Ecosystem, innovation ecosystem, and Platform: Finding the right combination

In the world of business platforms, the ecosystem features large – but how many of us understand what ecosystems are, in business at least, or how ecosystems function?

The idea of a business ecosystem has two origins in business writing. In one strand, you can see the idea of a very distinct, contractually committed community at work. This is the innovation ecosystem. It is the ecosystem as a partnership network. Big companies often allied to big with some investment in startups and more in new initiatives.

The other way to look at the ecosystem is its power really stems from the power of advocacy.

If you have a thousand organisations or individuals in your ecosystem, you have a thousand advocates. That means you build up a significant foothold in the information market around your product, service, platform. The information market is critical – it is what, in the past, companies bought through marketing and PR. In the modern age the ecosystem can give you multiples of what PR spending can.

This latter view of the ecosystem though is not an innovation ecosystem. While companies in Apple’s apps ecosystem build new products and services, they don’t innovate with Apple on the fundamentals of the iPhone or the platform. In that sense they are not partners.

As Nick Vitalari and I pointed out in The Elastic Enterprise this new type of ecosystem is spontaneous and often fractious, a meeting of peers built on common terms and conditions rather than on bilateral contracts. It calls on a very high order of community management skills.

Why does the difference matter? Well here’s why. Many companies are confused by the difference. They set out with an innovation ecosystem strategy hoping to gain the benefits of the advocacy ecosystem. By understanding neither very well they end up achieving few of the benefits of either.

In my view GE has fallen victim to this problem. I am a GE fan as SHIFT should make clear. CEO Jeff Immelt has done immense work. A recent HBR article though pointed out some issues arising with its ecomaginati0n program. Ecomagination, GE claims, has earned it over $160 billion. But what is it?

Launched in 2005, ecomagination has always been a bit amorphous. Is it a marketing campaign? A corporate strategy? A guide for product and service development? In truth, ecomagination is all of these and more.

Now, a sensible riposte to this is who cares. It made $160 billion. But the way it made revenues was by selling GE sustainability R&D. Ecomagination isn’t any particular product or service; it is a strategy to pursue green objectives in energy products. In that sense it is a business line, as much as anything, so it is bound to make money.

GE has tried turning ecomagination into a platform. Its strategy now “includes a new open innovation program that encourages ideas to reduce greenhouse gases from Canadian oil sands production.” Prior to that it hosted two open innovation challenges around green tech in partnership with VCs.

GE has tried similar platform plays in cancer diagnostics (healthymagination) and industrial data.

You can see very much the “innovation ecosystem” approach at work in these examples, In healthymagination GE tried to build up its diagnostics business with a $6 billion investment around crowdsourcing diagnosis of cancer, particularly breast cancer. However, the crowd was actually quite a small number of companies, allied to GE’s relationship with VCs, just as in ecomagination. Five years in, in 2014, GE made just seven investments. It is likely that GE’s attempts to remake its business around platforms would be better served by acquisitions – by buying into companies at the leading edge of data and diagnostics like Illumina.

In industrial data, GE has repackaged its turbine maintenance data and made it available to the wider world, using that experience to pivot to a big data strategy in healthcare as well.

predix

Initially the Predix program looked like being an apps-type play with the data made available to the developer community to build new business. Right now GE boasts of a much smaller innovation ecosystem (there is another partner ecosystem here). There is still some momentum in the apps store for industrial data concept. However, it is complex to sign up for the Predix community and nor is it universally available. Many of the contributors have GE email addresses, so are presumably GE staff. Nonetheless there is a substantial set of GitHub projects, though it is unclear how much engagement these have created.

As an innovation ecosystem, GE’s strategy is a mixture of old fashioned PR, intelligent packaging and sound investments. But it doesn’t spill over into an advocacy ecosystem.

An advocacy ecosystem would be the tens of thousands of SEO experts who quickly advocated for Google Page Rank as a breakthrough in search relevance. That was back in the early 2000s. Or the hundreds of thousands of developers who worked on iPhone apps. Or the millions of businesses that transact with customers through Alibaba.

In each of these cases the activities of the ecosystem pitched the platform to the world and closed the sale!

Healthymagination by way of contrast has not created a powerful advocacy network of analysts, developers, writers, users who want to rewrite the narrative on cancer.

What it has done has provided a strong banner under which GE has made significant investments in reducing cost for health care providers, for example. Here’s a list of achievements.

That’s no mean feat but it is not what the ecosystem is really about. It dresses itself in the language of ecosystems without really engineering them with a platform strategy.

If that sounds negative it is not meant to be. GE is a great company. In Shift I spelled out how I think platforms become disruptive and summarised some of these points here and again here. One key element is how you win the information market or information layer.

