How should we analyze business ecosystems - here's some ideas.

1. The Enterprise Ecosystem:
How do we analyze a new management paradigm?
Haydn Shaughnessy

2. Agenda
Systemic Problems
The Ecosystem as Systemic Solution
A Sector Example
Case Study
Measuring Innovation in Ecosystems
Lessons
2

3. Systemic Problems
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4. The era of unprecedented economies of
scale
• Competition just got very tough. China and
India enjoy unprecedented economies of scale:
• The $2,000 Auto in India
• India mobile market headed towards 1 billion +
subscriptions
• 30% price reductions in telecommunications
infrastructure equipment globally (delaying
introduction of next generation Internet, IPv6)
• China supercomputer industry – 10 new
supercomputer centers THIS YEAR
• China’s strategy to retain more value added each
year - current target 20%
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5. Introduction: The growth of system-
Debt de-leveraging at household, enterprise and national
wide energy issues, declining world
levels, hyper-competition,
problems
trade….
These types of issues create systemic or sector-wide problems beyond
what one enterprise can address – the innovation focus is autos, cities,
mobile, logistics, silicon….
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6. Introduction: The innovation crisis
• Remarkably, the return on assets (ROA) for U.S. firms has
steadily fallen to almost one-quarter of 1965 levels
–John Seely Brown and John Hagel, The Shift Index 2010
Developed world Developing world
The $20,000 infant incubator The $7 infant incubator
The $20,000 auto The $2,000 auto
15,000 UK bank branches 17,500 mobile money
agencies in Kenya
560 million China Mobile
500 million Facebook users
subscribers
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7. Enterprise objectives
• The ecosystem can be defined as a need or
approach to radically improving the external
environment and as a consequence changing
the enterprise, driven by.
 A need to integrate customer ecosystems to refresh customer service offerings
 The desire to use or experiment with an API strategy to create an entirely new
supply chain to transform the cost base or product offering
 To overcome industry or sector bottlenecks
 Disrupt the product roadmap or the current business models
 Use open source to reduce cost and extrapolate innovation outside the
organization
7 | © 2010 nGenera Corp. All Rights
Reserved.

8. The Ecosystem as Systemic Solution
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9. The growth of the new ecosystem
5000
4500
conversation 90000
80000
Business
4000 Ecosystem
70000
3500 60000 Business
3000 Business Ecosystem
50000 Ecosystem (w/e)
2500
2000 Open Ecosystem 40000 Open Ecosystem
1500 30000
1000 20000
500 10000
Open Ecosystem
0
0
(w/e)
Comparison of Business Ecosystem blog references using exact term and using
“all the words” (excluding all ecological references)
80,000 blog posts a year reference
ecosystem and business together
in the same post
9|
Source: Cogenuity May 2010

10. Open ecosystems and the future of
management
Old
The old ecosystem
1995 - 2007
New
The new ecosystem
2008….
• The old idea of ecosystems: • Investing your business future in the
“glocal” partnerships relationship cloud
• Targets system wide innovation
• Tight corporate focus
• Global search for free labor and talent +
revenue generating micro-partnerships
• Glocal search for cheap labor
• Value re-alignment process
• Labor market dis-alignment • PLANNING FOR RANDOMNESS
• Central planning and reporting • Value-diverse and customer-centric
• Corporate value focused • Perception driven
• Communications driven
10 |

11. Why randomness?
• We are speaking of a
significant societal shift — from
organizations leveraging technology to accomplish their goals
TO individuals leveraging technology to accomplish THEIR goals.
MUNDANE
And their goals are
They are ABSURD
And they areanything BUT rational
• —Blogger Sean Howard, June 28, 2010
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12. A Sector Example
12 |

13. Ecosystems and competition in the
mobile sectorsignificant growth
mobile phone subscriptions to 2013 A
sector estimated at 5
1.1. billion
billion online devices
by 2014 (CISCO)
50% growth
720 million
315 million
10% growth
Projected
285 million Device and equipment sales in this
Current
industry – a model
for
USA India challenges and solutions
elsewhere
13 |

14. Introduction: New frontiers in innovation
Global
3 sold per innovation in
second technology and
banking
Hypergrowth
New business
models
One sold every
three seconds
Mobility is a model for massive market growth and system-wide innovation.
The ecosystem is becoming the model for mobile management.
14 |

15. Major open source initiatives in mobile
• Android – the Google-led alliance developing an
open operating system based on Linux
• Limo – an alliance to build a Linux based
operating system for mobile
• Symbian – the Nokia operating system pitched
into open source in 2010
• MeeGo – an Intel – Nokia open source project
for premium phones
• Moblin – an Intel driven project for open source
mobile interfaces, across phones, netbooks and
similar devices
15 |

16. From open source to open ecosystem
•Incremental gains
from service to
product to apps to Price,
ads market share,
market range Extending
the Google
business
model
Three innovative players:Three current strategies beyond open source
16 |

