Abstract
While open innovation ecosystems allow a firm to harness external sources of value creation, these external ties can also constrain its ability to adapt its innovation strategy to pursue new opportunities. This article looks at how an incumbent firm approached such constraints, and used cognitive artifacts to transform its value chain into a collaborative ecosystem. It examines the case of a 3D printing-enabled shift to mass customization of orthopedic medical implants. The results demonstrate how firms can use artifacts to build a shared understanding across heterogeneous stakeholders as they explore and develop new open innovation models, and how this process can be managed flexibly to avoid adopting a locally (rather than globally) optimal strategy.
Keywords
Firms increasingly adopt open innovation (OI) practices to innovate beyond their boundaries by sourcing innovations externally or commercializing internal innovations externally, and thus leverage external stakeholders to broaden their paths for creating and capturing value. However, these external stakeholder ties can also provide constraints that limit a firm’s ability to evolve its strategy to pursue new opportunities, particularly in the cognitive understanding of how the firm and its partners should create and capture value. 1 This constraint is even more pronounced when firms transition from a linear value chain to an innovation ecosystem, given the complexity and heterogeneity in stakeholder interests and understandings inherent in such ecosystem models. 2
Yet, evolving such value creation and capture strategies is particularly crucial when adopting an innovation ecosystem, whether for proven models such as hardware-software platforms, or for new emerging technologies such as 3D printing or the Internet of Things. These ecosystem models have increasing influence on the theory and practice of OI, reflecting the strategies of firms to jointly create and capture value through external stakeholders who are suppliers of innovation, who buy the firm’s innovations, or provide complementary innovations. 3 Developing innovation ecosystems, however, can be both complex and abstract, and we lack insights on how this process can be made more concrete and actionable.
So what tools can a firm use to conceive and implement the transition to OI? Prior research has emphasized the internal changes within the firm in the transition from closed innovation to OI—most often when externally sourced innovations are commercialized through the firm’s existing development, production, and distribution activities. While OI is inherently a model of interorganizational cooperation based on permeable organizational boundaries, less often studied is how a firm can manage the value creating relationships among organizations outside its boundaries, particularly when utilizing OI to collaborate with an ecosystem or other groups of heterogeneous stakeholders. 4
From the beginning, the conception of OI has always included a cognitive dimension. Chesbrough conceived OI as “both a set of practices . . . and also a cognitive model for creating, interpreting, and researching those practices.” 5 In OI, the business model plays a central role as “the cognitive device that focuses the evaluation of R&D projects, . . . [filtering] in projects that ‘fit’ with the model, and selects against those that do not.” 6 The firm’s business model reflects how it thinks about creating and capturing value, but also constrains the choices that it is willing to implement or even consider. These cognitive constraints are even more pronounced when firms apply OI principles to evolve into an ecosystem model. 7 Prior research lacks clarity on how firms should deal with such constraints in practice.
In this study, we are interested in the tools firms can use to overcome cognitive constraints to adopt such an ecosystem model. In particular, we focus on how cognitive artifacts—tangible, visual representations that synthesize how to create and capture value 8 —can be used to aid collaboration across multiple, heterogeneous stakeholders to simultaneously change value creation and value capture strategies.
We investigate this in the context of a firm’s potential shift from mass-produced prosthetic bone implants to those custom-produced using 3D printing. This highlights how a firm evolves from a linear value chain to an innovation ecosystem to exploit a new opportunity created by technological change. Based on action research performed for one of the largest incumbent suppliers, we utilize interviews, observations, and archival data from three continents to understand how cognitive artifacts can be used to overcome the challenges of transforming both the business model and the cognitive understandings of relevant stakeholders.
To do so, we draw on the typology developed by Berglund and colleagues 9 that differentiates between two kinds of artifacts: those that aid experimentation and those that drive transformation. Experimental artifacts provide distinct representations with minimal interpretative flexibility, which facilitate reliable information gathering and validation from external stakeholders. In contrast, transformative artifacts are mutable with high interpretative flexibility, to stimulate creative and collaborative interactions among heterogeneous stakeholders. This research focuses on how material artifacts can act as boundary objects to reconcile competing interests and interpretations across diverse stakeholder groups. 10
We find that artifacts can enable the cognitive reframing needed to transition to the ecosystem model of OI. Such a transition corresponds to the firm’s evolving use of cognitive artifacts, and the role they played in aiding coordination with internal and external stakeholders. The change in the role of the artifact progressed from experimental (i.e., test distinct components of its envisioned model with stakeholders) to transformative (i.e., engage stakeholders in creative negotiation and cocreation of the model). Interestingly, the hybrid use of experimental and transformative artifacts triggered a cognitive shift toward an emergent ecosystem strategy.
We show how these cognitive artifacts can be used to gain both insights and buy-in from external partners, and how such a process allows a firm to discover a more radical and higher-potential transformation. These results apply to the more general question of how managers can address cognitive issues in practice when developing a transformative OI strategy in settings involving heterogeneous stakeholder groups.
Background: 3D Printing Orthopedic Implants
Ecosystem Value Creation in Healthcare
The complex interdependencies needed to deliver healthcare have previously been considered as a form of value creating ecosystem. 11 However, such ecosystems differ from other technology product ecosystems in four important ways.
First, the development and sale of biomedical products are part of a complex offering of products and services delivered by a diffused network of medical providers. A range of expertise among doctors, nurses, technicians, and others is often required to diagnose and treat a single medical event for a patient. Products can substitute for other products and services for products, or they can be combined—as when a surgeon implants a patented medical device into patient.
