: Managing Evolutionary and Revolutionary Change , 1996 .

[40]  W. Powell,et al.  Interorganizational Collaboration and the Locus of Innovation: Networks of Learning in Biotechnology. , 1996 .

[41]  B. Uzzi,et al.  Social Structure and Competition in Interfirm Networks: The Paradox of Embeddedness , 1997 .

[42]  D. Teece,et al.  DYNAMIC CAPABILITIES AND STRATEGIC MANAGEMENT , 1997 .

[43]  Øystein D. Fjeldstad,et al.  CONFIGURING VALUE FOR COMPETITIVE ADVANTAGE: ON CHAINS, SHOPS, AND NETWORKS , 1998 .

[44]  M. Porter.  Clusters and the new economics of competition. , 1998, Harvard business review.

[45]  Etienne Wenger,et al.  Communities of Practice: Learning, Meaning, and Identity , 1998 .

[46]  Kathryn Graziano.  The innovator's dilemma: When new technologies cause great firms to fail , 1998 .

[47]  E. Wenger.  Communities of Practice: Learning, Meaning, and Identity , 1998 .

[48]  Morten T. Hansen,et al.  The Search-Transfer Problem: The Role of Weak Ties in Sharing Knowledge across Organization Subunits , 1999 .

[49]  Kathleen M. Eisenhardt,et al.  DYNAMIC CAPABILITIES, WHAT ARE THEY? , 2000 .

[50]  Josh Lerner,et al.  The Simple Economics of Open Source , 2000 .

[51]  Øystein D. Fjeldstad,et al.  Linking intangible resources and competition , 2000 .

[52]  K. Provan,et al.  Legitimacy Building in the Evolution of Small-Firm Multilateral Networks: A Comparative Study of Success and Demise , 2000 .

[53]  Eric A. von Hippel,et al.  How Open Source Software Works: 'Free' User-to-User Assistance? , 2000 .

[54]  B. Kogut,et al.  Open-source Software Development and Distributed Innovation , 2001 .

[55]  Gary L. Lilien,et al.  Performance Assessment of the Lead User Idea-Generation Process for New Product Development , 2002, Manag. Sci..

[56]  Morten T. Hansen,et al.  Knowledge Networks: Explaining Effective Knowledge Sharing in Multiunit Companies , 2002 .

[57]  A. Bonaccorsi,et al.  Why Open Source Software Can Succeed , 2002 .

[58]  Maryann Feldman,et al.  Small-Firm Strategic Research Partnerships: The Case of Biotechnology , 2003, Technol. Anal. Strateg. Manag..

[59]  Michael E. Raynor,et al.  The Innovator's Solution: Creating and Sustaining Successful Growth , 2003 .

[60]  Karim R. Lakhani,et al.  Community, Joining, and Specialization in Open Source Software Innovation: A Case Study , 2003 .

[61]  Robert E. Cole,et al.  From a Firm-Based to a Community-Based Model of Knowledge Creation: The Case of the Linux Kernel Development , 2003, Organ. Sci..

[62]  Joel West,et al.  How open is open enough?: Melding proprietary and open source platform strategies , 2003 .

[63]  D. Harhoff,et al.  Profiting from Voluntary Information Spillovers: How Users Benefit by Freely Revealing Their Innovations , 2003 .

[64]  Thomas A. Hemphill,et al.  Strategic Research Partnerships: A Managerial Perspective , 2003, Technol. Anal. Strateg. Manag..

[65]  Sonali K. Shah,et al.  How Communities Support Innovative Activities: An Exploration of Assistance and Sharing Among End-Users , 2003 .

[66]  Georg von Krogh,et al.  Open Source Software and the "Private-Collective" Innovation Model: Issues for Organization Science , 2003, Organ. Sci..

[67]  Zi-Lin He,et al.  Exploration vs. Exploitation: An Empirical Test of the Ambidexterity Hypothesis , 2004, Organ. Sci..

[68]  Andrew D. Henderson,et al.  Selection-Based Learning: The Coevolution of Internal and External Selection in High-Velocity Environments , 2004 .

[69]  J. Marshall.  Open Innovation: The New Imperative for Creating and Profiting from Technology , 2004 .

[70]  W. DeSarbo,et al.  Revisiting the Miles and Snow Strategic Framework: Uncovering Interrelationships between Strategic Types, Capabilities, Environmental Uncertainty, and Firm Performance , 2005 .

