Chapter 13

Transformation Is a Game We Can’t

Play Alone: Diversity and Co-creation
as Key to Thriving Innovation
Ecosystems

Pauliina Mattila, Boris Eisenbart, Anita Kocsis, Charles Ranscombe

and Tiina Tuulos

Abstract Innovation ecosystems and their prosperity have drawn increasing

interest in research and practice. Through a literature review, diversity in terms of the
types of collaborators and the nature of interactions are identified as key ingredients
for innovation ecosystems to thrive. Co-creation practices and culture help coping
with inherent, added complexities in the collaboration among actors and create more
sustainable, mutually beneficial value for all stakeholders in the ecosystems.

13.1 Introduction

Innovation ecosystems, often being region specific, have increasingly gained

ground in the literature on innovation, strategy and university–industry collabora-
tion. They have drawn interest specifically due to the opportunity to gain com-
petitive advantage on a firm level but also to drive sustainable growth on a regional
and even national level. Scholars have developed a number of definitions and labels
such as open innovation [1], innovation clusters [2–6], innovation networks [7],
innovation ecosystems [8–10] and triple or even quadruple helix models [11, 12].

P. Mattila (&)
B. Eisenbart
A. Kocsis
C. Ranscombe
T. Tuulos

Swinburne University of Technology, Melbourne, Australia
e-mail: [email protected]
B. Eisenbart
e-mail: [email protected]
A. Kocsis
e-mail: [email protected]
C. Ranscombe
e-mail: [email protected]
T. Tuulos
e-mail: [email protected]

© Springer Nature Singapore Pte Ltd. 2019 151

A. Chakrabarti (ed.), Research into Design for a Connected World,
Smart Innovation, Systems and Technologies 135,
https://doi.org/10.1007/978-981-13-5977-4_13
152 P. Mattila et al.

Generally, innovation ecosystems consist of a number of symbiotic economic and

sociological interactions between actors or entities [2, 8]. A well-established
combination of these entities involves private sector, academia, including univer-
sities and research organisations, as well as public sector (like governmental bodies)
and citizens living in interdependent relationships and creating mutually beneficial
value to the society [2]. Furthermore, innovation is said to lie in the intersection of
different bodies of knowledge and diversity has a tendency to increase the likeli-
hood of innovations to emerge [13]. Despite the extensive literature to date,
research calls for a further understanding of the successful implementation of
innovation ecosystems specifically through a people-centric lens [14]. Moving
beyond transactional collaboration and with the thought of mutual value creation
and interdependent relationships among a diverse group of actors, a more holistic
perspective on ecosystems [15, 16] and opportunities to draw inspiration from
co-creation needs to be taken [17].
Hence, this paper sets out to deepen our knowledge on how diversity can be
embodied in ecosystem context and what are possible co-creation processes
enhancing innovation ecosystem success. We approach this topic through a sys-
tematic review of extant literature from innovation, engineering and design, but also
organisational management, cognition, and adjacent fields. We specifically focus on
eliciting how to enhance diversity of ecosystems on multiple levels—and across
these—as well as to provide practical implications on how to effectively achieve it.
Continuous cross-pollination of ideas, knowledge and technology between actors is
fundamental to introducing innovation and a more divergent combination of these
elements increases the chance for innovation to emerge. In this paper, we will first
explore how diversity can be introduced on three levels (macro, meso and micro)
among the collaborators. This is followed by examining the diverse nature of
interactions and its impacts, and finally, we will explore how transition towards
co-creation practices and mindset/culture can facilitate coping with the inherent
complexities of collaboration in diverse settings.

13.2 Diversity in an Ecosystem and Its Link to Successful

Innovation

The benefit of diversity for innovation processes and knowledge creation has been
highlighted by numerous scholars [1, 18–21]. Based on the literature review in the
fields of innovation ecosystems and diversity, a framework was formed as a result
categorising different types of diversity among collaborators and/or entities. The
framework differentiates three different levels: sector (macro), organisational
(meso), and individual (micro). Named as multi-level diversity framework
(Table 13.1), it illustrates how diversity can be impact innovation ecosystems on
multiple levels. The central literature underpinning the framework is explored in
more detail in the following subsections.
13 Transformation Is a Game We Can’t Play Alone … 153