Second, this brings with it a complex web of stakeholders and their concerns. In any context, the patient, provider, payer, and public interests are imperfectly aligned. Aligning these interests is inherently difficult because different stakeholders will have differing perspectives on the costs and benefits of healthcare innovations. 12
Third, the questions of value creation and value capture are very different in healthcare. While there is agreement that ultimate value creation lies in efficiently providing long-term patient welfare, the weak (or distorted) price signals across the network makes it difficult to measure value creation by individual stakeholders. At the same time, many providers prioritize patient welfare over their own self-interest. Even for individuals or organizations pursuing private interests, regulations, and medical ethics provide constraints not seen in other industries. 13
Finally, healthcare is an essential good alongside food and shelter. While a local healthcare ecosystem can fail temporarily due to natural disaster or war, a healthcare provider network is not going to disappear due to mismanagement or a lack of demand. At the same time, the magnitude of healthcare expenditures creates tremendous cost pressures that mean that medically desirable treatments will be denied solely due to cost. 14
Thus, a biomedical products company promoting adoption of a radical innovation must do so while meeting the constraints of government regulation and addressing on-going cost pressures. Most of all, it must navigate this complex web of stakeholders, addressing both its self-interested motivation to adopt (e.g., making their job easier, reducing organizational cost), as well as how such an innovation can improve patient outcomes. 15
To successfully innovate healthcare products and services using OI both requires and enables coordination with external stakeholders. On the one hand, no one stakeholder has all the necessary information, and thus firms must incorporate knowledge from a wide range of external stakeholders, particularly when it involves a change of business models. This includes identifying and maintaining communication ties with the external stakeholders and creating internal processes to utilize the external knowledge that comes from these ties. On the other hand, engaging external stakeholders is often a prerequisite when government approval is necessary to sell or be paid for these innovations. Finally, firms will be more successful if they engage with external stakeholders with highly complementary resources and goals. 16
Medimplant Seeks a Shift to an Innovation Ecosystem
Our study examines Medimplant, a pseudonym for a U.S.-based Fortune 500 company in the medical products sector. Founded more than 50 years ago, its main products are implantable orthopedic devices, as well as instruments that facilitate orthopedic and other forms of surgery. Its prosthetic implants are used to replace or reinforce a damaged spine or bone, or to replace an entire joint in the hip, knee, or elbow. While healthcare is delivered through a complex network of service providers, as with many medical device companies, Medimplant has historically used a traditional value chain to supply its mass-produced implants to hospitals on inventory consignment order. These implants are produced and sold in various sizes, scaled to fit a particular anatomy that might range from a small child to a tall adult.
The authors are part of a team that was commissioned by Medimplant’s Australia office to examine the business feasibility related to 3D printing patient-specific implants for treating bone sarcoma by creating an orthopedic implant to replace cancerous bone removed by surgery, one of the earliest commercial applications of 3D printing in healthcare. This led Medimplant to evolve from a traditional value chain to an innovation ecosystem, in order to exploit this new technological opportunity.
To collaboratively develop the technology and ecosystem model for its intended product offerings, Medimplant created an OI research partnership 17 that assigned rights to all technology developed by three external partners: a manufacturing research laboratory at a leading engineering university, the advanced research lab of a private hospital, and a center of innovation within a university business school.
These partners were contracted to develop and assess the feasibility of prototypes for innovations in two areas. The first combined existing technology for 3D printing titanium components with advanced imaging technology that customizes the shape and size of the implant for each specific patient. The second technology provided robotic surgery to more precisely and reliably excise the tumor and implant the prosthetic replacement into the patient.
This technology development was part of a broader project to understand the scope of producing 3D printed bone tumor implants based on “just-in-time” (JIT) principles, where parts are delivered when they are needed, rather than before, to the hospital. The ultimate aim was to examine how Medimplant can conceive, develop, and implement the ecosystem model of OI connecting the various stakeholders required to achieve this technologically advanced treatment pathway. This project included a strategic analysis, where two of the authors were involved in collecting and analyzing data on different stakeholders involved in the existing treatment pathway, and to evaluate their interests and concerns for implementing the potential new treatment and related ecosystem model.
The author team had unimpeded access to key company decision makers and representative external stakeholders in medicine, health insurance, regulatory, and government organizations; the project did not directly gather data from patients. Given differences in demand, regulation, and production capabilities between national markets, the study included research on three continents, with 75 interviews, several formal project meetings, informal conversations, and archival documents. In a five-phase process over a 21-month period, the academic consulting team met with and interviewed internal stakeholders, interviewed external stakeholders in Australia, ran a design-thinking workshop with all stakeholders, interviewed internal and external stakeholders in Europe and North America, and then conducted a second workshop along with follow-up interviews.
This follows recognized theoretical sampling procedures for developing theory from a single longitudinal case: it offers the opportunity for unusual research access, and it is an extreme exemplar of developing a radical innovation in a highly regulated industry with a complex web of stakeholders. We iteratively used accepted methods for gathering, reflecting upon, and analyzing the large volume of qualitative data. 18 Overall, this approach helped develop a framework of the cognitive shift associated with transforming a value chain into an ecosystem model of OI, and unpack the role played by cognitive artifacts in this process. See Appendix for a detailed account of our research method.
Managing Cognitive Shift and Stakeholder Cooperation in Ecosystem Transformation
Multiple stakeholders are involved in the existing sarcoma patient journey from diagnosis and treatment to rehabilitation. The first stakeholder is the patient, as well as friends or family involved in the care decisions. Next comes healthcare employees—in this instance, professionals in a specialist oncology hospital—involved in diagnosis and treatment: the nurse that specializes in treating sarcoma patients, the radiologist who performs diagnostic imaging to detect the tumor prior to removal, and the surgeon who both removes the tumor and implants the prosthetic replacement. After treatment, the nurse and physicians will evaluate the success of the treatment and plan recovery stages, while rehabilitation specialists (such as an occupational therapist and physiotherapist) will work with the patient to restore as normal function as possible. Outside the health system are the government regulators as well as insurance reimbursement (whether private or government). Finally, the manufacturer itself has its own interests.
