Chapter 4

Network

How You Connect with Others to Create Value

In today’s hyper-connected world, no company can or should do everything alone. Network innovations provide a way for firms to take advantage of other companies’ processes, technologies, offerings, channels, and brands—pretty much any and every component of a business. These innovations mean a firm can capitalize on its own strengths while harnessing the capabilities and assets of others. Network innovations also help executives to share risk in developing new offers and ventures. These collaborations can be brief or enduring, and they can be formed between close allies or even staunch competitors.

Open innovation approaches such as prizes or crowdsourcing are particularly emblematic of how interconnected we all are today, and have helped companies to enlist a chosen few or the entire world in solving difficult challenges—from moving low earth orbit space flight into the private sector, or to “automagically” recommending the perfect movie.1 Other examples of Network innovation include creating secondary markets to connect with alternative consumers, or building franchises to license proprietary company thinking, capabilities, and content to paying partners.

Network innovations are not about internal or IT networks; we use the term here to signify external relationships, partnerships, consortia, and affiliations.

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