The Building Blocks for Managing within an Ecosystem Design
Today business organizations are in need to put in place the building blocks for managing ecosystem designs. These building blocks are offering the potential of new pathways to a greater 'connected' innovation, expected today, one that gives increased value to the consumer. Yet the understanding of what this means in commitment and structuring has some clear implications behind this. Managing ecosystem arrangements, I feel requires a far greater understanding of the potential design, so you can achieve a more robust, open, dynamic and highly collaborative environment. I have argued in previous posts that working in Ecosystems will change the nature of business activities. Let me take four of these: •
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Ecosystems will have the potential to expand capabilities and enable experiences beyond anything possible today in the present world that most of our business organizations operate in; ones that are operating in their own ‘disconnected’ world, internally focused, constrained by limited technology connection and resources. Ecosystems open up the world. They connect it for richer access to diversity and different sets of discoveries not possible within one organization's current capabilities or capacities. It is highly collaborative and interactive. It is by this very nature of opening up and interacting building a growing interdependence in relationships, that is driving the new innovation potential. One is looking to create and explore new business value by acting together, which offers the potential for outcomes to be greater than the sum of the individual parts.
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As our world becomes more complex, ecosystems offer ways to coalesce around those sort of challenges, that brings together within the ecosystem community the potential to build, solve, share and exchange goals and concepts that help solve these complexities, achieved in highly collaborative ways.
We presently seem to lack a process of evaluation on what forms the building blocks of ecosystem validation and why entering into one can be significantly different. Let me offer some thoughts here in a fairly long, rather detailed post that explores six critical parts: As we learn and gain a better understanding of how ecosystems work, we need to establish a thinking-through of what might form the controls and mechanisms needed to be put into place. We need to build a common understanding, so as to move with increasing comfort into this broader community of networked organizations to operate within by recognizing some founding principles. We need to recognize the building blocks will be different in managing ecosystems Ecosystems do build far better around platforms. Platforms are not just the digital meeting point, they are providing critical focal points to draw in the community to collaborate through, yet there are some critical building blocks the Ecosystem participants need to have in their broader framework of shared understanding. I would like to explore six aspects here that need ecosystem management considerations, ones that form the building blocks of managing within ecosystems. By recognizing this set of conditions we can design the community structure far better.
Distinctive Governance Challenges that keep evolving. Governance is always essential. It provides the rules, mechanisms and framing for all the partners to sign on to and use as (one of) the foundation documents, to refer to on a constant basis, as issues arise and need some level of resolution. Yet in designing the governance within ecosystems you do need to reflex on a number of issues that can arise in evolving environments: •
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Here you need to establish a relational, institutional and coordination sets of strategic and operational approaches. The document needs to reflect on the constant reshaping of the ecosystem as it evolves and recognize that this is a ‘living’ design. It needs to articulate the influencing and coordinating mechanisms, their different levels and the protocols and procedures to resolve any disputes or pathway directions all would need to follow and adhere to. It needs to determine the boundary conditions and if, and when, these change, which they are most likely to, there is a mechanism in place to recognize this and determine any new scope, direction or design to be accepted going forward. A governance document needs to have built into it sufficient commonality and be clear in its spirit of amiability to coordination and decision-making. It needs to determine the critical driving forces but equally, reflect on the different catalysing forces in tensions and design that individual members will attempt to
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impose, so there needs a resolution method to be able to go back and refer to, so as to adjust and adapt as more insight and design evolves. Managing the dynamic tensions carefully can result in significant breakthroughs in thinking and design solutions. There will be very different cognitive frames constantly occurring, as we all see something more unknown than known in our own ways of thinking and experiences. The Governance mechanism should attempt to reflect this variance but have the controls to recognize and draw those increasingly into one view, vision and mission. What you start with inevitably does not stand the test of time, certainly when you are in a creative, innovative, pioneering environment. Checking constantly builds the changing view, allowing options to reflect this in parts of the vision and mission, so all those involved have an understanding that this is a "living, breathing evolution" All ecosystems evolve or will eventually die. The ability to design in some constantly proactively shaping, steering and leveraging mechanisms helps. How this is handled, communicated and discussed becomes a critical 'living force' to construct. Lastly, the whole need to address inertia or free-riders does need carefully designed into the document. Those that cannot support creation have a lesser place in any ecosystem. They cannot stop evolution. Those not contributing need to recognize the consequences in ecosystem thinking of natural selection, the need of having a certain fitness, robustness, and resilience is to be valued, otherwise, it offers no value.
