Winning the Right Game: A Competition in the Age of Ecosystems
A review of BEA’s Webinar on “Competition in the Age of Ecosystems”
We are in a time of great change. Companies are facing a market full of complexity and uncertainty, they need to constantly meet the challenges brought about by personalized customer needs, technological improvements, as well as political fluctuations. These challenges require businesses to become faster, more innovative and more responsive to realities and changes. Compared with the past 50 years, we have entered a completely new business environment. However, under this background, many enterprises are still trapped in the strategies of the 20th century. They cannot cope with the new market conditions. Managers encounter great problems. Their strategies and management practices are no longer available in the new era. From March 23rd -24th , Business Ecosystem Alliance, with the theme of “ Competition in the Age of Ecosystems”, launched a total of nine online webinars over two days. A total of 24 well-known experts and scholars from the field of global business ecosystem, including the founder of business ecosystem theory, James F. Moore, had great conversations with representatives of enterprises at the forefront of ecosystems practice about the new reality of competition. They called on global business leaders to rethink whether their management thinking, management model and business model are suitable for today’s situation and times.
Why are we in the Age of Ecosystems?
Competitive strategy has been proposed for more than 70 years, where the research object is mainly companies. Nearly every major competitive strategy concept — from Resource-based theory to Michael Porter’s Five Forces model to Christensen’s theory of disruptive innovation — attempts to explain why one company outperforms another. Stuart Crainer, Director of Business Ecosystem Alliance, sends a strong signal to the world that the next era of competition will be defined by the business ecosystem.
What is a business ecosystem exactly? Martin Reeves, chairman of the Boston Consulting Group’s Henderson Institute, gave a broad definition, which is, a group of companies cooperate with each other, and jointly provide some products or services. So, what drives competition in the age ecosystems? Professor John Hagel, a well-known consultant to Fortune 500 companies, said that there are two factors driving the ecosystem: the increasingly close connectivity based on digital technology on a global scale and the user’s demand for personalization of products and services. Usually companies seek growth through two paths: to make or buy, but today managers need to realize that they have a third option, which is to leverage the ecosystem and mobilize third-party resources to help users provide more value. This leveraged growth will make the company more profitable, and will bring more opportunities and more relationships to the company than simply buying a company. Mr. Zhang Ruimin, Founder and Chairman Emeritus of the Board of Directors of Haier Group, once said that products will be replaced by scenarios, and industries will be enveloped by ecosystems. In this era of business ecosystem, companies have only two choices: create their own ecosystem, or join the ecosystem of others, otherwise they will only go to extinction. This is by no means alarmist.
How to win this competition?
In this uncertain world, asking the right questions is actually the answer. Ecosystems are driven by questions, and the ecosystem partners are actually a group of people who know the answers to different questions. They either understand the needs of users from different cultures or have solutions for different needs, which helps move the situation forward. Pia Lauritzen and Hal Gregersen focus on the power of the questions, they look at ecosystems from the human dimension, the human-centered ecosystem, which is the foundation and the core of everything. Yet people are often afraid to ask questions, especially at work, where managers and employees are afraid to ask silly questions. Thinking as a beginner, i.e. always questioning oneself, is crucial to the development of the project and even of the society. As Leena Nair, CEO of Chanel, said, key business drivers — such as innovation, idea generation and knowledge sharing — thrive when people feel psychologically safe to ask questions, debate vigorously, and commit themselves to continuous learning.
However, have we created an environment where people can safely ask questions? The traditional bureaucratic organisational structure obviously cannot provide such a safe environment. We must transition from an organisational structure with one-to-many centralized information collection and decision-making and high-level monopoly management to an ecological organisational model that is decentralized, there people are encouraged to ask and answer questions, share their knowledge and experience to others, so as to be closer to users.
Ron Adner, Author of Winning the Right Game, stressed that the basis of competition was moving from well-defined industries to broader ecosystems. Your competitors are coming from a new direction, looking for goals different from those you’re familiar with, and they may be on a new track. In this era, the success of the old rules can mean losing the new game. Kodak is a classic story of innovation failure, who did transform from traditional photo industry to a digital printing one, but they still lost the new game of digital browsing. The mission of current leaders have changed indeed, they are no longer the man having the most information or knowledge about internal and external environment. They need to ask challenging questions and look at the future beyond the original boundaries. This is where a new strategy should begin. “In a recent conversation with Amy Edmondson, we defined leadership as the art of enabling others to achieve greatness,” says Leena Nair. This should not only happen within a company, but also in a business ecosystem, where the role of a leader is completely different. The goal of the company is not to be the first in the ecosystem, the dominant one, but to be the one that brings people together, by creating reasons or purposes for them to join your ecosystem, normally we start from users. This is how the company should win this game.
Haier’s Ecosystem Practices
Haier’s name comes up frequently during the webinars. Taking user needs as the core is the top priority of Haier’s ecosystem practice. Since Haier put forward its ecosystem brand strategy in 2019, Haier Group has been rated as the only ecosystem brand leading the world by BrandZTM for three consecutive years. The ecosystem brand guided by RenDanHeYi scorecard can realize the value cycle, which is derived from the new understanding of “human value”. The longitudinal axis of the scorecard is a co-evolving in the organisational dimension: breaking its own hierarchical structure, getting rid of middle managers have always been the hash tag of Haier Group for a long time, while the real reason behind it is to create and maintain a safe environment where people could actively raise questions, interact with users, continuously innovate. This has been done by Ecosystem-Micro-Communities(EMC)-based organisational structure, through giving back the rights to make decisions, to hire talents and to distribute compensation to ME owners. The mechanism as EMC contract is designed to make it a transparent process where everyone on the contract clearly knows how much value they are bringing in and how much they are gonna share. The decision maker is not your leader or your manager, it’s the user in this context. The horizontal axis is the value circulating in brand practice dimension: to guide organisations to stimulate Micro Enterprises(MEs) and eco-partners to jointly create value for users and share value through EMC contract, thus to achieve exponential growth and becoming an endless tropical rainforest. Therefore, users are the real reason for Haier to gather ecosystem partners together.
Key responsible person from Candy and GEA were invited to share their experience within Haier’s ecosystem practices. Andrea Contri, Haier’s European IoT Ecosystem Director, shared their interpretation of Haier’s eco-practices with the audiences. The Wine user experience platform is the result of listening to the market. Andrea believes that the project is based and driven by the needs of consumers rather than the needs of enterprises. They hence build and cultivate the local wine lovers community, based on which they constantly introduce new eco-partners into the hOn App of wine purchase, identification and intelligent storage, matching dishes recommendation, wine equipment purchase, winery tourism and so on, providing the whole process solution for local wine lovers. “Each of us is a member of an ecosystem, and if we think that we are the center of everything, we will go blind. We want to put the users or consumers, at the center, not ourselves, and once we have that perspective, we see the world differently and we see more, “said Kevin Nolan, CEO of GE Appliances. Just as Mr. Zhang Ruimin said, the winner of the business ecosystem era is measured by the number of lifetime users. Are you ready for it?
Please watch the full recordings here for more inspirations! https://business-ecosystem-alliance.org/blog/
