Haydn Shaughnessy on ecosystems


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How should we analyze business ecosystems - here's some ideas.

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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
  • Haydn Shaughnessy on ecosystems

    1. 1. The Enterprise Ecosystem:How do we analyze a new management paradigm? Haydn Shaughnessy
    2. 2. Agenda Systemic ProblemsThe Ecosystem as Systemic Solution A Sector Example Case StudyMeasuring Innovation in Ecosystems Lessons 2
    3. 3. Systemic Problems 3|
    4. 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. 5. Introduction: The growth of system-Debt de-leveraging at household, enterprise and national wide energy issues, declining worldlevels, hyper-competition, problemstrade….These types of issues create systemic or sector-wide problems beyondwhat one enterprise can address – the innovation focus is autos, cities,mobile, logistics, silicon…. 5|
    6. 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 –John Seely Brown and John Hagel, The Shift Index 2010 Developed world Developing world The $20,000 infant incubator The $7 infant incubator The $20,000 auto The $2,000 auto 15,000 UK bank branches 17,500 mobile money agencies in Kenya 560 million China Mobile 500 million Facebook users subscribers 6|
    7. 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. 8. The Ecosystem as Systemic Solution 8|
    9. 9. The growth of the new ecosystem 5000 4500 conversation 90000 80000 Business 4000 Ecosystem 70000 3500 60000 Business 3000 Business Ecosystem 50000 Ecosystem (w/e) 2500 2000 Open Ecosystem 40000 Open Ecosystem 1500 30000 1000 20000 500 10000 Open Ecosystem 0 0 (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 9|Source: Cogenuity May 2010
    10. 10. Open ecosystems and the future of management Old The old ecosystem 1995 - 2007 New The new ecosystem 2008….• The old idea of ecosystems: • Investing your business future in the “glocal” partnerships relationship cloud • Targets system wide innovation• Tight corporate focus • Global search for free labor and talent + revenue generating micro-partnerships• Glocal search for cheap labor • Value re-alignment process• Labor market dis-alignment • PLANNING FOR RANDOMNESS• Central planning and reporting • Value-diverse and customer-centric• Corporate value focused • Perception driven• Communications driven 10 |
    11. 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. MUNDANE And their goals are They are ABSURD And they areanything BUT rational • —Blogger Sean Howard, June 28, 2010 11 |
    12. 12. A Sector Example 12 |
    13. 13. Ecosystems and competition in the mobile sectorsignificant growthmobile phone subscriptions to 2013 A sector estimated at 5 1.1. billion billion online devices by 2014 (CISCO) 50% growth 720 million 315 million10% growth Projected 285 million Device and equipment sales in this Current industry – a model for USA India challenges and solutions elsewhere 13 |
    14. 14. Introduction: New frontiers in innovation Global 3 sold per innovation in second technology and banking Hypergrowth New business models One sold every three secondsMobility is a model for massive market growth and system-wide innovation. The ecosystem is becoming the model for mobile management. 14 |
    15. 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. 16. From open source to open ecosystem •Incremental gains from service to product to apps to Price, ads market share, market range Extending the Google business model Three innovative players:Three current strategies beyond open source 16 |
    17. 17. Managing complexity in the relationship cloudA partial view of Hardware- the mobile OS Tools software interface developers developers Apps ecosystem developers Function Ecosystem brands developers Supply Mobile chain Nokia advertising Services revenues End-user Ovi communities Apple Apps Geodata/AR store Location AR Content Google Search/ Maps based content developers Operators Play services Solutions ecosystem Embedded Home Device device device sales markets markets 17 |
    18. 18. Case Study: How do you migrate frombusiness as usual to a neworganizational form? 18 |
    19. 19. The Nokia open source decision February 4th, 2010 April 2009 Almost 40 million Foundation lines of code open- Mid-20082007 launches sourced Nokia createsNokia decides to Symbian Foundation officiallyopen source its main and open sourcesmart phone project announcedoperatingsystem, Symbian, the most widelydistributedsmartphone OS NOKIA’S KEY TENSION POINT:globally (abouttime of iPhone Its core culture is notlaunch) adapting to new open realities 19 |
    20. 20. Symbian’s missionTo create an open managementparadigm• 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. 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. 22. Symbian’s open management, open ecosystem tools•Developer community•Apps community (horizon.symbian.org)•Ideagora – (ideas.symbian.org)•Open research community•Volunteer community•Ecosystem blog platform (blog.symbian.org)•Get satisfaction 22 |.
    23. 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. 24. Relationship management in the cloud at Nokia Ovi - Rural Nokia development co- MeeGo, OS services life investments tools India Symbian Nokia money Point and find Technology (ads/search) Institute BrazilQt Interface tools NOKIA Business solutions community Forum Nokia Mobile brain bank Operators Africa Device Navteq, supply maps chain 24 |
    25. 25. The Symbian ecosystem OS component Chipset Operators, e specialists, e.g. makers, Texas .g. Vodafone Sun Hard- Instruments ware/soft- OS wareOEMs, Sony Tools interfaceEricsson, No redesign kia Members Developer (200 communityConsultants, e. enterprises) g. Accenture Ideagora Apps Academia/ community open Volunteers innovation 25 |
    26. 26. Measuring Innovation in Ecosystems 26 |
    27. 27. Measuring innovation• How successful has Nokia/Symbian been?• The headline 2008 – 2010 is the iPhone − And the sub-heading is Android 27 |
    28. 28. Measuring innovation Time ROI Patent Brand equity Scaling a business quantity development Pipeline Some kind of balanced Internal metrics scorecard for New ideas attitude (2,5, 10 year knowledge changes product flow) production CertaintyConventional measures of innovation balance certainty against time:by the time you can really measure theoutput it’s too late to change 28 |
