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Ecosystems will be a key differentiator in the next 5-10 years

Episode 18, Part 2/2 of our conversation with Oliver Wright, MD and Global Lead for Consumer Goods and Services at Accenture.

Partner ecosystems are time consuming to build and challenging to manage. But this trend is crucial to understand to succeed in the post COVID world.

In the words of our guest, Oliver Wright, “It's going to be one of those things, which will become amongst the biggest strategic differentiators of players across a whole range of industries for the next five to ten years. This is a big theme.”🚀

Continuation of part 1

Oliver, what I sincerely want to understand is, in your report more than 50% of executives mention that they are actively thinking about ecosystems. Do you see that wave of activities happening already?

I think there's two things happening. One is, there's increasing recognition across executives that this external orientation, these linkages to these partners is something that they should be doing. So, I think that that conversation, that thinking, is largely there. The degree to which that's translating itself into large changes in the way in which people are actually operating, there's still a lot more to do in that space. And what I would describe as happening is, in some cases is what I would describe as “fence peering”. So, you've got big players who are very interested in what other players are doing in this area. You know, where might we be able to operate? And so on and so forth. Which is the reason why there's so much interest from the WEF side around this research, as a mechanism to start to understand where those linkages might be. And this is both big players with small players, this is big players with each other, this is consumer with retail, you know. This is potential linkages with other industry boundaries, and so on. So there's lots of what I would describe as exploratory conversations going on in this whole area.

You mentioned that it is challenging, and we also see that it is challenging for companies to shift into this open and more collaborative mentality. What are the best examples of how companies can actually speed up this tradition?

So, I think there's a few things here. One is, what we're typically saying is when companies express an interest in doing it, the first thing we start to say is, the first question is, "What are the big rock problems you're looking to solve?" Back to my earlier comments at the start, this has to be something which has a very high level of gain to overcome some of that initial inertia. What are those big rock problems? And, what we typically suggest is, things that are very directly linked to customers or consumers. So if I think about this in the context of a consumer goods company, this could be something like, a question that's as simple as, "How do we identify stores that may be opening over the next two, three, four, five months that we should have our products into?" So, if you've got somebody who's setting up a new store, how do we get there quickly? How do we then get our footprint into that place in the right way so that they assume that ours is going to be a critical part of the assortment that they carry and that we have the appropriate level of positioning, right? And so, in those questions they're then saying, "Okay, you know we could just wait for people to approach us, or what is it that we could actually do to think about a range of potential relationships that may allow us to get advanced warning when therefore, we would get preferential treatment, where they would list our product ahead of one of our competitors", for example. And so, the sort of thing that's emerging is people saying, "Okay, well hold on a second, if we were to do that, who would be the network of relationships that might be actually useful to be able to work in that way?" So there's specific, simple examples like that. That would be the first thing.

Second one is when people are then saying, "Actually we recognize that this is something that we will potentially need to do across a broader part of our value chain. Particularly if we get into the creation of new business models." So, the way that this is, again as a simple example, I'll give you a couple. One is, there's a company that we've worked with called Peerspace, and what Peerspace do is they let out, they look at non-traditional meeting space. And so this is things like identifying space in art galleries, in football stadiums, et cetera. They've taken some of the very large old format Walmart stores and looked at what they could do with them, et cetera. And what Peerspace have done is when they look at a potential new business opportunity, rather than trying to take people from within their core Peerspace team to look at that opportunity what they say is, "Let's think about the network of players who might be optimally suited to explore it. Let's assemble them, have them work on that idea, if it works then we'll scale it, and if it doesn't work then we'll close it down." But, they're using an ecosystem model to very directly drive the growth of something very rapidly with the best expertise, right? And then you get other examples similar to that, where companies are saying, "We want to get into a new business model space, so tell us who all the potential partners are that we could work with through every step in the value chain. And then we'll look at where we would decide we need to participate in that process."

So a company might say on the call, "We're going to definitely own the marketing piece but we're not going to own R&D or distribution, or the sales side, et cetera." And so, they're making those choices by understanding, what are the potential relationships that you could build in that way? And then they are saying, "Okay, let's actually make sure that those relationships we have with all those players that we set up in the value chain are very driven to the idea of the mutual benefit." So it's getting them engaged heavily into that thought process.

Where would you recommend our viewers to educate themselves in terms of ecosystems beyond your report and following you?

What I'll do is, there are a number of things that I think people might find interesting to read. So, what I'll do is I'll get that forwarded to you and you can list that out as a link to this site. The thing I would say, though, is this whole area is moving very quickly. And so, the best examples actually are ones where you start to look at some of the companies that are emerging, that you haven't necessarily heard of in the past because they are almost all using these sorts of relationships. I would strongly suggest moving away from the, kind of, the Apple and the Amazon type conversations to thinking much more about some of these more emergent players. I think that the piece that we wrote in HBR last year would be useful, and I'll get that listed for you. But, there are a range of pieces in this area. And the academic research is quite interesting, but, as I said, this field is moving very, very rapidly. So, a number of the things that you may read may still confuse the link between platform and ecosystem and the depth of things that are evolving. As I said, this seems like it's going to be one of those things which will become, amongst the biggest strategic differentiators of players, across a whole range of industries for the next five to ten years, this is a big theme. And I think, in general, in academia, and in business as a whole people are slowly waking up to that. But this curve has happened really quite quickly.

