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Open management and the enterprise ecosystem


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I prepared this well over a year ago now. It is a look at why business ecosystems are becoming more important and how we might begin to judge their performance - given that they are important how can we describe and measure them?

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Open management and the enterprise ecosystem

  1. 1. nGenera Insight All-Member MeetingOpen Management and theEnterprise Ecosystem:A new management paradigm and itsmetricsHaydn Shaughnessy, CogenuityJuly 26-28, 2010Park Hyatt Aviara ResortCarlsbad, CA
  2. 2. Agenda Changing Externalities The Ecosystem as Solution A Sector Example Case StudyMeasuring Innovation in Ecosystems Lessons 2 | © 2010 nGenera Corp. All Rights Reserved.
  3. 3. Changing Externalities 3 | © 2010 nGenera Corp. All Rights Reserved.
  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 4 | © 2010 nGenera Corp. All Rights Reserved.
  5. 5. The growth of system-wide challenges Debt de-leveraging at enterprise and national levels, hyper- competition, energy issues, the empowered consumer. 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…. 5 | © 2010 nGenera Corp. All Rights Reserved.
  6. 6. 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 500 million Facebook users 560 million China Mobile subscribers 6 | © 2010 nGenera Corp. All Rights Reserved.
  7. 7. India’s $35 laptop Unveiled 23.07.10 7 | © 2010 nGenera Corp. All Rights Reserved.
  8. 8. New frontiers in innovation Global 3 sold per innovation in second technology and banking Hypergrowth New business models One sold every three seconds The ecosystem is becoming the model for powering growth and extensibility. 8 | © 2010 nGenera Corp. All Rights Reserved.
  9. 9. The Ecosystem as Solution 9 | © 2010 nGenera Corp. All Rights Reserved.
  10. 10. The growth of the new ecosystem conversation 90000 80000 Business 70000 Ecosystem 60000 Business 50000 Ecosystem (w/e) 40000 Open Ecosystem 30000 20000 10000 Open Ecosystem 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 postSource: Cogenuity May 2010 10 | © 2010 nGenera Corp. All Rights Reserved.
  11. 11. Open ecosystems and the future of management Old The old ecosystem 1995 - 2007 New The new ecosystem 2008….• The old idea of ecosystems: “glocal” • Investing your business future in the partnerships relationship cloud• Tight corporate focus • Focus on externalities• Glocal search for cheap labor • Global search for free labor and talent + revenue generating micro-partnerships• Labor market dis-alignment • Value re-alignment process• Central planning and reporting • PLANNING FOR RANDOMNESS• Corporate value focused • Value-diverse and customer-centric• Communications driven • Perception driven 11 | © 2010 nGenera Corp. All Rights Reserved.
  12. 12. 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 12 | © 2010 nGenera Corp. All Rights Reserved.
  13. 13. 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 the need to: To overcome industry or sector bottlenecks Disrupt the product roadmap or current business models Use open source to reduce cost and extrapolate innovation outside the organization Integrate customer ecosystems to refresh customer service offerings and respond to empowerment 13 | © 2010 nGenera Corp. All Rights Reserved.
  14. 14. A Sector Example 14 | © 2010 nGenera Corp. All Rights Reserved.
  15. 15. Ecosystems and competition in the mobile sectormobile phone subscriptions to 2013 A significant growth 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 15 | © 2010 nGenera Corp. All Rights Reserved.
  16. 16. 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 16 | © 2010 nGenera Corp. All Rights Reserved.
  17. 17. 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 17 | © 2010 nGenera Corp. All Rights Reserved.
  18. 18. Transforming the external environment A partial view of Hardware- the mobile OS Tools software Apps interface developers developers ecosystem developers Function developers Ecosystem brands Mobile advertising Supply revenues Nokia End-user chain Services communities Ovi Apple Apps Geodata/AR store Content Location AR Google Maps based content developers Apps services Operators Solutions ecosystemExtensibility: new Embedded Home Device devicebusiness models, sales device markets marketsactivities and markets 18 | © 2010 nGenera Corp. All Rights Reserved.
  19. 19. Case Study: How do you migratefrom business as usual to a neworganizational form? 19 | © 2010 nGenera Corp. All Rights Reserved.
  20. 20. Nokia heads for the ecosystem February 4th, 2010 April 2009 Almost 40 million lines Mid-2008 Foundation of code open-sourced 2007 Nokia creates Symbian launches Nokia decides to open Foundation and open officially source its smart phone source project operating system, announced Symbian, the most widely distributed smartphone OS globally NOKIA’S KEY TENSION POINT: Its core culture is not adapting to the new realities, particularly customer centricity and “openness” 20 | © 2010 nGenera Corp. All Rights Reserved.
  21. 21. 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 21 | © 2010 nGenera Corp. All Rights Reserved.
  22. 22. 4 Steps to open management values Values and creativity help staff to bring values and creativity to work Participation be a participant, e.g., open up the sustainability plan, don’t dominate the ecosystem; all staff to participate via blog and twitter Future worlds orient not just to the future but to transformed environments Excellence set the highest standards 22 | © 2010 nGenera Corp. All Rights Reserved.