We structure our findings on the roles and interactions among these stakeholders along the stages of the “patient and stakeholder journey” model: diagnosis, pre-operative care, the actual surgery, and recovery. 19 We start by presenting the existing value chain—in particular, the stakeholder pain points for each stage that motivated Medimplant to deliver 3D printed patient-specific implants. We then present the five-step transformation process through which Medimplant led the cognitive shift from a traditional value chain to a technology-centric OI model, and then ultimately to a radically new, stakeholder-centric ecosystem model of co-created value.
Existing Value Chain: Related Stakeholder Challenges
As evident from Figure 1, Medimplant’s value chain is vertically integrated. Our interviews with Medimplant managers and wider stakeholders revealed that this linear value creation logic translates into several pain points in the patient journey.
Existing prosthetic implant value chain.
Diagnosis
The process starts with the patients presenting themselves to the specialist clinic with potential tumor identified in an X-ray. The sarcoma nurse whose role it is to organize imaging has to deal with “very anxious [and] stressed” patients and their families, due to lack of clarity on the treatment pathway and costs. A nurse related that “they do become more panicked and waiting a week for a scan or a biopsy can be harrowing.”
It could take up to three weeks before a specialist can be seen and treatment plan charted. This is exacerbated by technology limitations and the “intensive process” of current imaging. With multiple radiology scans, it consumes time, resources, and adds to patient anxiety. Accuracy and timeliness of diagnosis and surgery is also affected.
Hospital pre-operative pathway
Limited treatment options and lack of consistent protocols hinder surgical planning and delay patient treatment. A significant issue is communication between Medimplant and surgeons when ordering implants. Multiple forms, emails, and design sessions are often coordinated by Medimplant with ultimate sign-off required by the surgeon, typically taking “6-8-10 weeks maybe more for complex cases” before the order is sent to the hospital. A surgeon remarked, “If someone comes with a grade 6 . . . you don’t want to wait 6 weeks before going in and operating on them.” Another surgeon explained, One of my problems is that I am extremely time poor. I want to offer my patient the best possible solution, but I know that if I want a custom product at the moment, I have to drive that process and take ultimate responsibility. I have to book it in, follow the paper trail . . . so the problem you can solve for me is to help me speed up this process.
Moreover, the radiology and imaging constraints affect Medimplant’s ability to design implants, and prostheses may not replace the patients’ native anatomy. Such complications prolong surgical intervention and patient rehabilitation. The regulatory or reimbursement roadblocks also make it too hard to design/manufacture an implant, so surgeons decide to remove the whole joint or femur at times. These limitations mean the best option is often not available to patients. Yet, there is mounting pressure on surgeons to deliver to a patients’ specific expectation.
Inconsistencies in facts of tumor growth and margins mean that implants could go to waste. As the traditional value chain is designed to manufacture off-the-shelf implants, implants left on the shelf become obsolete and expire. Yet, the one-off nature of custom design means costs are higher, posing a challenge for advocates making a case to regulatory bodies and health insurance companies to approve custom implant manufacturing.
Surgery
The use of different treatment protocols and limitations of off-the-shelf implants compromise surgery outcomes and patient recovery. For example, the surgeon may cut more bone and tissue than required as they have to “cut to the size that is available on the table . . . that’s how it works currently.” A tumor change or differing bone quality could mean that the implant ordered may not fit during surgery, and the treatment is lengthened or becomes obsolete: At the moment . . . we’re doing our best as surgeons to get margins. But, you’d be telling lies to say that you think that you’ve always got the best margin possible for a patient . . . what we’re doing now is very wide margins . . . whereas with technology we can perhaps then do lesser margins because we know that it’s still going to be a safe margin.
These result in additional time and resources for both the hospital and Medimplant.
Post-operative care
Traditional surgery calls for significant post-operative care by nurses and rehabilitation professionals through radiotherapy, chemotherapy, pain management, and exercise regime. Due to the extent of surgical intervention, risk of infection, and slow healing, major surgeries can keep patients in hospital for two to three months, with additional months of rehabilitation at home, increasing patient anxiety and adverse psychological effects. The post-operative recovery and rehabilitation phase is the longest in the patient pathway, sometimes taking up to eight years. A rehabilitation specialist illustrates, We know the longer the length of time, the longer the anesthetic . . . I can only imagine that if all of those things were improved, particularly surgery time, less surgical cutting and all that stuff, it must have a positive impact on length of stay.
Medimplant’s Five-Step Transformation
Stakeholder Scanning: Starting the Shift to a Technology-Centric Model
The shortcomings in the existing value chain motivated Medimplant to shift to patient-specific JIT 3D printed tumor implants. To implement this strategy, Medimplant entered into an OI research partnership with an engineering university’s additive manufacturing research laboratory, a hospital’s advanced research laboratory, and a university business school to develop and assess the technological feasibility of 3D printing implants in-theater and providing robotic surgery for each patient.
As a first step in implementing this strategy, Medimplant presented a technology roadmap to its OI research partners (Figure A1). Designed as a flowchart, this roadmap was a distinct cognitive artifact
20
that instantiated and communicated Medimplant’s vision and pathway for the project, broken down into distinct technological components and their linkages. Although multiple external stakeholders are affected by Medimplant’s existing value chain, the roadmap showed that Medimplant’s conception of value creation was largely inward-looking and technology focused. An industry engineer validates Medimplant’s emphasis on overcoming technology-related shortcomings: We are picking along the technology side . . . the materials that you see used in additive right now are fairly standard . . . we always want better materials and better performance from the material. So the design piece is very interesting . . . we’re always keeping abreast of the newest, up and coming great ideas, who has the best capability for producing more complex, faster [solutions]. . . those are interesting.
Surgeons too seemed to view technology as the manufacturer’s sole domain of focus: “The manufacturer’s expertise is to manufacture, hospitals expertise is to care for sick patients . . . the manufacturers carry technology and the license to do [manufacturing] because it’s their job to do it, just like it’s our job to carry the license to treat.”
