Closing the 16x Gap: Is Europe's Data Rebellion Finally Here?

Un Espresso per favore!?

It is Friday and I am glad you take a sip of Ecosystem inspiration.?

This is?#EcosystemEspresso ?#29

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2|Beyond the Hyperscalers: Europe's Innovative Ecosystem Approach

First. I am not a data expert. We look at Data Spaces and federated data ecosystems, the successful journey so far.

We spent the last 48h with the #CofinityX and #CatenaX team. We learned a lot, heard stuff we have not heard from European Leadership and a few prerequisites we see in place. Yet, we will look at 4 opportunities we see and we would focus on NOW before scaling!

TAKE AWAY BOX:

I want you to leave with 3 inspirations:

1. Hyperscalers - winner takes most or all - also create negative externalities. Consortium-led ecosystem approaches are a valuable alternative, if you manage with speed and individuals that lead and connect authentically.
2. Mounting pressure to capture cost reduction potential in light of poly-crises and EV revolution while fulfilling increasing regulatory and customer demands are a good environment to jump historic (emotional) barriers.
3. Private-Public funding is a powerful alternative to VC and PE funding. Level playing field, strong principles guarded by Non-Profits based on cultural values fuel trust and adoption.

Quote of the week:

It is not about the functional expertise, but the personal relationships to make ecosystems work.

Unknown (at least I do not find the source)

Alora! Let′s take a sip!

Closing the 16x Gap: Is Europe's Data Rebellion Finally Here?

Where did this X-thing come from?

#X formerly known as #twitter is hot and fresh. There is a different -x in Europe. It was established before Elon's rebranding.

Let me start with a little story that Oliver Ganser told us vividly:

Imagine 1 MM cars were to be recalled. A real threat back then at #BMW. But which ones were affected. Triangular search narrowed down to 200.000 vehicles. A recall this size could be € 0.5 Bn! This is not "chicken shit"...(sorry my French).

This initial challenge and the advent of tighter #EU regulations led BMW to initiate with 10 players Catena-X.

The first open and collaborative Data Ecosystem

The Chat GPT4 simple language and analogy translation. That has something...

1. The New Kid on the Block: Open and Collaborative Data Ecosystem

Characteristics:

• Democratic: Everyone has a say, much like a town hall meeting.
• Collaborative: Think of it as a potluck dinner, where everyone brings a dish to share.
• Transparent: A glass house where you can see everything inside.

Strengths:

• Inclusivity: Like a park open to all, anyone can participate.
• Diverse Insights: Multiple chefs in a kitchen, offering a variety of tastes.
• Flexibility: As easy to adjust as clay, adapting to users' needs.
• Resilience: Like a network of intertwined roots, even if one fails, others provide support.

Risks:

• Data Quality: The potluck might have a few bad dishes.
• Security Concerns: A glass house might sometimes be too open.
• Coordination: Like herding cats, getting everyone on the same page can be a challenge.

2. The Established Giant: Hyperscaler Data Ecosystems

Characteristics:

• Centralized: Imagine a big castle with a king making decisions.
• Standardized: Think McDonald's; no matter where you go, the Big Mac is the same.
• Tightly-Controlled: A VIP club with strict rules and select membership.

Strengths:

• Stability: Like a rock, it's solid and reliable.
• Scale: Picture a mega-factory producing goods at lightning speed.
• Efficiency: A well-oiled machine with every part in its right place.

Risks:

• Lack of Flexibility: As rigid as a tree; hard to bend without breaking.
• Vendor Lock-in: Once in the VIP club, it might be tough to leave.
• Potential for Monopolization: A single ice cream shop in town can set any price.

We should talk about value circles and not value chains!

Rainer Daude , BMW Circularity

The Strategic überbau (superstructure) of it - 4 Goals

(1) End-to-end data chains along value chains

The value creation of automotive production will be integrated across companies and in a data-based manner. At least three stages of the value chain are to be taken into account. Central aspects are semantic technologies, appropriate modeling, and the digital twin.

