Portfolio of Relationships as a Differentiating Asset

Written by admin on October 25th, 2011

Value creation is derived from value chain disruption. If you don’t build strategic relationships to disrupt your value chain, someone else will. As such, adaptive innovation can be characterized as a series of logical processes and critical relationships often interdependent on one another. These sequential processes are:

Seeding – market research and conceptualizing often far-fetched ideas
Prioritization – selective decision process
Product Development and Product Road Map
Commercialization – Adapting, bridging, and aligning with those dynamic customer demands

These are links in a value chain. And for adaptive innovation to work, these must be flawlessly incorporated and deliver a very high level of reliable performance over time. Relationship-centric DNA focuses heavily on not just the passing of the baton between those vital stages, but being able to do so without knowledge drain.

An organization’s relationship-centric DNA mitigates market risks and additionally hones on organization’s capabilities in project prioritization and subsequently commercialization. This is ideally coupled with a sharp understanding of not only what its customers want, but also what they need.

Adaptive innovation can also greatly benefit from co-opetition, where promising ideas are mutually developed and advanced through a consortium. Agility, systematic seeding, and broad-based involvement, including that of the senior leaders, in the conceptualization and further refinement of new ideas, are other critical characteristics we’ve seen in this area.

Portfolio of Relationships as a Differentiating Asset

Another fundamental enabler to relationship-centric innovation is the critical yet often missed notion of location.

Face-to-face is still critical for the effective exchange of ideas, and nowhere is this exchange more valuable for technology companies than in Silicon Valley. A professor of the Graduate School of Business at Stanford University, argues that geography absolutely matters and that technology ideas with their genesis in Silicon Valley have an exponential advantage over those brought to market elsewhere.

Have you ever wondered why some of the most successful VC firms that often back some of the most compelling ideas are often obsessed with the 50-mile radius between San Jose and San Francisco? On a quarterly basis, PricewaterhouseCoopers releases its MoneyTree Report, which consistently points to over 25 percent of all venture investments in the United States going to Silicon Valley ideas and ventures.

Strong portfolios of relationships create a highly differentiating asset in this scenario based on two fundamental factors: 1) mover advantage and 2) a noticeably higher return on any of these investments. Some of your best future employees are friends of your current employees. As such, their personal relationships outside of work become a huge determining factor in where they choose to work. And besides, who wouldn’t want to work for a rock star company like Intel, Apple, or Google (all of which are within a 50-mile radius of San Francisco and San Jose)?

An assistant professor of management at the Franklin P. Purdue School of Business at Salisbury University has studied the rise of Silicon Valley. In his research, he points to the fact that venture capital attracts a lot of ideas, which in turn attract a stronger portfolio of relationships. This genesis of an ecosystem fascinates newcomers who are plugged into existing relationships of seasoned professionals, which allows the right teams to assemble great technology ideas much more quickly than anywhere else in the country. They understand, embrace, and apply adaptive innovation at a much faster rate. They test ideas, fail, learn, reinvent, repurpose, and reintroduce groundbreaking approaches much faster than anyone else in the world.

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