Ever since Nike, Apple, Google and Amazon started integrating their products and services into their ecosystems, companies want to copy the model and build their own. But it’s harder than they think. The companies that I mentioned have been building their ecosystem brick by brick, or should I say click-by-click since decades.
And not everything they’ve done was successful. Over the years they have discovered and perfected the way they “surround” their customers with their offer.
The Power of an Ecosystem
An ecosystem is a fully functionally integrated user experience. Devices and services combine into one incredibly relevant experience. And that experience is not pushed on them through intrusive and annoying advertising, but through experience. As the services are so embedded in the lives of the customers, using them feels natural.
And that’s the power of an ecosystem: customers do not want to leave it, because leaving it would diminish the value of the experience. Once you have started with Apple, you are likely to buy another Apple device to take advantage of the App Store, iTunes, IOS, iCloud. Why would you leave it and buy an Android Phone?
Ecosystems are also captive because they create value for their customers that goes beyond the simple usage of a device. They create contexts that allow customers to get access to services in various ways and to experience a seamless integration.
The key to ecosystem thinking is functional integration. Simply put, this is about adding new functions (devices) and integrating them into a customer experience.
Most companies do not own an ecosystem. They can be a part of it, but they have failed to integrate their own products into a captive system. Most companies have added services, without combining them. That strategy determines the customer experience: a series of interchangeable and commoditized product to which there is no emotional or functional adherence.
And when starting an ecosystem, there are no quick fixes. Many organisations underestimate the difficulty of designing, building and maintaining an ecosystem approach. Here’s why.
A first mistake that many companies make is mistaking an ecosystem with an organisation model. An ecosystem is not an organisation. It is not a structure.
The second mistake is that organisations want to introduce the ecosystem idea without thinking it through. Ecosystems are about customer experience. And that means that organisations need to change all bad habits, old ways, … and that the design of services and all that entails needs to breathe the customer.
The third mistake is that organisations are paralysed by the shit of yesterday (an expression I borrow from Peter Hinssen). Legacy systems are clouding the future of Banking, Payroll, Insurances, Tourism, … By holding on to the legacy for too long – maybe for good reasons that have nothing to do with the customer – the idea of fully integrated ecosystems becomes impossible. If this happens, organisations look at the customer through the lens of old technology and old ways of doing things. The customer has however other expectations. And other rights.
Then, a next mistake is that too many organisations do not think about customer experience in the first place. They have an introverted view of the purpose of the organisation, where the customer does not play the first fiddle.
The fifth mistake is that there is an incompatibility between the ecosystem idea and the organisational culture. Ecosystems can thrive when both innovation and agility go hand in hand. But to have this, organisations need to foster autonomy, creativity, trust. The prime directive is to think for the customer first. If every employee, freelancer or person who works with the company would be convinced and empowered to act upon this conviction, the ecosystem idea can work.
And the last mistake is that organisations underestimate the urgency. The big players are increasingly integrating new functionality into their ecosystem (Apple Pay, Amazon buying WholeFoods, …). And new agile players are eating away the market of the established organisations . So there is no time to waste.
Looking at the agenda of most organisations, it seems that they are still thinking in old models and paradigms. How important is experience in contrast to efficiency? How often do boards talk about the customer? How much of the budget is given to customer relevant projects?
The Era of the Customer
2018 is the year of the customer, we might think. Well probably, it’s more like we are in the century of the customer. Let’s not forget that an organisation derives its relevance from the service it gives to its customers, patients, citizens, … Organisations who do not have this notion in their DNA are today’s dinosaurs. Tomorrow they will be extinct. Thinking of products and services as a part of a customer-oriented ecosystem can enable organisations to take a leap forward.
And I know that leadership, organisational design, people strategies should all be directed towards the purpose of the organisation: the customer. An organisation exists only because (and if) it enables someone to work, play, live, heal, succeed, survive, thrive, flourish, …
Let’s make this work in 2018.