Ecosystem Leadership

In today’s world, the most effective CEOs recognize that no one is an island: no CEO, no company, no industry, no country. The lines have permanently blurred, and chief executives must embrace the opportunity to help shape our shared future — as enterprise leaders who are moving across and beyond — to influence entire ecosystems

Sarah Jensen Clayton, Tierney Remick, and Evelyn Orr -Today’s CEOs Don’t Just Lead Companies. They Lead Ecosystems

That quote from a recent HBR article speaks to a phenomenon that has been developing for some time in a synergistic relationship with a growing focus on purpose. I have covered the topic of ecosystems extensively across many years – the various posts can be found here. An ecosystem is a complex network of connected stakeholders interacting in ways that create and capture value for all ecosystem participants. Increasingly, that value addresses the various aspects of our well-being. This visual describes a cross-industry scenario that addresses human need in the context of wellness (click to enlarge).

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The Journey: A World Of Ecosystems

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:

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The Journey: The Next Phase Of Human Development

In a continuation of my series titled “A Journey through the Looking Glass”, I will touch on the next phase of human development. The post picks up from the last one where I explored two historical paths of innovation. To this point in our story about the future, we have explored the past, identified signals that may help us understand the future, and applied that learning in a way that helps us envision it. In telling this story, a common reaction is split between fear and fascination. Indeed, both reactions are human responses we must consider when gazing into the future. In truth, we are part optimist and part pessimist. I explored that sentiment in a poll dating back to 2016. In that poll, 44% identified as optimists, 16% as pessimist, and 38% were somewhere in the middle. What do you think?

In this segment, I will view the future through the lens of fascination and optimism.


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The Purpose-Driven Corporation

I’ve had the pleasure of facilitating a CEO roundtable each of the last four years at the CEO of the year gala sponsored by Chief Executive Group. The 2021 winner was Merck’s Ken Frazier. This year, the roundtable explored the growing shift towards purpose. Specifically, the roundtable Topic was: “Purpose-driven: Implications for Strategy and Cross-Industry Collaboration”.

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Ecosystem Business Strategy

I recently added a book to my library titled Winning the Right Game. I then had the pleasure of talking to the book’s author, Dr. Ron Adner. He was gracious enough to sit for an interview, which you can view below. This ecosystem topic is growing in importance, but success in a growing ecosystem world is not easy. Dr. Adner provides his thoughts on what it takes to succeed. Anyone exploring ecosystem business strategies will benefit from his advice.

Winning The Right Game

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:

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The Building Blocks Of Our Future

In a post from 2019, I described the building blocks that established our modern society. It was convergence across multiple domains that shaped our current world. From the post:

A century ago, a convergence across domains ushered in unprecedented advancements in human development. As Robert J. Gordon describes, the special century (1870 – 1970) that followed the Civil War was made possible by a unique clustering of what Mr. Gordon calls the great inventions. The great inventions of the second industrial revolution significantly improved our well-being. In his view, the economic revolution of 1870-1970 was unique in human history, unrepeatable because many of its achievements could only happen once. What makes this century so special, is that these inventions altered what until then, was a life lived in misery. 

Frank Diana – Convergence

I captured many of those building blocks in a visual that I use to tell this story (click on the visual to open in a separate window).

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Organizing For An Ecosystem World

As we witness the rise of ecosystems, organization structure becomes a critical area of focus. How do we operate in an increasingly horizontal world versus the vertical structures of the past? Should organization structure mimic the ecosystems that they will ultimately operate in? Do organizations ultimately become platforms? A recent video gives us answers provided by an early pioneer: Haier.

Ecosystems Set To Redistribute $60 Trillion In Annual Revenue By 2025

In a post back in 2013, I focused on value ecosystems and how they would blur the lines between industries, making Industry constructs irrelevant in the future. At the time, I said the phenomenon would accelerate and companies would ultimately identify the relevant ecosystem(s) that enable their growth strategies. It was clear back then that ecosystems are complex, relationship-oriented, and represent future growth opportunities that are increasingly outside a company’s traditional business.

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Innovating In An Uncertain World

Two words have come up frequently in leadership dialog: Innovation and Ecosystems. Several posts have described ecosystems and the dominant role they are likely to play in future economic activity. The number of organizations pursuing ecosystem-related initiatives is growing rapidly. Innovation on the other hand has been a topic of conversation for most of our economic history. Yet, something is different. The conversation about innovation culture is intensifying and the need for an innovation mindset to permeate the organization is increasingly recognized. Why? What changed? We can attribute some of the change to uncertainty. One could argue that business has always operated in uncertain environments. I would argue that a number of factors make the uncertainty in our current environment unique, comparable only at some level to past transformative periods in history. We then must consider complexity, pace, volatility, unpredictability, and the unexpected.