  23. 23. Symbian’s open management, open ecosystem tools • Developer community • Apps community ( • Ecosystem Ideagora – ( • Open research community • Volunteer community • Ecosystem blog platform ( • Get satisfaction 23 | © 2010 nGenera Corp. All Rights Reserved.
  24. 24. An open ecosystem ideagora Pushing the openness agenda, by ideating  The management of the foundation  The operating system  The future of mobile 24 | © 2010 nGenera Corp. All Rights Reserved.
  25. 25. Growing externalities at Nokia Rural Ovi - Nokia development co- MeeGo, OS services life investments tools India Symbian Nokia money Point and find Technology (ads/search) Institute Brazil Qt Interface tools NOKIA Business solutions community Forum Nokia Mobile brain bank Operators Africa Device Navteq, supply maps chain 25 | © 2010 nGenera Corp. All Rights Reserved.
  26. 26. The Symbian ecosystem Operators, OS component Chipset e.g. specialists, e.g. makers, Texas Vodafone Sun Hard- Instruments ware/soft- OS ware OEMs, Sony Tools interface Ericsson, redesign Nokia Members Developer (200 community Consultants, enterprises) e.g. Accenture Ideagora Apps Academia/ community open Volunteers innovation 26 | © 2010 nGenera Corp. All Rights Reserved.
  27. 27. Measuring Innovation inEcosystems 27 | © 2010 nGenera Corp. All Rights Reserved.
  28. 28. Measuring innovation • How successful has Nokia/Symbian been? • The headline 2008 – 2010 is the iPhone − And the sub-heading is Android 28 | © 2010 nGenera Corp. All Rights Reserved.
  29. 29. 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 Certainty Conventional measures of innovation balance certainty against time: by the time you can really measure the output it’s too late to change 29 | © 2010 nGenera Corp. All Rights Reserved.
  30. 30. 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 2008Source: 30 | © 2010 nGenera Corp. All Rights Reserved.
  31. 31. 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 31 | © 2010 nGenera Corp. All Rights Reserved.
  32. 32. 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 platformsSource: Appcelerator, Inc., 06/2010 32 | © 2010 nGenera Corp. All Rights Reserved.
  33. 33. 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-centricSource: Cogenuity 2010 Date range All time 33 | © 2010 nGenera Corp. All Rights Reserved.
  34. 34. Ecosystem metrics: Platform Deployment No of apps Widely criticized 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 opennessSource: Cogenuity 2010 Date range All time 34 | © 2010 nGenera Corp. All Rights Reserved.
  35. 35. Ecosystem metrics: Value conversion - 1 Market Mobility Enterprise analysis consulting mobility offers strategy B2B consulting sell test services to Rapid indirect monetization the ecosystem Texas Instruments Product creation Value conversion in the Symbian ecosystem services 35 | © 2010 nGenera Corp. All Rights Reserved.
  36. 36. Ecosystem metrics: Value conversion - 2 OEMs use Android, Rapid direct monetization B2C incorporate 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 apps Value conversion in the Android ecosytem market, hosted by Google; apps promote handset 36 | © 2010 nGenera Corp. All Rights Reserved.
  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 | © 2010 nGenera Corp. All Rights Reserved.
  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 mediaSource: The Conversation Group 38 | © 2010 nGenera Corp. All Rights Reserved.
  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 | © 2010 nGenera Corp. All Rights Reserved.
  40. 40. 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 40 | © 2010 nGenera Corp. All Rights Reserved.
  41. 41. Lessons 41 | © 2010 nGenera Corp. All Rights Reserved.
  42. 42. Lessons: Three styles of ecosystem strategy APPLE, high end single product focus, multiple services; high margins, targeted ecosystem, astute NOKIA, global, across perception market segments, management income groups, price Price bands and service ANDROID, tight offers with diffuse interaction between ecosystem, poor industry participants perception for broad device management distribution, improving perceptions Models for sustainable competitive advantage 42 | © 2010 nGenera Corp. All Rights Reserved.
  43. 43. Lessons: Ecosystem strategy Polarization - Incumbent - uniqueness scale Ecosystem strategies Chain and Facilitation - channel reciprocation 43 | © 2010 nGenera Corp. All Rights Reserved.
  44. 44. Lessons: Management The key tension point Use platforms Work with to structure ad Invest in the developer Strategize Create hoc innovation relationship 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. 44 | © 2010 nGenera Corp. All Rights Reserved.
  45. 45. 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 45 | © 2010 nGenera Corp. All Rights Reserved.
  46. 46. Lessons Free labor/ 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 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 New hardware – M-PESA, Kenya 17,000 billion in revenues to software integration micro-partners, micro-partners, 2008- initiatives mobile money agents 2010 200,000 Nokia Forum Mobile brain bank, Symbian contributions members Africa from TI, Sun,Ixonos Some way to go with aligning the enterprise ecosystem to consumer ecosystems or in evolving a wider emerging value set 46 | © 2010 nGenera Corp. All Rights Reserved.
  47. 47. 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. 47 | © 2010 nGenera Corp. All Rights Reserved.
  48. 48. Haydn 48 | © 2010 nGenera Corp. All Rights Reserved.