Download - Open management and the enterprise ecosystem
Open Management and the Enterprise Ecosystem: A new management paradigm and its metrics
Haydn Shaughnessy, Cogenuity July 26-28, 2010 Park Hyatt Aviara Resort Carlsbad, CA
nGenera Insight All-Member Meeting
Changing Externalities
The Ecosystem as Solution
Measuring Innovation in Ecosystems
A Sector Example
Lessons
Agenda
Case Study
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Changing Externalities
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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
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The growth of system-wide challenges
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….
Debt de-leveraging at enterprise and national levels, hyper-competition, energy issues, the empowered consumer.
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The innovation crisis
Remarkably, the return on assets (ROA) for U.S. firms has
steadily fallen to almost one-quarter of 1965 levels
The $20,000 infant incubator
The $20,000 auto
15,000 UK bank branches
The $7 infant incubator
The $2,000 auto
17,500 mobile money
agencies in Kenya
Developed world Developing world
–John Seely Brown and John Hagel, The Shift Index 2010
500 million Facebook users 560 million China Mobile
subscribers
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India’s $35 laptop
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Unveiled 23.07.10
New frontiers in innovation
The ecosystem is becoming the model for powering growth and extensibility.
New business models
Hypergrowth
Global innovation in
technology and banking
One sold every three seconds
3 sold per second
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The Ecosystem as Solution
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0
10000
20000
30000
40000
50000
60000
70000
80000
90000BusinessEcosystem
BusinessEcosystem (w/e)
Open Ecosystem
Open Ecosystem(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
The growth of the new ecosystem conversation
Source: Cogenuity May 2010 10 | © 2010 nGenera Corp. All Rights Reserved.
Old New Open ecosystems and the future of management
The new ecosystem 2008….
• The old idea of ecosystems: “glocal” partnerships
• Tight corporate focus
• Glocal search for cheap labor
• Labor market dis-alignment
• Central planning and reporting
• Corporate value focused
• Communications driven
• Investing your business future in the relationship cloud
• Focus on externalities
• Global search for free labor and talent + revenue generating micro-partnerships
• Value re-alignment process
• PLANNING FOR RANDOMNESS
• Value-diverse and customer-centric
• Perception driven
The old ecosystem 1995 - 2007
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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.
And their goals are MUNDANE
They are ABSURD
And they are anything BUT rational —Blogger Sean Howard, June 28, 2010
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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 the need to:
To overcome industry or sector bottlenecks
Disrupt the product roadmap or current business models
Use open source to reduce cost and extrapolate innovation outside the organization
Integrate customer ecosystems to refresh customer service offerings and respond to empowerment
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A Sector Example
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Ecosystems and competition in the mobile sector
Device and equipment sales in this
industry – a model for challenges and solutions elsewhere
A significant growth
sector estimated at 5 billion online devices by 2014 (CISCO)
USA India
Projected
Current
720 million
285 million
1.1. billion
mobile phone subscriptions to 2013
10% growth
50% growth
315 million
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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
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From open source to open ecosystem
Three innovative players:Three current strategies beyond open source
Price, market share, market range
Incremental gains from service to product to apps to ads
Extending the Google business model
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End-user communities
Apps developers
Ecosystem brands
Nokia Services
Apps
Geodata/AR
Maps Location
based services
Embedded device markets
Mobile advertising
revenues
Home device markets
OS developers
Tools developers
Device sales
Content developers
Function developers
Solutions ecosystem
AR content
Supply chain
Hardware- software interface
Transforming the external environment
Apple
Apps store
Ovi
Operators
A partial view of the mobile ecosystem
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Extensibility: new business models, activities and markets
Case Study: How do you migrate from business as usual to a new organizational form?
