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  • The ecosystem as a new enterprise paradigm, if you like an extension of enterprise 2.0 but what every enterprise needs to be examining.Metrics to judge success or failure.Open management as the managerial principles.
  • Starting with an overview of system-wide challenges I will propose the ecosystem as a system-wide solution, looking first at ecosystem adoption in the mobile sector, diving deep into a case study of that, and then looking at success and failure metrics, and what lessons we can learn for the enterprise in general.
  • SO is the ecosystem a solution?
  • Silicon is an important example. The poster child of innovation with processing power doubling every 18 months. But has this figure encouraged complacency? LED lighting offers 50 times the life span of incandescent bulbs as well as consuming 20% of the power.
  • SO is the ecosystem a solution?
  • Social commerce makes randomness a more acceptable part of the enterprise agenda.
  • Extraordinary given the success of the business.
  • Disrupting the roadmap
  • Micro-partnerships are a force against price maintenance
  • Transcript

    • 1. The Enterprise Ecosystem: How do we analyze a new management paradigm? Haydn Shaughnessy
    • 2. Systemic Problems The Ecosystem as Systemic Solution Measuring Innovation in Ecosystems A Sector Example Lessons Agenda Case Study 2
    • 3. Systemic Problems 3 |
    • 4. The era of unprecedented economies of scale • Competition just got very tough. China and India enjoy unprecedented economies of scale: • The $2,000 Auto in India • India mobile market headed towards 1 billion + subscriptions • 30% price reductions in telecommunications infrastructure equipment globally (delaying introduction of next generation Internet, IPv6) • China supercomputer industry – 10 new supercomputer centers THIS YEAR • China’s strategy to retain more value added each year - current target 20% 4 |
    • 5. Introduction: The growth of system- wide problems 5 | These types of issues create systemic or sector-wide problems beyond what one enterprise can address – the innovation focus is autos, cities, mobile, logistics, silicon…. Debt de-leveraging at household, enterprise and national levels, hyper-competition, energy issues, declining world trade….
    • 6. Introduction: The innovation crisis• Remarkably, the return on assets (ROA) for U.S. firms has steadily fallen to almost one-quarter of 1965 levels 6 | The $20,000 infant incubator The $20,000 auto 15,000 UK bank branches The $7 infant incubator The $2,000 auto 17,500 mobile money agencies in Kenya Developed world Developing world –John Seely Brown and John Hagel, The Shift Index 2010 500 million Facebook users 560 million China Mobile subscribers
    • 7. Enterprise objectives • The ecosystem can be defined as a need or approach to radically improving the external environment and as a consequence changing the enterprise, driven by.  A need to integrate customer ecosystems to refresh customer service offerings  The desire to use or experiment with an API strategy to create an entirely new supply chain to transform the cost base or product offering  To overcome industry or sector bottlenecks  Disrupt the product roadmap or the current business models  Use open source to reduce cost and extrapolate innovation outside the organization 7 | © 2010 nGenera Corp. All Rights Reserved.
    • 8. The Ecosystem as Systemic Solution 8 |
    • 9. 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 Business Ecosystem Open Ecosystem 0 10000 20000 30000 40000 50000 60000 70000 80000 90000 Business Ecosystem Business Ecosystem (w/e) Open Ecosystem Open Ecosystem (w/e) Comparison of Business Ecosystem blog references using exact term and using “all the words” (excluding all ecological references) 80,000 blog posts a year reference ecosystem and business together in the same post The growth of the new ecosystem conversation 9 | Source: Cogenuity May 2010
    • 10. Old New Open ecosystems and the future of management The old ecosystem 1995 - 2007 • The old idea of ecosystems: “glocal” partnerships • Tight corporate focus • Glocal search for cheap labor • Labor market dis-alignment • Central planning and reporting • Corporate value focused • Communications driven The new ecosystem 2008…. • Investing your business future in the relationship cloud • Targets system wide innovation • Global search for free labor and talent + revenue generating micro-partnerships • Value re-alignment process • PLANNING FOR RANDOMNESS • Value-diverse and customer-centric • Perception driven 10 |
    • 11. Why randomness? • We are speaking of a significant societal shift — from organizations leveraging technology to accomplish their goals TO individuals leveraging technology to accomplish THEIR goals. And their goals are MUNDANE They are ABSURD And they are anything BUT rational • —Blogger Sean Howard, June 28, 2010 11 |
    • 12. A Sector Example 12 |
    • 13. Ecosystems and competition in the mobile sector 13 | Device and equipment sales in this industry – a model for challenges and solutions elsewhere A significant growth sector estimated at 5 billion online devices by 2014 (CISCO) USA India Projected Current 720 million 285 million 1.1. billion mobile phone subscriptions to 2013 10% growth 50% growth 315 million
