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TRANSCRIPT
The Enterprise Ecosystem: How do we analyze a new management paradigm?
Haydn Shaughnessy
Systemic Problems
The Ecosystem as Systemic Solution
Measuring Innovation in Ecosystems
A Sector Example
Lessons
Agenda
Case Study
2
Systemic Problems
3 |
Introduction: 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 |
Introduction: The growth of system-wide problems
5 |
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….
Debt de-leveraging at household, enterprise and national levels, hyper-competition, energy issues, declining world trade….
Introduction: The innovation crisis• Remarkably, the return on assets (ROA) for U.S. firms has
steadily fallen to almost one-quarter of 1965 levels
6 |
The $20,000 infant incubator
The $20,000 auto
15,000 UK bank branches
The $7 infant incubator
The $2,000 auto
17,500 mobile money agencies in Kenya
Developed world Developing world
–John Seely Brown and John Hagel, The Shift Index 2010
500 million Facebook users 560 million China Mobile
subscribers
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.
The Ecosystem as Systemic Solution
8 |
Abso-lute
2002 2003 2004 2005 2006 2007 2008 20090
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
Business Ecosystem
Open Ecosystem
Ab-solut
e
2002 2003 2004 2005 2006 2007 2008 20090
10000
20000
30000
40000
50000
60000
70000
80000
90000Business Ecosys-tem
Business Ecosys-tem (w/e)
Open Ecosystem
Open Ecosystem (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
The growth of the new ecosystem conversation
9 |Source: Cogenuity May 2010
Old NewOpen ecosystems and the future of
managementThe old ecosystem
1995 - 2007• The old idea of ecosystems:
“glocal” partnerships
• Tight corporate focus
• Glocal search for cheap labor
• Labor market dis-alignment
• Central planning and reporting
• Corporate value focused
• Communications driven
The new ecosystem 2008….
• Investing your business future in the relationship cloud
• Targets system wide innovation
• Global search for free labor and talent + revenue generating micro-partnerships
• Value re-alignment process
• PLANNING FOR RANDOMNESS
• Value-diverse and customer-centric
• Perception driven
10 |
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.
And their goals are MUNDANE
They are ABSURD
And they are anything BUT rational• —Blogger Sean Howard, June 28, 2010
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A Sector Example
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Ecosystems and competition in the mobile sector
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Device and equipment sales in this
industry – a model for challenges and solutions elsewhere
A significant growth sector estimated at 5 billion online devices by 2014 (CISCO)
USA India
Projected
Current
720 million
285 million
1.1. billion
mobile phone subscriptions to 2013
10% growth
50% growth
315 million
Introduction: New frontiers in innovation
14 |
Mobility is a model for massive market growth and system-wide innovation.The ecosystem is becoming the model for mobile management.
New business models
Hypergrowth
Global innovation in
technology and banking
One sold every three seconds
3 sold per second
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
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From open source to open ecosystem•
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Three innovative players:Three current strategies beyond open source
Price, market share, market range
Incremental gains from service to product to apps to ads
Extending the Google business model
End-user communities
Apps developers
Ecosystem brands
Nokia Services
Search/Play
Geodata/AR
MapsLocation
based services
Embedded device markets
Mobile advertising
revenues
Home device markets
OS developers
Tools developers
Device sales
Content developers
Function developers
Solutions ecosystem
AR content
Supply chain
Hardware-software interface
Managing complexity in the relationship cloud
17 |
Apple
Apps store
Ovi
Operators
A partial view of the mobile ecosystem
Case Study: How do you migrate from business as usual to a new organizational form?
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The Nokia open source decision
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2007 Nokia decides to open source its main smart phone operating system, Symbian, the most widely distributed smartphone OS globally (about time of iPhone launch)
Mid-2008 Nokia creates Symbian Foundation and open source project announced
April 2009 Foundation launches officially
February 4th, 2010Almost 40 million lines of code open-sourced
NOKIA’S KEY TENSION POINT:Its core culture is not
adapting to new open realities
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
20 |.
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 |
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 |.
An open ecosystem ideagora• Pushing the openness agenda, by ideating
– The management of the foundation– The operating system– The future of mobile
23 |
NOKIA
Symbian
MeeGo, OS
Navteq, maps
Ovi - services
Qt Interface tools
Point and find (ads/search)
Forum Nokia
Device supply chain
Operators
Nokia life
tools
Rural development co-
investments India
Technology Institute
Brazil
Mobile brain bank Africa
Nokia money
Business solutions
community
Relationship management in the cloud at Nokia
24 |
Developer community
Ideagora
Members(200
enterprises)
Volunteers
Apps community
Chipset makers, Texas Instruments
OEMs, Sony Ericsson,
Nokia
Consultants, e.g. Accenture
Operators, e.g.
Vodafone
Academia/open
innovation
OS Tools
OS component specialists, e.g.