GE has not captured the information market through an ecosystem. It has bought it in industrial data through its power, financing and muscle, whereas in health it can barely be said to own it at all. That means it loses out on many of the benefits of true platform ecosystem.

I’m doing a deeper dive on the issues in my new book. But to summarise this issue there are of course different types of ecosystems. The innovation ecosystem is distinct from the advocacy ecosystem. Tomorrow I will spell out how those differences arose

The Role of Social In The Future Enterprise

Social media is like search engine optimization. It is easy to self-educate, it is slightly complex, but it is also game-like. In both cases the market or audience gives you feedback – you get likes or Tweets or analytics that tell you how many readers you got and who liked what. You know where to go next with it.

What it also does is distract you from the real purpose of communications – figuring out something valuable to say and laying it out for people to make a judgment or a contribution.

Are social media activities the best ways for an economy or an enterprise to market products? A low friction economy would rely on individuals to communicate their preferences to friends word of mouth. Continue reading

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

Skydivers, Mountaineers and Bicyclists – An Update on Google’s Project Glass

Realtime feed of skydiver wearing Google Glass prototype in descent to Moscone Center in San Francisco, June 27, 2012. Source: Google

Google had fun at its latest I/O developer conference with a theatrical level performance including skydivers wearing Google’s electronic glasses streaming live realtime video as they descended from high above San Francisco. As they landed on top of Moscone Center they relayed their payload to awaiting mountaineers who repelled down the side of the building. The payload was quickly transferred to bicyclists who road through the auditorium to cheering fans and up onto the stage to an awaiting Sergey Brin (see video).

Latest Details on Project Glass

Nonetheless, the theatrics provided some new information including the announcement that the glasses will become a product next year, and prototypes (i.e. beta version) are now available for $1500 to well-heeled developers flourishing in the Google ecosystem.

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.

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.

Everyone Beware: Microsoft is Alive Again and May Become an Elastic Enterprise

A giant has awakened.  Microsoft’s alliance with Barnes and Noble is a major market signal. It should be a wake up call for everyone.  Yes, it’s a great deal for Barnes and Noble and just what the doctor ordered (see my previous blog on B&N). But, it also builds up Microsoft’s business platforms and adds an established e-commerce engine to Microsoft’s repertoire that could add to the appeal of Windows 8.

Yes there are detractors. On Yahoo Finance’s Daily Ticker, Dan Gross quipped, “The desperate got married to the hopeless,” and Henry Blodget added “My guess is that this is rearranging deck chairs.”  I am a fan of both commentators. But, in this case, there is more to the story. The bigger story is about the overlooked overhaul and transformation of Microsoft, the company. Continue reading

Pebble Technology and its “Watch” — A Start-up Surging with Elasticity

With thousands of others, I just became an official backer on Kickstarter of the Pebble, a watch, really a wearable computing device that interfaces seamlessly, conveniently, and wirelessly  with Apple’s iPhone and Google’s Android OS phones.

The Pebble / Pebble Technology
Source: http://www.getpebble.com

Over the past two months I’ve written twice about wearable computing – coming from mainline firms, Nike (the FuelBand) and Google (Google glasses). Nike and Google are well-established elastic enterprises and benefit from the elasticity that they have built into their companies. Their wearable devices add new levels of engagement and options for  their huge base of customers.

But Pebble Technology, the maker of Pebble, is a startup.  It also has a noteworthy distinction: it raised over $1 Million dollars from supporters on Kickstarter in 28 hours – for a product that is not yet in production.   But a snappy video and a low-key pitch inspired thousands to make an “investment.”  The Pebble folks also smartly provided “investors” with various contribution options, from a minimum of $99 to a high of $10,000, but each level will receive 1 or more Pebble watches when they are produced sometime in the fall of 2012. Continue reading

We’re on a Journey to the Vanishing Point: Google’s Project Glass and Why You Should Care

It started as a rumor.  It rippled through social networks.  Then came stories by Nick Bilton at the New York Times in December 2011, Seth Weintrab at 9TO5 Google and most recently again from Nick Bilton in a follow-up article about testing prototypes of “Google Glasses.” And Steven Levy at Wired recounted some deep history and added perspective and background elements about the project, now known as Project Glass.

Google CEO, Larry Page Sports New Google Glasses
(Flickr / Thomas Hawk)

This much we know.  According to many reports, an official demo video, and individuals who recently saw Larry Page wearing the glasses at a party, these high-tech glasses superimpose critical information and alerts as one interacts with the physical world, in realtime.  They are essentially a heads-up display for daily life. And if it catches on and moves beyond geekdom, it could be a winner in the interface wars. And no matter how much you want it, whatever you see is a prototype, not yet a product for sale.

But Google’s Project Glass is about more than a new mobile or wearable device – it’s about what we call the vanishing point.  Smartphones and tablets are only the first step on a journey to operationally merge the digital and physical worlds. Continue reading