(2) Digital maturity leap of the SME sector

The offerings of the ecosystem should be understood and used by companies with little effort. This promotes acceptance and also offers companies that only have invested to a minor extent up to now the opportunity to use the added value of digitalization. Retrofit packages for the integration of existing production facilities based on connectors, transformation and data cleansing services make it possible to connect existing systems to the ecosystem and share its data.

(3) A highly dynamic, rapidly growing and trusted data ecosystem

A growing ecosystem must have the ability for successive expansion ?by design“. In this context, the GAIA-X underlying design principles and architecture concepts are considered, applied and further developed. They aim at secure, stable, scalable, and user-friendly data interoperability and data interaction. In doing so, Catena-X balances openness of data and protection of intellectual property.

(4) Innovative value-added services through networked data structures and business models

Start-ups & joint ventures can build on the platform and act as providers of value-added services in the ecosystem. These value-adds can address logistic or manufacturing challenges or they can be offered in/for connected cars. Own business models are also made possible by the subsequent use and enrichment of the of the available data. A software development kit is provided for this

purpose. Four central targets for greater competitiveness Catena-X defined four central targets to master the current challenges of the automotive industry:

Honesty and telling it like it is

Growth Mindset

The market is merciless. Companies that do not offer the services and products that meet the market will sooner or later become irrelevant. Established products, processes, and value propositions do not guarantee future success (Source Whitepaper, T Systems).

Change of Customers from Drivers to Riders

Drivers are becoming car users, who are creating their personal digital ecosystem in the ?living space car”. Digital convenience is becoming a differentiator and a purchasing criterion – Software creates more value, while technical indicators are taking a back seat (Source Whitepaper, T Systems).

Interesting they are still called "Drivers" - in an autonomous driving world mobility users, riders or so would be even more spot on.

Challenges with eEcosystem Participants

Medium-sized companies often lack the willingness to invest. In addition, the lack of suitable IT infrastructures and skilled workers are the reason for a low level of digitalization.? Although collaborative use of data increases resilience and efficiency, companies have reservations about sharing data. They fear that partners will use shared data beyond its original purpose to their advantage.

? Proprietary systems, individual data formats, and protocols hinder value-added networking. Existing standards are. With the establishment of an industry-wide ecosystem, Catena-X wants to create the conditions for more efficient processes. Incidentally, this changes the automotive value creation over the long term.

Infinite complexity for reporting

A factory has millions of parts to work with. Every minute a car is rolling off. Tesla Model 3 takes 10 hours to produce. VW 17 hours. To be able to report PCFs ("Product Carbon Footprints") it is mandated to report real numbers and not averages.

On a path to a circular economy, identifying origins, ESG compliance, state of health etc. is essential to create impact.

While hugely complex it is like the bridges, railroad tracks, electricity networks we all needed to install before, so that on top if it innovation can happen now.

Europe's International Data Space approach:

While #USA and #China follow the hyperscaler approach, Europe with its diversity and complexity goes the federated approach.

For some Blockchain Experts this is still not far enough, sitting right between Decontrol and Central. Blockchain based fully central systems are even further:

• Decentralization: Unlike centralized systems, decisions and verifications come from multiple participants rather than a single entity.
• Transparency: All transactions are publicly recorded on the blockchain, and anyone can review them.
• Immutability: Once a record is added to the blockchain, it cannot be changed or deleted, ensuring data integrity.
• Consensus Mechanisms: Transactions are validated by network participants according to agreed-upon rules, ensuring legitimacy.
• Security: Due to cryptographic techniques and decentralized validation, it's extremely difficult for any single entity to alter the data maliciously.
• Trustlessness: Participants don't need to trust any single entity; the system's trust is derived from its cryptographic and consensus protocols.
• Disintermediation: Direct peer-to-peer interactions eliminate the need for middlemen, reducing costs and points of failure.
• Pseudonymity/Anonymity: Participants in the network can interact without revealing their true identities, though the degree of privacy varies by blockchain.

The IDS certified tech shall ensure privacy and security AND level playing field which is supposed to protect the diversity of Europe's SME landscape. Sovereignty and Trust are key principles rounding this off.

