The New Innovation Era

Blockchain and distributed ledgers as innovative platforms

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It had to come to this eventually.  The emergence of Blockchain and distributed ledger systems illustrates how innovation is moving from focus on products and services, which are interesting but don’t provide a long-lasting competitive advantage, to a focus on platforms and ecosystems.

Over the last few weeks this need for a lasting competitive shift in focus was emphasized as Ford pushed out its CEO because he wasn’t changing the company fast enough. As discussed in this blog previously, the automotive sector must rethink its competitive position.  Increasingly, people want flexible transportation – from cabs, Uber, public transportation and/or their cars.

The automotive manufacturers (Ford, GM, Fiat, Mercedes, etc) must shift their focus from building physical cars to providing transportation – a shift in thinking and strategy.

In a very similar manner we can see that banking and financial services are moving from offering discrete services (mortgages, loans, checking/savings accounts, etc) and are considering how to either own or integrate with larger platforms and ecosystems, because the older conventions are less attractive to emerging customers and technology is advancing so quickly that soon many different companies and industries can offer banking-like services.

Distributed ledgers and Blockchain may point out a new competitive platform that some firm is going to capitalize on.  For example, we can imagine a time in the not too distant future where a large company that supports and relies on an extended supply chain – the automotive industry for example – could dictate that all of its supply chain participants must interact using Blockchain.  Then we’d have a company spanning, industry wide ERP like platform.  If this sounds crazy, don’t laugh.  The government of Dubai just announced that within five years every entity that interacts with the government must do so using Blockchain.

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So Let’s Take the Autonomous Car in the Wider Ecosystem Perspective

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Image Credit: Rinspeed

My collaborative colleague here on this website, Jeffrey Phillips, recently wrote a piece on his own blogging site “What autonomous cars tell us about the future of innovation.”  I could not resist picking up on this by taking a broader ecosystem perspective to autonomous vehicles and all the mounting “unintended consequences,” many yet to be fully worked through.

We tend to focus always on the innovation promises of new growth and achieving a clearer competitive advantage, yet we often ‘gloss over’ or push issues and problems onto others to resolve, it is often that innovation has many “unintended consequences”.

Many “unintended consequences” are often very unfortunate and we so often fail to see the consequences, many times our capabilities run ahead of our foresight.Casual maps or cognitive mapping can help reduce these.

We often fail to recognize the “connected system” as we focus on our narrower objectives and fail to fully appreciate the primary objectives of others or the impact this might have. We need to take more of the ‘wider system’ approach into consideration as it might highlight missed opportunities but equally, consequences can have a higher impact cost than expected that allows one part of this wider ecosystem to gain increased value and return but for many others will have a higher knock-on economic cost.

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Many-to-Many (M2M) Business Ecosystems are far more challenging

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Our experiences determine to a large degree, success or failure. When you are reliant on others to collaborate and exchange knowledge, for the better good, you need to make sure there is a consistent validation process.

Building the multi-sided solutions where an ecosystem of providers is collectively working towards finding solutions that radically advance on existing ones, you have to enter these type of relationships with your eyes wide open, they are extremely hard and demanding.

They are complex in their relationships, collaborating and exchanging knowledge and expertise to get to a given ‘transformation’ point. You have to become adaptive.

They are differences in the different types of business platforms and who engages with whom and where they enter the value building chain. In my last post “Seeing differences between B2C and B2B within Ecosystems and Platforms” I covered the major differences between them.

Here in this post, I explore the considerable differences between ones that are one-to-many in the relationship that most of our digital platform solutions have been evolving into (B2B, B2C) and many-to-many. The complexity rises to a very different level.

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Seeing differences between B2C and B2B within Ecosystems and Platforms

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Jeffrey wrote a recent post “No walled gardens in B2B platforms” and started with this: “Paul and I have noted throughout our writings on platforms and ecosystems the key differences between companies that interact primarily with consumers (B2C) and companies that interact primarily with other corporations (B2B)”

I wanted to highlight some key differences as a follow-up post and was beginning to work on this when up “pops” a really valuable article by McKinsey “Finding the right digital balance in B2B customer experience”.

Jeffrey and I have championed the idea that customer experience is the ultimate innovation outcome, based on strong ecosystems and platforms so this caught my attention. The article does a good job of focusing the B2B companies to putting customer-centricity and experiences at the heart of their strategy. This offers good advice on the one-to-one model but less on the complications of many businesses working with other business on a two-sided platform of multiple participants

The writers for this McKinsey article, rightly point out the root of the problem is that while the role of customer journeys is central to both B2B and B2C, their incidence and importance are different for B2B and they go on and explain the chief differences.

I’d like to “lift out” these four chief differences McKinsey defines and discuss these more in the multi-sided platform context and ecosystem needs, going beyond the customer experience ones.

