Building Effective Ecosystems for the Future:2. Natural vs. Linear Thinking
by Bill Fischer and Simone Cicero
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.
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