You Asked, We Answered: Questions On Ecosystems with Dartmouth’s Ron Adner Rita McGrath
Ron Adner’s latest book is chock a block full of concepts, frameworks, and examples that lead you to rethink the taken for granted assumptions about what happens in business, by looking through an ecosystem lens.
For instance, why is TomTom still a viable business in light of Google and Apple literally giving away for free what generated all their revenue? Why did Spotify have to trim back its plans to become an intermediary between artists and audience?
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Defining an ecosystem and the threats within it
Question: How do you define an ecosystem, in your words and experience?
Before you get to defining an ecosystem, it’s important to understand a few other concepts first. The place to start is with an understanding of the value to be created by the ecosystem, or the value proposition. The formal definition I use is: A value proposition is defined by the benefit that the end consumer is supposed to receive from your efforts. An ecosystem, then, is how this value proposition is delivered and by whom. The definition for that is: An ecosystem is defined by the structure through which partners interact to deliver a value proposition to the end consumer.
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Question: You point to the threat coming from your partners within the ecosystem. Is it a bigger threat then the competition from other ecosystems?
Not necessarily, although in a concept described by Ron as “value inversion” one or more of the partners in an ecosystem take actions that destroy value for others.
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Question: So what is the difference to the “The Value Net”?
The idea of a “value net” was articulated by Adam Brandenberger and Barry Nalebuff in their highly impactful book “Co-Opetition.” They suggested that to understand the competitive playing field, strategists need to also understand the gains (or losses) to be had by cooperating, to some extent, with potential competitors and showed how this could be applied in strategic analysis
BLIND SPOTS
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Question: What do you feel is the reason that the Kodak CEO could not see around corners?
The snarky answer to this is, because he came from HP and printing was the world to them! He built his whole career on success in the printing business and only departed the company when he lost out to Carly Fiorina in the bid to become CEO. CEO’s backgrounds often influence the strategies they pursue at their firms, even when they move to other firms.
STRATEGIC CLARITY AND ECOSYSTEM EVOLUTION n.5
Question: Can you talk about Peter Drucker’s observation that many companies do not know their objectives or their strategy?
It is not uncommon, particularly in far-flung parts of an organization, for people to express confusion about what their strategy is. It would be a mistake, however, to attribute most causes of corporate failure to CEO cluelessness – you don’t get those jobs without a hefty measure of capability and competence. Instead, there can be many other issues that lead to confusion, among them the necessary unfreezing of a strategy that occurs as an ecosystem evolves and changes.
A QUOTE TO SHARE n.6
Question:Question: One of my favorite quotes from Strategy class at Tuck (2014) is: “if you have to between good luck and great strategy, always pick Is there a Adner corollary to that quote stemming new book?
Ron Adner’s choose good luck.” from the
Yes! “Why does good strategy matter? Because every time someone says the word ‘pivot’ an entrepreneur loses equity.”
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SHOPIFY – A STELLAR EXAMPLE!
Question: Can you tell us what you think about SHOPIFY. It appears to be competing strongly in many different ecosystems – piggyback on bigger ecosystems (e.g. Amazon) while delivering what ultimately will be a superior value proposition across time and space
Brilliant! A poster child for ecosystem – offense and defense.
DUGGAN’S INSIGHT MATRIX AND THE AMAZON FIRE PHONE STORY
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Question: Question: Is the Amazon Fire story and it’s spread out to success via the technology an example of William Dugan’s“Elements” that can form into something new, useful and maybe magical?
Yes! For those that don’t know it, Bill breaks down strategy into different component problems that can be solved. In a great framework called the “insight matrix,” he shows you how to break a big, gnarly strategic topic into manageable chunks, allowing you to find solutions from a variety of places and then recombine them. Read the article in the link for insight matrix for details on how to use it. Here’s what it looks like:
MICROSOFT’S RADICAL SHIFT OF DIRECTION n.9
Question: This is excellent. How does Satya Nadella’s instructions to Peggy Johnson in 2014 that competitors can be “friends” in certain arenas and contexts. This inflection must be part of this story
One of Nadella’s breakthrough moments was when he spoke at the Salesforce conference demonstrating Office on an iPhone – breaking multiple taboos in a single moment. This is core to the advice given in Chapter 6 of the book.
Winning the Right Game sheds a new light on strategy and competition in ecosystems. It is a perfect complement to Ron’s earlier book, The Wide Lens: What Successful Innovators See that Others Miss, which focused on innovation in ecosystems. Interested in more? Another great perspective on value creation through interactions vs simple product and service attributes is offered by Erich Joachimstaler. You can watch Rita’s Friday Fireside chat with Erich here. A whole new world for strategy!
A new perspective on strategy
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