Orchestrating innovation ecosystems – A case study on the Financial Big Data Cluster

Gaia-X aims to build a new generation of transparent, controllable, and interoperable services that implement a common set of rules shared by hundreds of European and non-European players in the market to bolster the European sovereignty in digitalisation and the data economy.

However, can one orchestrate such an ecosystem? And if so, who should be the orchestrator and how should one go about it?

In our contribution to the Gaia-X newsletter, Luisa Kruse, Sebastian Schäfer – both from our FINDER partner TechQuartier – and I deep-dived into the project safe Financial Big Data Cluster (FBDC) to extrapolate answers for such an approach of open innovation.

We find that innovation hubs are in a prime position to take over the role of an orchestrator of a publicly funded ecosystem. To make most of the complementary, modular actors within such an ecosystem we suggest a hybrid orchestration form. Finally, it is important to mention that a successful ecosystem not only needs orchestrators but also contributors to create something new and valuable. At best, these should be innovative and have the capability to lead the ecosystem to new perspectives and products.

The complete version of our contribution is available to download below:

Jonas Geisen, ESR

Collaboration FINDER and TechQuartier for the project ’Financial Big Data Cluster’

The success of the safeFBDC depends on our understanding of the underlying mechanisms (and technologies) which determine its modes of operation. While the liability study already has shed light on the IT infrastructure the underlying mechanisms of interaction between participants have not been fully outlined yet. Identifying and understanding these would help to leverage and manage relevant partners. Since such a project lives on from its members, the collaboration between TechQuartier and FINDER contributes directly to the long-term success of the safeFBDC.

“If we are to make strategic sense of innovation communities, ecosystems, networks, and their implications for competitive advantage, we propose that a new approach to strategy [called] ’open strategy’ is needed.”Chesbrough and Appleyard, 2007: 58[1]

An important underlying idea of innovation is its reliance on competition and thus the intertwined nature of both innovative and competitive behaviour.[2][3][4][5] While this idea has prevailed for a long time the predominance of competition has been slowly losing ground to the idea of cooperation.[6] In that light the concept of business ecosystems gains in prominence in both research as well as its application in business. Before diving into the underlying mechanisms of ecosystems we first should line out what we can understand under such a concept.

Back in school ecology taught us that ecosystems are systems of living and non-living interacting components within the same environment. So how can we apply that concept to business? An innovative reader (as innovation is also the application of an established idea to a new context[7]) may think about something in the line of the following:

“Business ecosystems are a network of firms with differing interests bound together as a collective whole such that the fate of its members is bound to the structure of that network and the roles played by its members.”Tan, Tan & Oh, 2007: 2[8]

In case of the safeFBDC the set of goals, its mission defined by its value proposition, binds together the consortium. The distinction is an open approach of formulating the mission – in other words their strategizing. That openness allows cooperation, a joint engagement in a strategy process of different organizations instead of their competition.[9] Following the literature, we can therefore define the safeFBDC as an ecosystem-as-structure.[10] For such structural approaches of ecosystems a keynode member with central positioning is of importance.[11] Such keynode members, already generally addressed in a blogpost by my colleague James, have three major tasks.

  1. They consolidate disperse resources & capabilities, as e.g. knowledge, of members.
  2. They engineer processes to initiate and grow the ecosystem.
  3. They oversee the creation and extraction of value for members.[12]

Therefore, the first research project to be conducted will be to identify if and how the TechQuartier is fulfilling the role of an orchestrator for the safeFBDC. A network analysis will be conducted in the first step. The results – the existing ties within the ecosystem – coupled with the second step, a cluster analysis of the activities carried out, should therefore determine the TechQuartiers role as orchestrator.

With that in mind we can have a look on how the mode of operation leads to the realization of the projects objectives, namely the development of AI applications. Instead of competition the project allows the collaboration in the provisioning and usage of shared, aggregated and uniformly formatted, cross-sectoral financial data. Such a concept of open strategy offers advantages for both affiliated producers and consumers.[13] Typically benefits for producers are lowered development and launch costs, quality improvement due to a joined development environment and increased speed to market. This, in turn, translates into the benefits of consumers since the reduced costs are reflected in the price (up to being open source) as well as a direct incorporation of feedback and implementation of specifications in the development cycle.[14] Since for the safeFBDC participants are often both – provider and user of data – an open strategy, triggered by the access to data, is of high functionality.

However, there also loom disadvantages which need to be tackled. In my GAIA-X post I already highlighted the loss of established business models and hence value appropriation. Accordingly, participants engaging in cooperation within an ecosystem have to find new ways to appropriate value within the value chain to generate profit.[15][16] Data monetarisation therefore is a research object of special interest to us. Hence, building on our first research project we will investigate how the TechQuartier, in its role of orchestrator, can determine and govern a value appropriation regime.

Together, Luisa Kruse and me are looking forward to report on our progress on both research projects in the upcoming months.