17. Managing complexity in the
relationship cloud
A partial view of Hardware-
the mobile OS Tools
software
interface developers developers Apps
ecosystem developers
Function
Ecosystem brands developers
Supply Mobile
chain Nokia advertising
Services revenues End-user
Ovi communities
Apple
Apps Geodata/AR
store
Location AR Content
Google Search/ Maps based content
developers
Operators Play services
Solutions
ecosystem
Embedded Home
Device device
device
sales markets
markets
17 |

18. Case Study: How do you migrate from
business as usual to a new
organizational form?
18 |

19. The Nokia open source decision
February 4th, 2010
April 2009 Almost 40 million
Foundation lines of code open-
Mid-2008
2007 launches sourced
Nokia creates
Nokia decides to Symbian Foundation officially
open source its main and open source
smart phone project announced
operating
system, Symbian, th
e most widely
distributed
smartphone OS NOKIA’S KEY TENSION POINT:
globally (about
time of iPhone Its core culture is not
launch) adapting to new open
realities
19 |

20. Symbian’s mission
To create an open management
paradigm
• Realign IT/engineering and other departments like
design, marketing, ideation
• Liberate the strategy process from the roadmap
• Grow an ecosystem where innovation is systemic though
unpredictable
• Respond to a world where openness is an expectation
• Deal with complexity
20 |.

21. Symbian’s open management values
• Values and creativity
help staff to bring values
and creativity to work with
openness as a byword
• Participation
be a participant, e.g., open
up the sustainability
plan, don’t dominate the
ecosystem
• Future worlds
orient not just to the
future but to transformed
environments
• Excellence
• set the highest standards
21 |

22. Symbian’s open management, open
ecosystem tools
•Developer community
•Apps community (horizon.symbian.org)
•Ideagora – (ideas.symbian.org)
•Open research community
•Volunteer community
•Ecosystem blog platform (blog.symbian.org)
•Get satisfaction
22 |.

23. An open ecosystem ideagora
• Pushing the openness agenda, by ideating
– The management of the foundation
– The operating system
– The future of mobile
23 |

24. Relationship management in the cloud
at Nokia Ovi -
Rural
Nokia development co-
MeeGo, OS services
life investments
tools India
Symbian Nokia
money
Point and find Technology
(ads/search) Institute
Brazil
Qt Interface
tools NOKIA Business
solutions
community
Forum
Nokia Mobile brain bank
Operators Africa
Device
Navteq,
supply
maps
chain
24 |

25. The Symbian ecosystem
OS component Chipset
Operators, e
specialists, e.g. makers, Texas
.g. Vodafone
Sun Hard- Instruments
ware/soft-
OS ware
OEMs, Sony Tools
interface
Ericsson, No redesign
kia
Members Developer
(200 community
Consultants, e. enterprises)
g. Accenture
Ideagora
Apps Academia/
community open
Volunteers innovation
25 |

26. Measuring Innovation in Ecosystems
26 |

27. Measuring innovation
• How successful has Nokia/Symbian been?
• The headline 2008 – 2010 is the iPhone
− And the sub-heading is Android
27 |

28. Measuring innovation Time
ROI
Patent Brand equity
Scaling a business
quantity development
Pipeline Some kind of
balanced Internal
metrics
scorecard for New ideas attitude
(2,5, 10 year
knowledge changes
product flow) production
Certainty
Conventional measures of innovation balance certainty against time:
by the time you can really measure the
output it’s too late to change 28 |

29. Measuring innovation: Principles
•“ Make room for qualitative and subjective measures
• Measure iteratively rather statically
• Measure the stack –
firm, industry, sector, nation, region….
• Pilot new metrics”
—Secretary of
Commerce, January 2008
29 |
Source: www.innovationmetrics.gov/

30. An approach to ecosystem innovation
metrics Strategic
Socio- • Transformational
• Acceptance
• Alignment economic narrative
• Consistency • Price • Positioning (e.g.
• Platform incumbency)
• Trust deployment • Market conditions
• Extensibility • Innovation dynamics • Acquisition of low cost
• Value conversion inputs
• Values/perception • Engagement • Presence
• Acquisition of ideas
• Diversity • Messaging
• Friction reduction • Tangible value
Socio- Market conversion investments
cultural • Geographical growth
curve
In search of a balanced scorecard approach to judging future value
30 |

31. Ecosystem metrics: Acceptance
Developers ‘very interested’ in developing for each platform N = 2773
Tier 1 iPhone (iOS) 90%
iPad (iOS) 84%
Android Phone 81%
Android Tablet 62%
Tier 2 Blackberry 34%
Windows Phone 7 27%
Tier 3 Symbian 15%
Palm Pre / Pixi 13%
Meego 11%
Kindle 6%
% 20 40 60 80 100
Developers characterizing their commitment to these platforms
31 |
Source: Appcelerator, Inc., 06/2010

