Which organization would you put your money on? Tesco or Sony? In a 2013 article Keen and Williams call the first an ultra success and the latter an ultrafade. They describe an ultrafade as a company that has been very successful in the past but seems to gradually slide away, without making obvious mistakes. They just fade away. According to Keene and Williams, this is because they are not good enough in playing with changes in value dimensions and making use of an ecosystem of partners in continuously delivering new value. Pagani (2013) speaks in this context of relational intelligence. Organizations that try to centralize organizational intelligence instead of maximizing it with the aid of partners, run the great risk of becoming ultrafades.
The times of completely predefining and controlling an entire value chain are gone. Today’s game is more about seizing opportunities as they come along. Or even better, generating opportunities, making use of the capabilities present within an ecosystem. This makes for excellent customer experience. Let’s face it, most brilliant innovations emerge from an unexpected combination of perspectives and skills. Generating these different perspectives within one company is a challenge. It is much easier to be inspired from outside. From an efficiency point of view too, it is no longer necessary to control the entire value chain. With the event of digitalization, transaction costs of cooperation with various parties are rapidly decreasing.
So, what does it mean to participate in an ecosystem instead of a value chain? The main difference, in my opinion, is the element of surprise. An ecosystem is not built around a fixed chain of processes. Instead, it fosters a culture of seizing opportunities that arise when parties with diverse backgrounds and ideas meet. Architects can provide their organizations with the necessary agility to do so, by defining an open and scalable infrastructure of digital capabilities, building an up-to-date ecosystem services catalog, defining interaction protocols on a pragmatic, semantic, syntactic and technical level and developing ecosystem digital capabilities models.
The importance of thinking in ecosystems is expressed in the following general principle, that I and many of my fellow architects subscribe to:
We want to be a player in the customer’s ecosystem of value, collaborating with other players, in order to maximize customer value.
We think it important enough to include in our Architecture Manifesto.
So much so, that it is also reflected in one of the core values of the manifesto:
Innovation and ecosystems over industrialization and value chains
I will get to the innovation and industrialization part in a future blog post.
Keen, P., Williams, R. (2013). Value Architectures for Digital Business: Beyond the Business Model. MIS Quarterly, 37(2), 642-647.
Pagani, M. (2013). Digital Business Strategy and Value Creation: Framing the Dynamic Cycle of Control Points. MIS Quarterly, 37(2), 617-632.