The Interaction Field In Action

Welcome back to Exponential Growth, where I’ll share my insights and ideas on brand strategy, platform business, new technology, innovation, and staying relevant in a digital world. For more information, check out my website.

We’ve introduced The Interaction Field and discussed how it is a new model for value creation in business. Now, how can the interaction field be put to use? I could start by talking about young start-ups and how they create platforms, engage participants, and bake learning into their companies, but I won’t. They represent a special case. When you start with a blank slate and focus on disruption, as start-ups do, it’s relatively easy to create an interaction field, but how can this new model be deployed in an existing business?

Start-ups have the advantage of not having many fixed costs and capital assets. They can invest in the latest technologies to become efficient and streamlined. They are thus able to exploit revenue opportunities faster and scale more rapidly than value-chain behemoths and platform monsters, which makes them attractive to investors.?

It’s harder for a legacy company—especially a large enterprise and, above all, a traditional value-chain one—to create an interaction field. They have so much already in place: infrastructure, hierarchy, tradition, process, brand identity, products, network, and culture.

But it can be done, and, when it is done successfully, the results can be amazing.?

The $30 billion agricultural equipment firm, John Deere, is an interaction field company because it enables interactions in all three elements of the model: the nucleus, the ecosystem, and the market makers. Deere designs these interactions to solve farmers’ immediate issues—such as farm productivity, yield, and profit per acre—while also solving the broader challenges of agriculture as an industry and society at large.?

If you wish to create an interaction field company, you need to design and build the three elements that constitute an interaction field:?

1. A nucleus of participants

This comprises the direct users and buyers of the offering, the people that are essentially customers or consumers. They are the closest to the company and the company’s products and services and typically interact with it the most. They are the richest source of data for the company and, ideally, gain the most value from their participation. For John Deere, most participants in the nucleus are farmers.

The thousands of farmers comprising the Deere nucleus agree to share data they collect through sensors on equipment with the John Deere Operations Center. As they connect to the Deere platform, they contribute productivity data about their farms and activities. Deere then collects, aggregates, and augments the data with historical geographic data and environmental data such as the weather, analyzes the information, and makes it available to all the farmers in the nucleus. Now the farmer has a much broader understanding of his own industry, and the more farmers join in and contribute information, the more the value of information sharing is greatly increased.

Rather than jealously guarding its valuable data, Deere shares it beyond the immediate nucleus to other elements of the interaction field, such as market makers.?

2. An ecosystem of partners and contributors

The ecosystem is comprised of the people and entities that do not engage directly with the offering, but who can indirectly participate, share, and create value. In the John Deere interaction field, an ecosystem member might be fertilizer makers, software developers, independent retailers, or independent seed producers. Such companies do not directly use Deere equipment to work a farm, but Deere does share data with them about farming results, which the companies in the ecosystem can then use to improve their products, which eventually deliver new value to the farmers in the nucleus.

The value created by third-party participants in the ecosystem looks different from the value created in the nucleus: the nucleus farmers benefit directly from other farmers, while participants in the ecosystem benefit from the accumulation and aggregation of the data from all farmers. Third-party suppliers may apply the knowledge they gain from being part of the Deere interaction field to their research, development, manufacturing, and marketing efforts. And the farmers in the Deere nucleus may or may not use the seeds, software, fertilizer, or equipment these participants develop, but others in the industry, or in other industries, may. Shared-value creation depends on how the interactions between the nucleus participants and the ecosystem are designed. Through its nucleus of farmers and its ecosystem of farmers, collaborating companies, suppliers, and partners, Deere enables a complex interaction field that achieves new levels of farm productivity and creates new shared value for all its participants.?

3. A group of market makers that exert influence on the field

These are individuals or entities—public or private—that do not directly or do not yet use the offerings but nevertheless create value. They have an influence on the interaction velocity of the field.?

Deere reaches out beyond the nucleus and beyond the ecosystem of connected partners and suppliers to an even wider range of participants: the manufacturers, dealers, and farmers who use the competing tractors. Deere offers software, such as Microsoft FarmBeats project, which develops solutions to collect information and manage the operation of a range of farm equipment using sensors, drones, and vision and machine-learning algorithms. Deere brings in institutes and universities, technology incubators, accelerators, and investors.?

The contribution made by the market makers looks different from that of the participants in the nucleus or the ecosystem. Market makers can add to shared value by facilitating network effects, but their contribution is more about influence and can be quite long-term. In the case of Deere, a market maker might be the US Department of Agriculture (USDA), which sets regulations, provides subsidies, and does other things that have an effect on the value that Deere can produce. The agency may then use the data to inform policy or set objectives that eventually affect farmers through regulations or subsidies. By changing its funding policy based on better data from the field, the USDA strongly influences shared value creation across the entire interaction field.

John Deere has successfully evolved and rethought itself.

What I find most admirable about Deere is that the company has transformed itself without chopping off its value-chain roots. It did not engage in a wholesale digital transformation. It leveraged its existing company assets—technology, product, manufacturing, reputation, brand, and organizational capabilities—in a way that no start-up or digital pure play could, and John Deere has benefited greatly.?

The interaction field model is the business model for today and for the future.

Want to learn more?

Check out my book, The Interaction Field: The Revolutionary New Way to Create Shared Value for Businesses, Customers, and Society.

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