[71]  Charles C. Snow,et al.  Collaborative Entrepreneurship: How Communities of Networked Firms Use Continuous Innovation to Create Economic Wealth , 2005 .

[72]  Joel West,et al.  Contrasting Community Building in Sponsored and Community Founded Open Source Projects , 2005, Proceedings of the 38th Annual Hawaii International Conference on System Sciences.

[73]  B. Uzzi,et al.  Collaboration and Creativity: The Small World Problem1 , 2005, American Journal of Sociology.

[74]  Eric M. Olson,et al.  The Performance Implications of Fit among Business Strategy, Marketing Organization Structure, and Strategic Behavior , 2005 .

[75]  Linus Dahlander,et al.  Relationships Between Open Source Software Companies and Communities: Observations from Nordic Firms , 2005 .

[76]  P. Klemperer,et al.  Coordination and Lock-In: Competition with Switching Costs and Network Effects , 2006 .

[77]  Jeffrey H. Dyer,et al.  Relation‐specific capabilities and barriers to knowledge transfers: creating advantage through network relationships , 2006 .

[78]  J. Henkel.  Selective revealing in open innovation processes: the case of embedded Linux (gekürzte Version) , 2006 .

[79]  A. Geuna,et al.  Factors affecting university-industry R&D projects: The importance of searching, screening and signalling , 2006 .

[80]  Eric M. Olson,et al.  The moderating influence of strategic orientation on the strategy formation capability–performance relationship , 2006 .

[81]  Rebecca Henderson.  The Innovator's Dilemma as a Problem of Organizational Competence , 2006 .

[82]  Carliss Y. Baldwin,et al.  How User Innovations Become Commercial Products: A Theoretical Investigation and Case Study , 2006 .

[83]  Richard DeMartino,et al.  Organizing for Radical Innovation: An Exploratory Study of the Structural Aspects of RI Management Systems in Large Established Firms, Journal of Product , 2006 .

[84]  Jakki J. Mohr,et al.  Successful Development and Commercialization of Technological Innovation: Insights Based on Strategy Type , 2006 .

[85]  H. Chesbrough.  Open Business Models: How to Thrive in the New Innovation Landscape , 2006 .

[86]  Daniel A. Levinthal,et al.  Exploration and Exploitation in Organizational Learning , 2007 .

[87]  B. Hattingh.  The competitive advantage , 2007 .

[88]  G. Duysters,et al.  Networking as a Means to Strategy Change: The Case of Open Innovation in Mobile Telephony , 2007 .

[89]  J. Füller,et al.  Innovation creation by online basketball communities , 2007 .

[90]  Beth A. Bechky,et al.  The Emergence of Governance in an Open Source Community , 2007 .

[91]  L. Jeppesen,et al.  The Value of Openness in Scientific Problem Solving , 2007 .

[92]  J. West,et al.  Open innovation : researching a new paradigm , 2008 .

[93]  Arindam K. Bhattacharya,et al.  Cómo las empresas locales mantienen a raya a las multinacionales , 2008 .

[94]  M. Wright,et al.  Research and Technology Commercialization , 2008 .

[95]  Bruce Tether,et al.  Beyond industry–university links: Sourcing knowledge for innovation from consultants, private research organisations and the public science-base , 2008 .

[96]  Daren C. Brabham.  Crowdsourcing as a Model for Problem Solving , 2008 .

[97]  G. Pisano.  Which kind of collaboration is right for you , 2009 .

[98]  Yi Xu,et al.  Innovation Contests, Open Innovation, and Multiagent Problem Solving , 2008, Manag. Sci..

[99]  E. Ostrom.  A General Framework for Analyzing Sustainability of Social-Ecological Systems , 2009, Science.

[100]  Julian Birkinshaw,et al.  Organizational Ambidexterity: Balancing Exploitation and Exploration for Sustained Performance , 2009, Organ. Sci..

[101]  R. E. Miles,et al.  The I-Form Organization , 2009 .

[102]  R. Coff,et al.  Both Market and Hierarchy: An Incentive-System Theory of Hybrid Governance Forms , 2009 .

[103]  Ben Lowe.  Design Driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean , 2010 .

[104]  Sara Lindblom,et al.  Co Opetition , 2010 .

[105]  Christoph Hienerth,et al.  Exploring How Peer Communities Enable Lead User Innovations to Become Standard Equipment in the Industry: Community Pull Effects , 2011 .

[106]  D. North.  Competing Technologies , Increasing Returns , and Lock-In by Historical Events , 1994 .