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Revisiting Experiences

So far, I have revisited Automation, Digital Transformation, and Autonomous Vehicles. This reflection on the past continues with a look at experiences. Back in 2013, as part of a series on digital transformation, I focused on what at the time I referred to as Next Generation Experiences. Back then, the issues of customer experience, customer-centricity, and customer intimacy were top-of-mind and dominated many executive discussions and conference agendas. I envisioned a next generation experience anchored in how customers think about it, not the way functional silos do. Those experiences would be delivered by the stakeholder ecosystem, requiring experience strategies to include all stakeholders whether internal or external.

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Organizing For Future Readiness

Back in 2013, weak signals clearly pointed to a structural change that was desperately needed. In a Post from that year, I described the type of change I envisioned in a world that looked very different than the world where these structures were born. The pandemic, as it has on so many levels, made something lying beneath the surface very visible. What it should also illuminate for leaders is that the future is uncertain, approaching rapidly, and likely to contain regular extreme events. Those factors make future readiness crucial to viability. To be future-ready, and to operate in a world dominated by uncertainty and pace, structures must change. When I say structure, I mean a broad set of things to consider:

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Is The Shareholder Doctrine Dead?

Fifty years ago, Milton Friedman announced that the social responsibility of a business was to increase profits. So was born the shareholder value era. Friedman was pushing back on dominant movements of the day: the new deal and European models of social democracy. Global inequality issues trace back to this rise of shareholder value. A recent Article explores the topic and the resulting power of the stock market. The authors suggest that while the market and the wealthy soared, consideration of the interests of workers, the environment, and consumers declined. 

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Strategy Looks Very Different In A Fast, Complex, And Uncertain World

In a recent Article, author Greg Satell describes strategy in a post-Digital world. Michael Porter positioned Competitive Advantage and dominating value chains as the foundation of strategy. Like many of our institutions and ideas, multiple forces are pushing that view into the dustbin of history. Two key forces are the shift to horizontal ecosystems versus vertical value chains, and technology cycles outpacing planning cycles. I have written extensively about Ecosystems and their impact on the value equation. Maximizing bargaining power among suppliers, customers, and new market entrants gives way to value-sharing scenarios where all participants in an ecosystem win.

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The Ecosystem Edge

I just finished another book and added it to my Book Library. Ecosystem Edge was written by Peter J. Williamson and Arnoud De Meyer. Ecosystem EdgeThe 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.

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Shifting Platform and Ecosystem Dynamics

As platform business models increasingly gain board-level attention, the ecosystem conversation intensifies. David Kish – a TCS colleague – recently worked with the broader team (Kevin Mulcahy, Rose Rodriguez, Bill Quinn, Bill Bosak)  to author an article focused on shifting platform and ecosystem dynamics. I am sharing Dave’s article via this guest post.


Since the advent of the internet, the combinatorial effect of innovation in science and digital technologies has rapidly driven the world toward a platform economy where software, apps and APIs enable every human activity and radically change how people interact and create value. Companies like Google, Microsoft, Facebook, Amazon, Apple, Alibaba and Tencent, which represent seven of the top ten valued companies by market capitalization, are leading this transformation and have created an imperative for all companies: develop platform capabilities and adapt your strategy to survive and succeed in the platform economy.

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Embracing the Collaborative Nature of Ecosystems

Thoughts I shared at this years TCS Innovation Forum in New York City.

Ecosystems in the Context of Digital Transformation

I recently authored an article on ecosystems and digital transformation along with leading platform strategist Simon Torrance. Here is a brief abstract of the article. You can read it Here on the TCS website – along with other perspectives on digital transformation.


ABSTRACT

As Frank Diana and Simon Torrance explain in “Defining Your Digital Ecosystem: The First Step in a Machine First™ Transformation,” many leaders are no longer looking at strategy and industry structure in the ways of a non-digital world. Business 4.0 and EcosystemsInstead, they’re analyzing how emerging ecosystems—networks of stakeholders, including business partners, suppliers, customers, and competitors that interact digitally to create value are supplanting traditional industries as the organizing construct. For example, in a mobility ecosystem, automakers no longer just make cars; they must redefine the very notion of automobile ownership and how people get around.

 

 

Ecosystem Readiness

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:

  1. The mental models that drive an organization
  2. The lens in which an organization views value creation and capture
  3. The orientation of an organization – which in most cases is shareholder value
  4. 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).

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Unlearning May be our Biggest Challenge

The illiterate of the 21st century will not be those that can’t read or write, but those who cannot learn, unlearn, and relearn – Alvin Tofler, Rethinking the Future. 

As we all become life long learners, unlearning could be our biggest challenge. Our mental models prevent us from seeing the need for change. We are creatures of the only world we have individually known. Even if you are one hundred years old, the mental models established after humanities second Tipping Point dominate your thinking. They form our intuitions and belief systems.

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