Sun
The Symbian ecosystem
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Hard- ware/soft-
ware interface redesign
Measuring Innovation in Ecosystems
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Measuring innovation
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• How successful has Nokia/Symbian been?• The headline 2008 – 2010 is the iPhone
− And the sub-heading is Android
Conventional measures of innovation balance certainty against time:
by the time you can really measure the output it’s too late to change
ROI
Scaling a business
Internal attitude changes
Brand equity development
New ideas
Patent quantity
Pipeline metrics
(2,5, 10 year product flow)
Some kind of balanced
scorecard for knowledge production
Time
Certainty
Measuring innovation
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—Secretary of Commerce, January 2008
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”
29 |Source: www.innovationmetrics.gov/
• Acceptance• Alignment• Consistency• Trust• Extensibility• Values/perception
Socio-cultural
• Platform deployment
• Value conversion• Engagement• Diversity• Friction reduction
Socio-economic
• Price• Market conditions• Innovation dynamics• Presence
Market
• Transformational narrative
• Positioning (e.g. incumbency)
• Acquisition of low cost inputs
• Acquisition of ideas• Messaging• Tangible value
conversion investments• Geographical growth
curve
Strategic
An approach to ecosystem innovation metrics
30 |
In search of a balanced scorecard approach to judging future value
Ecosystem metrics: Acceptance
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Developers characterizing their commitment to these platforms
Developers ‘very interested’ in developing for each platform
Source: Appcelerator, Inc., 06/2010
Tier 1
Tier 2
Tier 3
iPhone (iOS) 90%
iPad (iOS) 84%
Android Phone 81%
Android Tablet 62%
Blackberry 34%
Windows Phone 7 27%
Symbian 15%
Palm Pre / Pixi 13%
Meego 11%
Kindle 6%20 40 60 80 100%
N = 2773
The culture of the ecosystem is developer-centric
Ecosystem metrics: Alignment with business values
32 |Source: Cogenuity 2010 Date range All time
The core connections are from brand to device and user features
Business performance is distant from brand
Alignment with emergent values
– = Not evident = of average relevance = highly relevant
Ecosystem metrics: Alignment
33 |
Nokia/Symbian Android/Google
Apple
Open Altruism – –New naturalism Randomness Individualism – – Collaboration – –Popularity –
Ecosystem metrics: Platform Deployment
34 |Source: Cogenuity 2010 Date range All time
Widely criticized for terms and conditions and high handedness
Widely envied for developer engagement
Criticized for cost and complexity but admired for openness
41,000
No of apps developers
10,000
Nokia doesn’t release figures
sell test services to the ecosystem
Mobility consulting
Market analysis offers
Enterprise mobility strategy
consulting
Value conversion in the Symbian ecosystem
Ecosystem metrics: Value conversion - 1
35 |
B2B
Rapid indirect monetization
Texas Instruments
Product creation services
Google/Android
OperatorOEM
OEM
Apps community
OEMs use Android, incorporate Google and receive ad revenue share
Apps community shares revenue from Android apps market, hosted by Google; apps promote handset
Operators too receive revenue share and promote Android handsets
Value conversion in the Android community
Ecosystem metrics: Value conversion - 2
36 |.
B2CRapid direct monetization
The iPhone price
premium
Nokia driving price down
to widen market
Balanced by broad geographical growth opportunities
Justified by astute product focus and hardware revenues
Ecosystem metrics: Price
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Price sustainability is an issue with 1000s of micro-partnerships
A measure of the iPhone’s influence: Online references to HTC/Android G1 vs Apple October 2008/January 2009: Bought vs earned media
Ecosystem innovation metrics: Owning a transformational narrative - I
38 |
Apple iPhone 3g1,216,794
Blackberry Storm1,188
Android G193,228
Palm Pre48,359
Source: The Conversation Group
Online references to Symbian, Android and iPhone in millions, April 1st 2009 to March 31st 2010
Ecosystem metrics: Owning a transformational narrative - 2
39 |
1.1
6.4
19.5
Lessons
40 |.
Lessons: Three styles of ecosystem strategy
•
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NOKIA, global, across market segments,
income groups, price bands and service offers with diffuse ecosystem, poor
perception management
ANDROID, tight interaction between industry participants
for broad device distribution, improving
perceptions
APPLE, high end single product focus, multiple services; high
margins, targeted ecosystem, astute
perception management
Price
Models for sustainable competitive advantage
Lessons: Ecosystem strategy
•
42 |
Polarization -uniqueness
Incumbent - scale
Chain and channel
Facilitation - reciprocation
Ecosystem strategies
Lessons: Management
Invest in the relationship
cloud
Work with developer
meritocracies but create
wider values
Use platforms to structure ad hoc innovation
and revenue micro-
partnerships
Strategize around price vulnerability
Create downstream
metrics
43 |.
The key tension point
Managing perception becomes MORE importantPerceptions influence
relationships. An ecosystem is a diffuse relationship matrix.
Question:• System-wide innovation
• Access to free or very cheap labor and talent
• Unpredictability and random effects in a planned environment
• Labor market value-system realignment
• Adaptation to customer centricity and customer ecosystems
44 |.
Does the ecosystem deliver?
Some way to go with aligning the enterprise ecosystem to consumer ecosystems or in evolving a wider emerging value set
LessonsFree labor/ talent/revenue
partnerships
1200 entries at ideas.symbian.org
< $8 million annual budget, 200 company members, 40 million
lines of codes, 29 innovations
Apple passes on $1 billion in revenues to micro-partners, 2008-
2010
200,000 Nokia Forum members
System wide innovation
Mobile transformation is global, sector wide
and extensible
Involves content (music), maps, geo-
data, augmented reality, autos, home devices, advertising
New hardware – software integration
initiatives
Mobile brain bank, Africa
Unpredictable innovation
iphone 250,000 apps
Price reductions from $250+ to $150 to $70
in a year
M-PESA, Kenya 17,000 micro-partners,
mobile money agents
Symbian contributions from TI, Sun,Ixonos
Labor market alignment
Brings enterprises closer to open source
values
Places too much emphasis on meritocracy
45 |.
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.
Haydn [email protected]
47 |.