“The Ecosystems strategies and their implications ”

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Didier Marlier

October 05, 2012

From Disruption to Engagement

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Synchronicity: I met some weeks ago in Rio, a friend who is the program director for one of France’s Business School’s Executive MBAs. The highlight of their Brazilian tour had been to challenge participants in the field of strategy and move them from egocentric strategies to ecosystems ones.

I then boarded a flight after having run a morning session with Brazil’s CFO association (Instituto Brasileiro de Executivos de Finanças) which central theme was the evolution of the CFO role in the emerging Open Source Economy…The theme which strongly emerged at the end of our discussions was that, if leaders should continue to flex their style to match the need of their followers (such as in the old Situational Leadership model where the leader needs to take a directive, “Telling” style, a convincing “Selling” one, an engaging “Coaching” one or a devolving “Delegating” one, depending on the urgency of the situation and maturity of the followers), the CFO’s present recognized that the radical challenges posed by an ever accelerating and more disruptive Open Source Economy, would be a radical mindset shift in strategy and that it would, as a consequence, request that leaders not only “lead in function of their people but also with the fast changing outside in mind”…

The strategic mindset shift is that, increasingly, strategies will be more of “ecosystems” rather than egocentrically focused. The most vivid example that comes to mind are the three competing operating systems in the mobile phone industry, Apple, Google’s Androïd and Microsoft’s. Where would Apple be if it had designed a strategy based on its own hardware and software capabilities? The genius of the Cupertino brand was to think wider, in ecosystems terms and integrate the applications’ developers in its universe. Google has done this for years and applied it to its Androïd operating system.

Strategies that focus and build from an egocentric perspective (like a SWOT analysis) may be suboptimal in a world of interdependence such as the one we are heading for. Egocentric strategies belong to the 1.0 ways of thinking and beliefs: MY company, MY I.P., MY capabilities, MY customers, MY suppliers… Ecosytems strategies belong to the Open Source way of exploring the world: our mutual benefit, our openly shared knowledge, what is good for you is good for me…

Ecosystems strategies have several implications for leaders:

  • It was strongly reinforced that, as Business Futurist Gerd Leonhard has been claiming for years, “Trust would become the new currency”. Ecosystems strategies will require unconditional trust amongst partners. And under today’s unequaled scrutiny of all sorts of media and public, trust and transparency are tested at every moment. The recent story of that unfortunate schoolgirl in a miserable neighborhood of Florianopolias (Brazil) was in everybody’s mind: In a record of time, the unacceptable conditions in which her school was forgotten by authorities traveled the world as one of the most successful viral videos of 2012… Not a very nice visit card for a country about to host the next World Cup and Olympics… The students elementary and basic needs were met in a record of time. The surprise must have been huge for the so called responsible authorities. The whole world knew before them of the miserable conditions in which their pupils were kept…
  • Scanning the periphery and challenge orthodoxies: in order to design a relevant ecosystem, leaders will have to continuously scan the periphery and question their long time held beliefs about what their core business is and where customers intend to take it… When seeing how everybody in the mobile phone industry now talks about ecosystem just to describe their company and the way it interacts with independent applications designers, may suggest that a new and original ecosystem is about to emerge in an already aging industry.
  • The complexity of these interacting, interdependent ecosystems is unmanageable for even the smartest executive teams. The metaphor I like to use is the one of our brain being over flown by 11 million bits of information/second. Following neuroscientists, our conscious brain is only able to process consciously… 40 of these per second… So how does the rest of the body react to this??? Does it sit and patiently wait until the conscious brain has solved its backlog issue? Or does it have a sufficient understand of our whole body’s higher Purpose (to keep us alive and healthy!) that it may operate from its own intelligence? This is just a metaphor but it illustrates well the dead end in which 1.0 leaders, unable or unwilling to develop an intelligent organization and the people that go with it, are locking themselves in…

So what are the implications in terms of culture and leadership? The recent and fascinating CEO’s Survey run regularly on a worldwide basis by IBM and which results were presented at the CFO’s  Conference, shows that one of the fundamental change in leaders’ ways of thinking is the critical necessity to “engage our people through values”… And we are leaving here the sacred world of Logos and its PowerPoints to move towards the world of Ethos (behaviours) and Pathos (emotions)…

  • Trust does not only concern the top execs of the organization. It may be lived or betrayed every day by every single employee… People will judge the trustworthiness of your firm by the way your drivers behave on the streets and the way your customer service handles their complaint. This is only possible if all of your employees, like the four to six thousands unpaid members of a samba school, are fully aligned and emotionally committed to the Purpose and Values of your firm.
  • Scanning the periphery and challenging requires your employees to “go the extra mile”. It is part of the “discretionary effort” as ex-IMD Professor Chris Parker used to label the extra, unpaid and unenforceable energy that passionate employees will dedicate to their work, such as thinking of a business issue on the way home, reflecting about a challenge while taking the sun on a beach, etc… There is no Discretionary Effort where there is no passion for the purpose of the company…
  • Finally the start point of building an intelligent organization is that, just like for all the organs of our human body, the employees all be aligned on the higher Purpose of the organization they chose to join and work for…

Ecosystems strategies are probably one of the ways forward… And they will merely be a fad and bring very little disruptive potential if not supported by fundamental changes in leadership practice.

