In the first blog we discussed where we might find ecosystems and the issues of leading in this type of environment. Now we show examples and explore challenges in new ways of thinking.

Putting Darwin in the Strategists’ Seat

Management currently means to lead and direct, and strategy is choosing the direction. But in ecosystems, where diverse members tend to have value-objectives that are different to one another, any effort at organization, much less direction, alarms the community. Ecosystems work best when they maximize chance idea-collisions based upon first-hand knowledge of market dynamics, and where both entities might come out better off as a result. Any suspicion that one partner is trying to control such interactions almost immediately destroys the trust that is key to such co-creation.

Drucker Forum 2019

This article is one in the “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems” taking place on November 21 & 22, 2019 in Vienna, Austria.
#GPDF19 #ecosystems

Haier expects its employees to be entrepreneurs and has made it easy for them to start-up new ventures, launching many new bets into an unknown future. By requiring employees fund most or all of the venture, Haier has done this at a relatively low risk. These bets raise Haier’s chances to be in the right future places, at the right time, because they are placing many bets and allowing market receptivity to replace strategic direction. The result is that Haier is now venturing into areas of clothes cleaning, such as shoes and exotic fibers, never thought of before, but which represent attractive new laundering opportunities.

Reliance on chance is the very anthesis of strategic decision-making, yet it is eminently suitable when there is little good logic or data on which to base strategies. There is little integrity in such strategies where the future is unknown, and small bets represent a useful way to explore the future, while reducing risks. However this takes control out of leadership’s hands at the very moment when stakeholders look more to leadership, making ecosystems a difficult sell.

Innovating Organizational Platforms

Placing many bets works only if the rest of the organization is able to respond. Platforms are needed for this; organizational bridges between the chaotic world of the external ecosystem, and the regulated internal world within a large organization. Haier is building such platforms around common market affinities; there are platforms for: Biomedical endeavors, Laundering, Food, the Smart Home and others. These platforms share lessons-learned, coordinate solution- and experience-creating activities of disparate free-wheeling microenterprises and provide a selection of shared services, such as branding, legal, HR, etc. They are the enablers of ecosystem participation, and deserve more attention than they currently receive. Without platforms, microenterprises might be unable to execute the new ideas that they are exposed to.

The challenge of moving from emphasizing holding to sharing power

Earlier, when the linearity of value chains was considered an advantage, there was a belief that governance was important if they were to achieve maximum potential.

Power was often the privilege of the largest organizations, but if novelty is prized over reliability, any form of centrality is suspect as a distorting field. How can we argue that legacy assets endows the holder with increased insight in a completely different future? In addition, there is an inherent “what’s in it for us?” question that needs to be addressed in any ecosystem invitation, if it is to be successful in unleashing co-creation.

The Journey Still To Come

Ecosystems will undoubtedly play a bigger role in the continuing growth j of most firms, not because they wish it, but because they will need access to assets and capabilities that are not presently available to them. The real reason for developing ecosystem engagement is to unleash creativity that has for too long been constrained by a traditional linear view. Because of their unpredictability and their spontaneity, ecosystems offer a greater idea yield from the assembled brains than traditional approaches. This journey is not for the faint-hearted. Rather than building portfolios, the challenge is to abjure a reliance on strategy and power, and to, instead, invite others to come onto your organizational platforms and contribute their dreams, all of which requires a willingness to lose traditional managerial control.

About the authors:

Bill Fischer is Professor of Innovation Management, at IMD business school. He coauthored the book “Reinventing Giants” which describes Haier’s évolution as an innovative organization and he and Simone Cicero have been working with Haier developing the story of  Haier’s emergence as an ecosystem participant. He was inducted into the Thinkers50 Hall of Fame in 2019.

Simone Cicero is a designer and facilitator, speaker and entrepreneur, with a special focus on open business models, both in software and in hardware.
Simone created the first completely open source methodology for the design of Platforms and Ecosystems, The Platform Design Toolkit, that has contributed a new design domain emerging.

This article is one in the Drucker Forum “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems”, taking place on November 21-22, 2019 in Vienna, Austria #GPDF19 #ecosystems

Value-chains have been a mainstay of organizational strategy; they are designed for reliability, and a well-run value-chain will inevitably reduce operational surprise, but they are also linear and therefore slow and limited in how they respond to a fast changing environment. Ecosystems however, with many possible partners self-defining how they might interact, are better suited for novelty than for routine, and can be perfect when new ideas or experimentation are required.

Drucker Forum 2019

This article is one in the “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems” taking place on November 21 & 22, 2019 in Vienna, Austria.
#GPDF19 #ecosystems

As we move into a future characterized by hyper-connectivity, there will be an unprecedented opportunity for the sorts of innovative spontaneity that ecosystems excel at to become a competitive differentiator; but they need leadership to think differently regarding strategy and organizational boundaries.

Our work with ecosystem pioneers offers guidance to those managers who will face these choices in the near future, and we highlight some especially intriguing scenarios.

Ecosystems are not new in organizational discussions. The richness of their randomness in promoting sustained vitality in biological communities is well-established, and their possible application to economic activity might provide new forms of expertise in the face of ever-demanding customer expectations, without adding to the balance sheet.

Ecosystem potential is often hiding in plain sight

Many of the ecosystems we are working with were already in place, without being recognized for the potential that they offered to generate ideas. The traditional process-linearity and role-sequentiality of value-chain thinking acts as a limiting factor in envisioning possible sorts of partnering.

One European tier three commodity supplier for the automobile industry has told us that they are stereotyped by the efficiency with which they play their current role. There is no thought given to what they could add in customer experience innovation, and the invitation to redefine their role never comes. This is a testimony to limited imaginations without tangible evidence of ecosystem possibility. But In Copenhagen, concern over a lack of software design talent was the catalyst that led to public recognition of an already existing, but latent, local ecosystem that was already exceling. Once recognized, it was much easier for stakeholders to invest in its future development, but the recognition was the essential first step. Leadership imagination is an essential ingredient in such situations, but former head of GE’s business innovations, Beth Comstock, has argued recently that that the ability to “imagine forward” is not as abundant as we might have hoped.

We see ecosystems in nature but our leadership imagination does not inherently make the leap to business as they require a light touch on the strategy wheel allowing generosity in the way in which that value is distributed among partners.

In our next blog, we explore the challenges this produces for existing management thinking, and how that might be changed.

About the authors:

Bill Fischer is Professor of Innovation Management, at IMD business school. He coauthored the book “Reinventing Giants” which describes Haier’s évolution as an innovative organization and he and Simone Cicero have been working with Haier developing the story of  Haier’s emergence as an ecosystem participant. He was inducted into the Thinkers50 Hall of Fame in 2019.

Simone Cicero is a designer and facilitator, speaker and entrepreneur, with a special focus on open business models, both in software and in hardware.
Simone created the first completely open source methodology for the design of Platforms and Ecosystems, The Platform Design Toolkit, that has contributed a new design domain emerging.

This article is one in the Drucker Forum “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems”, taking place on November 21-22, 2019 in Vienna, Austria #GPDF19 #ecosystems