Table 13.1 Multi-level diversity framework

Collaborator Dimension Impact on ecosystems
level
Sector (macro) Types of sectors Management of risk
Spark new insights and novel solution
combinations/ideas
Organisational Vertical–horizontal Advanced capacity and resources additional
(meso) partnerships paths to market
Types of organisations Incentive for competition and differentiation
Sizes Security to use new technologies
Distribution of risk in R&D
Spark new insights and ideas
Creation of new/unique knowledge
Individual Qualifications Spark new insights and ideas
(micro) Knowledge/expertise Cross-pollination/-fertilisation of knowledge
Culture or nationalities Deeper understanding of new opportunities,
Novelty in an industry users and market needs
sector
Diversity (inherent or
acquired)
Established vs new
relationship

13.2.1 Diversity on Macro-level

Diversity at sector level can impact on ecosystems essentially in two ways. Finding
the right balance between specialisation and diversification is key to robustness in
economic and societal changes [22]. The dot-com boom in early 2000s (and sub-
sequent collapse) had a major negative impact globally on the information tech-
nology sector including the one in Silicon Valley illustrating the vulnerability to
market turmoil if an ecosystem is highly dominated by a single industry sector,
expertise and focus on a small market section. What sped up the recovery process
was the strong presence of other sectors ranging from biotechnology, medical
devices, aeronautics and medical devices [23, 24]. In addition to managing risks for
long-term sustainability through staying insight of alternative markets, a more
diverse mix of sectors in an innovation ecosystem can significantly raise the like-
lihood of novel solutions to form as unconnected ideas, methods and technology
can merge into innovative breakthroughs [13, 18].

13.2.2 Diversity on Meso-level

Diversity at an organisational level (meso) can create multiple benefits and

specifically from an organisation’s perspective collaborating beyond organisational
boundaries has been identified as highly beneficial. The number and diversity of
154 P. Mattila et al.

direct connections a company has can boost its innovation capacity, when well
set-up and managed [25]. Similarly as to the sector level diversity, risk reduction in
research & development can be achieved by having a number of collaborators as
activities can be distributed among them. In addition, it may give a confidence
boost to the rising uncertainty of the development and application of new tech-
nologies. They also reduce associated ambiguity of innovation and facilitate
information streams to accelerate [26].
Diversity can be identified and introduced in vertical (such as suppliers in the
supply chain) and horizontal (e.g. direct peers within and between industries
including education and R&D companies) partners of the organisations [5, 27, 28].
The benefit of horizontal and vertical partners is demonstrated in two different
ways. Collaborating, horizontal partners will end up racing against and pushing one
other, and as a result create an important incentive for innovation and differentia-
tion, especially in the context of early stage cluster formation [2]. On the other
hand, vertical links such as customers and suppliers incentivise market and pro-
duction demand and therefore promote growth [29]. In addition, these relationships
provide a unique type of knowledge that is solely accessible to the partners within
the ecosystem and thus can lead to competitive advantage. The literature suggests
that complementary investments aimed at acquiring a deeper understanding of the
market, e.g. from competitors or customers, can increase the organisational per-
formance significantly [30]. To avoid the risk dependencies and to hold ownership
in decision-making, an organisation should liaise with a number of partners. These
collaborative settings should ideally represent public and private sectors as well as
research organisations to maximise innovative outcomes [31].
Finally, a factor mitigating the economic volatility is the vast number of
organisations of varying sizes [32]. An appropriate example may be found in
Finland where Nokia’s decline in the mobile phone market boosted the Finnish
start-up ecosystem. Former Nokia employees transitioned to founders of new
ventures and start-up support organisations contributing to the blooming yet pre-
viously almost non-existent entrepreneurial tech sector [33]. Before, the national
economy was too reliant on a small number of traditional, established and
large-scale companies. Despite the national crisis the Nokia crash caused, the local
economy was able to create a more balanced mix of corporations, including a
significantly higher number of diverse organisations: from small- and medium-sized
companies and start-ups to large corporations [34].