Several meetings and public speeches in São Paulo are ahead then back to Switzerland. Have a great week all.

Synchronicity: I met two weeks ago in Rio, a friend who is the program director for one of France’s Business School’s Executive MBAs. The highlight of their Brazilian tour had been to challenge participants in the field of strategy and move them from egocentric strategies to ecosystems ones.

I am now boarding a flight after having run a morning session with Brazil’s CFO association (Instituto Brasileiro de Executivos Financeiros) which central theme was the evolution of the CFO role in the emerging Open Source Economy…The theme which strongly emerged at the end of our discussions was that, if leaders should continue to flex their style to match the need of their followers (such as in the old Situational Leadership model where the leader needs to take a directive, “Telling” style, a convincing “Selling” one, an engaging “Coaching” one or a devolving “Delegating” one, depending on the urgency of the situation and maturity of the followers), the CFO’s present recognized that the radical challenges posed by an ever accelerating and more disruptive Open Source Economy, would be a radical mindset shift in strategy and that it would, as a consequence, request that leaders not only “lead in function of their people but also with the fast changing outside in mind”…

The strategic mindset shift is that, increasingly, strategies will be more of “ecosystems” rather than egocentrically focused. The most vivid example that comes to mind are the three competing operating systems in the mobile phone industry, Apple, Google’s Androïd and Microsoft’s. Where would Apple be if it had designed a strategy based on its own hardware and software capabilities? The genius of the Cupertino brand was to think wider, in ecosystems terms and integrate the applications’ developers in its universe. Google has done this for years and applied it to its Androïd operating system.

Strategies that focus and build from an egocentric perspective (like a SWOT analysis) may be suboptimal in a world of interdependence such as the one we are heading for. Egocentric strategies belong to the 1.0 ways of thinking and beliefs: MY company, MY I.P., MY capabilities, MY customers, MY suppliers… Ecosytems strategies belong to the Open Source way of exploring the world: our mutual benefit, our openly shared knowledge, what is good for you is good for me…

Ecosystems strategies have several implications for leaders:

  • It was strongly reinforced that, as Business Futurist Gerd Leonhard has been claiming for years, “Trust would become the new currency”. Ecosystems strategies will require unconditional trust amongst partners. And under today’s unequaled scrutiny of all sorts of media and public, trust and transparency are tested at every moment. The recent story of that unfortunate schoolgirl in a miserable neighborhood of Florianopolias (Brazil) was in everybody’s mind: In a record of time, the unacceptable conditions in which her school was forgotten by authorities traveled the world as one of the most successful viral videos of 2012… Not a very nice visit card for a country about to host the next World Cup and Olympics… The students elementary and basic needs were met in a record of time. The surprise must have been huge for the so called responsible authorities. The whole world knew before them of the miserable conditions in which their pupils were kept…
  • Scanning the periphery and challenge orthodoxies: in order to design a relevant ecosystem, leaders will have to continuously scan the periphery and question their long time held beliefs about what their core business is and where customers intend to take it… When seeing how everybody in the mobile phone industry now talks about ecosystem just to describe their company and the way it interacts with independent applications designers, may suggest that a new and original ecosystem is about to emerge in an already aging industry.
  • The complexity of these interacting, interdependent ecosystems is unmanageable for even the smartest executive teams. The metaphor I like to use is the one of our brain being over flown by 11 million bits of information/second. Following neuroscientists, our conscious brain is only able to process consciously… 40 of these per second… So how does the rest of the body react to this??? Does it sit and patiently wait until the conscious brain has solved its backlog issue? Or does it have a sufficient understand of our whole body’s higher Purpose (to keep us alive and healthy!) that it may operate from its own intelligence? This is just a metaphor but it illustrates well the dead end in which 1.0 leaders, unable or unwilling to develop an intelligent organization and the people that go with it, are locking themselves in…

So what are the implications in terms of culture and leadership? The recent and fascinating CEO’s Survey run regularly on a worldwide basis by IBM and which results were presented at the CFO’s  Conference, shows that one of the fundamental change in leaders’ ways of thinking is the critical necessity to “engage our people through values”… And we are leaving here the sacred world of Logos and its PowerPoints to move towards the world of Ethos (behaviours) and Pathos (emotions)…

  • Trust does not only concern the top execs of the organization. It may be lived or betrayed every day by every single employee… People will judge the trustworthiness of your firm by the way your drivers behave on the streets and the way your customer service handles their complaint. This is only possible if all of your employees, like the four to six thousands unpaid members of a samba school, are fully aligned and emotionally committed to the Purpose and Values of your firm.
  • Scanning the periphery and challenging requires your employees to “go the extra mile”. It is part of the “discretionary effort” as ex-IMD Professor Chris Parker used to label the extra, unpaid and unenforceable energy that passionate employees will dedicate to their work, such as thinking of a business issue on the way home, reflecting about a challenge while taking the sun on a beach, etc… There is no Discretionary Effort where there is no passion for the purpose of the company…
  • Finally the start point of building an intelligent organization is that, just like for all the organs of our human body, the employees all be aligned on the higher Purpose of the organization they chose to join and work for…

Ecosystems strategies are probably one of the ways forward… And they will merely be a fad and bring very little disruptive potential if not supported by fundamental changes in leadership practice.

Several meetings and public speeches in Rio and São Paulo are ahead. Have a great week all.

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