Competition, cooperation and learning: the new dynamics of strategy and organisation design for the innovation net

The proliferation of breakthrough technologies and innovations among many industries has spurred the formulation of new types of competitive strategies and imperatives to learn new sources of competitive advantage. It is increasingly the case that the rising costs and risks of innovation make it increasingly difficult for any firm to undertake this knowledge-intensive endeavour completely on its own. As firms move towards establishing closer relationships with their suppliers, partners, and even their competitors, a new paradigm of strategy, value creation, and organisation design appears to be emerging. In this paper, we propose and define the concept of an 'innovation net,' whereby competition is based on creating new product architectures and technological platforms that often transcend the boundaries of any given industry. Within the innovation net, firms are becoming increasingly specialised in their value-creation activities, and yet simultaneously interdependent on other economic entities to shape the underlying value proposition offered to customers. Competitive advantage in the innovation net is based on learning and absorbing new sources of knowledge, no matter where they may emanate. A focus on modularity, cultivation of tacit knowledge, and learning alliances provides the key organisational design drivers that sustain competitive advantage.