32. Ecosystem metrics: Alignment with
business values The core
connections are
from brand to
device and user
features
Business
performance is
distant from brand
The culture of the ecosystem is developer-centric
32 |
Source: Cogenuity 2010 Date range All time

33. Ecosystem metrics: Alignment
Nokia/Symbian Android/Google Apple
Open   
Altruism  – –
New naturalism   
Randomness   
Individualism – – 
Collaboration  – –
Popularity –  
Alignment with emergent values
– = Not evident
 = of average relevance
 = highly relevant
33 |

34. Ecosystem metrics: Platform
Deployment
Widely criticized
No of apps
developers
for terms and
conditions and 41,000
high handedness
Widely envied for
10,000
developer
engagement
Criticized for cost Nokia doesn’t
and complexity but release figures
admired for
openness
34 |
Source: Cogenuity 2010 Date range All time

35. Ecosystem metrics: Value conversion -
1 Mobility
consulting
Market
analysis
Enterprise
mobility
offers
strategy
B2B
consulting
sell test services to
Rapid indirect monetization the ecosystem
Texas Instruments
Product creation
Value conversion in the Symbian ecosystem services
35 |

36. Ecosystem metrics: Value conversion -
B2C 2
OEMs use Android, Rapid direct monetization
incorporate Google and
receive ad revenue share
Operators too receive
revenue share and
OEM promote Android handsets
Operator
Apps community
OEM
Google/Android
Apps community shares
revenue from Android apps
Value conversion in the Android community market, hosted by Google;
apps promote handset
36 |.

37. Ecosystem metrics: Price
Price sustainability is an issue with 1000s of micro-partnerships
Justified by
The iPhone astute
price product
premium focus and
hardware
revenues
Balanced by
broad
geographical Nokia driving
growth price down
opportunities to widen
market
37 |

38. Ecosystem innovation metrics:
Owning a transformational narrative - I
Android G1 Palm Pre
93,228 48,359
Blackberry
Storm
1,188
Apple
iPhone 3g
1,216,794
A measure of the iPhone’s influence: Online references to HTC/Android
G1 vs Apple October 2008/January 2009: Bought vs earned media
38 |
Source: The Conversation Group

39. Ecosystem metrics:
Owning a transformational narrative -
2
1.1
6.4
19.5
Online references to Symbian, Android and iPhone
in millions, April 1st 2009 to March 31st 2010
39 |

40. Lessons
40 |.

41. Lessons: Three styles of ecosystem
strategy high end
APPLE,
single product
• focus, multiple
services; high
margins, targeted
NOKIA, global, across ecosystem, astute
market perception
segments, income management
Price groups, price bands
and service offers ANDROID, tight
with diffuse interaction between
ecosystem, poor industry participants
perception for broad device
management distribution, improvi
ng perceptions
Models for sustainable competitive advantage
41 |

42. Lessons: Ecosystem strategy
•
Polarization - Incumbent -
uniqueness scale
Ecosystem
strategies
Chain and Facilitation -
channel reciprocation
42 |

43. Lessons: Management
The key tension point
Use platforms
Work with
to structure ad
Invest in the developer Strategize Create
hoc innovation
relationship meritocracies around price downstream
and revenue
cloud but create vulnerability metrics
micro-
wider values
partnerships
Managing perception
Perceptions influence becomes MORE important
relationships. An ecosystem is
a diffuse relationship matrix.
43 |.

44. Question:
• System-wide innovation
• Access to free or very cheap labor
Does the and talent
ecosystem
• Unpredictability and random
deliver? effects in a planned environment
• Labor market value-system
realignment
• Adaptation to customer centricity
and customer ecosystems
44 |.

45. Free labor/
Lessons
System wide Unpredictable Labor market
talent/revenue
innovation innovation alignment
partnerships
Mobile transformation Brings enterprises
1200 entries at
is global, sector wide iphone 250,000 apps closer to open source
ideas.symbian.org
and extensible values
< $8 million annual Involves content
budget, 200 company (music), maps, geo- Price reductions from Places too much
members, 40 million data, augmented $250+ to $150 to $70 emphasis on
lines of codes, 29 reality, autos, home in a year meritocracy
innovations devices, advertising
Apple passes on $1 M-PESA, Kenya 17,000
New hardware –
billion in revenues to micro-
software integration
micro-partners, 2008- partners, mobile
initiatives
2010 money agents
200,000 Nokia Forum Mobile brain Symbian contributions
members bank, Africa from TI, Sun,Ixonos
Some way to go with aligning the enterprise ecosystem to consumer
ecosystems or in evolving a wider emerging value set
45 |.

46. Lessons: Summary
• There is a new moral framework out there around the
preferences of labor and talent, and a new wealth
creation paradigm is evolving around ecosystems where
complexity is managed in the relationship cloud.
• Competitiveness will only get more uneven and
difficult.
• Ecosystems have a role in helping to create system-wide
innovation, through a broader open management approach.
• There are models to work from.
46.

47. Haydn Shaughnessy
haydn@cogenuity.com
47 |.