Ecosystems are like puzzles; to fit, you must be compatible.

Un Espresso per favore!?

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

This is?#EcosystemEspresso?#31

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2| Navigating a ship? Short-term waves shouldn’t divert your long-term course.

Quote of the week:

You as a CEO have 3 tasks and 3 tasks only: (1) craft the vision how you will change the world crystal clear. (2) find the best people in the world to execute that vision - people that get excited by it. (3) give them the resources to do their job better than anyone else in the world and get the hell out of the way!

Richard Branson

While this is oversimplified in its core that what this is all about.

3 things to be compatible with Ecosystems! (see the text!)

TAKE AWAY BOX:

I want you to leave with 3 inspirations:

1. Incrementalism AND Transformational: If you are only focused on your current business, sector competition and minimum growth to stay in the leaders′seat, you might be the gravedigger of your business in the Decade of the Ecosystem.
2. Short-Termism AND Long-term: If you are blown by the analyst winds and not by your strategic destination, then most probably you will be the last CEO of your business that had room to manouver.
3. Customer-centric AND tech-enabled. If your business is not yet in the cloud and modularised, then partnering, adjusting will be really hard and you will miss opportunities as you fall in the trap of secondmover disadvantage.

(1) Carve out a Strategic Destination and sequence it the right way future backwards

We often see the trap that a destination is beautifully designed and crafted. It is holistic and for the "endgame". It ticks too many boxes with too many partners, products, services, business models, KPIs, markets, channels and so on.

To have this carved out is good.

Learning 1: Focus on the right sequencing first.

Too many businesses communicate in good old linear business model style everything at once. This feels great for all departments because they can take pride in their contributions. But it is too cluttered to drive transactions in marketplaces and platforms.

To be compatible. It takes a cross-functional team to sort out the right value creation unit and focus on the core interaction. Next the right Metrics and experimentation for finding product-market-price fit.

Learning 2: Be inspired by SaaS or generally aaS companies and products.

SaaS companies are focused on getting the proposition and messaging right. Product-led growth is ensuring the product is clear, easy to use, user are marketers, product use is simple plug and play and monetization frictionless and users trigger network effects.

Rather than only relying on marketing that still has a role to play, it is advisable to not all rely on the marketing and sales but assign clear roles.

Learning 3: get the Metrics right.

Most projects are like a new factory, new line, NPD or new channel initiative. Finance and innovation teams have hurdle rates and top-line and bottom-line numbers. Great and needed. But you cannot focus on the right launch metrics of your marketplace, which are focusing on Liquidity, Trust and Matching Quality. It is all about retention and viral loops.

(2) Short-Termism is a barrier to be ready for the complexity (not complicated!) of Ecosystems

We always hear: we got to keep it simple. Agreed. And if something is complex, it requires you to get immersed first and you need time on a robust understanding to make it simple thereafter.

Learning 1: Ecosystems by default are complex - that's how it is!

1. The Wide Lens Perspective: Recognizing that success isn’t just about internal innovation, but also about the broader ecosystem's readiness.Explanation: In an interconnected world, innovation's success isn't isolated. It's about ensuring both your organization and the external ecosystem are aligned and prepared.
2. Ecosystem Architecture & Design: Understanding how components in an ecosystem fit together, and who captures what value.Explanation: The ecosystem is a meticulously designed structure where each component has a role, influencing value distribution.
3. Ecosystem Orchestrators: The key players who structure the ecosystem to capture value.Explanation: Just as conductors guide an orchestra, orchestrators shape and guide the flow of value within the ecosystem, ensuring harmony.
4. The Dynamics of Disruption: How shifts in one part of the ecosystem can cause ripple effects throughout.Explanation: A disruption in one corner can send shockwaves across, making adaptability crucial.
5. Value Migration: Over time, where value is captured in the ecosystem can shift dramatically.Explanation: As the ecosystem evolves, the 'value hotspots' change. Today's core can be tomorrow's periphery.
6. Interdependence & Modularity: Balancing the interconnectedness of components with the need for individual flexibility.Explanation: In ecosystems, entities are interconnected. Yet, each must retain some modularity to adapt swiftly to changes.
7. The Role of Institutions: Recognizing how formal and informal rules shape the ecosystem dynamics.Explanation: Beyond businesses, institutions, with their rules and norms, play a pivotal role in directing ecosystem behaviors.
8. Collaboration & Competition Dynamics: The ecosystem mindset between cooperating with partners and competing with them.Explanation: Ecosystem players often find themselves in a paradox, where they collaborate in one arena and compete in another. This will be the new normal - the book Co-opetition looked at this in the 80ies. Now tech enables this.
9. Platform Leadership & Bottlenecks: Identifying and leveraging key control points in the ecosystem.Explanation: Platforms dominate in many modern ecosystems. Controlling or influencing these platforms can be pivotal to success.
10. Innovating Beyond the Core: The need to look beyond current competencies and explore innovations at the ecosystem's edge.

