THE DYNAMICS OF GAMES OF INNOVATION

Abstract

Many executives see innovation as an unmanageable process, riddled with risks. The research we conducted with the Industrial Research Institute, interviewing over 200 vice-presidents of research and development and chief technical officers in many sectors around the world, yields a more nuanced view. Innovation becomes manageable once managers move away from normative prescriptions that view the process as uniform and recognise that different rules and practices apply to different circumstances.Our argument is that clusters of interdependent firms contributing to the building of a set of interacting products and services tend to self-organise themselves into distinct and relatively persistent "games of innovation". Such games operate at a meso level of analysis, grouping together many complementary agents, such as competitors, suppliers, public regulators, universities, innovation-support agencies, and venture capitalists. Six games of innovation, each with a distinct set of rules for innovating, have been identified around value-creation exchanges between buyers and sellers. Three games focus on market creation: "patent-driven discovery", "systems integration" and "platform orchestration". Market maintenance games are "cost-based competition", "systems extension and engineering" and "customised mass production".The perspective proposed in this paper recognises that heterogeneous innovation patterns and strategies can coexist within a single industrial sector and that the same game can be played in many sectors. Specific conditions call for distinct rules and practices. Customer expectations, for example, are central in some games but almost irrelevant in others. Rules for managing innovation are neither generic best practices that can be applied universally nor narrow industry recipes. They are game- and role-specific ways to create and capture market value.