– Jonas Geisen, ESR

[1] Chesbrough, H. W., & Appleyard, M. M. (2007). Open innovation and strategy. California management review, 50(1), 57-76.

[2] This is based on Schumpeters (1934, 1939, 1950) work who expected that innovative behaviour is based on the profit expectations during the growth of an industry as the major determinants of a firms growth.

[3] Schumpeter, J. A., & Nichol, A. J. (1934). Robinson’s economics of imperfect competition. Journal of political economy, 42(2), 249-259.

[4] Schumpeter, J. A. (1939). Business cycles (Vol. 1, pp. 161-174). New York: McGraw-Hill.

[5] Schumpeter, J. A. (1950). The march into socialism. The American Economic Review, 40(2), 446-456.

[6] McKinsey and Company, 2015, Global Media Report

[7] Martín‐de Castro, G., López‐Sáez, P., Delgado‐Verde, M., Quintane, E., Casselman, R. M., Reiche, B. S., & Nylund, P. A. (2011). Innovation as a knowledge‐based outcome. Journal of knowledge management.

[8] Tan, F. T., Ondrus, J., Tan, B., & Oh, J. (2020). Digital transformation of business ecosystems: Evidence from the Korean pop industry. Information Systems Journal, 30(5), 866-898.

[9] Gooyert, V. D., Rouwette, E. A. J. A., & van Kranenburg, H. L. (2019). Interorganizational strategizing.

[10] Adner, R. (2017). Ecosystem as structure: An actionable construct for strategy. Journal of management, 43(1), 39-58.

[11] Spigel, B. (2017). The relational organization of entrepreneurial ecosystems. Entrepreneurship Theory and Practice, 41(1), 49-72.

[12] Dhanaraj, C., & Parkhe, A. (2006). Orchestrating innovation networks. Academy of management review, 31(3), 659-669.

[13] Chesbrough, H. W., & Appleyard, M. M. (2007). Open innovation and strategy. California management review, 50(1), 57-76.

[14] Appleyard, M. M., & Chesbrough, H. W. (2017). The dynamics of open strategy: from adoption to reversion. Long Range Planning, 50(3), 310-321.

[15] Hautz, J., Seidl, D., & Whittington, R. (2017). Open strategy: Dimensions, dilemmas, dynamics. Long Range Planning, 50(3), 298-309.

[16] Chesbrough, H., Heaton, S., & Mei, L. (2020). Open innovation with Chinese characteristics: a dynamic capabilities perspective. R&D Management.

Collaboration FINDER and TechQuartier for the project ’Financial Big Data Cluster’

On the 1st January 2021 the initiative Financial Big Data Cluster was launched with the research project “safeFBDC” as a solution for a technological driven development of the European Financial Sector. To do so the safeFBDC congregates a consortium of public and private collaborating partners managed by TechQuartier – to leverage knowledge in the areas of artificial intelligence, machine learning and business model development.

Therefore, the initiative is a response to increasingly structural change, fuelled by technological innovation. Participants are reacting to the challenge of adaptation with increasing speed.[1] As “banking is unbreakably connected with the use of information technology”[2] the financial sector is a prime representative of the importance of technological innovation. While US and Chinese actors have been predominant in the adaptation of technological innovation in the financial sector, European actors have to step up their game. Their engagement is of importance to secure data sovereignty and thus obtain a competitive position when it comes to data-driven financial services. To achieve this collaboration of the private and public sector is of utmost necessity. For this applicable, european-centristic research is needed to understand and thus enable innovations and their necessary environment. Providing such research will in turn enable the proactive engagement of practitioners.

Thus the safeFBDC project is set up to deliver on these necessities by aligning three major goals:

  1. Increasing research output through the development of new AI systems and analysis of new, information-rich data sets.
  2. Enhancing financial stability by facilitating the exercise of oversight and supervisory functions by public authorities.
  3. Promoting the development of new data-based products, services and business models, and to increase the transfer of knowledge from research to business.

Collaboration on the research of new business models driven by technology

To facilitate applicable, european-centristic research of the financial sector TechQuartier and FINDER, have decided to join forces. Together we want to utilize the opportunity the safeFBDC is providing to study the collaboration driven by technological change. To do so Luisa Kruse from TechQuartier and me will work together on this project. Aim of our collaboration is to study the underlying organizational mechanisms driving this flagship project. By doing so we generate value in three important ways. First, we facilitate applicable research to enable practitioners. Second, we gain a better understanding of how technology affects opportunities of innovation. Third, we establish a new venture of research of the European financial sector. The progress of our collaboration will subsequentially covered within my blogposts culminating in a collaborative whitepaper.

Jonas Geisen, ESR

[1] Schwab, K. (2017). The fourth industrial revolution. Currency.

[2] Thalassinos, E. (2008). Trends and Developments in the European Financial Sector. European Financial and Accounting Journal, 3(3), p. 58