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TIVIT Results and Business Forum

TIVIT Results and Business Forum

12 April 2011

Saku Mäkinen, TUT

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Saku_Mäkinen_ tivit_business_ forum Presentation Transcript

  • 1. Tivit Business ForumPerspectives on interconnected global business ecosystems Mäkinen, Saku, PhD, professor April 12th, 2011 1
  • 2. Brief agenda• Ecosystem and its evolution • Properties of ecosystems • [R]Evolutionary mechanisms • Challenges arising from basic properties• Roles in ecosystems • Keystone player • Dominator player • Niche player• Value delivery to customer • The central theme for profitability and survival for any ecosystem and party • Empirical example of value delivery deficiencies and delays• Summary from structure-evolution-value considerations 2 Mäkinen, Saku, PhD, professor, industrial management
  • 3. Business ecosystem and its [r]evolution Mäkinen, Saku, PhD, 3 professor, industrial management
  • 4. Ecosystem; defined• Ecosystem, in biology • An ecosystem is a biological environment consisting of all the organisms in a given area, along with the nonliving factors with which they interact; a biological community and its physical environment linked together through nutrient cycle and energy flow.• Business ecosystem • An economic community supported by a foundation of interacting organizations and individuals; suppliers, producers, competitors, etc. The economic community produces goods and services of value to customers, who are themselves members of the ecosystem. Over time, they coevolve their capabilities and roles as well as structures of the ecosystem. Mäkinen, Saku, PhD, 4 professor, industrial management
  • 5. Case mobile ecosystem;firm level Basole, 2009 Mäkinen, Saku, PhD, 5 professor, industrial management
  • 6. Properties of systems• Hierarchy • System has a hierarchically nested structure, whereby the system is seen as a composition of smaller sub-systems that are themselves systems• Goal orientation • System as a whole is goal-seeking• Holism at system level performance delivery • Holistic system, its performance and its properties are synthesised /synergised through the sub-systems properties 6 Mäkinen, Saku, PhD, professor, industrial management
  • 7. Properties of systems• Interdependence • Sub-systems are interdependent both within the same as well as across different levels of the system hierarchy• Modular structure • Sub-systems are specialised for particular functions• Feedback mechanisms • System has multi-levelled feedback loops 7 Mäkinen, Saku, PhD, professor, industrial management
  • 8. Case mobile ecosystem; industry level•Hierarchy•Goal orientation•Holism at system level performance delivery•Interdependence•Modular structure•Feedback mechanisms Basole, 2009 Mäkinen, Saku, PhD, 8 professor, industrial management
  • 9. Analyzing generic ecosystem; reducing complexityComponents Complements Supplier 1 Complementor 1 Focal firm Customer Supplier 2 Complementor 2 9 Mäkinen, Saku, PhD, professor, industrial management
  • 10. Generic ecosystem; case semiconductor manufacturingLens manufacturer Mask manufacturer Lithography tool Semiconductor manufacturer manufacturers Energy source Resist manufacturer manufacturer •Hierarchy •Interdependence •Goal orientation •Modular structure •Holism at system level •Feedback mechanisms performance delivery Adner, Kapoor, 2010 10 Mäkinen, Saku, PhD, professor, industrial management
  • 11. Evolution of ecosystem2 basic mechanismsAll actors aim at improving towards holistic goal of performance deliveryBut make innovation decisions uniquely Technology option 1 Performance Technology option 2 Current technology Launch Development Maturity Time 11 Mäkinen, Saku, PhD, professor, industrial management
  • 12. So, if lens producer develops technological performance? Lens producer Mask producer PerformancePerformance Launch Development Maturity Time Launch Development Maturity Time Performance Semiconductor Lithography tool producer manufacturers Performance Launch Development Maturity Time Performance Performance Launch Development Maturity Time Launch Development Maturity Time Launch Development Maturity Time Energy source producer Resist producer 12 Mäkinen, Saku, PhD, professor, industrial management
  • 13. Challenges arising from [r]evolution• Goal orientation and holism in performance delivery • Customer value should be the central theme directing evolution • Managing the goal orientation is not trivial for all parties• Hierarchy and interdependence • Sub-systems are tied together, coevolving • The delivery of performance is delayed due to interconnectedness• Modular structure and feedback mechanisms • Synthesis of performance delivery of sub-system levels needs to be coordinated, either by focal agent or self-organization • Feedback mechanisms may not be economically viable• Coordination mechanisms • Focal firm, self-interest, profit-survival interest • Other focal agent, e.g. regulatory, other social interests • Self-organization, mutual self-interests, cliques, social interests etc. Mäkinen, Saku, PhD, 13 professor, industrial management
  • 14. Roles in ecosystems One view on the role aspect… Mäkinen, Saku, PhD, 14 professor, industrial management