    • 14. Introduction: New frontiers in innovation 14 | Mobility is a model for massive market growth and system-wide innovation. The ecosystem is becoming the model for mobile management. New business models Hypergrowth Global innovation in technology and banking One sold every three seconds 3 sold per second
    • 15. Major open source initiatives in mobile • Android – the Google-led alliance developing an open operating system based on Linux • Limo – an alliance to build a Linux based operating system for mobile • Symbian – the Nokia operating system pitched into open source in 2010 • MeeGo – an Intel – Nokia open source project for premium phones • Moblin – an Intel driven project for open source mobile interfaces, across phones, netbooks and similar devices 15 |
    • 16. From open source to open ecosystem • 16 | Three innovative players:Three current strategies beyond open source Price, market share, market range Incremental gains from service to product to apps to ads Extending the Google business model
    • 17. End-user communities Apps developers Ecosystem brands Nokia Services Search/ Play Geodata/AR Maps Location based services Embedded device markets Mobile advertising revenues Home device markets OS developers Tools developers Device sales Content developers Function developers Solutions ecosystem AR content Supply chain Hardware- software interface Managing complexity in the relationship cloud 17 | Apple Google Apps store Ovi Operators A partial view of the mobile ecosystem
    • 18. Case Study: How do you migrate from business as usual to a new organizational form? 18 |
    • 19. The Nokia open source decision 19 | 2007 Nokia decides to open source its main smart phone operating system, Symbian, th e most widely distributed smartphone OS globally (about time of iPhone launch) Mid-2008 Nokia creates Symbian Foundation and open source project announced April 2009 Foundation launches officially February 4th, 2010 Almost 40 million lines of code open- sourced NOKIA’S KEY TENSION POINT: Its core culture is not adapting to new open realities
    • 20. Symbian’s mission To create an open management paradigm • Realign IT/engineering and other departments like design, marketing, ideation • Liberate the strategy process from the roadmap • Grow an ecosystem where innovation is systemic though unpredictable • Respond to a world where openness is an expectation • Deal with complexity 20 |.
    • 21. Symbian’s open management values • Values and creativity help staff to bring values and creativity to work with openness as a byword • Participation be a participant, e.g., open up the sustainability plan, don’t dominate the ecosystem • Future worlds orient not just to the future but to transformed environments • Excellence • set the highest standards 21 |
    • 22. Symbian’s open management, open ecosystem tools •Developer community •Apps community ( •Ideagora – ( •Open research community •Volunteer community •Ecosystem blog platform ( •Get satisfaction 22 |.
    • 23. An open ecosystem ideagora • Pushing the openness agenda, by ideating – The management of the foundation – The operating system – The future of mobile 23 |
    • 24. NOKIA Symbian MeeGo, OS Navteq, maps Ovi - services Qt Interface tools Point and find (ads/search) Forum Nokia Device supply chain Operators Nokia life tools Rural development co- investments India Technology Institute Brazil Mobile brain bank Africa Nokia money Business solutions community Relationship management in the cloud at Nokia 24 |
    • 25. Developer community Ideagora Members (200 enterprises) Volunteers Apps community Chipset makers, Texas Instruments OEMs, Sony Ericsson, No kia Consultants, e. g. Accenture Operators, e .g. Vodafone Academia/ open innovation OS Tools OS component specialists, e.g. Sun The Symbian ecosystem 25 | Hard- ware/soft- ware interface redesign
    • 26. Measuring Innovation in Ecosystems 26 |
    • 27. Measuring innovation 27 | • How successful has Nokia/Symbian been? • The headline 2008 – 2010 is the iPhone − And the sub-heading is Android
    • 28. Conventional measures of innovation balance certainty against time: by the time you can really measure the output it’s too late to change ROI Scaling a business Internal attitude changes Brand equity development New ideas Patent quantity Pipeline metrics (2,5, 10 year product flow) Some kind of balanced scorecard for knowledge production Time Certainty Measuring innovation 28 |
    • 29. —Secretary of Commerce, January 2008 Measuring innovation: Principles• “ Make room for qualitative and subjective measures • Measure iteratively rather statically • Measure the stack – firm, industry, sector, nation, region…. • Pilot new metrics” 29 | Source:
    • 30. • Acceptance • Alignment • Consistency • Trust • Extensibility • Values/perception Socio- cultural • Platform deployment • Value conversion • Engagement • Diversity • Friction reduction Socio- economic • Price • Market conditions • Innovation dynamics • Presence Market • Transformational narrative • Positioning (e.g. incumbency) • Acquisition of low cost inputs • Acquisition of ideas • Messaging • Tangible value conversion investments • Geographical growth curve Strategic An approach to ecosystem innovation metrics 30 | In search of a balanced scorecard approach to judging future value