    29. 29. 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” —Secretary of Commerce, January 2008 29 |Source: www.innovationmetrics.gov/
    30. 30. An approach to ecosystem innovation metrics Strategic Socio- • Transformational • Acceptance • Alignment economic narrative • Consistency • Price • Positioning (e.g. • Platform incumbency) • Trust deployment • Market conditions • Extensibility • Innovation dynamics • Acquisition of low cost • Value conversion inputs • Values/perception • Engagement • Presence • Acquisition of ideas • Diversity • Messaging • Friction reduction • Tangible value Socio- Market conversion investments cultural • Geographical growth curveIn search of a balanced scorecard approach to judging future value 30 |
    31. 31. Ecosystem metrics: Acceptance Developers ‘very interested’ in developing for each platform N = 2773 Tier 1 iPhone (iOS) 90% iPad (iOS) 84% Android Phone 81% Android Tablet 62% Tier 2 Blackberry 34% Windows Phone 7 27% Tier 3 Symbian 15% Palm Pre / Pixi 13% Meego 11% Kindle 6% % 20 40 60 80 100 Developers characterizing their commitment to these platforms 31 |Source: Appcelerator, Inc., 06/2010
    32. 32. Ecosystem metrics: Alignment with business values The core connections are from brand to device and user features Business performance is distant from brand The culture of the ecosystem is developer-centric 32 |Source: Cogenuity 2010 Date range All time
    33. 33. Ecosystem metrics: Alignment Nokia/Symbian Android/Google Apple Open    Altruism  – – New naturalism    Randomness    Individualism – –  Collaboration  – – Popularity –   Alignment with emergent values – = Not evident  = of average relevance  = highly relevant 33 |
    34. 34. Ecosystem metrics: Platform Deployment Widely criticized No of apps developers for terms and conditions and 41,000 high handedness Widely envied for 10,000 developer engagement Criticized for cost Nokia doesn’t and complexity but release figures admired for openness 34 |Source: Cogenuity 2010 Date range All time
    35. 35. Ecosystem metrics: Value conversion - 1 Mobility consulting Market analysis Enterprise mobility offers strategy B2B consulting sell test services toRapid indirect monetization the ecosystem Texas Instruments Product creationValue conversion in the Symbian ecosystem services 35 |
    36. 36. Ecosystem metrics: Value conversion - B2C 2OEMs use Android, Rapid direct monetizationincorporate Google and receive ad revenue share Operators too receive revenue share and OEM promote Android handsets Operator Apps community OEM Google/Android Apps community shares revenue from Android appsValue conversion in the Android community market, hosted by Google; apps promote handset 36 |.
    37. 37. Ecosystem metrics: Price Price sustainability is an issue with 1000s of micro-partnerships Justified by The iPhone astute price product premium focus and hardware revenuesBalanced bybroadgeographical Nokia drivinggrowth price downopportunities to widen market 37 |
    38. 38. Ecosystem innovation metrics: Owning a transformational narrative - I Android G1 Palm Pre 93,228 48,359 Blackberry Storm 1,188 Apple iPhone 3g 1,216,794 A measure of the iPhone’s influence: Online references to HTC/Android G1 vs Apple October 2008/January 2009: Bought vs earned media 38 |Source: The Conversation Group
    39. 39. Ecosystem metrics:Owning a transformational narrative - 2 1.1 6.4 19.5 Online references to Symbian, Android and iPhone in millions, April 1st 2009 to March 31st 2010 39 |
    40. 40. Lessons 40 |.
    41. 41. Lessons: Three styles of ecosystem strategy high end APPLE, single product• focus, multiple services; high margins, targeted NOKIA, global, across ecosystem, astute market perception segments, income managementPrice groups, price bands and service offers ANDROID, tight with diffuse interaction between ecosystem, poor industry participants perception for broad device management distribution, improvi ng perceptions Models for sustainable competitive advantage 41 |
    42. 42. Lessons: Ecosystem strategy• Polarization - Incumbent - uniqueness scale Ecosystem strategies Chain and Facilitation - channel reciprocation 42 |
    43. 43. Lessons: Management The key tension point Use platforms Work with to structure adInvest in the developer Strategize Create hoc innovationrelationship meritocracies around price downstream and revenue cloud but create vulnerability metrics micro- wider values partnerships Managing perception Perceptions influence becomes MORE important relationships. An ecosystem is a diffuse relationship matrix. 43 |.
    44. 44. Question: • System-wide innovation • Access to free or very cheap laborDoes the and talentecosystem • Unpredictability and randomdeliver? effects in a planned environment • Labor market value-system realignment • Adaptation to customer centricity and customer ecosystems 44 |.
    45. 45. Free labor/ Lessons System wide Unpredictable Labor market talent/revenue innovation innovation alignment partnerships Mobile transformation Brings enterprises 1200 entries at is global, sector wide iphone 250,000 apps closer to open source ideas.symbian.org and extensible values < $8 million annual Involves content budget, 200 company (music), maps, geo- Price reductions from Places too much members, 40 million data, augmented $250+ to $150 to $70 emphasis on lines of codes, 29 reality, autos, home in a year meritocracy innovations devices, advertising Apple passes on $1 M-PESA, Kenya 17,000 New hardware – billion in revenues to micro- software integration micro-partners, 2008- partners, mobile initiatives 2010 money agents 200,000 Nokia Forum Mobile brain Symbian contributions members bank, Africa from TI, Sun,IxonosSome way to go with aligning the enterprise ecosystem to consumerecosystems or in evolving a wider emerging value set 45 |.
    46. 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.• Ecosystems have a role in helping to create system-wide innovation, through a broader open management approach.• There are models to work from. 46.
    47. 47. Haydn Shaughnessyhaydn@cogenuity.com 47 |.