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Design Strategies to galvanize Ecosystems

Crafting a power "Shaping Strategy" and galvanize an entire ecosystem to join a platform for collaborative value creation is the new strategy to transform markets in the XXIst century.
Networked business models are transforming markets, communities and production through network effects.

Presentation given in Aalborg University for the BizMedia2016 Event

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Design Strategies to galvanize Ecosystems

  1. 1. SIMONE CICERO @meedabyte #PDToolkit Design Strategies to galvanize Ecosystems BizMedia Design ’16 Platforme & Co-Creation
  2. 2. This is an EXECUTIVE SUMMARY: Know more about the Platform Design Toolkit, get in touch with us and register to the Platform Design Newsletter at: WWW.PLATFORMDESIGNTOOLKIT.COM
  3. 3. PLATFORM DESIGN TOOLKIT - BORN IN 2013 TO HELP DESIGNERS The motivation matrix to look into motivations to participate The PD Canvas to map the whole of a multi sided platform model A BIT OF HISTORY Launched in 2013 in Barcelona Design Week Platform Design Canvas: a derivative of Business Model Canvas plus a Motivation Matrix Mission: help designers design multi sided business models, identify value flows and design channels accordingly
  4. 4. PLATFORM DESIGN TOOLKIT - MOVIGN TO POST INDUSTRIAL BUSINESS DESIGN Finally the digitally transformed economy is moving towards a post-industrial age Firms are less about organizing production but more into organizing interaction THE CORE IDEA BEHIND #PDTOOLKIT
  6. 6. A research study and model that described the five exponential growth levers identified after studying 50 organisations which have grown more than 50% in terms of revenue and number of users between 2008 and 2013. Result: growth is seen as a function of connectivity, enablement and empowerment of users and partners - a result of interaction and reach. MORE STUDIES: THE PENTAGROWTH THE PENTAGROWTH: GROWTH AS A FUNCTION OF ENABLEMENT AND INTERACTION
  7. 7. Asset Builders: build, develop, and lease physical assets Service Providers: provide services to customers in form of billable hours Technology Creators: develop and sell intellectual property Network Orchestrators: create a network of peers in which the participants interact and share in the value creation. MORE STUDIES: THE VALUE SHIFT Studied the history of business model and concluded that Networked Business models are the latest evolution in business models (better performances) “Our business model classification and analysis says that Network Orchestrators outperform companies with other business models on several key dimensions: higher valuations relative to their revenues, faster growth, larger profit margins.” (Deloitte and Open Matters Study) THE VALUE SHIFT: PLATFORMS ARE JUST THE NEXT EVOLUTION OF BUSINESS MODEL
  8. 8. “…an effort to broadly redefine the terms of competition for a market sector through a positive, galvanizing message that promises benefits to all who adopt the new terms” from Deloitte’s “Business ecosystems come of age” A SHAPING STRATEGY TO GALVANIZE PARTICIPANTS
  9. 9. “…the ability to change how an entire marketplace operates and capture more value by doing so…restructure entire markets and industries by designing new platforms and offering powerful incentives to motivate third parties to participate on them.” from Deloitte’s “Business ecosystems come of age” A SHAPING STRATEGY TO GALVANIZE PARTICIPANTS
  10. 10. WHY DO PLATFORMS WIN? Empowering the ecosystems by creating a space where relationships and exchanges can flourish brands can multiply their potential to shape markets beyond their potential “industrial” reach PLATFORMS HELP BRANDS REACH UNTHINKABLE RESULTS
  11. 11. The PLATFORM is a tool to let the Firm access the ecosystem The boundaries of the firm overlap with the boundaries of the Platform The evolution of the platform is to reach bigger ecosystems FIRMS BUILD PLATFORMS TO ACCESS ECOSYSTEMS
  12. 12. “In many ways, [platforms like] Uber and Airbnb represent a 21st century update of the franchising model. In franchising, the parent company brands and markets the product, sets standards for producing it, and charges a licensing fee and receives a percentage of revenue... [now] technology radically lowers the barriers to being a franchisee. In many ways, you can call the modern trend 'the franchise of one.'" Excerpted from: ”Networks and the Nature of the Firm” TIM O’REILLY ON PLATFORMS THE FRANCHISE OF ONE
  13. 13. Increasingly the tradeoff between coordination (through platform) and motivation (through a shared marketplace) works better than the extremes (industrial firm or open market) THE NATURE OF THE FIRM IS CHANGING IN THE MIDDLE BETWEEN COMPANIES AND MARKETS
  14. 14. Geoffrey Moore “...the nature of the firm itself is changing: this changes are deeply disruptive to the hierarchical management structures and are changing the inner working of the firm itself.”