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Nokia heads for the ecosystem
2007 Nokia decides to open source its smart phone operating system, Symbian, the most widely distributed smartphone OS globally
Mid-2008 Nokia creates Symbian Foundation and open source project announced
April 2009 Foundation launches officially
February 4th, 2010 Almost 40 million lines of code open-sourced
NOKIA’S KEY TENSION POINT: Its core culture is not
adapting to the new realities, particularly customer
centricity and “openness”
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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
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4 Steps to open management values
Values and creativity help staff to bring values and creativity to work
Participation
be a participant, e.g., open up the sustainability plan, don’t dominate the ecosystem; all staff to participate via blog and twitter
Future worlds orient not just to the future but to transformed environments
Excellence
set the highest standards
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Symbian’s open management, open ecosystem tools
• Developer community
• Apps community (horizon.symbian.org)
• Ecosystem Ideagora – (ideas.symbian.org)
• Open research community
• Volunteer community
• Ecosystem blog platform (blog.symbian.org)
• Get satisfaction
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An open ecosystem ideagora
Pushing the openness agenda, by ideating
The management of the foundation
The operating system
The future of mobile
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NOKIA
Symbian
MeeGo, OS
Navteq, maps
Ovi - services
Qt Interface tools
Point and find (ads/search)
Forum Nokia
Device supply chain
Operators
Nokia life
tools
Rural development co-
investments India
Technology Institute
Brazil
Mobile brain bank Africa
Nokia money
Business solutions
community
Growing externalities at Nokia
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Developer community
Ideagora
Members (200
enterprises)
Volunteers
Apps community
Chipset makers, Texas Instruments
OEMs, Sony Ericsson,
Nokia
Consultants, e.g. Accenture
Operators, e.g.
Vodafone
Academia/ open
innovation
OS Tools
OS component specialists, e.g.
Sun
The Symbian ecosystem
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Hard- ware/soft-
ware interface redesign
Measuring Innovation in Ecosystems
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Measuring innovation
• How successful has Nokia/Symbian been?
• The headline 2008 – 2010 is the iPhone − And the sub-heading is Android
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Conventional measures of innovation balance certainty against time:
by the time you can really measure the output it’s too late to change
ROI
Scaling a business
Internal attitude changes
Brand equity development
New ideas
Patent quantity
Pipeline metrics
(2,5, 10 year product flow)
Some kind of balanced
scorecard for knowledge production
Time
Certainty
Measuring innovation
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—Secretary of Commerce, January 2008
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”
Source: www.innovationmetrics.gov/ 30 | © 2010 nGenera Corp. All Rights Reserved.
• Acceptance • Alignment • Consistency • Trust • Extensibility • Values/perception
Socio-cultural
• Platform deployment
• Value conversion
• Engagement
• Diversity
• Friction reduction
Socio-economic
• Price • Market conditions • Innovation dynamics • Presence
Market
• Transformational narrative
• Positioning (e.g. incumbency)
• Acquisition of low cost inputs
• Acquisition of ideas
• Messaging
• Tangible value conversion investments
• Geographical growth curve
Strategic
An approach to ecosystem innovation metrics
In search of a balanced scorecard approach to judging future value
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Ecosystem metrics: Acceptance
Developers characterizing their commitment to these platforms
Developers ‘very interested’ in developing for each platform
Source: Appcelerator, Inc., 06/2010
Tier 1
Tier 2
Tier 3
iPhone (iOS) 90%
iPad (iOS) 84%
Android Phone 81%
Android Tablet 62%
Blackberry 34%
Windows Phone 7 27%
Symbian 15%
Palm Pre / Pixi 13%
Meego 11%
Kindle 6%
20 40 60 80 100 %
N = 2773
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The culture of the ecosystem is developer-centric
Ecosystem metrics: Alignment with business values
Source: Cogenuity 2010 Date range All time
The core connections are from brand to device and user features
Business performance is distant from brand
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Ecosystem metrics: Platform Deployment
Source: Cogenuity 2010 Date range All time
Widely criticized for terms and conditions and high handedness
Widely envied for developer engagement
Criticized for cost and complexity but admired for openness
