Digital Evolutions Startups, Platforms and Ecosystems

Mentorship Lecture - 25th/26th Sept. 2013

by Simone Cicero - meedabyte.com - @meedabyte

Exponential Times Digital Ecologies

Platform Design Thinking

Digital Evolutions

Understanding Dynamics

Exponential Times

everyone is networked with everithing

everyone is networked with everything

Tech Cycles (every 10 years)

Now it’s time for Wearable

Image from KPCB Internet Trends ‘13

Two main disruption drivers

A growing computing density in

matter

Growing possibilities in AI

and Machine Learning

Connectedness =

Sharing more and more

Text Pictures Videos Sounds Data

Consolidated Explosive Growth

Ramping up fast

Emerging Emerging

Mobile chats, Social

networks

Vine, Intenet Cams

Sound sharing,

video chats (eg: Snapchat)

Personal Tracking,

Quantified Self

Lifelogging!

Data is all & all is Data

Everything it’s personalized. Data are connected and socialized. Devices are allover the place. It’s the Digital Market today.

Nature Humans

Technology Interactions

“Order doesn't come by itself” Benoit Mandelbrot

chaos

“We're just increasing our humanness and our ability to connect with each other, regardless of geography” Amber Case, (Cyborg Anthropologist) - SXSW Keynote 2012

Non linear dynamics

It’s kinda hard to predict stuff

Illustration: Simon Wardley – blog.gardeviance.org

Digital Ecologies

All this demand for innovation drives componentization*

as a buyer you push down price and ask for standardization: this creates your competition.

* breaking down into cost competitive and interchangeable pieces.

Illustration: Simon Wardley – blog.gardeviance.org

Increasing competition in demand and supply

Red Queen Effect (evolutionary biology)

Regardless of how well a species adapts to its current environment, it must keep evolving to keep up with its

(also evolving) competitors.

competition = coevolution

Fortune 500 companies life expectancy in 2013 is 15 years.

Was 70 in 1930.

“Software is eating the world”

Marc Andreessen

Access +

Componentization +

Collaboration =

the highest disruption rate ever

Long tail = Diversification Diversification = Niches

Niches = Economies of Scope

“Whereas economies of scale for a firm primarily refers to reductions in the average cost (cost per unit) associated with increasing the scale of production for a single product type, economies of scope refers to lowering the average cost for a firm in producing two or more products”

The Age of Economies of Scope

Designers are increasingly dealing with designing tools that allow users to create

value on their own (and within a community).

Switching from Economies of scope (multiple products) to User Centric experiences (user

customizable products)

“Toolkits for user innovation allow producers to abandon attempts to understand user needs in favor of

transferring need-related aspects of product and service development to users

along with an appropriate toolkit". Eric Von Hippel

“Unleash your creativity by customizing select products to create exactly what you want with eBay Exact. Simply select a product, choose a design, and add your own personal flair to create a unique item for yourself or someone special”

"Once you finish assembling it, you’re emotionally attached to that. You’ve basically gone through the process to build your own phone”

Moto X head product manager - Lior Ron

tools

Facilitated Contexts/Channels

Consumers can also become Producers and Designers

themselves.

Roles can change

allowing peer to peer production

Understanding Dynamics

Digital Market: opportunities & huge competition What Dynamics?

Pioneers Thrive in uncertain times Search for Experimentation Accept Failure

Players that face poorly understood markets, trying to define gaps and opportunities, constantly undergoing changing dynamics and small numbers. They want to create the future.

Startups

Settlers Learn from feedbacks Investigate needs Spot new trends

Players that face increasing demand, growing market opportunities for mature products and revenues that grow accordingly

Platforms & Ecosystems

Town Planners Search for self disruptions Base business on measures and scientific models Optimize for operations

Leaders/players that face standardized demand and fight growing competition on mature markets. Always focus on essential cost of doing Business.

Ecosystems & Industrialization

The ILC Cycle

Illustration: Simon Wardley – blog.gardeviance.org

Innovate Leverage

Commoditize (repeat)

Facebook Doesn’t Want To Be Cool, It Wants To Be Electricity

FB Identity Services Opengraph Payment Services

Valu

e Ch

ain

Genesis Custom Built Product Commodity/Utility

Social Networking

Different Dynamics

Illustration: Simon Wardley – blog.gardeviance.org

Startups Platforms

Ecosystems

In the Platform phase you must - nurture community

- create community support services - identify emerging behaviors

- model channels to cope with interactions

In this way You increase resilience by enabling peer segments to

create their own interactions inside your platform

In the Ecosystem Phase you must - drive cost down and outperform competitors value

- be cool with utility like consumption patterns - allow new startups/platforms to grow and monitor

use case innovation

In this way You increase resilence by enabling other business

players to create complex higher value proposition on top of your interface*

Innovation happens:

• on top of the interface*: higher value systems (use case innovation) • under the interface*: process maturity, elastic provisioning, measuring (competition) Va

lue

Chai

n

*interface: a shared and commonly adopted or standardized protocol or practice

Arduino Most of the innovation happens above the interface (higher value: smaller size, specific features, etc…) as Arduino has become a standard community of knowledge (interface)

Microduino (microsize)

Flutter (long range)

Smartduino (modularity)

Amazon AWS Established Amazon Machine Images as the ruling interface in cloud deployments. Enabled the birth and growth of several (higher) value proposition. Commoditized specific frequent uses cases (eg: Elastic Map Reduce for big data = now a commodity).