  17. 17. “We’ve been seduced by the deep discounts, the monthly automatic diaper delivery, the free Prime movies, the gift wrapping, the free two-day shipping, the ability to buy shoes or books or pinto beans or a toilet all from the same place. But it has gone beyond seduction, really. We expect these kinds of conveniences now, as if they were birthrights. They’ ve become baked into our ideas about how consumers should be treated.” Franklin Foer THE NEW DESIRABLE
  18. 18. FAST
  19. 19. PERSONAL
  20. 20. RELEVANT
  21. 21. HUMAN
  23. 23. We become what we behold. We shape our tools and then our tools shape us A SELF REINFORCING SHIFT
  25. 25. Providing personalization for each customer can be hard with industrial approaches: the cost of variants for small/niche customers may harm revenues and make it “unworthy” WHY DO PLATFORMS WIN? PLATFORMS MAKE THE LONG TAIL SUSTAINABLE FOR BRANDS
  26. 26. WHY DO PLATFORMS WIN? Peer to peer helps create human & personalized (long tail) experiences in ways that are impossible in a centralized way. With less bureaucratization and less capex required: through design. PLATFORMS MAKE THE LONG TAIL SUSTAINABLE FOR BRANDS
  27. 27. “What assets were for the industrial firm, network effects are for the post-industrial firm” Esko Kilpi
  28. 28. “The main mission of platforms is to make network effects possible” “Platforms are the best means to flourish and create growth in low transaction cost environments, the same way as the industrial firm was the best means to flourish and grow in high transaction cost environments.” Esko Kilpi
  30. 30. WHAT IS A PLATFORM? “...business models that allow multiple sides (producers and consumers) to interact [...] by providing an infrastructure that connects them” Sangeet Choudary Author of “Platform Scale”
  31. 31. “...a governance structure that determines who can participate, what roles they might play, how they might interact, and how disputes get resolved plus additional set of protocols or standards typically designed to facilitate connection, coordination, and collaboration.” John Hagel’s definition excerpted from: ”Business ecosystems come of age” WHAT IS A PLATFORM?
  32. 32. Aggregation Platforms - focused on simple transactions, connecting users to resources mostly in Hub and Spoke - middleman/gatekeeper - fashion (Eg: Apple, Airbnb) Mobilization Platforms - helping people to “act together”, fostering long term relationships (Eg: Linux, Li & Fung) Social Platforms - focused on social interactions, connecting individuals to communities, tend to foster mesh relationship networking (Eg: Facebook) Learning Platforms: facilitate learning, bring participants together to share insights, foster deep/trust based relationships, help participants realize more together and hone their capabilities (Eg: World of Warcraft) J.HAGEL’s TYPE OF OF PLATFORMS WHY DO PLATFORMS WIN?
