In 2003, Thomas Ritter and Hans Georg Gemuenden published their foundational work in the Journal of Business Research, Network Competence: Its Impact on Innovation Success and Its Antecedents. Up until this paper, research had already revealed that companies with close relationships with consumers, suppliers, competitors and research institution were more successful in driving innovation in product and processes. Thomas and Hans surveyed 308 German business leaders with various questions analyzing their business. In their study evaluating the respondents’ answers, the authors concluded that organizations that do not readily interact with their external environment limit their strategic flexibility to in-house resources. Product and process innovation, they concluded, are best nurtured with inter-organizational relationships that link partners with critical resources.

What does this mean, practically? Successful business strategies must foster the development of crucial competencies through support networks across resource silos. These concepts can readily be applied across diverse problem domains. Later research would demonstrate that varying degrees of interconnectedness is essential for firms to gain a competitive advantage in their respective product space. Individual employee success, also, could be shown to be relevant for career growth and employability. This is simply distilled in the oft repeated nugget of wisdom that building networks is key your individual career success. The research is not isolated to private businesses and extends into the public sphere where frameworks for pooling resources between governmental and nongovernmental entities to achieve common goals can cultivate success in more spaces. More abstractly, cross-collaborative practices is the locus for innovative success across the spectrum of economic and political organizational structures.

Examples of Networks of Competence

While the business research was laying the groundwork of understanding the keys to product success, businesses, states, and international organizations were busy implementing these principles to foster innovation. These networks already existed in various forms throughout innovative communities in Silicon Valley, open-source communities, and various international commerce and trade organizations. The ideas were rapidly being deployed in business and across nation-states alike.

Successful enterprises actively implement and manage programs that foster interconnectedness within their business and with external partners. Proctor and Gamble administers an internal program called “Connect and Develop”, which “actively scouts, identifies, engages and collaborates with external partners such as startups, laboratories, research institutes, financial institutions, suppliers, patent-holders, and academia”. Toyota manages an internal program called “The Toyota Way”. In this way, Toyota emphasizes inclusive philosophies for consensus decision making, respect for extended network of partners and suppliers by challenging them and helping them improve, and an expectation that managers experience the problems their teams face so the manager can understand the problem first-hand. Both Toyota and Proctor and Gamble have cited these programs for various successful process improvements or product successes in their respective industries.

As a measure of effectiveness in public policy, there are numerous examples of interconnected innovation strategies at play. In the United States, National Science Foundation’s (NSF) Industry-University Cooperative Research Centers (IUCRCs) develops crucial relationships between research institutions and industry to devote resources for solving problems in industries like food production and agriculture. European Innovation Partnerships (EIPs) string together resources at national and regional levels to coordinate resources for innovation. Under the EU Common Agricultural Policy (CAP) Network, resources are targeted for reaching sustainability and production goals to meet the proliferating challenges in a rapidly developing era. International collaborative organizations are capable of achieving far more than they can in isolation, as many of these problems extend outside of the nations boundaries and require the members to cooperate in order to solve them.

Practical Benefits and Advantages

Research supports the principles of distributed networks of competence and organizations large and small have practiced these ideas with great success. How does interconnectedness work and what are the advantages? Networks of competence provide their advantages by breaking down silos and sharing knowledge, experience, and expertise more effectively than individuals or isolated teams. This “cross-pollination” of resources enhances problem-solving. In a cross-disciplinary exercise, different members can contribute their specific experience and knowledge leading to more creative ideas and more fully-thought through solutions.

This interconnectedness enables accelerated innovation, as the contributions of each person can lead to group consideration and consolidation of the best ideas between the contributors. Efficient knowledge sharing fosters a culture of continuous learning and development, growing the competencies of each person that interacts in the group and the group as a whole. As economic and political conditions evolve while novel technologies emerge, larger networks allow teams to more readily adapt to an evolving environment and focus its collective intelligence on new priorities.

Perhaps most importantly, as teams interact resource utilization is improved and stronger collaborative relationships are developed. These relationships improve morale and member confidence which in turn rewards the organizations that participate with a virtuous cycle that compounds its success across its most valuable resource: its participating members.

Conclusion

Success leads to success, and organizations that adopt and foster networks of competence will reap the rewards of its benefits more readily. Businesses in more competitive spaces can gain an advantage by building relationships with external institutions and firms. Business leaders that wish to build successful products or develop more refined processes can lean on these principles to design robust programs for developing its resources to be more effective in effectuating the overall business strategy. Policymakers that develop and implement frameworks that incentivize collaborative relationships within their spheres of influence will see the seeds they plant grow into something more ready to meet the needs of their constituents. Success and innovation are a collaborative exercise. Leaders can beter stimulate and enrich their teams, organizations, business, and political spheres by nurturing inclusion and connecting diverse perspectives and resources.