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TheNTWKSummit22 | How to Innovate with Digital Ecosystems

Speakers: Anna Noakes Schulze, Julian Kawohl, Andrea Contri & Simone Cicero

For companies aiming to develop new business beyond the boundaries of their organization, it is important to find ways to leverage the power of ecosystems by harnessing three key actors: Enablers, Realizers and Ochestrators.

Why digital ecosystems have become so important as a business strategy?

Andrea Contri introduced the digital kitchen journey, in which an ecosystem strategy that allows appliance manufacturers to partner with providers of complementary products and services to create more value for the customer and leverage network effects. Adding to that, Cicero emphasizes the need to adopt an ecosystem model in order to stay relevant as power shifts away from internal company structures to external, many-to-many relationships.

From Kawohl’s point of view, the three drivers of ecosystem business models are digital, connected, and sustainable.

The ecosystem strategy offers important advantages because the capabilities and assets of any given firm are limited and they compete for market share whereas they can grow the overall market by collaborating.

There are new opportunities that were not possible in a non-connected and non-ecosystem world. A platform model expands the opportunity space and creates new ways to provide value to customers. Cicero mentions that the experimental nature of ecosystems enables innovation and future-forward thinking, which Kawohl describes as the “innovation flywheel”.

In terms of positioning and partner selection, Contri emphasizes that an ecosystem strategy can start small. “No need to boil the ocean!”

It may also be necessary along the way to pivot from orchestrating one’s own ecosystem to joining another’s ecosystem if that offers better ROI and customer outcomes.

Kawohl believes that an ecosystem strategy is a portfolio game. The decision to build or join depends a lot on the maturity of the particular domain and what you can bring to the ecosystem party.

Cicero added that “the challenge is for companies to agree to create shared common goods, common infrastructures and to collaborate instead of just dominating, which requires a big cultural shift for companies.”

In terms of challenges with digital ecosystems, there exists a difficulty of managing customer expectations for a smooth and trouble-free customer journey while dealing with the complexities of ecosystem collaboration. “It’s very messy and there’s no playbook for getting it right,” according to Contri. He points out that there needs to be a deliberate striving to simplify and to get into the shoes of the consumer. In other words, intentional customer experience design.

Part of this is about setting a vision for an interesting and seamless experience for the consumer; and bringing everyone to task to determine how we achieve this particular vision together. Then it is a question of figuring out the mechanism for keeping partners incentivized and aligned over time.

Kawohl digs deeper into managing both sides - customers and ecosystem partners - to create win-win situations which, according to him, “are what ecosystems are about.” Cicero mentioned shared reputation for ecosystem partners and emphasizes the “need for partners who are assuming some risk to be involved in policy-making and governance issues as well.”

Ultimately, the ecosystem strategy will not suit company cultures that are very risk-averse. There has to be trust between partners, as well as openness to experimentation and learning.

As far as the future of ecosystems is concerned, Contri feels that “we should look to valuable opportunity spaces that were not possible before.” In turn, Cicero sees a future that is much more open, transparent, permissionless and decentralized, while Kawohl envisions a more human-centered paradigm with more holistic offerings driven by sustainability.

Orchestrator: offers products and services to final customers/end users through a (digital) B2C platform. Examples: Amazon, Alexa, Uber, Aribnb, Thermomix, Aldi, a farmer’s market.

Realizer: provides content, products, and services for final customers/end-users. Examples: Mercedes, Harvard University, Hilton, Kellogs, Universal Pictures.

Enabler: supports realizers, orchestrators and other enablers with products, services, or a (digital) B2B platform. Examples: Shell, Klöckner & Co, Lenze, IBM, Bosch, Boeing, Nokia Networks, McKinsey, Siemens Financial Services, Predix (GE), Metro.

Written by Anna Noakes Schulze

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