Jeffrey S. Kuhn, a researcher and executive advisor, has served on the faculty of Columbia Business School. He is a founding member of the Business Ecosystem Alliance.
A decade ago, Nokia’s CEO, Stephen Elop, published his prescient “burning platform” memo which lamented the precipitous decline of the company’s vaunted phone handset business by Apple and Google. He noted that, “Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem.”[i] The competitors’ ecosystems offered a curated network of developers, applications, e-commerce, advertising, search, social media, location-based services and unified communications. Given their immense value-creating potential, ecosystems―and whether to build, buy, or join one―have become a top agenda item in boardrooms around the world.
Unfortunately, Elop’s wakeup call was too late for Nokia; its mighty handset empire was quickly eclipsed by Apple and Google and Elop’s tenure as CEO ended in 2014. Nokia and other incumbent handset phone players had been trumped by a bold new logic predicated on open organizational architectures and collaborative economic ecosystems.
The ecosystem wave
A report from McKinsey suggests that in the coming decade, scores of industry sectors and value chains will converge into a dozen or so multitrillion-dollar digital ecosystems.[ii] Their analysis heralds a highly customer-centric future in which users can access a wide range of offerings and experiences through a single gateway without leaving the ecosystem.
Business ecosystems can take many forms; they are generally defined as confederations of organizations strategically selected by a host company that collectively deliver an integrated offering of products, services and experiences to customers via a digital platform.[iii] As IBM Institute for Business Value researchers point out, “organizations across virtually every industry are competing to have a primary relationship with customers, positioning themselves to not only provide their own products, but as a curator of customer experiences.”[iv]
Ecosystems are typically initiated by a central player with a market-leading brand; the host serves as the curator and orchestrator of offerings provided by complementary organizations. The ecosystem host plays a keystone role in establishing cooperative principles and revenue sharing agreements among ecosystem partners and in providing an identifiable brand and coherent digital landscape and experience to end users.
Haier: Ecosystem pioneer
Haier, a highly successful Chinese multinational corporation best known as a leading provider of large and small household appliances and consumer electronics, has developed an effective set of practices for managing an emergent, ecosystem-based business model.
Check the full article on Strategy & Leadership: Haier: ecosystem leadership | Emerald Insight
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