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A decade ago, Nokia’s CEO, Stephen Elop, published his prescient “burning platform” memo which lamented the precipitous decline of the company’s vaunted mobile phone business after just a few years of competition from Apple and Google. He noted that, “Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem.”[1] The competitors’ ecosystems offered a curated network of developers, applications, e-commerce, advertising, search, social media, location-based services and unified communications. Given their immense value-creating potential, ecosystems — and whether to build, buy, or join one — have become a top agenda item in boardrooms around the world.
Unfortunately, Elop’s wakeup call was too late for Nokia; its mighty mobile empire was quickly eclipsed by Apple and Google and Elop’s tenure as CEO ended in 2014. Nokia and other incumbent handset phone players had been trumped by a bold new logic predicated on open organizational architectures and collaborative economic ecosystems.
The ecosystem wave
A report from McKinsey suggests that in the coming decade, scores of industry sectors and value chains will converge into a dozen or so multitrillion-dollar digital ecosystems.[2] Their analysis heralds a highly customer-centric future in which users can access a wide range of offerings and experiences through a single gateway without leaving the ecosystem.
Business ecosystems can take many forms; they are generally defined as confederations of organizations strategically selected by a host company that collectively deliver an integrated offering of products, services and experiences to customers via a digital platform.[3] As IBM Institute for Business Value researchers point out, “organizations across virtually every industry are competing to have a primary relationship with customers, positioning themselves to not only provide their own products, but as a curator of customer experiences.”[4]
Ecosystems are typically initiated by a central player with a market-leading brand; the host serves as the curator and orchestrator of offerings provided by complementary organizations. The ecosystem host plays a keystone role in establishing cooperative principles and revenue sharing agreements among ecosystem partners and in providing an identifiable brand and coherent digital landscape and experience to end users.
Haier: ecosystem pioneer
Haier, a highly successful Chinese multinational corporation best known as a leading provider of large and small household appliances and consumer electronics, has...