  33. 33. WHY DO PLATFORMS WIN? Platforms support participants (individuals and companies) hone capabilities and improve performances providing an effective answer to the pressure coming from digital disruption PLATFORMS ARE POWERFUL ENGINES FOR LEARNING
  34. 34. THE PLATFORM DESIGN CANVAS 2.0 Used to map the overall platform’s dynamics, important resources and enabling and empowering potential - helps understand if the platform is doing its job of sustaining the ecosystem in value production with enabling and empowering services that the platform should provide SKETCHING THE PLATFORM OVERVIEW
  35. 35. ROLES IN A PLATFORM Platform Owners Stakeholders Partners Peer Producers Peer Consumers players who owns the vision behind the realization of the market and ensure that the platform exists entities that have a specific interest in platform success or failure, in controlling platform externalities and outcomes professional entities that seek to create additional professional value and to collaborate with platform owners with a stronger relationship entities interested in providing value on the supply side of the ecosystem/market place, seeking for a better performance entities interested in consuming, utilizing, accessing the value that the is created through and on the platform SUPPLY DEMANDIMPACT KEY ROLES
  36. 36. TWO MACRO TRANSACTION TYPES, EXCHANGES AND SERVICES Peers and Partners in the platform should be able to exchange value in peer to peer. Multiple, coordinated transaction-exchanges make up more complex experiences: here’ s where design is key EXCHANGES
  37. 37. TWO MACRO TRANSACTION TYPES Channels and contexts allow exchanges to happen inside the platform with negligible friction. They are key to allow value creation: the platform should actively create and improve them all the time CHANNELS & CONTEXTS
  38. 38. THE ESSENTIAL TOOLS Exchanges happen between peers (and partners) through channels (more formal) and context (more intangible, informal). EXCHANGES
  39. 39. THE ESSENTIAL TOOLS The right side of the Canvas is used to model all the P2P dynamics, peers exchanging value with partners and other peers in p2p fashion, through the channels and contexts designed for that, sharing value and currencies. THE RIGHT SIDE
  40. 40. TWO MACRO TRANSACTION TYPES Support services (empowering and enabling) must be provided by the platform to support producing participant’s (peers and partners) continuous performance improvement (through learning) (SUPPORT) SERVICES
  41. 41. TWO MACRO TRANSACTION TYPES Continuous performance improvement is key: the most successful platforms help consumers become producers and producers become partner LEARNING
  42. 42. TWO MACRO TRANSACTION TYPES In many cases platforms provide “complementary”, traditionally organized (industrialized), services for peer consumers They complement the value exchanged; they represent strong single user utility (CENTRALIZED) SERVICES
  43. 43. THE ESSENTIAL TOOLS The platform provided services can be towards producers and consumers. Each service cluster on the canvas is linked to the entities (consuming and producing peers and partners) on the right. COMPLEMENTING WITH PLATFORM PROVIDED SERVICES
  44. 44. THE ESSENTIAL TOOLS THE LEFT SIDE The left side of the Canvas is used to model all activities that the platform needs to put in place to support value creation and complement consumption in the ecosystem.
  45. 45. THE ECOSYSTEM CANVAS Used to map all actors in an ecosystem and what role they play in it MAPPING ROLES
  46. 46. THE ECOSYSTEM’s MOTIVATION MATRIX Used to dig deep into the motivation that push entities in the ecosystem to participate: tracks the advantages in participating (needs met, opportunities provided, positive outcomes) and what each entity can “give to” others UNDERSTANDING MOTIVATIONS & INCENTIVES
  47. 47. PLATFORM DESIGN TOOLKIT - BORN IN 2013 TO HELP DESIGNERS THE PLATFORM DESIGN TOOLKIT 2.0 (DRAFT) A revision of the type and set of key ecosystem entities A bigger set of canvases 3 Essential 2 Advanced More holistic point of view ADVANCED ESSENTIAL
  48. 48. LET’S REFLECT FOR A MOMENT: THE KEY TAKEOUTS OF PLATFORM DESIGN Long tail customer can be profitable with peer to peer Platforms help brands serve long tail customers: peer to peer transactions help create customized experiences in ways that are impossible for brands to provide traditionally Humanize services with peer to peer Peer to peer is the best way to humanize service personalization achieving mass market personalization going beyond marketing options overload Shaping strategies A market galvanizing shaping strategy is essential to conquer and transform markets: designing incentives matters more than building technologies Enabling a learning process is key Learning is an essential trait of platform shaped markets: in times of performance pressure, a learning process becomes the key product you're offering on a platform Centrally provided services can complement peer to peer interactions On platforms is the combination of centrally organized services and peer to peer transactions that makes the value proposition
  50. 50. This is an EXECUTIVE SUMMARY: Know more about the Platform Design Toolkit, get in touch with us and register to the Platform Design Newsletter at: WWW.PLATFORMDESIGNTOOLKIT.COM
  51. 51. Thanks Know more about the Platform Design Toolkit, get in touch with us and register to the Platform Design Newsletter at: www.platformdesigntoolkit.com hello@platformdesigntoolkit.com
  52. 52. Thanks Picture Credits: NOAA Photo Library https://goo.gl/0gUQTH Eduard Lefler https://goo.gl/T7GwHv