Before I can go the the opportunities in more detail, let me share the complexity of this consortium based Ecosystem:

The Developer Space

There is a very clear architecture. Developers are used to this complexity, business people not.

• The release schedule 4 p.a. will provide structure in the beginning.
• There is a webpage with the standards and white papers. There are clear Releases with Documentation and Status overviews.
• Reference implementations arena the Eclipse open standard.

This all should invite developers to innovate to create and capture value.

The Network of Networks

Business Model Innovation is happening through SaaS models = EDC aaS. Catena-X is providing managed services for that. See below the federated Operating Environment with Trusted Identities, Marketplace, Digital Twin Registry, Semantic Hub.

Core, no operational data, but meta data is shared.

Given where this ecosystem is at the moment, I do recommend working on 3 opportunities now. Scaling without this readiness is creating rework requirements. Adoption and Liquidity will be hard to get and thus the tight financial situation of the industry would bring this to a halt. And that would not only be a hit to automotive but Europe's Ecosystems Play overall

1. From snowplough to staged expansion and platform scaling = Marketplace Grand Strategy.
2. From sequential communication to simple and repeatable Strategic Narrative = Strategic Brand Destination and GTM
3. From sequential communication to brand- and product-led = Brand Architecture Ecosystem.

OPPORTUNITY 1: From snowplough to staged expansion and platform scaling

Cofinity-X The Marketplace

With the Marketplace the ecosystem can move and has to move from a design, governing, architecture phase into a transactional stage.

The image illustrates a screenshot of the beta that will be released on Oct 16th. This is an important milestone as the abstract becomes concrete.

Humans learn through moving from the specific to the general. Not the other way around!

With the launch the shareholders (Catena-X shareholders are also shareholders of Cofinity-X 9/10) will provide some apps and service to create supply and address the chicken and egg problem.

The structure of the Marketplace is across different application spaces, like Traceability, Circularity, etc.

At this point it is not yet clear to us outside what monetisation model will be applied. We heard about some aaS.

Apps and Enabling Services

The offering is structured into two different junks:

1. Apps - to work with the data and enhance reporting, manufacturing, circularity etc.
2. Enabling Services - helping customers set up the data space architecture and enable working with the data.

Data Landing Zones - The Gateway into the Data Space

Looking at the architecture it is clear that only Enterprise customers and large #HiddenChampions or #Top #Mittelstand will be able to handle access with IoT Adopters while the rest will be upload with Excel Files to start with.

In order to be able to apply to fully leverage the broad learnings we have made over the past 15 years in marketplaces we advise to develop a Marketplace Grand Strategy.

Take the huge capabilities and vision of products and services and assess where to go first.

The Marketplace Grand Strategy as Catalyst

McFadyen Digital Strategy Team has developed a Marketplace Grand Strategy Matrix which helps you identify in which areas of Cofinity-X it is more likely to create liquidity and solve relevant problems now.

A simple 2x2 matrix (Value x Effort) is underpinned by Platform Principles and other information on the products, complexity, competition etc.

Benefit - transparency for alignment and commitment for focus

Given the many participants and shareholders with different needs, the risk is inevitable that too many transactions are "pushed" onto the agenda. The Grand Strategy will provide sizing scenarios for each which allow to be checked vs. Ambition and which can be evolved in a quarterly rolling planning routine.

This way around all aspects of Marketplace, Communication, Partner Management, etc. become easier.

• #Amazon started with books, only books.
• #AWS started with cloud services. Now it is a full data and software marketplace.

We see this challenge all the time.

The better way is to combine the future intended endgame (future backwards) and approach it step by step.

ACTION BOX 1:

Follow a staged expansion path creating liquidity and network effects before scaling too widely. Ensure the ecosystem feel success and momentum through that to avoid spoiling the ecosystem play for many years to come

OPPORTUNITY 2: From sequential communication to simple and repeatable Strategic Narrative

?

The "X"-family and the fact that this about data is super complex for an audience that is not digitally savvy nor has data science background.?

The journey has taken some time. And the communication is "presence forward" instead also offering a "future backwards" track.

While this overview provides a better understanding of the roles. It is too complicated and long to acquire and access supply and demand. It is not clear what problem is actually solved. as there are so many problems solved.