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No walled gardens in B2B platforms

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Walled Garden Illustration by David Simonds

Paul and I have noted throughout our writings on platforms and ecosystems the key differences between companies that interact primarily with consumers (B2C) and companies that interact primarily with other corporations (B2B).  This difference is especially important when we begin to think about platform dominance.

You see, Facebook interacts primarily, almost exclusively, with customers (B2C) as such it’s platform serves to provide almost the entire interaction between Facebook and its customers.  We could almost return to the days of old, when AOL was your conduit to the internet, when we talked about “walled gardens”, because that’s what many of the pure play B2C platforms are – walled gardens, meant to provide as much of the platform as possible.  Their goal is “stickiness”, attracting you and keeping you plugged into their platform, consuming their content.

On the other hand, industrial companies are definitely as engaged in platform development, but their solutions require more than one platform.

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Entering new battlegrounds of connected devices

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There is a new set of battlegrounds brewing around platforms and ecosystems and what and who controls the data and the flows needed to build these thriving environments, reliant on the cloud.

One such battle zone will be on connected devices and who controls and delivers what.

It is not unlike the battleground of the mobile phone device that became famous in an internal note to Nokia employees that I wrote about, back in 2011 “Welcome to the brave new world of innovation ecosystems”.

We are coming to the time that will have similar high stakes of who thrives (and survives) by what they own or control in the looming battles ahead, the one of who and what connects and the way these connections generate, influence and control the connectivity required; to connect the ‘intelligent’ devices to platforms, clouds and all the partners in the ecosystem, seeking insight and understanding to exploit and explore new efficiency and growth opportunities, collecting the new gold called ‘fluid data’.

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The Interconnected Parts of an Ecosystem

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Credit Katri Valkokari

Now I relate very strongly to different visuals and this happens to be a current favorite of mine. It sums up the differences between the types of ecosystems we need to recognize and work through.

I came across this in a paper by Katri Valkokari, a Research Manager at VTT Technical Research Centre of Finland in the Business, Innovation and Foresight research area.

Although it presses a number of buttons for me, the paper seems to have limited the differences shown here and I just want to throw this visual open just a little more, in your ‘need to know’ here and then come back to it later.

What Katri does, is provide a really good contribution into how they differ in outcomes, interactions, even a logic of actions and the different ‘actor’ roles for the three.

A return to thinking Ecosystems and Platforms

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Recapping our ecosystem and platform thoughts

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Thoughts about ecosystems and platforms

For those of you following our posts about ecosystems and platforms and their importance to innovation, this is the 30th post offering some thoughts and recaps. We thought it made sense to take a breather before pushing on to other ideas, stop and recap what we’ve been writing about, and perhaps place some of these ideas in context.

Paul Hobcraft and I first began talking about ecosystems and platforms several years ago. It became more evident that innovation is often focused too narrowly, considering only a discrete product or service as its result.

Increasingly, we believe, innovators must become first more aware of the platforms and ecosystems that exist in their markets or segments. Secondly, they must become more willing to innovate about the platform or ecosystem and eventually innovate to change or disrupt the platforms and ecosystems.

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Are you in a fog or a cloud? Get ready for more complexity to come

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So what is the difference between a fog and a cloud? Well, actually bandwidth is part of the answer and where data needs to be situated.

Slow connections are driving the cloud closer to the actual asset that has the information, the cloud needs. “Fog computing, or edge computing” is getting closer to those local computers and devices to solve this bandwidth problem we all will be having it seems.

Solutions are looking far more to the how and where we store data and how we are setting about how to access it.

Fogging solutions are coping with the problem that sensor loading is creating altering what goes to the cloud and why

The reason why I’m interested in this, on a dedicated site discussing platforms and ecosystems, is that this fog computing is attempting to solve multiple problems at the edge where innovation lies far more for us to understand, where the devices and their users generate the insights and raw data.

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When a platform becomes an operating system

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In the last post Paul wrote about Bosch, and its focus on the industrial internet of things (IIoT).  Bosch, GE and other industrial companies are attempting to create industry leading or at a minimum industry standard platforms to link industrial organizations and create standards, with the hope that new ecosystems and new solutions are built on top of those platforms.

Each of their goals is to capture, manage and exploit information generated from thousands of activities and sensors throughout the industrial platform.

Here we can the see opportunity and the challenges associated with an IIoT play:  building a platform and managing the data of an industrial giant means managing (and harvesting) a tremendous amount of data.

But it also means plugging into or interfacing with other systems and platforms, as none of these companies can create a holistic platform or replace all of the platforms and systems in a large company.  Bosch, GE and others can create really powerful and important platforms in sections or functions, but must integrate and share data with other platforms.  While they can create really powerful and compelling platforms, these platforms are by necessity limited to specific capabilities or functions.

Now for something completely different

Let’s examine then, the power and flexibility that an Amazon, for example has in its quest to build platforms through its AWS offerings.  First, it is focusing on business to consumer (b2c) or in many cases a category that Paul has coined:  consumer to consumer (c2c).

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