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Business Ecosystems as an innovative approach – Cooperation as a future model for the digital economy

Business Ecosystems as an innovative approach – Cooperation as a future model for the digital economy

Organizations – like any social entity – are always in reciprocal relationships with the actors in their respective environments. As such, they are part of an informal ecosystem that they help to shape, whether they are aware of it or not. Without a strategic and organizational business-ecosystems-perspective, companies tend to think of themselves as the center of the universe, which does not allow them to see the bigger interconnected picture. They focus only on the rationality of their own (sub)system, usually through bilateral transactions structured in linear value chains. And thus neglect the opportunities that arise from active management of the interdependencies between the actors that make up a business ecosystem.

Dr. Roland Deiser of the Drucker School of Management and Executive Chairman of the Center for the Future of Organization explains in his study Organizing for Business Ecosystem Leadership that to succeed in the complex world of networked value creation, leaders need a new kind of strategic-organizational thinking based on a decentered perspective. They need to ensure that their organizations develop and maintain mechanisms that enable them, first, to actively perceive the larger context in which they operate and, second, to respond appropriately to the ever-changing dynamics of the system. This requires operating models that formalize these dynamics for the benefit of the entire ecosystem. To achieve this, such models must be structured as collaborative, horizontal networks. In this context, the elements cooperating in terms of value creation must be carefully selected and equipped with institutionalized interorganizational support mechanisms (such as rules, strategies, incentives) in order to make work steps manageable, transparent and capable of development for all actors involved. 

Business Ecosystems are becoming increasingly important

In the last two or three years, the concept of business ecosystems has gained considerable importance. Books and articles on the subject are proliferating, and the world’s most important management conference – the Global Drucker Forum – has chosen it as the theme of its 2019 edition.

The enthusiasm is not surprising. Leading and managing the complex networks that make up an organization’s business ecosystem has become a critical core competency in the context of the dynamics of digital transformation that are upending industries and redefining the way businesses operate in the 21st century. Effective engagement in business ecosystems requires a different kind of strategic and organizational acumen based on a dynamic systems view that transcends not only traditional linear thinking but also the egocentric perspective of most companies.

To gain insights into how large companies are dealing with this challenge, Dr. Roland Deiser conducted a global survey of executives in his study that focused on the strategic and organizational skills required to successfully operate in ecosystem networks. 

The most important results of the study

  • Sample:

    153 fully completed responses were submitted. 82% are in top or senior management, 76% are from companies with more than 1000 employees, 22% have a “high”, 23% a “low” digital maturity level (self-assessment).

  • Overall Capability Assessment:

    Business Ecosystem Management (BEM) skills are mediocre – only about 1/3 of respondents give themselves good or very good marks in this area.

  • Organizational Focus:

    There is little structural response to the challenge – only 16% have a dedicated unit dealing with BEM.

  • Inhibiting factors: Existing mindsets and cognitive maps are the top factors preventing organizations from being more successful in BEM – 72% identify a lack of understanding of network dynamics as “very important” and “important”; 69% are introverted/self-centered; also 69% are unable to think beyond traditional business methods.
  • Required skills:

    A culture of learning and change tops the list – more than 96% consider this a “very important” or “important” capability, followed by flexible resource allocation (92%), the ability to orchestrate multiple operating/business models (90%), and clear strategic governance (88%).

  • Existing capabilities:

    Less than 10% of companies report being “very strong” in the required capability areas. Those reporting strength are companies with high levels of digital maturity.

  • Effective measures:

    81% of respondents believe that addressing BEM in leadership programs and retreats will have a “very strong” or “strong” impact on BEM maturity. Other top choices include: Highlighting cases and success stories based on the company’s business ecosystem strategy (77%); talking to key influencers about the importance of the issue (75%); and institutionalizing collaborative processes with external stakeholders (75%).

  • What companies are really doing:

    not much is being done to systematically address the challenges. The most common actions are organizing cross-organizational communities (22% do this “regularly”), talking with key influencers (18%), and highlighting success stories (17%).

  • Support from L&D/OD:

    Significant support from L&D and OD to build capabilities occurs in only 5% of respondents, with 35% offering no support at all. OD – “Organization Development” – is about ensuring that the organization carries out a range of activities that help it work more efficiently. L&D – “Learning and Development” – is about developing people’s skills in the workplace so they can be effective in their work.

  • Ongoing initiatives:

    Half of the companies surveyed (51%) report specific ongoing initiatives in this area, covering a wide range of measures.

  • Continued interest:

    80% of all respondents would like to participate in a dialog platform that enables ongoing, in-depth dialog and shared learning on these topics.

What does Business Ecosystem mean for us?

As the digital industrial revolution continues at a dizzying pace, it is increasingly recommended that solution providers take an ecosystem approach. Currently, companies often overlook the opportunity for innovative ecosystem partnerships or even intentionally avoid them because they don’t want to lose control or feel too intimidated by the complexity. However, the potential benefits of participating in and shaping ecosystems are tangible and undeniable. They are key to unlocking growth: accelerating time to market, delivering insights, and creating business value.

