Ecosystems or Egosystems?

• Notes from a session by Michael  G. Jacobides, Professor of Strategy and Entrepreneurship, London Business School
• As part of its ‘Beyond connectivity’ track, Michael contributed a talk to the TM Forum's Digital Transformation World event on 'Becoming an ecosystem partner'

Essentially it was: Step 1 find out what customers might really want from you, Step 2 drop the buzzwords, Step 3 define your plan and execute. Out of those steps, dropping buzzwords might be the most valuable. 

Michael says ‘ecosystems’ are exciting but also prone to misunderstanding. 

“The problem many people in telecoms and allied bits of the industry have with the big tech companies is that they can see telco and vendor revenue share shrinking as these companies rise. In so doing they are changing the connection between customer and service provider. Those big companies want to be the interface between you and the world. Some of them use conventional  relationships or vertical integration, but others are using ecosystems - groups of firms that work together in a specific narrow way - in order to create a collective outcome.” So are ecosystems an  unalloyed success?

You guessed it... No.  

Michael points out that the more you broaden your ecosystem approach  the more you need to bring more people/companies in to meet your objectives. It often doesn’t work out well. He says he sees the resurgence of the walled garden idea where there’s a belief that telcos should be able to offer it all regardless of the quality of execution. 

“Think about Nokia and Symbian when it had 63/67% of the Smartphone OS market -  then Google came in. Then think about Microsoft’s missteps with its attempts at ecosystem building with its smartphone operating systems."

Michael says he thinks firms are often working on their ‘egosystems’ rather than their ecosystems. “They put themselves in the centre and say: “Yeah , here I am, I can provide stuff so people should be flocking to the thing I’ve  offered them.  But unfortunately this is not the case, it’s not the way that things work.“

“You actually need to think about what the customers really want. You need to focus on them and then create the bundles they want by selecting and convincing the desired partners to come and join you.”

In other words you don’t set out to build an ‘ecosystem’. Rather you think hard, build relationships where you need them and, if that looks like what you thought an ecosystem was, all good. But be sure to do it that way around rather than simply saying:  ‘I’m going to compete and offer an alternative because i really don’t like these people that have this great big market share.”

Another trap here is what he calls the Le Bron James (basketball player) fallacy. “The problem is that many companies look at Facebook and say to themselves, “Ha! They make a lot of money and we don’t. So we have to do exactly what they do. Which is kinda like saying Le Bron James is a very successful basketball player because he shoots from 7 metres out from the basket.  I’ll tell my son that he should shoot from 7 metres!” 

“The problem here is that everyone is obsessed with the idea of becoming an orchestrator rather than how to think about complete ecosystems.  They think that just being an orchestrator is all you need. “

Not a good idea 

The rules: First of all you need to think of a systematic set of questions to ask. “I’m afraid there’s a lot buzzwords out there rather than actual stuff,“ he says. Rather than adopting buzzwords in an attempt to define your approach, “you need to simply understand what you’re doing and how,”