41,000
No of apps developers
10,000
Nokia doesn’t release figures
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sell test services to the ecosystem
Mobility consulting
Market analysis offers
Enterprise mobility strategy
consulting
Value conversion in the Symbian ecosystem
Ecosystem metrics: Value conversion - 1
B2B
Rapid indirect monetization
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Texas Instruments
Product creation services
Google/Android
Operator OEM
OEM
Apps community
OEMs use Android, incorporate Google and receive ad revenue share
Apps community shares revenue from Android apps market, hosted by Google; apps promote handset
Operators too receive revenue share and promote Android handsets
Value conversion in the Android ecosytem
Ecosystem metrics: Value conversion - 2
B2C Rapid direct monetization
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The iPhone price
premium
Nokia driving price down
to widen market
Balanced by broad geographical growth opportunities
Justified by astute product focus and hardware revenues
Ecosystem metrics: Price
Price sustainability is an issue with 1000s of micro-partnerships
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A measure of the iPhone’s influence: Online references to HTC/Android G1 vs Apple October 2008/January 2009: Bought vs earned media
Ecosystem innovation metrics: Owning a transformational narrative - I
Apple iPhone 3g 1,216,794
Blackberry Storm 1,188
Android G1 93,228
Palm Pre 48,359
Source: The Conversation Group 38 | © 2010 nGenera Corp. All Rights Reserved.
Online references to Symbian, Android and iPhone in millions, April 1st 2009 to March 31st 2010
Ecosystem metrics: Owning a transformational narrative - 2
1.1
6.4
19.5
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Alignment with emergent values
– = Not evident = of average relevance = highly relevant
Ecosystem metrics: Alignment
Nokia/Symbian Android/Google Apple
Open
Altruism – –
New naturalism
Randomness
Individualism – –
Collaboration – –
Popularity –
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Lessons
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Lessons: Three styles of ecosystem strategy
NOKIA, global, across market segments,
income groups, price bands and service offers with diffuse ecosystem, poor
perception management
ANDROID, tight interaction between industry participants
for broad device distribution, improving
perceptions
APPLE, high end single product focus, multiple services; high
margins, targeted ecosystem, astute
perception management
Price
Models for sustainable competitive advantage
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Lessons: Ecosystem strategy
Polarization -uniqueness
Incumbent - scale
Chain and channel
Facilitation - reciprocation
Ecosystem strategies
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Lessons: Management
Invest in the relationship
cloud
Work with developer
meritocracies but create
wider values
Use platforms to structure ad hoc innovation
and revenue micro-
partnerships
Strategize around price vulnerability
Create downstream
metrics
The key tension point
Managing perception becomes MORE important Perceptions influence
relationships. An ecosystem is a diffuse relationship matrix.
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Question:
• System-wide innovation
• Access to free or very cheap labor and talent
• Unpredictability and random effects in a planned environment
• Labor market value-system realignment
• Adaptation to customer centricity and customer ecosystems
Does the ecosystem deliver?
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Some way to go with aligning the enterprise ecosystem to consumer ecosystems or in evolving a wider emerging value set
Lessons
Free labor/ talent/revenue
partnerships
1200 entries at ideas.symbian.org
< $8 million annual budget, 200 company members, 40 million
lines of codes, 29 innovations
Apple passes on $1 billion in revenues to micro-partners, 2008-
2010
200,000 Nokia Forum members
System wide innovation
Mobile transformation is global, sector wide
and extensible
Involves content (music), maps, geo-
data, augmented reality, autos, home devices, advertising
New hardware – software integration
initiatives
Mobile brain bank, Africa
Unpredictable innovation
iphone 250,000 apps
Price reductions from $250+ to $150 to $70
in a year
M-PESA, Kenya 17,000 micro-partners,
mobile money agents
Symbian contributions from TI, Sun,Ixonos
Labor market alignment
Brings enterprises closer to open source
values
Places too much emphasis on meritocracy
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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.
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Haydn Shaughnessy [email protected]
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