Ecosystems enabling Servitisation

by NIck Frank on April 12, 2015

 

ECOsyst pictureIt has been almost a year since I started to write about working with ecosystems in the real business world. (See my blog article Ecosystems: Easy concept harder reality.  Since then, together with MAC solutions, I have explored how to use ecosystem to develop advanced product-service solutions. We will be presenting our ‘Ecosystem Development Framework’ at the Spring Servitisation Conference at Aston Business School in May 2015.

But I must admit there have been times when I have asked myself the question, are we really doing anything new?

What I have concluded is that developing an ecosystem requires the same business thinking as one would need in managing a complex supply chain or business partnerships. In other words a really good understanding of:

a)     The Value chain in the customer, market or industry you are supplying

b)     The value proposition and the product-service solution you might be developing

c)      A very clear view of the business plan and value delivery model

d)     Resilient partnerships, which will not fall apart at the first sight of a problem

What makes an ecosystem different is the high level of inter-dependence between the partners. In other words its not a straight forward customer / supplier relationship. As the customer solution is co-developed by the different partners the interaction between the above steps becomes even more complex. For example in developing the product-service solution, a completely new perspective of the value chain needs to be developed, or significant change to different elements of the value delivery model. It actually becomes a highly interactive and iterative thinking process, which is difficult to control and document. This is where following a structured Ecosystem Development Framework can save companies a lot of time and headaches. These experiences have also shown that ecosystems do not only have applications in large grandiose projects such as Smarter Cities or the Electric Vehicles. Actually any company wanting to go outside it’s current capabilities can use this way of organising innovation.

For example in the last 10 years we have seen an exponential increase in the digitalisation of products, such that we now are all excited about concepts such as the Internet of Things and the smarter/connected products. These capabilities are leading to companies really questioning their business model. As products now produce so much data, one can see the line between the product and supporting services becoming blurred. Awareness of this phenomenon is leading many traditional engineering and manufacturing companies to now explore servitisation type business models being part of their growth strategies. So my guess is that ecosystem will become more important as companies are forced outside their comfort zone in order to remain competitive, differentiate themselves and find new pathways to growth. But a word of caution. Like all seemingly easy and obvious ideas, actually implementing an ecosystem is not so easy. I am now in the process of implementing a 2nd ecosystem in the services arena. Ironically our key challenge is that in some ways we have not yet acknowledged the fact, that we actually need ecosystem thinking. I imagine that others will fall into the same pitfall!

If you have any thoughts please see a discussion in the Services in Industry blog and Linked In group

 

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