Pierre Omidyar on eBay ◦ Almost every industry analyst and business reporter I talk to observes that eBay's strength is that its system is self-sustaining -- able to adapt to user needs, without any heavy intervention from a central authority of some sort. So people often say to me - "when you built the system, you must have known that making it self-sustainable was the only way eBay could grow to serve 40 million users a day." ◦ Well… nope. I made the system self-sustaining for one reason: Back when I launched eBay on Labor Day 1995, eBay wasn't my business - it was my hobby. I had to build a system that was self-sustaining… …Because I had a real job to go to every morning. I was working as a software engineer from 10 to 7, and I wanted to have a life on the weekends. So I built a system that could keep working - catching complaints and capturing feedback -- even when Pam and I were out mountain-biking, and the only one home was our cat.

1. Ecosystem Strategy

2. Ecosystems
• Ecosystems are communities of collaborating firms that
collectively produce a good, service, or solution, and co-
evolve their products under an aligned vision
• Ecosystem actors often provide groups of
complementary goods and services that form a bundle
that can be consumed by the final customer
• The bundle collectively can create consumer lock-in—
which, in turn, can bring benefits to the orchestrators of
those ecosystems with regard to both customers and
complementors.

3. Ecosystems and Platforms
Platforms provide the technical and institutional infrastructure for
enabling the collaboration of different entities.

4. Roles in ecosystems

5. Keystone Species
https://www.youtube.com/watch?v=HEmF6ycFvRI

6. The Keystone Advantage

7. Ecosystem Health
• Productivity
• Factor productivity
• Change in productivity
• Delivery of innovations
• Robustness
• Survival rates
• Limited obsolescence
• Niche creation
• Growth in firm variety
• Growth in product and technical variety

8. Virtuous Cycle
Build platforms
that create
opportunities for
other firms
Investments made
by other firms
Improvement in
productivity,
stability and
growth
Better operating
performance for
Platform builders

9. Impact

10. Why ecosystems? Technology Turbulence

11. Enabler: Modularity and Loose
Coupling

12. Opportunity Logic: Strength of weak ties

13. Investment Logic: The Open
Innovation Approach

14. Value Logic: Economies of Learning

15. Enabler: Network Effect
Direct Network Effect: Consumers value the product or service more if there are more other
consumers
Indirect Network Effect: Producers value the product or service more if there are more
consumers, and vice versa
Indirect
Direct
Direct
Indirect

16. Cost Logic: Reduction of transaction
costs

17. Social Logic: The Collective Impact
approach

18. Orchestration: Acts
• Distributed Experimentation
• Promote evolutionary learning and increase engagement
• Participatory Engagement
• Provide structure and rules that allow diverse actors to
interact constructively over prolonged periods
• Ambiguity in external interpretation of private and
public interest
• Promotes coordination without explicit consensus

19. Scenario I: High Risk Project with
All or Nothing Bet
Consider a project that requires $110 to commercialize
and will be worth $0 with 99 percent probability or
$10,000 with 1 percent probability.
Will you invest in this project?

20. Expected Value of the project = 1% * $10,000 – $110
= - $ 10

21. Scenario II: High Risk Project with
possibility of Experiment
Imagine we can conduct an experiment that will reveal
if the project has a 10 percent chance of working.
(Suppose further that the probability of the experiment
having a positive outcome is only 10 percent, so that in
this example the 1 percent chance of overall success is
unchanged.)
Will you invest in conducting this experiment? What is
the maximum investment would you be ready to make
for this experiment?

22. • Expected Value of the project if experiment is
successful= 10% * $10,000 – $110 = $ 890
• Probability of success of the experiment=10%
• Expected Value of the experiment = $89

23. Thank you!

24. Ecosystem Architecture:
Why and how ecosystems
emerge differently?

25. An Ecosystem Approach

26. Influencing Market

27. How emerging industry with
ecosystem logic grow differently?

28. Power in Ecosystems
• Envelopment: A strong network position makes it
easier to enter adjacent industries
• Gatekeeping: Use customer lock-in as entry barriers
to charge high prices to partners and complementors
• Information: As intermediaries, have greater access
to information about customers and competitors

29. Countervailing Power
• Platform Differentiation: Promotes variety and
competition
• Interoperability: Moderates lock-in effects
• Congestion: Customer desertion

30. Democratizing Markets

31. Democratizing Markets

32. Ecosystem Architecture
Ecosystem
Health
Roles
(Division of ecosystem roles between
State and Market)
Relationships
(Embedded vs
Contractual/Impersonal)
Rules
(Participation, Incentive and
Information)

33. Thank you!

34. Ecosystem Development

35. Business Ecosystem: Transaction Focused
View

36. A Business Ecosystem (Extended)

37. Alternative View of Business Ecosystem
Ecosystem as Interaction Field

38. Alternative Strategic Approaches in an
Ecosystem

39. Ecosystem Development Framework
• Step 1: Scope of play and target choices
• Where should the firm be active?
• Where should you focus?
• Step 2: Competitive landscape and anchor analysis
• What is the best positioning relative to other ecosystem and
solutions, with a focus on the value added for the customers?
• What could be a keystone contribution?
• Step 3: Role of the firm and strategic approach
• What role should the firm play and what could be the strategic
approach?