This world is complex not complicated. Unless leaders embrace that, they will lead with strategies that are oversimplifying. It does not mean the leader needs to know it all. Yet, a rough understanding is needed to find the right people that know.

"If I had more time, I would have written you a shorter letter."

Chinese Proverb

Learning 2: Leaders strategy is sooooo focused on spreading risks short and long-term that team and partners are confused

Case in point is #BMW at the moment. While the Sustainability, Circularity vision is clear and coherent, the focus on key tech is not there.

See these messages. Employees and partners go where there is hope and success. Would you as partner invest in such a thing wholeheartedly? No!

This is not to criticise as we do not know the Boards guidance and other issues. It is here to illustrate why decisiveness matters. Sometimes all in, most of the times spreading risk, but not to that level:

In times of disruption and uncertainty the leadership must be even more courageous and bold. A simple coherent narrative derived from the above Destination.

To do this influencing 12-14 years ago, ok, but why now. It is toooo late!

Learning 2: Too little - too late for Business Model Innovation - second mover disadvantage

Businesses do not have a clear narrative that excites teams and makes the contribute all in. The business cases are not fitting the 3 year mantra. So, businesses hesitate.

Adding a charging business is a whole different thing: Complex for approvals, manufacturing, maintenance, complex supply chain etc. Somebody will do it and control the access!

Everywhere there can be a platform, there will be one (on Oct 19th this week #Toyota followed as well). Hence somebody out there is already working on your disruption. Then the result is compliance with standards set by others.

See below the one by one by one of automotive following the Tesla standard. All data and access to client. Consumers parking next to Tesla fans. Comparing charging and digital performance. Guess what will happen?!

Every time another care is using the Superchargers the message and perception is reinforced: The Great Electric Transition leader.

Of course there are other examples, like in outdoor and sports now. Who would have that that #SignaSportsUnited would file for insolvency after a vertical platform play. But hey, sometimes things do not work out. The more cautious Mittelstand approach is often better, but not always!

Learning 3: Ignore Dealers, follow Investors

Dealers are using technical analyses. They keep themselves busy with little back and forth. Media needs content and there you go. You are in a bubble.

I am not saying ignore them, I am saying keep focused on the fundamentals.

• Are you making money?
• Do you have a clear Strategic Destination?
• Do you have the right Business Model?
• Is you Operating Model enabling that?
• Are you adaptable and fast?
• Do you have the best people?
• What are the trends in your performance?
• Is there data and automation driving the business?
• Is AI capability there?
• Is the business circular and fostering the triple bottom line?

Great example Tesla this week: Q3 23 "Oh my God"

Oh the numbers. The Stock came down -9.3% in a day. So what?!

Dealers created noise. Is there something fundamentally different? Not really. We are in a poly crises environment. Why should all go the way the money wants short-term?

(3) Short-Termism is a barrier to be ready for the complexit

Learning 1: Invest in a scalable architecture and data

As you can see. This is exponential. This is one of the futures of mobility. Unassailable data lead!

The investment in Tech stack and compute power on more loads is essential. It does not matter that Q3 23 was slightly off when this is the big transition that is happening!

Moving this one notch down from the global hyperscaler scene, it is similar in Mittelstand when #Cloud is still bad to many. When the architecture is monolithic, there is no data strategy and roadmap on how to proactively become modular, API driven....

Loosing people 2x

We have built most marketplaces worldwide. We see the challenges since 36 years in business. A business that is not tech enabled will not have access to ecosystem play. More dramatically it will not attract talent and it will lose consumers because they are already there.

Learning 2: Tech Debt might kill you

We are know businesses where new leadership teams have inherited Stone Age enterprise architecture. To offset this now at inflating cost is unaffordable to many. Hence new #IaaS and #PaaS model will have customers.

The more dramatic thing: the business will select strategies it can support. With old teach, there are no data, automation, interoperability.

Imagine a horse carriage...

More than 100 years ago you would be in the same situation. There are cars and horse carriage.

It would be pretty obvious that the horse cannot win. Well, it is somehow obvious that old tech stack is like that. Even if it is not written off, you are not invited to the party anymore. You will not be able to access flexibly winning tech and ecosystems anymore.

Learning 3. Speed and Business Model Innovation are exponential and consumers are there faster than you

What is now more dramatic is that change in tech is happening exponentially. While your organisation is changing in a linear fashion. The gap is widening.

The gap is first not perceivable until it is too late. It is too late in US.

See here the data:

It might be too late for many legacy players. 10 years ago: 2013 VW announcement. It would have been possible. Now too late most likely!

GM: #Mary Barra #CEO back then. Listen from Minute 03:57

Source: Sqawk Box

It is not about show cars, announcements. It is about driving cost down and digital up!

Hey Europe and Germany!

The Chinese are here...because the consumer wants them

It is not about built quality but experience and value for money.

The needs have shifted and business models in Europe are not ready for it, while ICE business is melting fat faster...

So, who will win?

Remove charging fears and price fears while exciting digitally.

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Ciao and Happy Friday = Saturday and Weekend!

Alex