If I'm an executive and I'm super keen to, at least, educate myself and maybe, try it, I will follow you as a thought leader in this area. But then, who are the people you are following for example?

Well, what I've been doing mostly is obviously, I'm very focused on commercials. So what we're looking at, really, is not so much what a lot of the academic theory in this area is. But actually, really directly observing companies that we see as rapidly expanding in this space. It is organisations that are doing this in a whole range of ways, across these different things. Whether that's in R&D, whether that's in data sharing, whether that's in the creation of new business models, whether that's capability building, et cetera. So, what we're doing is very much an exercise to understand what are the different types of problems that ecosystems are solving. And then understanding what some of those leading practices are and then engaging with those folks. And there are these patterns of different types of ecosystems that are emerging. But I would say that, as I said, this is an area where it's really moving really quite quickly. And so, I would just urge people to do, as they're looking at companies that they are particularly enamoured with, to say to what degree can they see these sorts of trends, these sorts of ideas emerging? Because as I said, almost all the ones that we've seen that are achieving the highest level of growth have got this in their model somewhere. But they may not be necessarily talking about this formally. But when we start saying to them, you know, "What is your ecosystem? And this is what we mean by ecosystems." it very rapidly becomes, "Okay, got it, okay this is what we're talking about" And so on. So it's where we're seeing, I think, in some ways the practical application of it is gone ahead of where a lot of the writing is.

Oliver, can you please share a bit more about your work which you are doing with the World Economic Forum and specifically, on ecosystems?

As a lot of your viewers will know, the Forum is a convening body for industry leaders, government leaders, and advocates, et cetera. And they have a big annual event at Davos every year. They also operate ongoing interactions with industry players, and one of the things they're doing right now, which we're supporting, is their response to COVID-19. And within that they organise, obviously as a series of areas to focus attention. Including the whole area around consumption, which includes the big consumer goods companies like Unilever and Nestle and Proctor and Gamble. It includes the big retailers, like Walmart. And then obviously it also includes the big e-commerce players, like Amazon or or Alibaba. And that's the group that we're mostly focused on. And within that, they've asked us to look at the evolution of how they see ecosystems, playing forward. And for two reasons, one is obviously that it is an opportunity for there to be much more non-competitive collaboration across the industry to help to do things that would actually be in the interest of society as a whole. But also we think things like C-19, it gives them the ability to think about how can we, as an industry, overcome some of the internal challenges that we've had, that have prevented us from responding to challenges like this, to the degree in which we should? And as I was saying when we started the conversation, this idea about using this crisis that this crisis has raised questions about, how should we work and act differently? It's clearly accelerating those questions. So what they've asked us to do is, to basically work with them on some thought leadership about how do we see ecosystems evolving going forward? And where are those opportunities, particularly where players have the ability to work together to achieve a higher level of public good?

That's actually very interesting. My quick last two questions. First is, going back to how people perceive ecosystems they think typically about big tech companies. What other industries do you think are on the frontier of this ecosystem thinking?

It's almost a direct relationship between areas where there is a very rapid rate of the introduction of technology, and where you've also got a strong interaction with consumers. So, if you think about areas like health and life sciences, obviously retail is a big one. And I would say less so in areas like, you know that are more B2B driven. In utilities, some of the heavy manufacturing, chemicals et cetera you'd see some of it a little bit less. But where you have this ability to very rapidly get feedback from customers or from consumers, where you have the ability to introduce new business models which you can very rapidly test. That's where you see a lot of these potential green shoot areas. So, it's going to predominantly more lean to B2C, than it will be typically B2B on its own. But if you think about, as I said, those areas where you can potentially deploy technology in a differentiated way, that's where you're particularly seeing these emerge quickly.

Brilliant. Thank you for sharing your insights. My last question is what is your one piece of advice? If you had a chance to just give one piece of advice to executives who are interested in the ecosystem, what would be a one-liner?

The big thing I would say is, external orientation. If you look at the way in which folks spend their time, what we see is a characteristic of those that get this, is the percentage of their time that they spend during the week, understanding what's happening outside the four walls of their own organisation. So they can tell you what the major technology fairs are or the major ways in which people are getting information. They can tell you where they've had direct interaction with a lot of the smaller scale companies that are disrupting their space, et cetera. It's that idea of actually having a clear mindset to say, "I have to designate three, four, five hours a week "to think about, what are these things that are happening?" And then to make very active decisions as to whether they're going to do something about them, or ignore them. Because what we know is that the people that have basically seen some of these disruptions and said, "Oh, you know, I can't get to it now." or "It's, I'm really not sure." Or that sort of thing, or treated them in a very traditional way, have been those that have very rapidly lost market share. And that's been one of the big wake-up calls. So for me, the headline is, "What are you doing, formally, to understand the world around you, as a core part of the way in which you see yourself as a manager and a leader?"


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