13.2.3 Diversity on Micro-level

Within both sector and meso-level, collaboration mainly occurs among individuals
(often called micro-foundations/micro-levels of innovation) and there is a variety of
ways to include diversity in such collaborative situations within and across stake-
holders. As discussed previously, innovation occurs at the intersection of different
bodies of knowledge with the greater potential for innovation the more diverse the
13 Transformation Is a Game We Can’t Play Alone … 155

inputs. Research has shown that an organisation with diverse staff tends to clearly
outperform those where employees have more homogenous backgrounds [35].
Heterogeneity can come from through inherent (traits people are born with) or
acquired diversity (traits gained from experience). As such, team compositions
should include collaborators with different qualifications and expertise [36]. Also,
inherent diversity, e.g. age or gender, more accurately manifests the construct of the
society or the marketplace and, therefore, the organisation is able to discover unmet
needs or untapped market segments. User needs are better understood by a team, in
which at least one team member has mutual traits with the end-user [37].
Furthermore, diversity as per cultural background and nationality puts a team in a
better position to question assumptions and societal norms. A high percentage of
people from different national and cultural backgrounds has been one of the
enablers for the mentioned ecosystem success in Silicon Valley [24]. Finally, it is
beneficial to combine both inherent and acquired diversity traits in an organisation
or a collaborative setting to achieve innovative outcomes as it creates an environ-
ment where unexpected ideas are heard. Acquired diversity specifically plays a
major role in allowing employees to express their ideas and to feel they are being
valued [37, 38].

13.3 Collaboration Ties and Relationships

Apart from the diversity of the actual stakeholders involved in a network, the way
collaboration ties are formed between them is equally important for the success of
an innovation ecosystem [39]. Collaboration ties refer to the nature of interactions
between stakeholders and what is effective in a particular context. Whilst diversity
of participants can be instrumental for an ecosystem to prosper, collaboration ties
between actors determine if the collaboration will be successful, or not. Different
types of collaboration ties and their impact on the successfulness of a collaboration
are explored systematically in the following, based on the extant literature and are
summarised in Table 13.2.
The first dimension we will look into is the formality of a collaboration tie.
Specifically, we discern between formal and informal ties, which may occur in
corporate alliances, project work or, at a higher level, through participation in
industry-specific associations. A formal type of collaboration is suggested to
facilitate reciprocal transfer of explicit knowledge between organisations or indi-
viduals, which can facilitate the execution of set tasks in a project. In innovation,
novel thought, however, often emerges in a rather unpredictable manner, for which
informal communication, sharing tacit knowledge and engagement in joint practices
are essential. As such, open forums that foster more informal types of communi-
cation are often key in making sure an innovation network functions well [39]. In
fact, beyond fostering informal exchange, it seems it is indeed the absence of formal
structures, providing a relaxed and mutually trusted environment that intrinsically
motivates individuals to collaborate and work towards a common objective, much
156 P. Mattila et al.

Table 13.2 Variety of collaboration ties and their impact on development activities
Type of Impact
relationship
Formality of ties Informal ties: effective in task exploration and sharing tacit knowledge
(mutual trust required between stakeholder)
Formal ties: effective for executing set tasks, mainly relying on explicit
reciprocal knowledge sharing
Strength of ties Strong: mitigates barriers for open transfer of knowledge
Weak: connect otherwise separated social groups
Number of Lower: balanced value creation, reduced negotiation competitions
collaborators Higher: increasing efforts to manage network and negotiate goals
Maturity of a Old: diversity and novelty of ideas
relationship New: diversity, novelty and uniqueness of ideas

more effectively and in a self-directed manner. This motivation—and its reliance on

mutual trust—is typically directly linked to the network’s overall purpose. If the
network has mainly performative objectives (i.e. reach a specific outcome), for
instance, sufficient trust can be ensured through relevant contract agreements. For
transformative goals (i.e. exploration of opportunities), which is much more
uncertain, trust in the partners’ native abilities to work jointly and communicate
openly is essential [40]. By and large, informal collaboration ties facilitate joint
exploration and reinterpretation of knowledge and ideas and trigger tacit (poten-
tially unrelated) knowledge to be shared ad hoc, which likely leads to new dis-
covery. Formal structures, in turn, are vital when it comes to implementing
solutions and/or executing clearly defined tasks along the innovation process.
Innovation ecosystems require both types of relationships.
Relationship types can also be described as per their particular strength, which
reflects the time and effort invested in building the relationship, and also is a
measure for the resulting emotional link between partners. Both strong and weak
ties are equally important, each for a different purpose. Similar to the formality of a
collaboration discussed prior, stronger relationship ties foster ad hoc transfer of
(tacit) knowledge, but might get in the way of search and exploration activities
(as information shared is more likely to be already known by both partners). Weaker
ties, in turn, help in the earlier, exploration phases of a project, though individual
activities might have to be managed more closely [39]. Weaker ties contribute to
innovation as they tend to connect otherwise disconnected social groups. As such,
fewer social conformities apply, hence allowing more flexibility for experimentation
and diverse knowledge to be combined and spawn new ideas [38].
The literature suggests another important factor, which pertains to the number of
collaborators in a network [41]. Particularly, connections across organisational
boundaries, potentially also involving (local) communities, are suggested to have a
clearly positive impact on innovation. The reasons for this are rooted in the
dynamics of collaboration between two as compared to more parties. The more
parties there are the less likely are self-interests of an individual entity to prevail,
13 Transformation Is a Game We Can’t Play Alone … 157