Valu

e Ch

ain

Genesis Custom Built Product Commodity/Utility

Amazon Elastic Map Reduce

AWS Elastic Beanstalk (beta)

AWS OpsWorks

PaaS Currently

built on AWS

Spotted growing

usage

Joining an existing Platform and Ecosystem

(outstanding opportunities)

Typical Stakeholders and contexts: Over The Top players ecosystems

Brand related initiatives Corporate innovation strategies

Open ecosystems (rare)

The App Ecosystem & OTT Platforms Eg: Building Native Apps to be distributed on Android/iOS Marketplaces

Facebook Eg: Using Facebook Connect and Facebook OpenGraph to enhance social interactions as part ofthe proposition.

It’s not only about APIs: corporate players are

increasingly looking for innovation *ecosystems*

Telco players looking for service innovation Manufacturers creating new interfaces and ways to interact with their producs.

Brands with a growing user base looking for disruption. Emerging fields of innovation require a higher experimentation level and inclusive innovation plans

Typical Phases

is about builging

blocks & dev services

is about coaching,

infrastructure & customer

access

is about market

channels & numbers

Eg: APIs and Infrastructures

Startup programs, Events and

conferences, Partner programs

Marketplaces, distribution agreements

Platform Design

Thinking

Grow your startup/product into a Platform (and then, Ecosystem)

Transform from a linear/single gap perspective into multilinear

engine of value creation enabling Peer Segments to co-create value

Community (relations)

Centric

User (gap)

Centric

Platforms target P2P Communities: value creation comes from relations, transactions and exchanges

How to lower Platform opt in cost?

The cost/friction for a user to adopt your

platform and start creating value

It’s a (co) Design challenge

about understanding user contexts and motivations and enabling vaue creation

Some big issues in Peer Platforms:

Marketplace Liquidity Exchange Currencies

Coincidence of Interests Reaching Tipping Point

Some tricks

Start from building single user utility “It might seem odd that systems designed to leverage interactions between people should have single person utility. The first users of delicious were barely aware of and rarely used its social aspects. They just wanted to store their bookmarks in the cloud instead of in their browser. And they liked the tag based classification system. And they liked being able to use their links from any device. That was the single person utility delicious was built on.”

Fred Wilson (avc.com)

Add mutual value

“Users hate spamming friends. It was all fine to begin with when only a few services required them to send out invites but as every new service asks for an invite to be sent out, users get more discerning. Dropbox had a brilliant way around this by incentivizing not only the user but also the invitee when he signs up.”

Sangeet Paul Choudary (platformed.info)

Spillover (across clusters)

Sangeet Paul Choudary (platformed.info)

“The networks with the fastest growth are the ones that freely allow spillover. AirBnB, unlike Uber and OpenTable, has tremendous potential for spillover. The fact that the use case is travel makes such spillover organic to the network. The host and traveler will most likely be part of different city networks. Such cross-cluster interaction allows growth to occur without having to be confined within geographical boundaries.”

Though tricks may work, most of growth problem are contextual:

there’s no one size fits all recipe (though best practices count)

The right approach: methodologically focus on

identifying value exchanges and motivations

Design Thinking &

Platform Design

Understand the basic roles in the Platform

Consumers Producers Stakeholders (platform)

Valu

e Ch

ain

Explore the core value creation relation

Consumers Producers Stakeholders (platform)

Valu

e Ch

ain

Consider that additional roles may appear

Facilitators Curators Information Brokers Enabling actors

Valu

e Ch

ain

Identifying Peer Segments and relations between them and with the platform is key

Mapping Platform Stakeholder

motivations will give you insights on how to overcome chicken/egg problem and

other motivation related design challenges

Peer Relations live through

channels

peers

Channels must be implemented to

facilitate emerging value exchanges.

In platforms, currencies such as trust and reputation may be required to

facilitate transactions and should be clearly valued.

the Platform Design Canvas

(see http://goo.gl/GAi0K)

Rel. in June 2013 an iteration of the Business Model Canvas (see http://goo.gl/GAi0K) Key community Feedbacks: - doesn’t show logical value flows - BM Canvas structure not good for non linear business - doesn’t model platform lifecycle - doesn’t help to hack growth

Currently in the works:

Plaform & Ecosystem Design Toolkit

Key challenges

- merging service design thinking practices with platform thinking - no more a single canvas (but a toolkit) - looking to the different phases - multi-sided by design - focused on value flow visualization

Open for contribution (reach out)

3 Takeouts

Work like a Startup solve gaps and hack growth

Grow like a Platform nurture relations and exchanges

Think like an Ecosystem always disrupt yourself

Thanks! Get in touch and hire me for talks

and workshops on meedabyte.com

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@meedabyte workshops & consulting

If you enjoyed this don’t forget to like the presentation!

…and share on Social Media!

Special Thanks to:

Simon Wardley as lots of this is based on his insights Sangeet P. Chaudhary for the exchanges we had on platforms

Raffaele Mauro for the inspiration on trends

Pictures used (Creative Commons):

Thanks Grzegorz Łobiński for the traffic light picture Thanks alphabetta for the cat picture

Thanks USFS Region 5 for the butterfly picture Thanks ben britten for the rainforest picture

Thanks Andrew Feinberg for Zuckerberg picture