Accordingly, Medimplant’s dominant logic 21 that drove its strategic shift was technology-centric—looking at how to achieve JIT manufacturing of implants through 3D printing supplemented by robotic surgery application to enable better outcomes. Driven by this logic, the components of the roadmap were focused on specific technical aspects, for example, pre-operative imaging, CAD modeling, implant manufacturing, surgical template, and intra- and post-operative performance. It was designed as an experimental artifact, that is, a focusing device that enabled Medimplant to validate fragmented sections, communicate what they perceived as key challenges, and gather reliable information for project execution. 22 It was as part of this discussion that the need for a stakeholder mapping exercise was highlighted, to engage a broader stakeholder base for value assessment.
This stakeholder scanning process 23 involved identifying and interviewing Medimplant representatives and a wider set of stakeholders. This helped reveal the need to address various stakeholder pain points, to deliver benefits across a more comprehensive patient and stakeholder journey. Accordingly, it was confirmed that the potential benefits of adopting the new technology broadly fell into three categories of increased value:
Quality: providing a better patient outcome.
Speed: reducing the time required to deliver the treatment, or for the post-operative recovery to return to normal function after surgery.
Cost: improvements in economic efficiency by speeding up the surgical and manufacturing process, reducing labor or material waste.
Internal Sensemaking: Developing New Cognitive Artifacts
The stakeholder scanning exercise not only assisted Medimplant in assimilating information about stakeholder roles, but also triggered an internal sensemaking process through the interplay of information seeking, meaning ascription, and action.
24
The process revealed two important insights. First, it highlighted the varied and siloed conceptions on value creation across different stakeholder groups within their boundaries of expertise. Interestingly, it also became apparent that the patient perspective was largely overlooked. A Medimplant manager commented, The additive researchers are working in the advanced manufacturing precinct so everyone is on their own little piece of land . . . their new manufacturing method . . . industry is very interested in this but from the surgeon’s perspective, what he sees is actually the use of the robot because it’s what helps him to do the surgery.
Another Medimplant representative points to the need to reconcile such differences: I think sometimes the surgeons don’t appreciate the value that the engineers bring to bear. We have some people on our team with 30 years’ experience . . . so they have done literally thousands of these types of implants and they have worked with the surgeons and they have met the patients . . . That being said we can’t do without the surgeons because we don’t know the patient care portion of it and we don’t really know the biology and the archeologic concerns that they would have so I think it’s one of those situations where together we can definitely do more than either one can do separately.
Communication between the design team and surgeons is crucial as another interviewee adds: A surgeon is going a million miles an hour. In the 17 seconds he has in between cases, he needs to be able to log onto an app that’s intuitive; that allows him to either approve or reject and there has to be recommendations from the design side that says why they are designing it one way or another.
To address the siloed vision and approach, a patient-centered stakeholder map was developed, which served as a key experimental artifact going forward. This artifact visually presented the patient at the core, and various stakeholder groups (e.g., frontline healthcare staff, hospital/health system, Medimplant departments, industry suppliers, and government and institutional bodies) in concentric circles in relation to their professional proximity to the patient. The map was validated to ensure the full stakeholder spectrum was captured.
Second, insights from stakeholder scanning also revealed that there were cognitive barriers and resistance to change, and questions were raised around whether JIT was necessary and how buy-in could be achieved across heterogenous stakeholders to move forward. One Medimplant engineer commented, “I’m not totally clear on why we’re all going down this journey of discovering this and it was never about an economic benefit in 3 to 4 years . . . I don’t think you’re going to have an answer in 4 years”
A surgeon challenged the need for JIT manufacturing: “An osteo-sarcoma patient receives chemotherapy, 3 to 4 cycles, that’s months. So just in time manufacturing is possibly not needed . . . because you could build your custom implant and you’ve got plenty of time to do that . . . just in time, you’re really only going to use if you need to take the patient to theatre within a couple of weeks . . . and those numbers are small.”
A surgeon also challenged the mindset of colleagues stating “20th century surgeons stick to the way they have always done things.” Thus, internal sensemaking of insights from stakeholder scanning highlighted the need to develop a shared cognitive map 25 —a common conception of the OI model of value creation. To do so, Medimplant agreed to run a collaborative workshop through the business school partner. Based on insights from the stakeholder scanning process, the “current state” and “future state” patient and stakeholder journey maps were designed as visual representations of Medimplant’s revised cognitive map of its existing and future business model, to be validated with the stakeholders at the workshop. To systematize feedback, the stakeholder journey was analytically broken down into tangible components, and mini-maps that presented more detailed flow charts of different parts of the journey (e.g., imaging, design, regulatory, and reimbursement) were developed to invite focused inputs.
At the same time, each stakeholder could interact with the “future state” map (Figure A2) hands-on during the workshop to collaboratively develop a “desired state” journey. To aid this co-creation, this map was designed as a flowchart with swim lanes to depict various stakeholder and patient perspectives, that participants could consider and contribute to. To keep the discussion patient-centered, four patient personas were also developed in consultation with the sarcoma nurse, each reflecting patient needs and pain-points of a specific sarcoma type. Thus, by graphically depicting the systemic aspects of the stakeholder network, and their value creating roles and relationships in a mutable way, this artifact supported creative negotiation and conceptual combination. This in turn led to the co-design of the new model of OI—and more notably, the development of a shared cognitive map among stakeholders.
