Nonlinear Thinking

Eluding the Zeitgeist

Zeitgeist: [tsīt’gīst’, zīt’gīst’] n. The spirit or genius which marks the thought or feeling of a period or age.

The bandwagoneers that comprise and embrace much of the Silicon Valley monoculture have increasingly not been among the vanguard of enterprises that are delivering real change and innovation within and across traditional value chains and business models.  Perhaps that is the result of a zeitgeist that manifests in the Valley on a regular basis in which the thinking goes that if one successful business launch makes sense, then several dozen more incremental versions of said business make even more sense.  Paypal founder Peter Thiel has even commented: "There is so much incrementalism now."  Umair Haque, Director of Havas Media Labs, discussed the problem in a Harvard Business Review article back in 2008, lamenting that “… the malaise is deep and systemic. Many of you may disagree – but I’m vastly disappointed in the moral and strategic bankruptcy of today’s crop of venture investors and so-called revolutionaries.”

In a zeitgeist market, the number of new entrants is usually high, the ability to create differentiated offerings with unique value propositions (the strongest predictor of new product success) is more difficult to achieve, and new forms of business model innovation are required for success (e.g., service and solution innovation rather than product and process innovation; experiential innovation; legal rights and bundling innovation; privacy rights innovation; agency innovation, where businesses act on behalf of customers).

There are reasons for this creeping incrementalism and much can be blamed on the democratizing nature of the Internet as the ultimate platform for idea sharing.  Additionally, the ability to rapidly access formidable compute capacity, other technology infrastructure and agile development tools via the cloud allows today’s garage startups to create stepwise iterations of already buzz-worthy offerings in record time.  The “sharing” economy dynamic has already become over-saturated with new enterprises springing up to compete with the innovators that broke trail in the space – uber, lyft, airbnb, Getaround, Zipcar, Homeaway, TaskRabbit, Liquid, Dog Vacay, Fon – you get the idea.

Innovation Zeitgeist, a book by entrepreneur/author Alistair Davidson, drilled deeply into this dynamic several years ago. 

What I have observed is in the rush to make individual companies and product successful, managers have missed a larger trend - a Zeitgeist influence on what is getting developed and launched. Simply put, there are more entrepreneurs launching similar products than ever before. And because of the Internet, these product leak into other markets quickly.

Far more companies in Silicon Valley think they are creating viable business models and services that deliver real economic and societal value than those that truly are creating something both lasting and impactful.  Eluding the zeitgeist and focusing on addressing real issues, problems and opportunities is the challenge that needs to be met.

Diverse thinking is critical to an effective culture of innovation and Silicon Valley’s challenges with respect to diversity, particularly when it comes to enterprise leadership, has been well-publicized.  That issue/challenge may be the central contributing factor in a culture that eschews business model innovation for incremental uniqueness and a “me too” entrepreneurialism.

When we stop and ruminate on the many macroeconomic and core societal problems the world faces today, can we really say that there is a need for yet another social network variant that succeeds only in chewing up time and mindshare – Instagram, Snapchat, Vine, blah, blah, blah.

I don’t know.  Perhaps these are only the cynical musings of someone who thinks we can do much better, must do much better.

Business Ecosystem Redux

“Business ecosystem” may be a relatively recent entry into our business lexicon but it is, perhaps, not an entirely modern concept.  Confederacies of market participants have allied around delivering comprehensive offerings to markets across epochs.  One could imagine Christopher Columbus, operating in the context of emerging western imperialism and economic competition between European kingdoms bent on establishing trade routes to access raw materials, devising a business ecosystems of sorts – ships, private equity, spice merchants -  to reach the East Indies and gain a foothold in the spice trade.

That those collections of interdependent actors were not identified as a business ecosystem matters little as the basic construct existed within the business, industries and markets of their particular time.  The strategic planning idea of “business ecosystem” is more contemporaneous and could be grouped with all the other management buzzwords of the recent past if its practical application in the science and process of strategy development wasn’t so damned profound.