40. Ecosystem Development Framework
• Step 4: Ecosystem double value proposition
• What potential value the firm could offer to the (a) ecosystem
final customers and (b) partners?
• Step 5: Partnering strategy
• Whom could the firm partner with? How could it attract them?
• Step 6: Governance and engagement
• How should the firm run and govern/participate in the
ecosystem better?
• Step 7: Performance Metrics
• What benefits do we expect? Are we able to realize it?

41. Shaping in a World of Constant Disruption

42. Monetization Strategies
• Identify a keystone contribution that the orchestrator
can uniquely own and control, and that is essential for
value creation in ecosystem
• Create efficient payment collection mechanism (e.g.
license fee, royalty, commission or pay per use)
• Charge differential rates to maintain contribution and
patronage
• Diversify and renew revenue sources

43. Ecosystem Canvas

44. Thank You!

45. EFFECTUAL THINKING

46. Entrepreneurial action under
Uncertainty
Effectuation
(decision making heuristics learned by expert entrepreneurs creating
new products, firms and markets in uncertain situations)

48. Results
Expert entrepreneurs
◦ underweight or eschew predictive information
◦ prefer to work with things within their control
◦ prefer changing goals to chasing means they do not have
◦ open to surprises
◦ keen on shaping or making opportunities than on finding them

49. 5
• Means. The basis for decisions
and new opportunities:
– Who I am
– What I know
– Whom I know
Where to Start
◦ Goals. Given (based on predictions)

50. Means: Check List
◦ Who am I?
◦ What gives me energy? In what situations do I feel most at ease? What makes me unique?
What am I most proud of? What do I have to offer in a team? What is my favourite mode of co-
operation?
◦ What can I do?
◦ What experiences have moulded me over the past few years? What knowledge do I have that
others find valuable? What can I do better than many others? What hobbies do or did I have?
What am I known for with friends and family?
◦ Who do I know?
◦ Which enterprises did I work together with during the past several years? Which are the
companies where I know people? Which customers are enthusiastic about me? With whom in
my network would I like to create something together?

51. 7
• Affordable Loss.
Calculate downside potential and risk no
more than you can afford to lose.
Risk, Return and Resources
◦ Expected Return.
Calculate upside potential
and pursue the (risk
adjusted) best opportunity.
Invest what you can afford to lose

52. 8
Stakeholder Commitment. Build your “future” together with
customers, suppliers and even prospective competitors
who commit to the idea of shaping the future
Attitude Toward Others
Competition. Set up transactional
relationships with customers and
suppliers.

53. 9
Surprise
◦ Avoid Surprises.
• Leverage Surprises.
Surprises can present new opportunities.
• What can I do now that I was not able to
do before?

54. Dynamics of the Effectual
network
(JEE 2005)
Who I am
What I know
Whom I know
What can
I do?
Effectual
stakeholder
commitments
Interactions
with other
people
New
means
New
goals
NEW MARKETS
AND NEW FIRMS
Expanding cycle of resources
Actual Means
Converging cycle of constraints
Actual courses of
Action possible (goals)
(Affordable loss)
Who We are
What We know
Whom We know
What can
We do?

55. Principles of Effectuation
(AMR 2001)
◦ Means Driven:
Start with Who you are, What you know, & Whom you know (Not with pre-set goals)
◦ Affordable loss principle:
Invest what you can afford to lose (Not expected return)
◦ Building a network of self-selected Stakeholders :
Each one partake of what one creates (Not competitive analysis)
◦ Embrace and Leverage Surprises :
What can I do now that I was not able to do before? (Not avoid them)

57. Pierre Omidyar on eBay
◦ Almost every industry analyst and business reporter I talk to observes
that eBay's strength is that its system is self-sustaining -- able to adapt to
user needs, without any heavy intervention from a central authority of
some sort. So people often say to me - "when you built the system, you
must have known that making it self-sustainable was the only way
eBay could grow to serve 40 million users a day."
◦ Well… nope. I made the system self-sustaining for one reason: Back
when I launched eBay on Labor Day 1995, eBay wasn't my business - it
was my hobby. I had to build a system that was self-sustaining…
…Because I had a real job to go to every morning. I was working as a
software engineer from 10 to 7, and I wanted to have a life on the
weekends. So I built a system that could keep working - catching
complaints and capturing feedback -- even when Pam and I were out
mountain-biking, and the only one home was our cat.

58. ◦ If I had had a blank check from a big VC, and a big staff running
around - things might have gone much worse. I would have probably
put together a very complex, elaborate system - something that
justified all the investment. But because I had to operate on a tight
budget - tight in terms of money and tight in terms of time - necessity
focused me on simplicity: So I built a system simple enough to sustain
itself.
◦ By building a simple system, with just a few guiding principles, eBay
was open to organic growth - it could achieve a certain degree of
self-organization. So I guess what I'm trying to tell you is: Whatever
future you're building… Don't try to program everything. 5 Year Plans
never worked for the Soviet Union - in fact, if anything, central planning
contributed to its fall. Chances are, central planning won't work any
better for any of us.
◦ Build a platform - prepare for the unexpected... …And you'll know
you're successful when the platform you've built serves you in
unexpected ways. That's certainly true of the lessons I've learned in the
process of building eBay. Because in the deepest sense, eBay wasn't a
hobby. And it wasn't a business. It was - and is - a community: An
organic, evolving, self-organizing web of individual relationships,
formed around shared interests. (Omidyar, 2002)