  • 15. Roles in ecosystem• Depending on the level of (cf. Iansiti, Levien, 2004) • Complexity of relationships • Level of turbulence and innovation• Keystone organizations • High complexity and high level of turbulence/innovation • Simplify complex connectivity btw participants • Reliable point of reference for technological innovations • Concentrating on its own core, and providing guidance on innovation in technology development of other parties • Disproportionately valued in contrast to its revenue/employees in the ecosystem as a whole• Requirements for keystone player • Create value e.g. through platform (services, tools, technologies) to other parties in ecosystem • Share value through platform to other to attract and retain parties in the ecosystem development (diversity and robustness on shocks) Mäkinen, Saku, PhD, 15 professor, industrial management
  • 16. Roles in ecosystem• Depending on the level of (cf. Iansiti, Levien, 2004) • Complexity of relationships • Level of turbulence and innovation• Dominator player • High complexity and low turbulence/innovation • Integrate vertically or horizontally to own and manage large part of the network directly (not ecosystem as such) • Controls value creation and value capture • Mediates market requirements to the network• Requirements for dominator • Market understanding and value delivery • Stability and ability to resist environmental shocks • Responsibility to manage the network Mäkinen, Saku, PhD, 16 professor, industrial management
  • 17. Roles in ecosystem• Depending on the level of (cf. Iansiti, Levien, 2004) • Complexity of relationships • Level of turbulence and innovation• Niche player • Low complexity and high turbulence/innovation • Concentrates on specialized capabilities that differentiates it from others in the ecosystem • Leverage from complementary offering facilitates specialization • In healthy ecosystem, form the bulk and create most of the value• Requirements for niche player • Careful consideration for developments in ecosystem • Keystone-dominator balance, are there forces to replace specialty? • Innovation is crucial in niche value delivery • How critical is the niche occupied for the whole ecosystem, can it be replaced? Mäkinen, Saku, PhD, 17 professor, industrial management
  • 18. Managing ecosystem? Example of keystone configuration… Lens producer Mask producer PerformancePerformance Launch Development Maturity Time Launch Development Maturity Time Performance Lithography tool producer Semiconductor KEYSTONE PLAYER manufacturers Performance Launch Development Maturity Time Performance Performance Launch Development Maturity Time Launch Development Maturity Time Launch Development Maturity Time Energy source producer Resist producer 18 Mäkinen, Saku, PhD, professor, industrial management
  • 19. It is all aboutBENEFIT for customer Mäkinen, Saku, PhD, 19 professor, industrial management
  • 20. Importance of BENEFIT for customer• The health of ecosystem depends on BENEFIT delivery • Environmental shocks need to be absorbed, diversity • Diversity to fulfill customer demand and moderate its changes• Different roles have differing dangers • Keystone needs to understand market trends, if not, some other player finds opportunities; fragile and vulnerable, albeit powerful • Niche player may be more survival oriented, may shift to new ecosystem with its innovation focus and specialized capabilities • Dominator is solely responsible for value delivery• BENEFIT for end-user ultimately determines fate • But what is this benefit then… Mäkinen, Saku, PhD, 20 professor, industrial management
  • 21. Value for customer and heterogeneity of customer needsNeeds of theSegment ANeeds of theSegment B Woodall,, 2003 Mäkinen, Saku, PhD, 21 professor, industrial management
  • 22. Value for customer heterogeneity and ecosystem structure• Role of value heterogeneity • More heterogeneous needs, Heterogeneity of market needs more niches • More homogenous needs, High Self- organizing Keystone more controlled ecosystem network platform • More niches, more fruitful avenues for ecosystem Dominator Low Dominator • More central control sought platform after, less needs satisfied competitively Low High Economies from centralized control • More heterogeneous needs, more value/risks on keystone Mäkinen, Saku, PhD, 22 professor, industrial management
  • 23. Summary fromstructure-evolution-benefit• Innovation and competitive advantage • Leaderships no guarantee for competitive advantage nor profits • Innovation in ecosystems cascades unpredictably • Value for the customer (benefit) needs to be the focal point• Platform for heterogeneous benefits • Heterogeneous value for customer, segment interconnectedness around core value • Emphasize modularity and platform design, profit sharing • Viable niche mechanisms in modules, survival and profitability • Stable, governed, proprietary platform with wide access to ecosystem participants• Systemic goods for homogenous benefit • Homogeneous value for customer, value chain configuration, orchestrated ecosystem • Emphasize partnership management, interfaces • Viability through joint technology development, sub-system competition • Oligopolistic competition at system level, market connections are stressed 23 Mäkinen, Saku, PhD, professor, industrial management
  • 24. Thank yousaku.makinen@tut.fi Mäkinen, Saku, PhD, 24 professor, industrial management