Collective Sensemaking: Co-Design the Technology-Centric Model
The patient and stakeholder journey maps served as experimental artifacts as they broke down the technological opportunity into tangible components to efficiently gather information about critical areas of the future stakeholder journey. Yet, interacting with the artifact enabled a “reflective” conversation among participants working in inter-disciplinary stakeholder groups. Each swim lane on the map was relevant to particular stakeholders, and they were invited to contribute feedback and ideas to improve each part of their and others’ journeys. The stakeholder map and personas were presented at the beginning of the workshop to bring everyone to a patient-centered perspective. Personas were then used as artifacts on each table during ideation to ensure participants could develop patient-specific solutions. This process helped participants collectively make sense of the broader stakeholder ecosystem surrounding the patient journey, and ascertain how JIT manufacturing of implants can address patient and stakeholder pain points, leading to the co-development of the ideal technology-centric model.
Thus, the patient and stakeholder journey map, in conjunction with the stakeholder map and personas, acted as transformative artifacts, that is, mutable boundary objects with some interpretative flexibility that facilitate as well as transform in interactions among heterogenous participants. 26 They not only aided straight-forward communication and validation of system process flows, but interestingly, also a process of collective sensemaking 27 among diverse stakeholders. They were used as a means to not only experimentally gather information on new value creation options, but also to collaboratively negotiate, engage, and learn from stakeholders in the process of value creation transformation. 28 These artifacts thus functioned as a cognitive scaffold where the aim is not to change the way OI models were conveyed, but the way they were conceived. This, in turn, helped achieve a shared cognitive map by creating a common mental model, that provided two key benefits.
First, the artifact was the key to build collaboration, consensus, and buy-in among stakeholders for the strategic shift to the technology-centric model. Second, it helped Medimplant managers learn about the central role of patients and stakeholder interaction in value creation, and use others’ knowledge to develop a new OI model of co-created value. The director of the advanced manufacturing center admitted that “this [outcome] was a bit unexpected but has opened my eyes . . . as engineers tend to sit in their own small boxes.” Such a hybrid approach to artifact-based experimentation and transformation led to the co-design of a technology-centric model incorporating revised roles and interactions among stakeholders (Figures 2 and 3) and improvements across all value drivers: quality, cost, and time of treatment, as describe below.
Future prosthetic implant model.
Interactions with external stakeholders to co-create customized implant.
Diagnosis
Following the ideation workshop, the nurse is reconceived as a “sarcoma coach” bringing personal touch and reassurance for patients, “to control [patient] anxiety, streamline the right investigation, and making sure that the right person is available to give them the results.” Technology advancements reduce the time for patient treatment. A sophisticated guided biopsy provides “all in-one” imaging/biopsy in 1 day, increasing imaging speed and accuracy. Surgeons receive radiology scans and image analysis via cloud-based communication, making diagnosis more efficient and effective, and helping improve patient outcomes.
Hospital pre-operative pathway
Virtual planning techniques improve information management and communication between surgeons and engineers to speed up design process. Surgeons use 3D model to visualize a tumor and determine margins more accurately, which allows for detailed pre-surgical planning. The use of auto-planning helps improve precision cutting and tumor excise to preserve bone. The implant journey is reduced by two weeks, while quality of patient outcomes is improved. For Medimplant, a fast post-processing pathway enables adoption of JIT manufacturing and also minimizes storage and wastage of implants.
Surgery
Robotic excision and 3D printed customized implants can deliver complex solutions, make surgeons’ roles easier to navigate and outcomes more effective, due to better fitting and function of custom prosthesis, improved speed and accuracy of surgical procedure, and better turnaround times. One surgeon remarked, [Robotics and 3D printing] would make us able to do things that we were not able to do before, with a level of precision and confidence . . . the best possible outcome, that we never had before. So, it will make us very, very happy surgeons undoubtedly . . . completely ground-breaking . . . a new way of reconstruction.
Patient outcomes are enhanced as one surgeon related: “Life is priority—but then the second priority is reconstruction and function of the patient. So, the more precise we can be, maintaining that safety, the better it is.” Also, JIT manufacturing means that lead time for delivery of custom implant is reduced. Custom implants and robotic surgery could reduce costs for patients in the long term, with lesser need for revision and cosmetic surgery. For Medimplant, this could provide significant market edge.
Post-operative care
Accurate prosthesis fitting allows for immediate weight bearing and functional mobility, having an “active impact on [patient] recovery and future life.” This minimizes their length of stay in hospital, and they can commence their rehabilitation exercise regime quicker. The longevity of prosthesis also decreases the need for ongoing revision, and related risk of infection. Patient outcomes are thus improved.
Revising the Cognitive Map: Pivot to a Stakeholder-Centric Model
The intended outcome of the ideation workshop was to use the artifact to implement the technology-centric model represented by the co-designed “desired state” patient and stakeholder journey map. However, an emergent (and unexpected) outcome was that Medimplant managers began to see potential for larger value creation across the whole ecosystem and not just via technological aspects. One manager commented, “The workshop helped us realize that we couldn’t just focus on one part of the solution . . . that is not enough . . . we need to be holistic in our approach.”
Over time, this new insight resulted in revising the cognitive map, and led to a pivot from the original intended strategy to the development of a new emergent strategy. 29 Over the next few months, this new map brought a revised managerial mental model and cognitive frame reflecting a new stakeholder-centric logic, in turn, driving a new ecosystem model. Thus, from the workshop process emerged a second, more radical transformation of Medimplant’s OI model—the idea of an R&D hub that would aim to create an ecosystem that brings together a range of stakeholders including hospitals, start-ups, government, and universities, all focused on digital healthcare transformation on a larger scale than originally conceived (Figure 4). In this way, the original technology roadmap depicting Medimplant’s technology-driven vision of JIT 3D printing and robotics applications changed with the development of the revised cognitive map. Eventually, instead of reconfiguring the firm to implement the originally proposed OI model, Medimplant decided to pursue the R&D hub—a radically different ecosystem approach to value creation, driven by a holistic stakeholder-centric logic. By partnering with a wider range of external stakeholders and leveraging cross-divisional capabilities, the R&D hub would enable the development and commercialization of solutions to complex problems impacting the future of healthcare:
Future prosthetic implant ecosystem.
