In our latest discussion we talked to Julian Kawohl, Professor for Strategic Management at the University of Applied Sciences in Berlin and founder of Ecosystemizer. Within this conversation we learned a lot about the more theoretical part behind the ecosystem thinking and its resulting challenges.
Julian Kawohl is a Professor for Strategic Management at the University of Applied Sciences in Berlin. He is also the founder of Ecosystemizer, a startup which helps managers with its framework and tools intuitively understand ecosystems, set up ecosystem strategies and position themselves in such ecosystems.
Platforms and ecosystems are different concepts but are tightly linked
Following Julian’s definition, a platform is a business model facilitating transactions between different stakeholders. An ecosystem, however, is a broader concept, embracing many interconnected partners who wish to create shared value, either for business or human customers. On platforms, the owner is usually a single company orchestrating the transactions between the other players (providers, partners, customers…). On the other hand, the ecosystem offers more of an equal playground, where all players can have different roles (providers and customers, competitors…) and own different segments of the market (ie: a bank and an airline company) but they all share the same goal: create innovation, growth and value.
The ecosystem’s co-creators build a bigger value proposition by working together.
So both concepts of platforms and ecosystems are different but linked: “In order to create value, ecosystems need platforms to create traction.”
Companies are evolving towards ecosystems
Research still misses some lighthouse case studies on successful B2B ecosystems and how companies benefit from them. Companies are still reluctant to invest in ecosystems strategies because it takes time, risk and strong support from the leader and the board. However, McKinsey estimates that ecosystems will account for 30% of global revenues by 2025 and 7 of the 10 largest companies by market capitalization are ecosystem players—Alibaba, Alphabet, Amazon, Apple, Facebook, Microsoft, and Tencent.
Regulations and competition are drivers for companies to evolve towards ecosystems, as they level up entry barriers for new companies to access markets. This means growing incumbent companies or new startups need to cooperate with existing players. For instance if a big software company wants to address the healthcare market with a specialised software, they need industry knowledge from existing players.
They could buy it, or cooperate and use the ecosystem business model to set up the rules for sharing revenues, sharing data, …
Executives’ mindset can make a huge difference
Executives need to think differently. For instance, opening a customers database to your competitors is counter-intuitive. However, sharing your data with “partners” can allow your company to grow.
The real risk is to wait, because later, it will be too late. The world and technology move so fast that it becomes more and more difficult for CEOs to know when is the right moment to take a drastic turn in the company’s strategy.
“You are in a time where you cannot survive by yourself” says Julian. You cannot just find and copy others’ good ideas anymore, you need to cooperate. It is important to have a business model to grow organically, but it is also important to include risks mitigations and defense mechanisms. That’s why you cooperate.
Another common mistake is to think that you can just copy another ecosystem. Even if you are a small player like a small bank in Southern Germany or in Southern India, you have to think about what could be the part played by your company, your unfair advantage, to contribute and leverage the current ecosystem. Julian also recommends companies “to be human customer-centric”, we call that Ecosystem-to-Human (see https://ecosystemizer.com/blog/ecosystem-to-human-e2h-paradigm/). According to him, this should be the new paradigm for companies who want to keep doing business in the future: improving human life. The tech ecosystem giants are striving for being the concierge of our life, trying to address each problem, each life purpose in an integrated experience.
Finding the right scope
A key success factor is to find the right scope, where you can leverage your existing advantages to get the right picture and the right positioning, before spending in execution. Ecosystemizer’s research is used to build concepts and frameworks, to structure the world so that you de-risk your decision-making.
Both the PIK and Ecosystemizer are tools to support those CEOs to get a holistic perspective and to break down very complex topics, combined with their industry knowledge.
As Julian concludes:
“Find the right scope, then you will navigate business ecosystems more easily, and you will be able to invest your money in the right place”.
Thank you Julian for the great conversation and insights.
The complete episode can be listed at your favorite podcast provider.
If you want to apply ecosystem thinking to your platform journey please have a look at our “Ecosystem Journey Canvas” as a starting point. It helps your to understand the ecosystem, upcoming user needs and to develop an ecosystem strategy for your business.