due to a reduced bargaining power against other participants, also facilitating fast
conflict resolution [41].
A final issue worth mentioning here is the level of maturity of a relationship
(established versus more recent), when it comes to novel ideas being created in an
innovation ecosystem. The literature suggests that creative thought is enhanced, at
individual and group levels, when more time is invested in exchange with a more
diverse group of people, i.e. acquaintances or even strangers, as compared to only
be sticking to colleagues or long-time partners [38]. Therein, it is important to keep
connecting to new people regularly, as, naturally, the innovation stimulation effect
wears off as more time is spent with others. This is simply because it leads to a
decrease in the amount of non-redundant information that is/can be shared between
participants.

13.4 Shift to Co-creation Practices and Collaborative

Culture

Building on the discussed insights, it is apparent that increased diversity in the

collaborators involved and of the relationships they have can add substantial value
to an innovation ecosystem. Yet, it stands to reason that adding diversity to an
ecosystem and introducing novel actors/stakeholders brings about significant
challenges in terms of collaborating seamlessly. It can reinforce the tension between
required dynamics (to foster novel thought) and desirable stability (to produce
outcomes reliably). Missing trust in novel entrants to a network can hinder transfer
of knowledge and thus inhibit open collaboration [42]. The multi-layered character
of an innovation ecosystem, diversity of involved actors and increasing demands of
co-creation activities make it difficult to manage collaborations effectively and,
therefore, exacerbate the challenges in knowledge exchange. An early and/or par-
ticularly novel/surprising discovery and the successful exploitation of the resulting
opportunity can help the network to grow strong right at the start. Though, the effect
can also be negative, depending on the trust and openness in the network, for
instance, when individual stakeholders want to take ownership of a new idea [40].
This risk can be effectively mitigated explicitly emphasising the concept co-creation
and of a collaborative culture, rather than allowing silos to form. There is, however,
no magic formula or clear-cut recipe as per how a successful innovation ecosystem
can be created and maintained [30, 42]. Each ecosystem and stakeholder network is
different and needs special attention. It is imperative to truly understand the needs
and goals of all actors, their context and culture, in order to select appropriate
mechanisms that facilitate the building process of ecosystems along the way.
Co-creation is defined as collaborative, joint acts of creativity, i.e. creative
problem exploration and solution finding carried out by two or more people [43]. In
other words, it is a collaborative effort of multiple stakeholders with the intent of
working towards a common, (novel) goal [44]. In trying to implement co-creation
158 P. Mattila et al.

in industrial practice, it is vital to consider a multitude of principles to achieve the

desired outcome. It does not happen by itself, but demands concerted planning and
true integration into the activities of the innovation ecosystem. Probably the most
important part is suitable time management. This is due to a more complex project
set-up, involving multiple actors, to equally create more complex barriers for col-
laboration, which have to be addressed. Whilst it carries great potential for inno-
vation, it also means that network participants will need a higher level of
engagement and patience [40]. Any sudden shift in the network may trigger a
disruption that needs to be managed, often delaying progress however brief, until
the change is fully addressed and dealt with by each stakeholder.
A beneficial approach can be to gradually build a network wider and wider, with
knowledge transfer limited to a small circle at the start, when levels of uncertainties
are highest, to a larger group as boundaries become more clear [40]. Concurrently,
effective channels of communication, knowledge transfer and also accountabilities
can be established that later facilitate building trust in the network quickly by every
(new) participant. Equally, the co-creation process itself needs clear structure and
project management that can be put in place as the network grows, also to facilitate
collaboration between the existing network and new entrants. Often, issues at an
individual level reflect larger issues/challenges at higher levels. These need to be
captured early and addressed integrally [45]. Also, in innovation, new ideas or
knowledge may be created at any level in an organisation: by individuals, within or
between departments or even at firm level. Successful organisations seem to
leverage off all these levels [46]. A key enabler for this is a collaborative, open
communication culture [44]. Where such a culture is missing or not yet fully
developed, formal roles like knowledge brokers might be installed. These could
intervene to stimulate sharing knowledge more openly [40].

