Building Ecosystems: Where does your business fit?
12 ecosystems will account for approximately 30 percent of all global revenues by 2025 — so where do you stand?
Serendipity by Design
The term ‘serendipity’ was coined exactly 256 years ago, in a fairy tale in which the heroes ‘were always making discoveries by accident and sagacity of things that were not in quest of’. As I started to make notes about this topic, I realised that many of the discoveries in our history happened by accident. Things like microwave, penicillin, botox, chewing gum etc. In the digital world, is it possible to ever be ready for these moments of serendipity? How do you prepare yourself to be able to create a such moment when things align by chance to deliver that perfect moment and experience?
The Internet of Me vs The Economy of We
Looking at the trends over the last 10 years, and especially with the likes of Apple and Samsung playing an integral part in our lives, one thing that’s easy to understand is the focus on “customer experience”. Individuals, corporates, governments and everyone else in between talk about customer experience. The amount of money spent on customer experience has been phenomenal and we as individuals can also feel the difference in our daily lives. Personalisation has now firmly established itself as a hygiene factor in any customer experience — it’s all about you as a singular individual. Another point which is worth noting is that while the experience is becoming more personal, the services we are getting from these platforms and channels is no longer just limited to a typical core service we would associate with these service providers. The likes of Grab offer not only mobility services, but also that of food delivery, payment services, point-to-point courier delivery services etc. One can argue that the likes of Amazon did the same over the last 20 years as they expanded from one service to another through their platform, but this multitude of services is not only limited to what some of my friends refer to as new age companies or the companies that came into existence in the last 20 years. My personal view on this trend is:
- While the customer experience will become more personal, the number of touch points we have to do a variety of activities will become much lesser.
- Secondly, in the short term, the money organisations will spend on personalising experience is going to be far more than the revenue they will get from it.
We are moving to what we can term as “experience of me” and the “economy of we”. There is growing acceptance, and adoption, of the fact that customer experience does not reside within a singular product or even company. The world is moving towards a place of multiple ecosystems, where multiple players from multiple sectors informally congregate to form an ecosystem and not only deliver a personalised experience but also various services through on integrated platforms.
In the Singapore context, we see players of the banking, telecommunication and utility industries taking proactive steps towards being part of — and even formulating — these ecosystems.
Recently named World’s Best Bank by Euromoney, DBS has ventured beyond being a traditional bank into creating a new digital marketplace for a variety of products — cars, properties, utilities and most recently, travel. In a way, by enlisting multiple services into a single platform, DBS looks to offer a seamless experience between banking and products/services. Does DBS go on this alone? No. In the property marketplace for instance, DBS partners with EdgeProp and Averspace to make a seamless property purchase experience possible — from view of listings, to purchase planning (using monthly cashflow, CPF coupled with existing regulatory rules), to loans etc. Essentially, a one-stop shop for property purchase.
Further away from Singapore, China’s Ping An has expanded beyond insurance into offering health consultations, real estate, automobile market place and other services. They have 350 million customers on these platforms. Do they offer these services all by themselves? The answer is no, they have built these ecosystems with various other players.
Away from the world of financial services, the Open Electricity Market (OEM) initiative by the Energy Market Authority is probably Singapore’s best example of a digital ecosystem. The OEM had seen a national-wide launch over the past two years, allowing consumers to buy electricity from a retailer of choice. SP Group, having been the sole retailer in the past, now had to explore avenues to compete with these new retailers and adopt its business model to ensure its relevance in the market. Fully embracing the liberalisation of the market, SP Group has now gone into installation of solar panels and IoT platform to optimise energy efficiency — moves that would have been traditionally frowned upon for fear of cannibalising into one of its key business models and revenue stream. The OEM initiative has also enabled an ecosystem of players, ranging from the retailers (e.g. Keppel, Sembcorp), 5G / telcos (e.g. M1, Singtel), banks (e.g. UOB, DBS), transport (e.g. Grab, GoJek), amongst others. In the global utility landscape, we can look at companies like Hive in UK, offering not only digital platforms to manage gas consumption for retail consumers but also insurance on gas pipes and homes through their partnership with AXA.
Some other notable examples shaping up these ecosystems include Orange. After successfully applying for a banking license, Orange — a telco — established an ecosystem of start-ups to establish the banking ecosystem. Now, Orange offers digital banking services in all the key markets it operates. The 150 branches of Orange telco shops also have Orange banking teams sitting in . A typical banking resource who was able to open only 4–5 banking accounts a month is now able to open 4–6 times that volume and at a cost which is only a fraction of what a traditional bank was able to offer. This is an example of business model extension and leveraging the power of ecosystems. We have similar examples in Malaysia with Celcom and Digi both partnering with ifilx to offer entertainment services to some of their client segments. They are not worried about using the same entertainment provider, but the differentiation will come from the experience and economy associated with it.
Leaps and Bounds
We are in phase one of ecosystems being formed — companies starting to work with one another to form a connected product / service offering to consumers. I wouldn’t be surprised if in the near future, these ecosystem landscape will evolve to connect with each other too. Each ecosystem consists of multiple players from multiple sectors, with an article by McKinsey predicting that 12 ecosystems will account for approximately 30% of all global revenues by 2025.