    • 31. Ecosystem metrics: Acceptance 31 | Developers characterizing their commitment to these platforms Developers ‘very interested’ in developing for each platform Source: Appcelerator, Inc., 06/2010 Tier 1 Tier 2 Tier 3 iPhone (iOS) 90% iPad (iOS) 84% Android Phone 81% Android Tablet 62% Blackberry 34% Windows Phone 7 27% Symbian 15% Palm Pre / Pixi 13% Meego 11% Kindle 6% 20 40 60 80 100% N = 2773
    • 32. The culture of the ecosystem is developer-centric Ecosystem metrics: Alignment with business values 32 | Source: Cogenuity 2010 Date range All time The core connections are from brand to device and user features Business performance is distant from brand
    • 33. Alignment with emergent values – = Not evident  = of average relevance  = highly relevant Ecosystem metrics: Alignment 33 | Nokia/Symbian Android/Google Apple Open    Altruism  – – New naturalism    Randomness    Individualism – –  Collaboration  – – Popularity –  
    • 34. Ecosystem metrics: Platform Deployment 34 | Source: Cogenuity 2010 Date range All time Widely criticized for terms and conditions and high handedness Widely envied for developer engagement Criticized for cost and complexity but admired for openness 41,000 No of apps developers 10,000 Nokia doesn’t release figures
    • 35. sell test services to the ecosystem Mobility consulting Market analysis offers Enterprise mobility strategy consulting Value conversion in the Symbian ecosystem Ecosystem metrics: Value conversion - 1 35 | B2B Rapid indirect monetization Texas Instruments Product creation services
    • 36. Google/Android Operator OEM OEM Apps community OEMs use Android, incorporate Google and receive ad revenue share Apps community shares revenue from Android apps market, hosted by Google; apps promote handset Operators too receive revenue share and promote Android handsets Value conversion in the Android community Ecosystem metrics: Value conversion - 2 36 |. B2C Rapid direct monetization
    • 37. The iPhone price premium Nokia driving price down to widen market Balanced by broad geographical growth opportunities Justified by astute product focus and hardware revenues Ecosystem metrics: Price 37 | Price sustainability is an issue with 1000s of micro-partnerships
    • 38. A measure of the iPhone’s influence: Online references to HTC/Android G1 vs Apple October 2008/January 2009: Bought vs earned media Ecosystem innovation metrics: Owning a transformational narrative - I 38 | Apple iPhone 3g 1,216,794 Blackberry Storm 1,188 Android G1 93,228 Palm Pre 48,359 Source: The Conversation Group
    • 39. Online references to Symbian, Android and iPhone in millions, April 1st 2009 to March 31st 2010 Ecosystem metrics: Owning a transformational narrative - 2 39 | 1.1 6.4 19.5
    • 40. Lessons 40 |.
    • 41. Lessons: Three styles of ecosystem strategy • 41 | NOKIA, global, across market segments, income groups, price bands and service offers with diffuse ecosystem, poor perception management ANDROID, tight interaction between industry participants for broad device distribution, improvi ng perceptions APPLE, high end single product focus, multiple services; high margins, targeted ecosystem, astute perception management Price Models for sustainable competitive advantage
    • 42. Lessons: Ecosystem strategy • 42 | Polarization - uniqueness Incumbent - scale Chain and channel Facilitation - reciprocation Ecosystem strategies
    • 43. Lessons: Management Invest in the relationship cloud Work with developer meritocracies but create wider values Use platforms to structure ad hoc innovation and revenue micro- partnerships Strategize around price vulnerability Create downstream metrics 43 |. The key tension point Managing perception becomes MORE importantPerceptions influence relationships. An ecosystem is a diffuse relationship matrix.
    • 44. Question: • System-wide innovation • Access to free or very cheap labor and talent • Unpredictability and random effects in a planned environment • Labor market value-system realignment • Adaptation to customer centricity and customer ecosystems 44 |. Does the ecosystem deliver?
    • 45. Some way to go with aligning the enterprise ecosystem to consumer ecosystems or in evolving a wider emerging value set LessonsFree labor/ talent/revenue partnerships 1200 entries at < $8 million annual budget, 200 company members, 40 million lines of codes, 29 innovations Apple passes on $1 billion in revenues to micro-partners, 2008- 2010 200,000 Nokia Forum members System wide innovation Mobile transformation is global, sector wide and extensible Involves content (music), maps, geo- data, augmented reality, autos, home devices, advertising New hardware – software integration initiatives Mobile brain bank, Africa Unpredictable innovation iphone 250,000 apps Price reductions from $250+ to $150 to $70 in a year M-PESA, Kenya 17,000 micro- partners, mobile money agents Symbian contributions from TI, Sun,Ixonos Labor market alignment Brings enterprises closer to open source values Places too much emphasis on meritocracy 45 |.
    • 46. Lessons: Summary • There is a new moral framework out there around the preferences of labor and talent, and a new wealth creation paradigm is evolving around ecosystems where complexity is managed in the relationship cloud. • Competitiveness will only get more uneven and difficult. • Ecosystemshave a role in helping to create system-wide innovation, through a broader open management approach. • There are models to work from. 46.
    • 47. Haydn Shaughnessy 47 |.