Knowledge of Creating Ecosystems Having some level of ecosystem thinking does help as already outlined. •
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Applying some principles that offer a systematic structure in exploring the underlying process is valuable to share. It is how any scientist, researcher or designer should go about his or her business. Knowing the principles of this can help form part of the common language. Just simply ask “why an ecosystem needs” and the necessary “complementary market considerations” offer the potential for your evolutionary thinking. It is also good to have a clear life-cycle perspective as this provides even greater scope for collective thinking and eventual design. The value of extensive evaluations, often conflicting in viewpoints can become the catalyst, it can draw out modifications in thinking, appreciating and mapping back to the bigger picture or digging deeper into one aspect. To achieve a goal formulation everyone should stay adaptive and flexible and then lock down their collectively agreed design. It is the ability to be “modified” that gives the greatest potential of not just survival but of becoming increasingly dominant.
Network Embeddedness Any network of collaborators does very quickly get past the pleasantries and get down to work. •
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The early framing of the challenges needs to be realistic, to have a level of clarity of the known projected risks, have exchanged significantly on the competitive advantages each contributor can bring and a growing appreciation of the capabilities and capacities of all the partners participating. It is ideal to encourage an open exchange of reciprocating visits initially, some further social and informal exchanges, clarity of the mechanisms for working follow-up, how
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they build the trust for working together, sharing in collaborative teams, insights, knowledge exchanges and recognizing any dangers in co-dependent relationships and what that might mean. Also to ensure you have some form of the mitigation process, when signs of opportunism creep in and how you handle the intellectual exchanges that can easily flow without recognition of the IP involved, establishing a mechanism to manage the "real cause of understanding or motive" sometimes behind the other parties seeking these out. The whole facilitation of a network is hard work. The mechanism and creating the right conditions in balancing out the mutual co-specialization dynamics, balancing out opportunities, openly talking about constraints or changes occurring in one organization or another, and the general reciprocity between parties needs constant attention. These conditions need to be constantly favourable for this often loose structure and extracting maximum performance and identification of projects that have high levels of complexity, cost and resource commitment. Justifying the financial return needs constantly handling but this 'evaluation' mechanism needs to be clarified early and built into the reviewing process to stop it from being consistent nit-picking, quietly eroding confidence and belief. Any ecosystem partnership out to change the “existing into the preferred” needs strong executive backing and identification, it needs encouragement and clear resolution. "Seeing the financials" needs a milestone approach alongside prototyping and piloting validation for example. Any network does need some commonality. Each person often looks at and converts their understanding differently and how this is cross-checked and managed is critical. There needs to be some clear network interlinking effect, on performance, measurements, and metrics. This needs to be shared, signed up to, and seen as a collective performance, to create that need for interdependency this requires.
The Need to Defuse For me, Absorptive Capabilities become vital operating within any Ecosystem. • • • •
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It is the ability to acquire, assimilate, transform and exploit knowledge flows, both coming in, and circulating between parties but also on outputs or learning outcomes. Building the understanding of key capabilities, of the appropriate useful knowledge, consistently wanting to share within the network, getting to see the ‘anchoring points’ of where it has real use and value, It is ensuring knowledge is well diffused and that is likely to require a common knowledge repository and a system that tracks and traces all the activities and people searching and contributing to this. Then there is the need to become increasingly comfortable to promote information disclosure requires a formal mechanism, knowing how to tackle those many informal ones constantly occurring, how to flag advances, knowledge and where new resources are brought to bear. It is the ‘combination effect’ we look for in ecosystems. How do you channel attention to promising areas of development and equally prevent the dissipation of effort or rein in the misdirected needs by carefully coordinating and managing
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Also, Ecosystems require intense interactions as they are only as powerful as they are dynamic. It is the ability to promote the constant movement to desired directions, as well as to ensure smooth transactions and collaborations can occur. It is how you set about the ‘complementary’ of this that does generate trust, and reciprocity and encourages further knowledge sharing. The task of diffusing, encouraging and drawing out is absolutely vital for ecosystems to flourish and grow.