13.5 Discussion and Implications for Future Research

The work presented in this paper sought to help building a better understanding of
the particular way diversity—at multiple levels of participation—as well as the
adoption of co-creation activities and mindsets can help innovation ecosystems to
prosper. We find that diversity is in fact vital in furthering creative, novel ideas to
be generated in an ecosystem as it allows alternative viewpoints and expertise to be
explored, providing opportunities for novel combinations of knowledge to emerge,
be varied and (re-) combined in new ways between all stakeholders involved. In
fact, a higher level of diversity in an ecosystem, i.e. the mix of stakeholders and
their expertise, the higher the chances for innovative solutions to be generated.
Equally, however, such ecosystems require more careful management to mitigate
different interests, aims and ways of working. Co-creation between committed,
open and engaged actors in an ecosystem allows harnessing diversity in a manner
that is usually not achievable with more traditional, rather transactional ways of
collaborating. It takes time for such a strong connection between actors in an
13 Transformation Is a Game We Can’t Play Alone … 159

innovation ecosystem to develop, requiring trust, patience and a long-term

engagement. Whilst there are several tools to facilitate such a strong connection
to grow, ultimately, we see a change in mindset towards common goals and benefits
of the ecosystems—rather than of the individual—as key prerequisite. And this is
ultimately rooted in building longer-term connections that allow trust to build that
involved actors have a common benefit in mind.
An ever-accelerating commercial landscape leads innovation ecosystems to
become more and more complex: starting with a triple helix—such as the public
sector, governments, research institutes but also the private sector—to a quadruple
helix, which entails citizens or the media to contribute and communicate knowledge
[11, 12, 47]. Thus, the importance of a mindset for co-creation is increased. This
means one has to expand the centre of attention to include stakeholders who are not
directly impacted by the development to ensure leveraging the full potential of, e.g.,
a community, business networks, etc. Harnessing such adjacent knowledge and
expertise in the best possible manner carries a huge potential to make ecosystems
more effective [16]. Yet, how this can be achieved (in different contexts)—in an
effective manner—still needs further exploration in research.
Further to our last point, we also expect the number and variety of involved
actors to increase as ecosystems evolve in future. This also means, inadvertently,
that the roles of involved stakeholders—public and private—will shift. We already
see tendencies in the public sector to enlarge their networks (e.g., universities
increasingly collaborating nationally and internationally or local governments
involving citizens in planning public construction/development projects), in attempt
to streamline efforts and ensure that activities cohesively build towards something
rather than to compete with one another [30]. Larger societal or technological
changes—often inherent to innovation—need the stewardship of the public sector
(through legislation or incentives) to ‘get off the ground’ and involving more actors
of an ecosystem ensures a broader public support and more directed actions.
Conversely, we see the private sector to gradually, but continuously, change its role
beyond their organisational boundaries to directly connect with users, clients or
society in general. Companies—not only in the area of design but also engineering
—more and more use common citizens for co-creation workshops to ensure
alignment with user wants and needs. This has progressed to a point, where the
boundaries between non-profit and for-profit organisations become slightly blurred.
The emergence of entirely new, more continuously engaging business models, such
as product-service systems rather than traditional sales-focused models, is a good
example. More continuous, collaborative, ‘fair’ partnerships with the public sector
and civil society, and embracing diverse cultures are likely to accelerate the
development of innovation ecosystems [42]. We believe this should also include a
stronger link between research institutes, particularly universities, to benefit edu-
cation of the next generation of employees. Universities can contribute enormous
societal value through research, education and generally instilling an innovative
spirit in students that benefit innovation ecosystems at multiple levels. This includes
for universities to move away from their traditional role as educators of future
160 P. Mattila et al.

employees and generators of knowledge to skills and capacity builders benefitting

the whole innovation ecosystem. This could also mean rethinking the importance
and offerings around lifelong learning.

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