For at least seven years, the concept of ecosystems has been discussed and defined in various ways, while sometimes applied in a context that dilutes its eventual impact. At the highest level, an ecosystem is a network of connected stakeholders interacting in ways that create and capture value for all participants. Why has this ecosystem phenomenon emerged now and why do people expect it to drive structural change? Once again, history may provide an answer.Continue reading
My belief in a shifting organizing system dates back several years. The work of leading think tank RethinkX effectively highlights why. History tells us that a collapse is inevitable when the existing system can no longer adapt fast enough to order-of-magnitude improvement in technological capabilities. When this condition is present, a new organizing system is required. RethinkX defines an organizing system as:Continue reading
I just finished another book and added it to my Book Library. Ecosystem Edge was written by Peter J. Williamson and Arnoud De Meyer. The move towards ecosystems as an organizing principle for market activity has been a foundational piece of my research on the future of business. You can find that research here. The book goes into depth on the what, why, and how of ecosystems. Anyone looking for detailed guidance on how to execute in this ecosystem world, this is the book for you. Supported by several real-world examples, the authors explore the different aspects of succeeding in the ecosystem world. I highly recommend the book. The abstract is included below.
Uber and Hyundai have teamed up to deliver on the Jetsons flying car future. One of several flying car initiatives likely to be realized by the end of the decade. Air taxis represent a further evolution of the Mobility Ecosystem. People point to the flying car as an example of future predictions that did not pan out. Well, much like everything else in this era of exponential progression – get ready. Uber Air is one example of services emerging in this space.
This Recent Article is the result of a collaborative effort between TCS and the Clayton Christensen Institute. The article examines the strategic choices faced by various players in the emerging Mobility Ecosystem – viewed through the lens of the Theory of Disruptive Innovation. It outlines the best course of action for achieving long-term profitability in the ride-hailing market.
As with any future scenario, the variables that must be considered in determining the path of the scenario can be overwhelming – There is Peril in Predicting. However, inaction is not an option. Strategic choices must be explored.
As the world continues its march towards platform-supported ecosystems, organizational readiness becomes a critical area of focus. Four facets of an organization contribute or detract from success in an ecosystem world:
- The mental models that drive an organization
- The lens in which an organization views value creation and capture
- The orientation of an organization – which in most cases is shareholder value
- The organization’s culture
The growth engine that ecosystems represent will serve as a forcing function, pushing Organizations to Mature across these key facets. For example, I firmly believe that over time, a transition occurs from shareholder value to stakeholder value. This transition places purpose at the center, with shared value at its core (Click on the Visual to expand).
Our structures and institutions are increasingly challenged by rapid innovation in science and technology. As Klaus Schwab stated in his book Shaping the Fourth Industrial Revolution, we face the task of understanding and governing 21st-century technologies with a 20th-century mindset and 19th-century institutions. One such institution is our vertically-oriented industry structure. We are in the early stages of An Ecosystem Evolution, where the boundaries between industries are completely blurred. The creation and capture of value is increasingly horizontal in nature, ultimately giving Rise to a Finite Set of Ecosystems.
As this shift occurs, our strategies are iterative in nature and guided by a constantly evolving view of emerging ecosystems. At the heart of this work lies Ecosystem Models. These models provide a range of possibilities inherent in emerging ecosystems, and identify three critical facets:
The notion of value creation and capture is a core component of business and the models that drive it. While historically viewed with a traditional product mindset, several emerging forces will alter this basic tenet of business. At its core, the way businesses create and capture value will change – the degree of change ranges from transformative to historical. The last several posts focused on the historical – namely Jeremy Rifkin’s view that we are heading towards A New Economic Paradigm. The foundation of Mr. Rifkin’s argument is a Third Industrial Revolution (TIR) platform that takes the marginal cost of production to near zero. Enabled by the Internet of Things, this General Purpose Technology (GPT) Platform could alter our landscape more dramatically than previous GPTs (steam-locomotive-printing press, electricity-auto-telephone). What happens to value creation and capture in a near zero marginal cost scenario?
The next focus of this transformation series shifts to the emergence of value ecosystems and their role in driving the Enterprise of 2020. As we look at the Apple ecosystem and offerings like the connected car, mobile commerce, energy efficiency, electric cars, eHealthcare, and energy performance contracts, we can see the lines between industries blurring. Some even question the relevance of Industry constructs in the future. As this phenomenon accelerates, more and more companies must identify the relevant ecosystem(s) that enable their growth strategies. These value ecosystems are complex and relationship-oriented, representing future growth opportunities that are increasingly outside a company’s traditional business.
My belief that digital is still very misunderstood is growing stronger. Instead of understanding digital to be the transformative engine that drives sustainability – it is still viewed as an offering or channel. Those are indeed critical pieces of the digital story, but it’s not the whole story. Those very innovations that drive our current disruptive environment – transform us to deal with the aftermath. Our customers have shifted – and we can’t shift with them if we are inhibited by traditional views of digital. I participated in a recent think tank discussion, where people talked of digital’s small contribution to revenue, concluding that it was not worth the focus.