Consider the Related Architecture •
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There is the technology architecture- it is the conduit for sharing resources, it has important platform considerations of what this can provide, how it and where it connects, not only into the ecosystem partners but their systems back in each company participating. So this has some real design issues to resolve in modularity and key interfaces. It needs to address all the needs of the individual participants, their design needs and how it all comes together and connects. How much is open and what is closed. Then you have activity architecture. Its composition and structures do it draw from a core platform design. It has to have clear who has and what roles; in designation, in reporting, in accountability. It needs co-specialization and coordination mechanisms and fail-safe designs, it needs to have the layered participants' roles and areas of access for engagement sorted and has to consider the long-term configuration of all in the activity network Then we have the value architecture. The whole purpose of this ecosystem lies in generating value. What is the value dynamic descriptors are they constantly seen, updated and questioned. The whole interplay is ‘rich’ in value contribution and what it needs to have drawn down from the technology and activity architecture needs careful consideration. It determines the value pathway from all of its associated parts and exchanges. What is drawn into this value architecture will be the diving-down point, the top picture output for those less engaged in the construction of the final output - a different and new innovation solution - will see progress, and a pathway to validation.
Lastly, we need to discuss the Operating Leverage Entering into any ecosystem is not for those simply curious. It is for those seeing the eventual value and potential to advance their existing business in dramatically different and positive ways. The commitment is a significant input in itself. Some operating considerations are: • •
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The high value, sharable assets call for a certain calibre of individual or resource and that has significant value. Advancing the ecosystem will sometimes need building or acquiring new financial assets to be injected into it for advancing this. this needs to be built into the thinking early enough and the broad principles on the need to have established the approval process to achieve this. To attract new partners further along the discovery or evolving design needs some thought into their share, the value they bring and how this is going to be handled. Can you imagine you lack a key understanding of one critical part- do you buy it in, draw it in as a partner or develop it yourself?
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Any new partner or significant additional resource input has its financial as well as time considerations in integrating them You have to constantly think of speed, scope and scale and what is needed to move these all along that is not already in place. Having a sound platform to build upon is critical. Operating across multiple partners requires reducing complexity. It becomes highly valuable to find a platform provider that can minimize this. It can also become a significant contributor to centralizing key parts, being the platform for coordinating communications, able to reduce the level of complexity in establishing common design, and language and providing performance consistency. Platform partners can also become partners in the ecosystem. Their contributions can equally evolve as specific demands within the ecosystem placed on the platform need changing. Knowing in 'real time' many of the demands helps in the design of uniform information and required coding standards that all can simultaneously work through by being a clear partner.
It is in these operational leveraging issues the platform can play such a critical role. It can be a physical and information hub, a natural meeting ground for the ecosystem partners to meet and work through collective issues. •
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Platforms can accelerate the value chain needed and leverage both internal and external connections. It might provide capacity and resources on-demand, know how to accelerate user experience if it is a platform for many, provide multiple services and analytics, has built-in end-to-end security, and share best or emerging practices on digital solutions. Platform partners might also be part of multiple ecosystem partnering alliances that are working towards advancing the new digital IoT era in common standards. Platforms are established for attracting different ecosystem partners, a diverse range of customers choosing to develop their solutions on the platform but also how they themselves, are part of the Industrial Internet Consortium.
In summary There is a lot of necessary thinking to go into when you consider joining any platforms and ecosystems. You simply cannot afford to just ‘drift’ into them. Your business need has to be driven by a recognition that all knowledge and solutions cannot come from you alone today. We are in a connected world because the consumer is demanding better seamless and connected experiences. The digital transformation being undertaken allows for this chance to extend and collaborate but not just for the sake of it but so the collaborative efforts provide greater innovation solutions that are higher in value than the existing ones available. One clear recognition is that your business need has to be driven by, firstly, recognizing that all knowledge and solutions cannot come from you alone today, and secondly, we are in a connected world because the consumer is demanding better seamless and connected experiences.
The digital transformation being undertaken allows for this chance to extend and collaborate but not just for the sake of it but so the collaborative efforts provide greater innovation solutions that are higher in value than the existing ones available. Collaborating gives the potential to create a different unique competitive position that others will find increasingly difficult to copy if they are not able to find the network effect that comes from working within platforms and ecosystems. Applying the network effect of ecosystems and platform application is where innovation becomes significantly different and seen as highly valuable, it is highly collaborative. This collaboration is not just for those participating but the consumer who begins to find his or her way to give voice to these designs and be an increasing influence on the ecosystem's final designs for the solution outcomes. PAH 2016- 2022