It is also worth noting that:
- These ecosystems are not just supply chains which is about efficiencies. The differentiation in the digital world will come through the collaborative nature of these organisations through these ecosystems.
- These ecosystems need not be only digital. It’s about establishing differentiating platforms to offer multiple services to clients.
- Connecting back with customer experience, it’s easy to understand that with increased number of players on these ecosystems, it will take much more efforts to keep the customer experience seamless.
While we don’t know how these ecosystems will evolve to deliver value and serendipitous moments, what can be done by design is to make sure our organisation is ready to evolve into such universe of ecosystems. Whether you are a new age company, or an established company, the eventual destination remains the same. The new ones can run faster as there is no baggage but old ones have to take bigger hops in spite of the baggage they have.
So how can you prepare your organisation to be ready?
Forming the Orchestra
If you’ll indulge me, I’d like to bring you through an analogy of a symphony orchestra. Each orchestra is made up of more than a dozen individual instruments — almost all of which are easily accessible for anyone to learn at a beginner level. The beauty of an orchestra is in the uniqueness of each instrument to bring across its own individuality and sound quality, yet come together in producing a majestic piece.
In the same vein, for your organisation to be able to conjure up such a melodious moment, it needs to be able to harmonise and put together 4 main pillars. Just like how a traditional orchestra has 4 main sections (woodwinds, brass, percussion, strings), these 4 pillars will help enable your organisation to be ready for these headwinds.
Creating Signature Moments
In this era of instant gratification, reducing inefficiencies and enhancing touch-points are no longer sufficient to providing a good customer experience — we love organisations and brands that stand apart to create specific signature moments by provoking emotion (usually a positive one) from people who directly or indirectly experience this service.
We like to define the horizontals of customer experience into 5Cs — customer, commerce, content, channels and context. Without boring you on the intricacies of each C, we believe that the design of a customer experience revolves around the ability of an organisation to understand its customers enough (customer relationship management, 360-view-of-customer) to provide contextualised content and commerce experience (giving a design-rich medium enabled by hyper-personalisation to experience products/services) through the right channels (omnichannel, API-enablement).
Robust, Future-proof Architecture
How do you build a future-proof architecture without clear understanding of what the future entails? A successful business ecosystem can only thrive on interconnectedness between the organisation, employees, customers, partners and the larger ecosystem.
A digital platform that can enable such interconnectedness will require a well thought-through architecture of various IT layers that encourages flexibility and agility. This compasses a strong digital core that sustains the business-critical applications such as your enterprise ERP systems etc, where systems are likely to have a longer lifespan with less frequent changes. This is coupled with a channel application layer where new digital channels are regularly rolled out and updated, such as your mobile applications, your web portals and self-service channels etc. Both the digital core and channel layers are fed by the data layer that serves to collect, interpret and harness various sets of data to derive new descriptive, predictive and prescriptive analytics. An API-driven integration layer serves as the focal point of the new headless architecture that allows for systems to be replaced/added without major implications on the integration points.
An Agile-First DNA
The above architecture can only be successful in the longer term with a two-speed transformational approach, in which the digital core is built in projects spanning 2–3 years, while the channel application layer is built in iterative cycles of 1–2 months (at most), with new features, content and improvements being constantly pushed.
This therefore requires an agile-first DNA to be built within the organisation, in which teams are no longer working in traditional silos of IT vs Marketing vs Customer Service etc. Teams will now be restructured into product-focused, led by a Chief Digital Officer who now leads product teams made up of a melting pot of various skillsets and departments. The presence of an agile organisation enables this shift in mindset, shortens time to market and provides focus back onto the products, services and customers.
When an agile-first movement spreads, it creates better outcomes for your customers, teams and the business.
Multi-faceted Talent Pool
Most important of all, such transformational change requires a strong core of multi-faceted talents in the organisation. Our traditional way of recruitment is going to change — the old model, where IT companies recruit IT graduates, marketing companies recruit marketing majors, banks recruiting finance students, no longer holds. We start seeing a cross-pollination of recruitment, where a company now recruits across the spectrum.
Even here in Capgemini, where we once recruited only IT graduates, we now have a pool of upcoming superstars hailing from law, biomedical sciences, mathematics — the pervasive nature of technology has altered the landscape of digital teams, whereby one no longer has to study IT to appreciate/know IT.
We are only in Phase 1 of the Big Bang. If I could borrow a quote from Doctor Who as an analogy describing the world of digital ecosystems:
This is one corner… of one country, in one continent, on one planet that’s a corner of a galaxy that’s a corner of a universe that is forever growing and shrinking and creating and destroying and never remaining the same for a single millisecond. And there is so much, so much to see.
Where will you be in this universe?
About the Author
Gaurav Modi holds the role of Chief Executive Officer for Capgemini Southeast Asia & Hong Kong and is closely associated with multiple global and regional digital initiatives.
Written in collaboration with:
Wong Qi Wen. Senior Consultant, Digital Customer Experience @ Capgemini Southeast Asia & Hong Kong.