Technology-focused organizations were among the earliest to understand that the connection and interdependence of all the actors in an industry, or sub-segment of an industry, could provide tremendous insight into market dynamics and uncover potential white space/blue ocean opportunities for their products, services and solutions.  While the concept has remained resonant over the past two decades, its use has seemed to vacillate between being a primary pillar of strategic assessment or languishing on the periphery as new ideas have taken their turn at center stage.  Lately, it seems to be achieving a higher profile and once again assuming, what I consider, its rightful place in the portfolio of core market and strategic planning tools.

The concept was codified in a 1993 Harvard Business Review article by James F. Moore, "Predators and Prey: A New Ecology of Competition".   In that article, Moore cited the anthropological process of coevolution and the biological model of ecosystems to provide context for his definition of business ecosystems.

“To extend a systematic approach to strategy, I suggest that a company be viewed not as a member of a single industry but as part of a business ecosystem that crosses a variety of industries. In a business ecosystem, companies coevolve capabilities around a new innovation: they work cooperatively and competitively to support new products, satisfy customer needs, and eventually incorporate the next round of innovations.”

Moore expanded on the concept in his seminal book, The Death of Competition: Leadership and Strategy in the Age of Business Ecosystems.  In the book, Moore did not suggest that competition was going to vanish.  His thesis was that the old notion of competition, where like-minded competitors match wits in pursuit of a prospect company’s business, was no longer as viable in an increasingly connected world.  As vertically integrated enterprises became less and less common and the extended enterprise business model increasingly took its place, understanding the broader environment in which the business operates became the foundation for holistic strategy development, more interdependent partnering structures and management of assets – human, intellectual, capital and financial – that cross traditional enterprise boundaries.

An important consideration here is that, for a business operating in a world of constant change, what you do is not as important as how your capabilities relate to what others are doing.  In this accelerating business environment, strategy-making involves having an awareness of the big picture and finding ways to play a role in it.  For some, the rise of ecosystems thinking is an opportunity to create powerful new competitive advantage.

There is a real “the whole is greater than the sum of the parts” idea at work here.  Many ecosystems are created to pursue objectives that would be beyond the effective scope and capabilities of any of the individual ecosystem members.  Also important to recognize and incorporate in ecosystem thinking is that business ecosystems emerge, operate and evolve over time.  Key to achieving some level of success and stasis is that all members of the ecosystem either evolve or are replaced so that the ecosystem continues to deliver the value proposition(s) it was founded upon.

In the connected economy, the value of interdependent relationships – partnerships, alliances, collaborations – continues to grow and ecosystems thinking provides a discipline and framework for understanding where active and latent opportunities reside.  Identifying and delivering the value proposition that addresses those opportunities can be done more effectively, efficiently and expeditiously when understanding and leveraging the power of the business ecosystem in which the enterprise finds itself.

Ecosystem thinking is also about leverage.  As the enterprise better understands its role in its business ecosystem, they can more effectively integrate their operations with those of partners/allies and have more influence on how partner assets are deployed and employed to deliver a more robust solution to a broader customer base.

A recent report by Deloitte highlighted the impact business ecosystems might have as they become more recognized and utilized.

The rise of business ecosystems is fundamentally altering the key success factors for leading organizations, forcing them to think and act very differently regarding their strategies, business models, leadership, core capabilities, value creation and capture systems, and organizational models.

If you have not read The Death of Competition, I encourage you to seek it out as it remains as resonant and contemporary today as when it was first published.

The Value Proposition Canvas

As someone who has spent much of the past 20 years defining, developing, and articulating value propositions to address all types of customer pains, I think this extension to Alexander Osterwalder's Business Model Canvas touches much of what I have come to think of as the formula for developing value propositions.

 

Alexander has a new book that details the process and journey to creating value propostions that match/address the pains your cusotmer is experiencing.