Source of information: http://www.strategyguide.nl/
From an academic perspective, the added value of formal planning for strategic decisions remains ambiguous. Should you as a digital gaming company have an explicit process for determining the firm’s long-range objectives? I would say up to certain extent, yes; know where you want to go but remain contingent in your strategies until you are a dominant force within the digital games industry. For iSEN (the interactive Sports and Entertainment Network) we have agreed that we want to be successful in bringing to market relevant innovations in the form of sports community solutions that bridge the gap between real life events and digital entertainment. This raises the following question: How to create a successful innovative organization?
The network organization
Organization structure is of great importance to any organization’s innovative capacity. Although there is no perfect one-suits-all organization structure for digital gaming companies, they generally have moved away from ‘vertically integrated monsters’ to more disintegrated forms, also known as network organizations. This might not hold for the few but very significant consolidated publishing houses, but this definitely holds for most creative output producing organizations in the industry. As organizations in the digital gaming industry have to be able to anticipate changes quickly and be contingent with their output (i.e. be innovative), a network structure is the preferred organization structure for digital gaming companies, this is no different for iSEN.
iSEN’s network structure
A network organization lies between a hierarchy (an organization that does everything in-house) and a market structure (buying of a ‘market’). It basically means you keep your core added value creation in-house and create partnerships around all other value creation activities. The Japanese Keiretsu is a good example. iSEN is the product of a partnership between product development and innovation lab Uluru/Beagle, PlayToTV developer ExMachina and Publishing & Media venture Brightstar. All companies have their distinct specialities to bring to the table: Uluru Beagle provide concept development and strategic positioning during start-up phase, ExMachina provide the live-multiplayer technology PlayToTV one of the platform’s cornerstones, and Brightstar connects the dots by delivering the executive team that carries the service during its existence. Additionally, Billing Solution experts IM Solution provide necessary monetization enablers.
The network is facilitated by thick relationships, CEO’s all know each other personally and communicate on a daily basis. Furthermore, there is mutual dependency and mutual added value, without either of the organizations involved, the service’ chances for success wouldn’t be half of what they are now. Complementarity and accommodation are the cornerstones for the success of iSEN and the organizations involved. This reciprocity is facilitated by a long-term perspective of all organizations involved, no one partner is involved with the aim of making a quick buck. The individual organizations all have their weaknesses and by forming the network that we are, we aim to overcome these. iSEN is not only a great innovation by itself, working on the platform facilitates organizational innovation for Brightstar, ExMachina and Uluru Beagle as individual organizations too.
Why create an innovative organization?
Digital gaming is at the forefront of both technical and non-technical innovation. As a prime example of a cultural industry, the digital games industry is dynamic, inter-disciplinary and rapidly changing. This implies that in order to compete, one has to be successful at innovation management. Successful innovation management leads to more effective market response be it response to environmental issues or competitors. I argue that the following organizational facets need to be planned for in order to create successful innovative behavior:
1. Organization structure
2. Resources, knowledge and capabilities
3. Management style
4. Legitimacy
These facets of organizations all affect each other and when adopted appropriately will create synergies. Becoming more innovative as a company takes significant effort, but doing so will lead to higher profit margins, organization growth and eventually industry leadership.
Rationale for a network structure
Network organization structures facilitate the creation and spread of knowledge, an intangible and difficult to grasp subject matter. This is due to the flatter organization structure, the complementary and interdependent nature of the partnerships and specialization in value creation processes. A network structure also implies a degree of flexibility to the organizations and its partners. This enables a certain speed within the variety of processes (innovation development, innovation to market, and/or change capacity). Lastly, network organizations lead to trust. Trust within members of the organizations and between the organization and its partners. Trust reduces risk and a low perception of risk facilitates an innovative climate.
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2. Foster, K. and Pryor, A. 1986. The strategic management of innovation. The Journal of Business Strategy, Vol. 7, 38-42.
3. Jeffcutt, P. and Pratt, A. 2002. Managing Creativity in the Cultural Industries. Creativity and Innovation Management, Vol. 11, No. 4, 225-233.
4. Powell, W.W. 1990. Neither Market nor Hierarchy: Network Forms of Organization. Research in Organizational Behavior, Vol. 12, 295-336.