The hub will provide a huge holistic shift in approaching value based healthcare . . . a bigger picture perspective . . . what is the value story and the ability to think differently with others’ insights . . . we can work hand-in-hand and be co-located with external partners and this will be a massive shift for Medimplant. (Business Development Manager, Medimplant)
The ideation workshop, and in particular, interacting with the transformative journey map artifacts were instrumental in generating this important pivot toward an ecosystem strategy. Collective sensemaking triggered by the artifacts led to a more holistic framing of the problem, and the possibility of a R&D hub and related ideas were brainstormed during the workshop. The workshop was attended by senior Medimplant managers from global divisions, and this “kick started a change in thinking . . . and their willingness to work differently,” to steer away from a technology-centric logic: Medimplant have been conservative to leap to JIT, but the workshop enabled a more pragmatic and realistic vision to be realized . . . bringing in the research and manufacturing hub . . . the JIT implant is a smaller piece of the holistic picture and the journey map has highlighted this. (Project Manager, Medimplant)
Medimplant’s R&D Lead also reflected on how the journey map artifact facilitated the revision of the cognitive map toward a stakeholder-centric logic: The initial idea was part of a broader benefit that we hadn’t really thought of . . . bringing clinicians in to discuss this helped us to realize the whole potential . . . understanding the clinical problem and what matters to surgeons.
Senior Medimplant leaders challenged the R&D Lead to create a hub that has a clear OI-centric value proposition “that differentiates from the other innovation centers to bring together cross-divisional research with external stakeholders.” To formulate a new ecosystem strategy, Medimplant ran a second workshop, conducted a year after the first ideation workshop. This workshop helped ideate a vision, structure, and business model for the hub—aiming to create an ecosystem to collaboratively develop treatment solutions that leverage 3D printing, robotics, and other digital technologies that cannot otherwise be developed internally.
New cognitive artifacts that were fully transformative were developed to achieve the desired outcomes. Problem narratives were deployed using a design-centered approach to get participants to co-ideate the vision statement for the hub. The key transformative artifact created for this workshop was the process map (Figure A3) to guide the R&D process and business model development. This artifact was kept intentionally mutable and incomplete so as to engage participants in creative negotiation. Medimplant and external stakeholders provided input into identifying the core R&D activities to be included in the hub, how OI opportunities were to be identified, and the design, experimentation, and concept development required to leverage each opportunity. These steps would then feed into the product development and commercialization pipeline of Medimplant. A key aspect of the map was incorporating external industry and stakeholder knowledge to feed into research opportunities, and how Medimplant would apply these to build short- and long-term organizational learning. During the workshop, there was a lot of organic coordination among the diverse participants, and creative interaction with the process map, to produce the final one. Teams worked collaboratively and then presented back to the whole group until consensus was reached. Thus, this artifact both facilitated and transformed in collective sensemaking, and mediated the development of a shared discourse such that the vision and value of the emergent strategy was more fully understood.
Referring to this cognitive transformation, the CEO of the partnering industry/government body commented that “Medimplant have been willing to ‘take the blinkers’ off and see . . . where is the right ecosystem [and] work with universities, industry bodies and government.” Echoing this view, the R&D Lead remarked: It is a broader service spectrum to think about and not just the technical solution . . . [the artifacts] helped us reorder our priorities and thinking for the whole patient journey . . . definitely changed the pathway . . . and where to go from here.
Sensegiving, Issue Selling: Champion the Stakeholder-Centric Model
The process described so far shows how the cognitive artifacts used during the ideation and business modeling workshops helped Medimplant work with key stakeholders and revise its cognitive map, transforming its linear conception of value creation to a new holistic ecosystem model of co-created value. This emergent OI strategy to develop a R&D hub was advocated and eventually adopted through the persistent efforts of the R&D Lead: a key boundary spanner in the transformation process, he was the Medimplant executive who had spent the most time interacting with the OI project partners and considered the implications of the proposed business model shift. 30 He served as the internal champion for promoting this more radical shift.
As a step toward this shift, right after the first ideation workshop, the R&D Lead adopted the patient and stakeholder journey map artifact as a frame to navigate and guide the strategy implementation process. 31 He used the journey maps in conjunction with the stakeholder map to present the patient and stakeholder journey perspective to internal and external audiences via conferences, meetings, and presentations. For example, the R&D Lead presented this artifact to key Medimplant divisions to show a broader continuum of care, and to design value propositions across the continuum with the patient in mind. During the aforementioned presentations, a digital version of the map was inserted into a slide, and projected during discussions with different stakeholders. The “desired state” journey map was also enlarged and displayed physically in the Medimplant co-located biofabrication facility in a hospital, and helped the project manager showcase how each part interacts with stakeholders and the wider ecosystem. He stated that “the journey map has been valuable to communicate the project from many different viewpoints.” Health economics representatives of Medimplant applied the journey map to their projects and implant design engineers overlapped the map on the design process to improve communication with surgeons. An implant designer acknowledged that the artifact “has shown the flow of the patient in such detail, this will really help us map the communication paths for other parts of the customer request system.” These led the European and North American divisions to also develop maps customized to their health systems and patient journeys. The impact of the artifact extended beyond Medimplant; for example, it was presented at conferences by leading oncology surgeons to articulate the wider value for patients.
Later, when the R&D Lead progressed discussions on the potential value of an R&D hub, a robotics engineer relates how the learning from the ideation workshop “provided an excellent base and catalyst to investigate the option to expand the [OI] project to a larger scale.” This triggered a joint meeting across teams to share ideas on the hub and “the dynamic changed quickly to one of adding value . . . the shift went from technical application to solving a problem.” The director of the additive manufacturing center also observed how the workshop enabled Medimplant create a stakeholder-centric vision for the hub: The main objective was to set up local R&D and manufacturing . . . this changes the technological focus and [brings] bigger picture need . . . the hub will be a great opportunity to create something more than Medimplant and bring others into the tent . . . more input from the surgeons [and] companies.
