Industrial companies have been developing from simply seeking cost-effectiveness to the service business in order to bring added value to customers, and improve the customer experience. The next step is
building a functioning ecosystem.
What is an ecosystem then? Picture companies that have already been working together in some form of cooperation, perhaps called subcontracting, a value chain, clustering or value networks; and now ecosystems. Which begs the question; does this ‘favourite child’ of the industry simply have a new name?
It is certainly true that all of these forms of cooperation have a great deal of similarity, but there is also a variety of characteristics. Perhaps the biggest difference between an ecosystem and the other forms of cooperation is transparency. In all of these forms of cooperation, most often, there is a party that can be identified by the dominant element of cooperation, a ‘rule maker’, for the needs of which, rules and the approaches for cooperation are created. Ecosystems also have leaders, but the leader of an ecosystem must understand their role as an enabler and not as a controller. The role of enabler, again, means an environment of much greater transparency and empowerment than other forms of cooperation.
“The builder of an ecosystem is a challenger who has a strong level of expertise and a desire to discover something new.”
Transparency and authorization frequently lead to a situation where the products and services of the ecosystem driver become a part of something that previously did not exist, and that would never be seen in the controlled and closed product development, or in value chain thinking model. “Industries as we now know them in value chain centred thinking will recede”, states Tieto Corporation’s Director of Industrial Ecosystems Joni Lehtonen.
Ecosystem builder challenges
Only rarely does the industry’s largest or second largest player become the ecosystem driver. They are satisfied with the current state of affairs. The builder of an ecosystem is a challenger who has a strong level of expertise and a desire to discover something new. The desire to change the rules of an industry where competition has occurred in the past. “This is a good opportunity for companies that have been training for international competition, have developed wonderful products, but nevertheless remain in the shadow of a few international giants,” states Joni Lehtonen.
Tieto builds road maps on how a company can develop from the product business to the service business, and continue to drive the ecosystem. The concept of the development of a service business and ecosystem is based on customer experience and changes in value chains.
Many companies have identified that the coming of an ecosystem would be a game changer in their industry. Companies are focusing on how to create ecosystems, and how to take the driver’s role in the ecosystem, rather than just being a singular ecosystem player. “There is an ongoing running of the gauntlet, where the winner could come from a totally surprising industry branch,” says Reetta Ruusunen, Head of Manufacturing Industry Consulting at Tieto. Also, in the industrial environment, it is necessary to look around, identify potential gamblers and think about one’s own role in this context. However, the most important thing is to put the customer at the centre. The ecosystem will be started by the one who is best at understanding the customer’s real pain points and needs.
The backbone of the new approach can be found in digitalisation
Today, all business is highly digitalized and therefore, it is natural to think that the ecosystem driver must also be able to co-ordinate its own ecosystem through a variety of digital platforms, which would be the backbone of the ecosystem’s operation.
“The company must have the desire to form a path to the future between its strategic intent and the prevailing current state.”
Often, identifying this technological need could drive the focus of the attention of companies; it would then follow that it would be necessary to select the tools for these needs, which may not yet have properly taken shape. It is at least important to understand how one’s own activities, one’s own products and services offered, will change. Ask, who is the future customer, who will be serving the customer, and what is the customer willing to pay for. This will also provide a basis to think about what kind of partners one must have, how one’s organization is changing, and what kind of people and services should be available so that the member of the ecosystem facing, or perhaps serving, the customer can create a good perceived value.
Therefore, in ecosystem thinking, as in other technology development, it can be seen that technology is a good servant but a bad master. Technology is an enabler on the one hand, but also an essential requirement in any business transformation on the other. Each company has its own developmental path. The company must have the desire to form a path to the future between its strategic intent and the prevailing current state. You have to choose waypoints, at which the capability needed in the future is created gradually. Although you’d wish this path or road map would be formed in a planned and determined manner, you must be prepared for the fact that various changes, new opportunities or outright adversity will change the alignment of your path many times along the way. You can be prepared for these changes with the help of flexibility, which means modularity at all levels; in business models, service practices, human multi-skills, organization structures, and technology platforms.