This was ok in the setup phase as the whole process was super agile and fast. Now it is time to be laser sharp and clear.

Complex Ecosystems need even simpler Strategic Destinations:

See #Tesla:

Purpose: “Accelerating the transformation of the world to sustainable energy” (9 words).

Ambition: Replace 1% of fleet annually reaching 20 Mio vehicles by 2030 (11 words)

This is memorable, simple to communicate, measurable, inspiring, bold.

See Cofinity-X:

Vision: 29 words

Mission: 45+ words!

Change happens when leaders are visible and repeat a simple inspiring narrative:

• Sadja Nadella, starts every speech with the purpose of #Microsoft
• Elon Musk, alway addresses the Purpose as guiding rail info Tesla's boldness.

There is no clear messaging architecture yet.

• The overall purpose-ambition-performance principles and behaviours.
• The focused product let growth messaging
• The instructions and documentation - how to - where do I find..

Given the size and sequencing from Opportunity 1 there will be different ICPs and Go To Market Implications (GTM). Not everything to everybody all the time.

The small crowd at #DigitalX and the #Cofinity-X Masterclasses were voting what they intended Cofinity-X to use for:

Understanding better what is NOW critical, what are the barriers to conversion and how to message it is key. The buckets above are too far away to move to action: "I subscribe", "I use", "I will provide resources", "I will test and learn"...

What are the specific communication challenges?

?

1.???? Self-referencing between Cofinity X and Catena X – Gaia-X principles.

2.???? Selling the total more than the individual proposition and products.

3.???? Unclear roles of the different levels of the ecosystem.

4.???? Growth agenda not providing clear priorities for staged expansion.

ACTION BOX 2:

Evolve or adjust the strategic destination with clear purpose-ambition and performance principles – key behaviours to create traction.

Derive from it a simple Strategic Narrative and storytelling repository in line with Go To Market and Ideal Customer Profiles

?

Opportunity 3: Brand- and product-led communication and architecture

Too many layers:

While the logic sequence of events was in reality:

?

1.???? Gaia-X

2.???? Catena-X

3.???? Cofinity -X

?

The new operating unit Cofinity X needs to find its lead role. This is the business, the operating unit, the platform. The others are the foundation.

Here we get an understanding of the layers technically. This needs to be simplified for Strategic Narrative.

?Brand Architecture as key to simplification

We are the only ones with a Brand Architecture framework for Ecosystems and a process to assess in scenarios how to structure the elements differently and align with the Opportunities 1+2-

?

There is a brand angle to it and product – transaction angle. So far, the latter is not yet visible of course, but I also do not see plans in line with that.

Many European businesses lack a clear purpose, even more so a bold ambition which could provide so much clarity for all involved.

?

ACTION BOX 3:

Move from consortium to a brand and business. Brand Architecture needs to be aligned with the strategic roles of all -X levels first. You cannot create awareness, trust, usage and virality without it. Especially not in SMEs.

?

While the evangelizing and collaboration angle remains essential, there needs to be a more transaction and value creation angle coming into the forefront!

?

So, do we have the Data Rebellion in Europe?

Yes, because this set up is relevant, it is in line with regulatory challenges and it with a EDC approach (Data Spaces)

No, because it is not about the set up but transactions and scale (Platform Principles)

?Thank you for the great hospitality - you are Rebells and you play team!

Oliver Ganser Marek Jersak Rainer Daude Marius Pohl Jens Raabe Hans Beck Anna Hees Felix Limbert Niklas Midolo Matthias Buchhorn-Roth

If I forgot someone here sorry!

For the road...

1. People relationships are stronger than competition boundaries and joint "enemies" help!
2. Change still requires sense of urgency - search for platform and ecosystem disruption threats to your business.
3. No premature scaling prior to iteratively getting ready, but then focus on scale!

Please share this Ecosystem Espresso with your network and a?#like ?to make this visible to more people as algorithms like interaction...?If not, please help make it better with?#feedback .?

Please come back next week...

Ciao and Happy Friday and Weekend!

Alex