In this way, following collective sensemaking, the journey map artifact has also enabled sensegiving 32 —the act of articulating and shaping meaning for the potential change to the new ecosystem model, as the R&D Lead sought to amplify the collective interpretation of the revised cognitive map and new value creation opportunities, both internally among Medimplant’s business units and externally across the wider stakeholder network.
In the months following the business modeling workshop, Medimplant’s R&D Lead continued to meet with the top management team regularly to champion the R&D hub. In these meetings, he presented the process map artifact produced in the second workshop to articulate the value and benefits of the newly envisioned ecosystem model. Such deliberate issue selling 33 allowed him to influence senior leaders’ attention to and understanding of the new ecosystem model. Through a series of meetings and presentations, he sought further internal buy-in and support for the hub. The report outlining the artifacts and outcomes of the workshop was also shared with all stakeholders. Over the next few months, Medimplant, led by the R&D Lead, began to broaden its stakeholder reach to present the case for the hub to government, industry, health departments, and universities. This required a different level of engagement with new stakeholders, including key policy makers. In 2019, Medimplant obtained further government funding to invest in a R&D hub and established new research partnerships with two universities.
Over a period of six months, the finer aspects ranging from partner development and research focus areas were discussed. Whilst the original strategy was to develop a technology-centric model, it was envisioned that the hub would create a more fluid ecosystem, with less control by Medimplant and more collaboration with a wider range of stakeholders, with key research areas being driven by the expertise and capabilities of these stakeholders: The hub is a win-win and will increase engagement with universities and SMEs and secure Medimplant’s footprint in Australia . . . as Medimplant wants to work with existing partners and broaden its scope of partners and collaborate on new projects.
Ultimately, the hub will not only address current Medimplant business challenges, but create an ecosystem for co-creating radical innovation by leveraging complementary partner capabilities: Companies in the medical technology sector approach innovation in the same ways . . . looking at product to market research and development, whereas the hub will now look at futuristic projects . . . what are the game changing technological needs . . . it is a huge opportunity . . . from an ecosystem point of view. Strong research partnerships will help facilitate the translation of the exceptional research into commercial products. (Business Development Manager, Medimplant)
A Process Framework for Ecosystem Transformation
Figure 5 summarizes the five-step process framework that was used, and that is applicable to how other firms might overcome cognitive constraints to achieve such a transformation requiring coordination with a range of heterogeneous stakeholders. That process began by using an experimental artifact reflecting the firm’s existing cognitive map to trigger stakeholder scanning that engaged potential external stakeholders in validating its proposed transformation.
The second step was internal sensemaking, applying principles of cognitive strategy to interpret this data and build a revised cognitive map. From this, a set of experimental and transformative artifacts were created to explain a revised OI model of value creation. This hybrid set represented the proposed model as modular components that are easier to communicate and test, and was kept intentionally mutable so as to engage others in creative interactions and transformation.
Third, the transformative artifact from this set was used as the focal point for an iterative process of collective sensemaking and negotiation between diverse internal and external stakeholders, and acted as a scaffold to develop a shared understanding of an expanded value creation model.
Fourth, this expanded understanding allowed revising the cognitive map to describe a new value creation logic, which enabled the conception of an alternate OI strategy and business model. The result was a new, fully transformative artifact that enabled ongoing negotiations and organic coordination central to the collective sensemaking process, communicating the nuances of the new model to the disparate stakeholders.
Finally, the cognitive artifacts also facilitated deliberate sensegiving and issue selling, through which the leaders of the new strategy amplified the collective reach and support for the new strategy and business model, both internally and across the network of external stakeholders. Together, these five steps allowed the firm to achieve cognitive reframing—in this case, shifting the firm’s dominant logic from a technology-centric OI model to a stakeholder-centric ecosystem approach.
Conclusion
This study examines how one company used cognitive artifacts to transition to OI and develop radical innovations in both its technology and business model, shifting from mass-produced prosthetic implants for cancer patients to patient-specific custom implants produced by JIT with 3D printing. Medimplant combined the use of experimental, transformative, and hybrid artifacts to negotiate a cognitive shift and stakeholder cooperation, so as to enact a radical shift in its business model that would transform its value chain into a collaborative innovation ecosystem.
The openness necessary for OI combines proprietary value capture goals with permeable organizational boundaries that enable knowledge flows with external partners. 34 However, prior research has said little about how these flows are negotiated, a daunting task when shifting from a linear value creation logic to a newly created ecosystem. Here we show how artifacts can be used to envision and design those flows simultaneously across a wide range of disparate stakeholders, and thus negotiate the tension between cooperative value creation and firm-specific value capture inherent in OI.
In particular, managers can utilize artifacts to overcome cognitive constraints and negotiate new model of OI across a heterogeneous range of stakeholder perspectives utilizing a process Vanhaverbeke and Chesbrough term “open business models.” 35 Here, we show that cognitive artifacts can be used to both reflect and shape the dominant logic underpinning the architecture of value creation and capture—within and across firm boundaries. 36 Specifically, a firm’s dominant logic can be changed and an entirely new logic created through the use of specific artifacts within and beyond the firm—if the firm is flexible in how it uses and evolves these artifacts.
Drawing on the Berglund typology, 37 Figure 6 illustrates how artifacts can be used for developing ecosystem models, highlighting the evolving roles artifacts can play in communicating and coordinating with external stakeholders the cognitive understanding and adoption of a new OI opportunity. Accordingly, artifacts can be used flexibly and iteratively to gather information to validate a distinct proposed open business model with stakeholders (i.e., experimentation), engage them in creative interactions and cocreation of the model (i.e., transformation), or a hybrid of both (i.e., a combination of experimentation and transformation).
