In a continuation of my series titled “A Journey through the Looking Glass”, I will describe how convergence across multiple forces likely changes the organizing system of society. The focus of the post is on one element of this change: the way value is created and captured in the future. The post picks up from the last, where I explored the next phase of human development. The well-being discussion from that post flows naturally into a discussion about our life experiences. Those experiences will increasingly be enabled by ecosystems.
A WORLD OF ECOSYSTEMS
Yogi Berra is credited with saying that the future ain’t what it used to be. What a perfect way to describe a phase transition that completely changes the way we think about the future. In an earlier series post, I described the complexity, volatility, and uncertainty associated with envisioning possible futures. Indeed, the experimentation we often talk about in the context of innovation also applies to the future. While running for president in 1932 during the depths of the Great Depression, Franklin Roosevelt remarked:
The country needs and, unless I mistake its temper, the country demands, bold, persistent experimentation-Franklin Roosevelt
Globally, I’d say we are in that same place, where an emerging era of experimentation is driven by the fact that no clear answers exist to the challenges looming before us. As we explore those challenges, they force us out of traditional boundaries. When I first launched my Blog in 2010 it was titled Blurring the Boundaries. It was growing clearer that lines were blurring between industries, physical and digital, reality and virtual, and other domains. It was evident that our growing digital world would drive significant structural change. This change results in a new organizing system that fundamentally alters our long-standing approach to organizing society. An organizing system represents our beliefs, institutions, governance, controls, rewards, and influence.
This blurring or collapse of boundaries is enabled by innovation that now allows once distinct Industries to come together to address challenges and satisfy human need. Future value creation will shift in orientation from vertical (Industry) to horizontal (ecosystem). Our industry construct – born during revolutions that set the standard of living in the western world – will give way to a finite set of horizontal ecosystems. Ecosystems are complex, relationship-oriented, and represent future possibilities for society, as many of our grand challenges like food abundance, health and wellness, environment, energy transition, expanded mobility, and more, are ultimately addressed via ecosystems. This road to future ecosystems is paved by stakeholder action in the coming decades and driven by purpose and our life experiences. When thinking about ecosystems, Apple is an often-cited example, but the connected car, smart cities, smart homes, and others also provide a glimpse into the future. The autonomous vehicle is another future example of multiple industries involved in value creation for the car owner.
Value creation and capture in the broadest sense becomes a collaborative affair that increasingly involves multiple stakeholders. Managing in this world is more complex, requiring effective collaboration and a focus on collective value sharing. Over time, established peer-to-peer relationships lead to benefits that accrue to all ecosystem participants. Along the way, value design gets complicated. It is this complexity that I believe challenges traditional thinking, both in how we view relationships and how we create and share value. We are therefore likely to see increased value design activity supported by emerging ecosystem models in the short term, with the competitive battleground shifting to ecosystem versus ecosystem. But in the long term, as traditional thinking gives way, the resulting ecosystems have the potential to move towards the collaborative commons described by Jeremy Rifkin.
This rise of ecosystems drives multiple stakeholders to come together in symbiotic relationships that achieve greater value for all, versus what any stakeholder could capture alone. As this evolves, Ecosystem Thinking must replace entrenched models of value creation and capture. Operating in a world of dissolving borders becomes a necessity for leaders. The way we serve our customers and citizens will transform, as will the way we fulfill human needs and enable life experiences. This visual depicts a perspective on an ultimate finite set of nine ecosystems.
In a business context, competing in this new world drives leaders to define their business models not by effectiveness against traditional industry peers, but how effective they are at competing within rapidly emerging ecosystems of businesses from different sectors. The rapid evolution to this world is currently fueled by platform business models. The early days of this transition focus on Uber-like platforms that extend traditional market mechanisms where value accrues primarily to platform owners. Fragmentation is likely to follow, as redundant platforms that enable life experiences emerge in every segment of the economy. The consolidation that ensues is likely to establish the eventual and finite set of ecosystems. Several signals point to an evolution towards models where value accrues to all participants. The ecosystem phenomenon is now getting considerable attention. Given its likely impact in the coming decade, that’s a good thing.
Everything that we have discussed in this series to date leads us to the next section. A point in time where a great reset is likely.
First Post in the series: A Journey through the Looking Glass
Second Post: An Historical Perspective
Third Post : A Growth Of Knowledge
Fourth Post: Our Current World Order
Fifth Post: Convergence Drives Human Advancement
Sixth Post: Catalysts Of The Past And Those On The Horizon
Seventh Post: A Phase Transition
Eight Post: Our Complex, Uncertain, And Volatile Future
Ninth Post: The Building Blocks Of The Future
Tenth Post: Dual Paths Of Innovation
Eleventh Post: The Next Phase Of Human Development