Ecosystems: The Future Of Work Or The Next Management Buzzword?
We were invited to the Imperial Palace in Vienna! If this sounds an unlikely place to do research on business trends, let me explain. This palace is home to the Drucker Forum, and we were invited by Haier as part of the research we are doing with them. This year’s theme was “The Power of Ecosystems. Managing in a network world”.
It’s good to remind ourselves that Drucker was famous for saying “Most of what we call management consists of making it difficult for people to get their work done”, and “Everyone can be a CEO”. We were curious to see how these ideas were addressed in the Ecosystem approach to doing business!
What are Ecosystems?
This apparently simple question was not given much attention at the forum. Yes, we learned Ecosystems are “vital”, “very important”, “good for everyone” and “absolutely necessary to survive”. But that says little about how they work, or what they are.
Julian Birkinshaw, Professor of Strategy & Entrepreneurship at the London Business School, warned we should be careful about using ‘ecosystems’ as a buzzword. Duly noted. So let’s try to explain them in a down-to-earth way, and invite your comments.
Here’s a simple interpretation. Ecosystems are open systems in which living organisms have struck a balance between resources and their consumption. In natural ecosystems, resources are transferred by organisms consuming each another, or benefiting in other ways. For example, a cow eats grass, then takes a dump and adds nutritients to the soil. The same is true for organisms that die. It’s not so good for the individual animal, but the ecosystem benefits.
Balance is key. If balance is disturbed by outside forces these can disrupt a larger Ecosystem. If you wonder how that could happen you should read this article that focusses on a different kind of buzzzzzword.
Business Ecosystems are different from ecosystems in nature. Nobody benefits if a colleague takes a dump in the corner office! So, how do they work? According to examples shared at the forum, similar principles apply, and two components need to always present be in such a system. Zhang Ruimin, the CEO of Haier, made those components explicit:
- Ecosystems should enable companies to evolve together. They should focus on co-creation rather than competition.
- Value created in the ecosystem needs to be shared so everyone benefits. And we mean the whole system. That includes producers, users, suppliers, employees and anyone else involved with your business.
Zhang: “We don’t want to create a walled garden. We want to create a rainforest”. In a rainforest, while a tree might die, it still adds to the health of the ecosystem and enables other species to thrive. In a walled garden a few crops might grow, but they can be destroyed if some metaphorical snails find a way in.
As you know, we like theories, but we love seeing them in practice even more. Luckily, a few practitioners shared their experiences.
Haier’s Internet of Food
Haier has been researching ecosystem principles. One example is “The Internet of Food”. They designed and built a fridge that can recognize the ingredients you have, access a database containing recipes from your favorite chef, and then advise what you can cook with those ingredients. And if any are missing, you can order these from a shop nearby, and even have them delivered.
Haier provides the platform on which different businesses (some owned by Haier and some not) can collaboratively solve user problems. They believe these problems can be solved by successfully integrating resources from different industries. And with an average price of ~$60,000 for the appliance, it seems users agree with that reasoning.
Vint Cerf, VP and Chief Internet Evangelist at Google, argued that Ecosystems need to be a “Harmonized Group of Elements”. He used Lego as an example: although the pieces are different, they can fit together. Google is trying to emulate this approach in its cloud services, by making the clouds interact with each other to offer users more choice. This is instead of being stuck with one company/app/cloud service because you once stored data there, and hesitated to transfer it. Unfortunately Vint didn’t offer detail on how Google is realizing those ideals, which makes it hard to see how their approach works. Will they, like some other ecosystems, open up their boundaries for collaboration with other companies?
A completely different approach to the “ecosystem-approach” was that of Dutch health-care organization Buurtzorg. Founder Jos de Blok shed light on their approach. “Keep it small. Keep it simple. We have 15,000 employees, 50 back-office employees, 21 coaches & 2 directors.” The nursing teams have a maximum of 12 nurses (”Because we couldn’t find bigger tables at Ikea!”). They collaborate with patients, their families, and other care providers to get them up and running and independent again, as soon as possible.
Buurtzorg’s IT system supports transparent interaction between families, caretakers and patients, to create a community around each patient. This leads to customized, really unique care. When one patient mentioned that there were no races for older people, nurses organized a “walker-race” on an official racetrack. The result? A lot of elderly people practiced hard to compete. This helped their overall physique. But most of all, it was a bonding experience for nurses, patients and families.
Buurtzorg’s role in this is that of enabler, making sure that there is enough autonomy for employees to take the initiative, and then by providing resources and tools for sharing information.
Can I ask you something?
It was really interesting to hear these examples. But unfortunately, most panels ended without much discussion or critical questions. We felt that was a missed opportunity, especially at an event that was named after someone who was famous for helping CEO’s by asking them the right questions. Asking questions is absolutely essential if you want to challenge the status quo and give people new insights, doing that will ultimately lead to change.
Question the buzzwords!
So, the next time someone introduces you to a “vital”, “very important”, “good for everyone” and “absolutely necessary to survive” way of organizing, such as the Ecosystem approach. Make sure to question how all stakeholders benefit, or if it’s simply a strategy used by a single company to acquire more and more resources, thereby disturbing the balance.