Furthermore, as a firm tries to envision a completely new model of value creation, the cognitive artifact should communicate the value-creating logic of each iteration of the model. This requires not only evolving the cognitive artifact to reflect the changes in the emergent strategy, but also how the artifact is used as a boundary object between internal and external stakeholders. Ultimately, cognitive artifacts used as boundary objects can help negotiate a new value creation logic, while an (intentional) delay in freezing this logic can allow a firm to consider and pursue a more radical transformation.
The order in which firms deploy these artifacts matters: in the Medimplant case, a specific shift—from those that are fully experimental, to hybrid, and ultimately to fully transformative—supported its open business model transformation. Interestingly, we found that a hybrid use of experimental and transformative artifact triggered the cognitive shift that enabled the pivot from deliberate to emergent OI strategy. Central to this process was collective sensemaking actively facilitated by mutable artifacts that mediate collaboration and negotiation among heterogeneous stakeholders, which led to “relentless de-framing and reframing” cycles. 38 Eventually, this allowed the firm to go beyond a local maximum to conceive and implement a more radical and higher-potential ecosystem transformation.
The challenges, approach, and solutions of the Medimplant case provides insights into how other firms can use artifacts to manage the cognitive shift toward new OI models of value creation, and address OI opportunities that require a complex restructuring of a firm’s internal and external stakeholder relationships in the face of environmental uncertainty. Beyond offering a concrete process framework for managerial implementation, we also extend the limited understanding of the role of artifacts in making the transition to OI actionable. In doing so, we shed light on how artifacts can be leveraged to enable cognitive reframing and transformation to open business models. Moreover, we show how transformative strategies can emerge when companies incorporate the use of artifacts into their process of developing and deploying OI, especially in complex and heterogenous stakeholder settings.
Managerial Implications
While OI originated as a cognitive paradigm where firms seek new external paths for sourcing or commercializing knowledge, prior managerial research tended to emphasize a specific type of firm transformation. In such cases, most elements of the business model are held constant and one element is varied, typically by substituting external innovation for internal innovation or external commercialization for internal commercialization: the firm continues to leverage most of its remaining resources, capabilities, and external relationships. 39
From a cognitive perspective, research has tended to focus on two areas: how internal cognitive barriers such as the not-invented-here syndrome affect firms’ adoption of OI; and how the differences in cognitive maps between the focal innovators and external stakeholders make it easier or harder for the focal firm to access external knowledge.
Beyond these customary challenges of OI adoption, large firms face specific cognitive constraints to effect a radical transformation of their closed linear value chain into a new open ecosystem model—requiring them to transform a more complex set of value creating activities to evolve their business model. This requires a shift in the firm’s dominant logic; that is, the cognitive understanding of how the firm has created and captured value till date. 40 This is further exacerbated by the complexity of heterogeneous stakeholder interests and understandings that further constrain the transition to an ecosystem. 41
Prior research has shown that firms in stable industries with similar cognitive maps are less likely to adopt openness. Such stable industries are particularly vulnerable to technological change that renders obsolete previous competencies and business models, and thus need cognitive reframing to stimulate the forward-looking processes necessary for strategic transformation. These cognitive processes ultimately underpin if and how traditional business models can be transformed into OI models of value creation.
Here we identify three layers of cognitive constraints for such a transformative change. The first layer comprises the customary challenges within a firm to understand the changes in competencies, roles, and activities required to implement OI. The second is the need to develop and refine a new value creating logic when a firm is creating a new-to-the-world business model. The third is the iterative process of reframing the firm’s dominant logic from its current cognitive understanding to its eventual goal. 42 In this study, we address the question of how such a transformation can be achieved in practice.
Our study highlights the practical role of cognitive artifacts in mapping and implementing this cognitive shift to the desired ecosystem state. 43 We show how these artifacts can be used to shape the cognitive maps of a firm’s managers to drive purposeful choices of OI activities and allow collective sensemaking across all ecosystem stakeholders despite heterogeneity of interests and understandings. At the same time, this study suggests how artifacts can facilitate considering multiple possible configurations, avoiding a premature cognitive reframing, and allowing a more radical transformation.
Thus, we show that using cognitive artifacts as boundary objects can help managers manage the complexity of such ecosystem transformation and thus make the transition to OI more concrete and implementable. In this respect, our study illustrates the nuanced roles that experimental, transformational, and hybrid artifacts can play in such a transformation process. Experimental artifacts are first used to test an intended OI strategy, allowing managers to gather and validate concrete information from external stakeholders. Then hybrid and transformative artifacts can be used to deploy increasingly radical deviations from that intended strategy. This requires managers to design and deploy mutable artifacts that can facilitate creative interactions and collective sensemaking among stakeholders at key junctures of the transformation process. Together these support the cognitive reframing needed to design and implement new OI models.
Overall, our findings point to the centrality of artifacts in driving organizational and strategy flexibility in creating open business models—and importantly, the order, schedule and trajectory in which to deploy these artifacts in shaping managerial cognition and stakeholder collaboration for achieving the desired transformation. Additionally, our findings also show that consultants who present relevant practical advice on artifact design and deployment can help firms overcome existing frames, 44 especially in situations where interorganizational complexity and stakeholder heterogeneity is involved in the transformation.
Footnotes
Appendix
Funding
This project was co-funded by the Department of Industry, Innovation and Science (Innovative Manufacturing CRC Ltd).
Notes
Author Biographies
Krithika Randhawa is Senior Lecturer (Assistant Professor) of Innovation and Entrepreneurship at the UTS Business School, University of Technology Sydney, Australia.
Joel West is Professor of Innovation and Entrepreneurship at the Keck Graduate Institute in Claremont, California.
Katrina Skellern is a post-doctoral research fellow with the Centre for Business & Social Innovation at the UTS Business School, University of Technology Sydney, Australia.
Emmanuel Josserand is Professor of Management and Director of the Center for Business and Social Innovation at the UTS Business School, University of Technology Sydney, Australia.