Magility as a driver of business ecosystems

Magility is also getting in on the action in the world of business ecosystems. Dr. Roland Deiser from the Drucker Institute in Los Angeles shines here as our cooperation partner. Starting in 2022, ‘Business Ecosystem Management Consulting’ will be one of magility’s new consulting products, alongside ‘b2b Sales Consulting’ and ‘Technology Consulting’ – with a focus on sustainability, electronification, IOT and cyber security. 

Follow us on LinkedIn for new articles and more news about Business Ecosystems, or contact us directly via our contact form if you have any questions. We are looking forward to it!

Convergences – Carrot or Stick?

Convergences – Carrot or Stick?

Convergences should secure demanding and solvent customers

The term convergence is on everyone’s lips. Because on the one hand, digitized vehicles open up an almost unlimited market of services in the field of mobility. In the case of motor vehicles, this ranges from the constantly self-expanding safety system, as Tesla is doing by means of data networks, to built-in game consoles and to artificial intelligence and autonomous driving. On the other hand, car manufacturers are also forced to convince customers, who are strongly courted and demanding in many ways, of the value of their respective brands with ever more efficient products and attractive service offers. Those who can adorn themselves with the names of global companies such as Apple, Microsoft or Google by cooperating with them or acquiring shares in them hope to secure the brand-conscious and financially strong generation of tomorrow. 

Convergences with IT giants are often billion-dollar deals

The emphasis is on the word “solvent”. Because everyone wants to earn: IT providers often let themselves be paid billions for their cooperation with car manufacturers. According to inside-it, VW will invest around 27 billion euros in digitalisation in general by 2025.

Microsoft and Google provide know-how for cash

According to VW’s head of software Dirk Hilgenberg, Microsoft is to help to accelerate the provision of applications in cloud computing and software engineering. Cloud services from Microsoft are to be used for this. VW is also interested in Microsoft’s developments in the field of artificial intelligence. The Wolfsburg-based carmaker’s quid pro quo remains monetary, as Scott Guthrie, vice-president of Microsoft Cloud, points out; his company does not get access to VW’s data. 

Ford has also entered into a 6-year connected driving collaboration with internet giant Google in the first quarter of 2021. Google is to become the central provider of cloud services for Ford. In addition, the infotainment systems are to run on Android as the operating system from 2023. Ford’s own Sync. software, which ran Ford’s infotainment systems until now, will be dissolved. When announcing the cooperation, Ford manager David McClelland referred to Google’s expertise in machine learning and artificial intelligence and also emphasised that Google would not receive any data from Ford customers for further use. 

[infobox headline=”Summary in a nutshell”]

  • Convergences open up an almost unlimited market in the field of mobility.
  • Mergers with IT giants cost carmakers a lot of cash.
  • Car manufacturers hope that by cooperating with IT giants, some of the latter’s attention will spill over to them.
  • Some car manufacturers do not further develop their own operating systems and instead rely on cooperations. Others go the opposite way and rely on the further development of their own operating systems in order to be able to exist independently on the market.
  • Industry benefits from the innovative impulses of high-tech startups.
  • magility networks companies with technology experts from all over the world.

[/infobox]

Cooperations are good – independence is better?

Even though the German car companies have just jumped on the bandwagon of convergence and are looking for cooperation with software developers – it does not seem to be in their nature to renounce independence in the long run. Daimler and VW are currently working flat out on their own operating systems with which they can survive on the market in the future without the intervention of Amazon or Google.

Experts from three corporate brands are developing a new operating system

At VW, the child already has a name: VW.OS is being developed by around 5000 experts from VW, Porsche and Audi. For this purpose, the company Car.Software.Org was newly founded, whose number of employees is to double again in the next four years.

From smartphone to electric vehicle

Meanwhile, one of the world’s largest smartphone manufacturers is starting up in China. Xiaomi is entering the smart electric vehicle business. Founder and CEO Lei Jun wants to invest around 10 billion dollars in a subsidiary over the next ten years to compete against rivals in a market that, according to Dan Ives, an analyst at investment firm Wedbush, will be worth 5 trillion dollars over the next ten years. Compared to that, the other products in Xiaomi’s belly shop look like peanuts. The Chinese giant makes electric toothbrushes and razors, light bulbs, watches, surveillance cameras and scooters on the side.

Convergences – Startups get in on the act 

In addition to classic convergences, start-ups with their high-tech developments are increasingly playing a leading role in the industrial markets. Entire startup-driven industry segments are increasingly emerging. According to Speedinvest, investments in so-called “industrial tech companies” have increased almost ninefold across Europe from 2014 to 2020. For many years, we at magility have been accompanying high-tech startups as they enter the EMEA market. Our clients from industry benefit from the innovative impulses of our high-tech start-ups. We bring together traditional companies with the right technologies and specialists from the high-tech world. Feel free to contact us if you would like to expand your international network in line with your company’s business model. We at magility will be happy to help you