Looking For The Origins Of The Modern Ecosystem

Platform and ecosystem research generally uses two founding texts as a reference point for the modern ecosystem.

There is James F Moore’s work beginning with his 1993 Harvard Business Review article “Predators and Prey: A New Ecology of Competition”. Here’s a link to Moore’s later work on ecosystems in developing countries.

And there’s Iansiti and Levien’s Keystone Advantage. 

In the Elastic Enterprise Nick and I argued that the ecosystems we are seeing now do not necessarily have these keystone elements and nor are they easily summarized in the way we used to think when the main ecosystems were highly controlled collaborative entities such as Intel and Microsoft’s WINTEL ecosystem. This is Moore’s definition of an ecosystem:

An economic community supported by a foundation of interacting organizations and individuals—the organisms of the business world. The economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organisms also include suppliers, lead producers, competitors, and other stakeholders. Over time, they coevolve their capabilities and roles, and tend to align themselves with the directions set by one or more central companies.

Why do I think it is wrong? The interaction between platform owner and ecosystem is highly variable. Those variations are an important source of learning (more of that in a minute). Continue reading

Glaxo Smith Kline Hoping To Become More Elastic

GSK is one of the biggest drugs companies in the world and like all big pharmas faces paradigm completion. That is to say their R&D paradigms have nowhere to go in a world where cost reduction is the overwhelming priority.

The company took a big chance a couple of years back by appointing a 40 something CEO, Andrew Witty. Witty has brought a little humility to GSK. Like GE’s leadership, he is now saying, publicly, that some of the problems of medicine are too big for a company to solve. Continue reading

The Ecosystem of People and Parts (And APPS!)

FitBit Wireless Activity Tracker

Nick wrote recently about the Pebble Watch, the watch that allows you to connect to your iPhone or Android data streams, and Google Glasses, two instances of the growing number of gateways to virtually constructed experiences. I find this connection between people and objects a fascinating development in ecosystem culture. It means  that ecosytems become more complex (with more devices, developers, producers) and more laden with opportunity. But there is another effect. There is a compression of physical and virtual worlds and, in that process, physical goods no longer need intrinsic value. They are a gateway.

To date an ecosystem has tended to form around a platform and a single device or device family – the iPhone and then Android. Then of course the tablets of Apple and Samsung came along. But the physical world adjunct or gateway to the platform is proliferating quickly. Here is GigaOm on the issue:

With the rise of consumer health-tracking devices and social-media-connected mobile health apps, the quantified-self movement has moved from data-obsessed engineers and hackers into the mainstream, thanks in part to new gadgets (such as the Nike FuelBand and the Fitbit) and apps like Strava and the Eatery.

The quantified-self movement already makes use of the Nike Plus, and in fact seemed stalled there for a while. But FuelBand, Pebble Watch, and Google Glasses are surely just the beginning of humans finding ways to augment their productivity and pleasure through connectivity using a plethora of devices. At this point connectivity becomes a whole lot more purposeful – to date it has seemed like connectivity for its own sake. There are other projects in the works such as Sidecar (due for launch soon).

But what it also raises is a very large question about the future of physical vs digital products. Right now the western system of consumption is configured around physical product design, production and distribution – at least in terms of how we characterize economic growth and business strategy. You either do product or you do servies, or you try to layer services onto product.Going forward product looks to be quite different.

What we are seeing is a sea change. The drift towards virtual production is becoming a strong tide. Products like Fitbit are not only fantastically valuable – they are also both extraordinarily personal and a gateway to the virtual with no intrinsic value of their own.

For those of us interesting in ecosystems it’s time to put in some overtime. What used to be a virtually connected economic group is fast becoming a hybrid of physical goods and virtual value.

Facebook and the Rise of Universal Connectors

In the run up to the Facebook IPO a number of commentators on social networking have made the point that the pre-eminent social networking site is actually not good at mobility. The consumer rush towards mobile devices left Facebook ill prepared with effective mobile ad inventory. That made me think of our “universal connectors” concept.

Universal connectors needs to be seen as the dominant trend in business, forcing behavior and strategy change onto companies. Continue reading

The Apple Developer Ecosystem

Apple’s developer ecosystem is something we refer to quite a bit in the book and today I happened across a quote that beautifully underlines its character and importance. It’s from Steve O’Grady at Redmonk. Steve makes these points in the context of Dell catering specifically for developers by developing a developer laptop (that was a tongue twister):

Developers were more than just another market for Apple, however, because as a population they were disproportionately valuable: alone among customer segments, they had the unique ability to make Apple’s platform more compelling. Developers, after all, build for themselves as much as any external audience, and the result was a rich ecosystem of developer oriented tooling and applications – tooling and applications that were by and large more compelling than Linux and Windows alternatives. For Apple, it was the equivalent of renting out an apartment at a premium and having the occupants leave behind a home theater, new kitchens and bathrooms and a kegorator.

Elastic Enterprise Published

It’s with some pleasure that Nick and I want to announce that we published the e-book edition of The Elastic Enterprise yesterday. It is available on Amazon.com. The print version is still about six weeks away but should be out early April. The e-edition is considerably cheaper, though, so now is the time to buy!

In the meantime we will begin to publish background papers here on the site. These will give you more detail on the key concepts in the book and how our thinking around them has evolved.  It’s an exciting few weeks for us. We hope you enjoy the book!

Salesforce.com Relishing Its New Elasticity

Salesforce.com is one of the companies we write about in the Elastic Enterprise. CEO Marc Benioff believes Wall St doesn’t quite understand what he’s achieving (though his P/E is 90). He added 2,500 employees over the past year, mostly in the U.S., an increase of 47%. He also delivered 37% growth.

The complaint is that Salesforce.com is not delivering the margins. But listen to how Benioff responds to this. Continue reading

MIT on The Need For Elasticity

In this video from this month’s CES Carlo Ratti from MIT’s Senseable City lab explains how the use of sensors is changing our impressions of the wrold around us. I think it is a classic statement of why companies need to become more elastic. We are fast moving towards a real-time data environment.

In The Elastic Enterprise we talk about the need for continuous active strategy and how great exponents of elasticity are able to respond to the market in a continuous way. Data is now a new business platform providing the means for such day-to-day strategic management.

A Quick Review of Cloud

A great, short piece on Forbes.com recently looked back and forward at Cloud: Interesting note:

According to a recent Carbon Disclosure Project report, companies that streamline operations to improve IT performance will not only reduce capital expenditures but they’ll shrink energy consumption and carbon emissions. The group estimated that, by 2020, U.S. organizations that move to the cloud could save $12.3 billion in energy costs and the equivalent of 200 million barrels of oil.

The article is well worth two minutes of your time. Here are some data:

In 2009, revenue for cloud services was just over $58.6 billion. In 2011, IT spending is expected to top $2.6 trillion. And with cloud computing accounting for just 2.3 percent of that global market, there’s plenty of room for growth. The research firm Gartner projects that revenue for cloud services will approach $152.1 billion in 2014.