Ecosystem Business Strategies & Mindset
It seems business leaders today must recognize and implement two distinct kinds of business strategies. One strategy for well established businesses in traditional industries designed to maximize efficient operations. The other is ecosystem business strategies required for innovative, fast transforming and emerging business environments.
In the traditional automobile manufacturing industry, competitors and suppliers were well known and competition was mostly centered around incremental design changes and improving efficiencies. Today electric vehicle (EV) manufacturers often use new and different supply chain ecosystems, and are just as likely to emerge out of Silicon Valley as Michigan.
In areas where there are a lot of innovations happening, it is more likely that cross-industry ecosystems will be formed to deliver new kinds of products, services and value that were not found within an existing industry. As a result of this, business leaders today must understand what it means to compete with ecosystem strategies.
Many new EV start-ups are being developed inside ecosystems today that include new participants from across many different industries: computer, electronics, energy, IoT, energy storage, internet, automotive, software, technology, telecom, transportation, venture capital, etc. All of these business entities must successfully align with each other in a manner that delivers enough value to be attractive to the end customer and to all those participating in the emerging ecosystem. This is a new kind of challenge and solutions will require new ways of leading and thinking.
Networked businesses and individuals, plus a plethora of digital platforms, makes it far easier today to find and connect to organizations that can contribute to and benefit from participating in your ecosystem. Each of these potential ecosystem participants might also be sitting on top of massive amounts of data that can inform and add value to the other ecosystem members. The goal of forming an ecosystem is to organize a group of contributing members that can first align their interests, and then create more value together than separate.
It is the notion of “ecosystem-value” that makes ecosystem business strategies so unique. The central organizer or orchestrator of an ecosystem, must have a collaborative and big-picture mindset that enables them to look out for the welfare of all the ecosystem participants, not just their own bottom line. If a new product requires nine ecosystem participants to develop and scale it, but three participants aren’t benefiting, then the ecosystem is not successfully aligned and is not sustainable. In ecosystem strategies it’s about the ecosystem thriving. This again takes a different, big picture leadership mindset and strategy.
As an ecosystem leader or participant, it is important to understand the value you and all other participants bring to the ecosystem as it will be constantly evolving and generating new opportunities and potential competitors. In Dr. Ron Adner’s book, “Winning the Right Game,” he writes about Kodak. Kodak successfully transformed their business from cameras, chemicals and film to being a digital printing powerhouse focused on organizing ecosystems to capture the value emerging around sharing digital photos (memories) on paper. The problem came when the value in this ecosystem shifted when mobile phone companies (Kodak ecosystem participants) upgraded their screens to be relatively big, beautiful, colored and connected to the internet. Seemingly overnight, the value (capturing and sharing memories) moved from photos printed on paper to mobile phone screens and internet sharing. That left Kodak with far less value and the ecosystem collapsed. A key Kodak ecosystem participant (mobile phone manufacturers) innovated and became their new source of competition. Once the value in the ecosystem shifted participants were no longer aligned and it dissolved and reformed into a different ecosystem with different participants.
Where are the sources of greatest value generation around electric vehicle ecosystems? Is the value generation of the future in the computers, software, sensors, robotics, batteries or motors, or is the value in the delivery of mobility? These technology players and many other companies will form, dissolve and reform ecosystems that generate trillions of dollars in value. Is your organization agile enough to capture some of it? Do you have the right mindsets and ecosystem strategies to jump in and out of these ecosystems fast enough to make money? Welcome to the new world!
As a final note, today most of us buy vehicles, but in the future will having a powerful immersive virtual 3D experience in the Metaverse mean physical travel loses value? Will the value of vehicle ownership give way to mobility-as-a-service? All of these take an ecosystem to deliver.