I’ll never forget how I had a knock-down drag out fight with someone at another company only to find out the following week that I needed to partner with that same person on a project of mutual interest. That was my sudden introduction to the world of collaboration and frenemies (enemies on some issues that are friends on others).
Just when I got used to that concept, a new Boston Consulting Group article, “The Emerging Art of Ecosystem Management”https://tinyurl.com/yb7qgr82, comes out and posits that the traditional collaboration model has been replaced with a digital collaboration ecosystem. Among the many changes:
- From worrying about the dominance of mature-market incumbents to worrying about the challenge from new emerging market players
- From the importance of scale and knowledge transfer to the importance of innovation leadership and speed to market
- From perfecting rigid value chains to perfecting highly adaptable ecosystem value webs
- From focusing on your “product” to focusing on “smart” integrated solutions
- From the goal of using the company’s own unit-based revenue model to maximize the company’s value creation to the goal of mutual, continuous value creation
Wow! I was giving head nods until I saw the last one. It’s hard to imagine any company would give up primary focus on itself for a multi-company win-win. But it works. Here’s an example of how a focus on a mutual, continuous value creation ecosystem benefits everyone.
Amazon’s Alexa paid for the R&D to create Software Developer Kits and now offers them, as well as related interfaces and tools, to a large network of developers for free. So far, more than 50,000 applications have been developed by companies ranging from Domino’s for pizza delivery to American Express for banking services. All of these useful applications developed by others improves speed to market and makes the Alexa smart speaker more useful and appealing to its customers—which, in turn, attracts new customers and more developers in a self-perpetuating cycle of new content and additional customer acquisition. It also generates a more robust database of user information which improves the user experience across its other Amazon businesses.
Traditionally, companies focused on maximizing their own profits while squeezing the margins of their vendors. I still run into CEOs that swear by this methodology. And perhaps, in some cases, that still is the best way to operate.
However, these new collaboration ecosystems push companies to rethink how they interact with their suppliers, for example, (AKA partners!) and ensure that benefits are shared by all. This new thinking is implemented using concepts such as a combined margin system, profit pooling, revenue sharing, and venture ownership to ensure that all partners have the potential to meet their goals.
As I mentioned, collaboration ecosystems are not for all companies. However, if your company has the opportunity to benefit from cross industry cooperation, particularly with intellectual property assets, ecosystem development or ecosystem participation could be what you need to take your top-line revenues to the next level.