How will Tesla develop the flying car in its offering and ecosystem ?
A look at what connects both
Designing your company’s ecosystem
It’s not new. Designing the company’s ecosystem has been there for half a century and most successful entrepreneurial stories show the benefits of it. Strategically it consists in managing your business and optimize how external and internal ecosystems are organized as business or research activities evolve. Methodologically, It consists of formalizing the sets of stakeholders and activities.
In this practice that is regaining traction, mostly financial activities tended to be represented. Such approaches were used early on to communicate strategy. But digital now offers a chance to systematically explore such ecosystems and build databases from those. And better formulate scenarios of ecosystems for new technologies and activities.
In this blog post, we explore how to modelize such ecosystems of value, characterising stakeholders and the different activities among them, which can also be seen as value flows.
Every company’s products or service inherit over time what is called a “dominant design”.
Historically this term comes from a market product that made consensus, not because of the best tech or best business model, but the prefered combination from the market’s point of view, most often combined with the efforts of the company(ies) lobby, to organise adoption of the product within a given ecosystem.
The company and the ecosystem dominant design
Think about the CD that replaced former standards (such as compact cassettes). In other words, the set of features of their products or services, validated by the market and commonly accepted. By extension, this analogy can be extended and used as an analogy to the company and it’s ecosystem.
Any company has a dominant design that is composed of features to deliver their offering, adopted both by its internal and external ecosystems of stakeholders. And because companies are organised to optimise the design, delivery, maintenance of their offering, any company features is tight to a certain degree to how their offering is being innovated.
Those features are intentionally designed and sometimes inherited over time. They are the set of features and knowledge of core activities required to produce and maintain their offerings, at it’s different lifecycle stages. And such core activities are usually depicted in “value chains” which tend to be linear, which are great representation for communication but not exploration.
But more and more, linear value chains are becoming value ecosystems with many stakeholders taking part in the technological solutions or service life cycle:
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Companies historically optimized their “dominant design” for efficiency and risk reduction in every aspect of such core activities. They made sure their ecosystem of stakeholders were organized in the best way to deliver core business activities associated with the dominant design(s) of their offerings.
But companies face the combined effect of a current intensive innovation economy and increasingly more complex ecosystems in which to deliver their offerings.
So, how do innovation projects impact your company ecosystem?
What is often not formalized in company ecosystem management but proved by decades of management science is that projects are drivers of the company ecosystem mutation (we explore that part in a previous article). Their impact should be piloted in 2 goals:
- Incremental innovation projects that reinforce inherited internal/external ecosystem. When designing your ecosystem, identify opportunities to best strengthen the core business activities.
- Breakthrough innovation projects that will necessarily make your ecosystem mutate. When designing your ecosystem, explore how existing and new stakeholders could bring new activities, and therefore redefine their roles and importance among the ecosystem.
What’s your take-away on Tesla’s potential strategy for flying vehicles, make or buy? Given that the company both relied on strong R&D partners in the past and that R&D efforts are being slowed down as we speak to enter industrialization race and meet volumes…
Designing your company ecosystem: a practical model and method
Often mis-regarded in building and capturing value are all the type of values that are not financial. In our model, ecosystems of value are made up of stakeholders which are qualified by importance and flows that are characterized by the underlying activity:
By representing your ecosystem of value you are able to:
- Identify existing or potential stakeholders and flows
- Articulate them, with a clear understanding of their importance in your value exploration scenario(s)
- Get a complete overview of an ecosystem, regardless of its complexity by picking the right focus on your ecosystem
/ very granular description of the ecosystems on a small scale (good to specify existing or missing value flows within your project and their impact on the company)
/ high level descriptions of the ecosystem on a large scale for industry wide analysis (good to detect new types of stakeholders and define broader value capture strategy)
When designing your ecosystem:
- (re) define the roles and strategic weight of stakeholders in existing ecosystems;
- trigger ecosystem mutations leading to new stakeholders and flows;
- include new stakeholders and new knowledge.
It will help foresee what we call their minimum viable ecosystem, the optimum ecosystem of value depicting existing and new stakeholders new importance and roles as well as new activities.
The benefits
We have been working on ECOS since almost a year and a half now and we are getting our first official customers, both for the method and the software. Numerous workshops and discussions with our partners on research projects and early clients, helped us spot 5 main area of value creation:
- Formulating a clearer strategic vision for the company itself, such representation often being held in the minds of the top management
if not the CEO - Better manage Innovation projects and their potential of value creation. Be they incremental or breakthrough, they impact the company’s internal and external ecosystem in different ways (see previous article introducing Hatchuel’s vision on how innovating on objects destabilise their ecosystem).
- Build more systematic scenarios to deploy ecosystems (read Midler Work in interested in the topic). Most often the strategy to capture or create value from innovation projects is not systematic. Potential project features and associated impacts, projected more thoroughly within the internal/external ecosystem, better informs and fluidify the transition from Research & Development to Industrialization stages your projects. See our model with Arnaud De La Tour co founder of Hello Tomorrow, for more infos on project stages.
- Defining clearer priorities in stakeholders management and actions through better user knowledge and building empathy toward them. Better win/win business models or informed strategies are needed in our current complex ecosystems. See last publication from Valkokari if interested in this topic.
- Building more resilience as the company better understand how its ecosystem evolves over time and how they become at managing their ecosystem mutation (see RCOV method from Demil and Lecoq, that especially explores sustainability of business models in ecosystems)
So how to get started ?
In our R&D effort while developing ECOS, a method and software to explore innovation and business ecosystems of a company, we partnered with EDF and the R&D division, to develop a blended learning program.
It combines 3 key modules, which we will detail in our next blog post:
- Managing knowledge of your innovation project while managing your ecosystem, existing and potential
- Managing your value exploration more systematically
- How to leverage design approaches to better communicate your incremental or breakthrough innovation project for stakeholder’s buy in and cohesion.
We would love to hear from your ecosystem challenges !
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