Design Strategies to galvanize Ecosystems

SIMONE CICERO@meedabyte #PDToolkit

Design Strategies to galvanize Ecosystems

BizMedia Design ’16 Platforme & Co-Creation

This is an EXECUTIVE SUMMARY:

Know more about the Platform Design Toolkit, get in touch with us and register to the Platform Design Newsletter at:

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PLATFORM DESIGN TOOLKIT - BORN IN 2013 TO HELP DESIGNERS

The motivation matrix to look into motivations to participate

The PD Canvas to map the whole of a multi sided platform model

A BIT OF HISTORY

Launched in 2013 in Barcelona Design Week

Platform Design Canvas: a derivative of Business Model Canvas plus a Motivation Matrix

Mission: help designers design multi sided business models, identify value flows and design channels accordingly

PLATFORM DESIGN TOOLKIT - MOVIGN TO POST INDUSTRIAL BUSINESS DESIGN

Finally the digitally transformed economy is moving towards a post-industrial age

Firms are less about organizing production but more into organizing interaction

THE CORE IDEABEHIND #PDTOOLKIT

POST INDUSTRIAL THINKING?

A NEW CONTEXT

A research study and model that described the five exponential growth levers identified after studying 50 organisations which have grown more than 50% in terms of revenue and number of users between 2008 and 2013.

Result: growth is seen as a function of connectivity, enablement and empowerment of users and partners - a result of interaction and reach.

MORE STUDIES:THE PENTAGROWTH

THE PENTAGROWTH: GROWTH AS A FUNCTION OF ENABLEMENT AND INTERACTION

Asset Builders: build, develop, and lease physical assets

Service Providers: provide services to customers in form of billable hours

Technology Creators: develop and sell intellectual property

Network Orchestrators: create a network of peers in which the participants interact and share in the value creation.

MORE STUDIES:THE VALUE SHIFT

Studied the history of business model and concluded that Networked Business models are the latest evolution in business models (better performances)

“Our business model classification and analysis says that Network Orchestrators outperform companies with other business models on several key dimensions: higher valuations relative to their revenues, faster growth, larger profit margins.” (Deloitte and Open Matters Study)

THE VALUE SHIFT: PLATFORMS ARE JUST THE NEXT EVOLUTION OF BUSINESS MODEL

“…an effort to broadly redefine the terms of competition for a market sector through a positive, galvanizing message that promises benefits to all who adopt the new terms”

from Deloitte’s “Business ecosystems come of age”

A SHAPING STRATEGY TO GALVANIZE PARTICIPANTS

“…the ability to change how an entire marketplace operates and capture more value by doing so…restructure entire markets and industries by designing new platforms and offering powerful incentives to motivate third parties to participate on them.”

from Deloitte’s “Business ecosystems come of age”

A SHAPING STRATEGY TO GALVANIZE PARTICIPANTS

WHY DO PLATFORMS WIN?

Empowering the ecosystems by creating a space where relationships and exchanges can flourish brands can multiply their potential to shape markets beyond their potential “industrial” reach

PLATFORMS HELP BRANDS REACH UNTHINKABLE RESULTS

The PLATFORMis a tool to let the Firm access the

ecosystem

The boundaries of the firm overlap with

the boundaries of the Platform

The evolution of the platform is to reach bigger ecosystems

FIRMS BUILD PLATFORMSTO ACCESS ECOSYSTEMS

“In many ways, [platforms like] Uber and Airbnb represent a 21st century update of the franchising model. In franchising, the parent company brands and markets the product, sets standards for producing it, and charges a licensing fee and receives a percentage of revenue... [now] technology radically lowers the barriers to being a franchisee. In many ways, you can call the modern trend 'the franchise of one.'"

Excerpted from:”Networks and the Nature of the Firm”

TIM O’REILLY ON PLATFORMS

THE FRANCHISE OF ONE

Increasingly the tradeoff between coordination (through platform) and motivation (through a shared marketplace)works better than the extremes (industrial firm or open market)

THE NATURE OF THE FIRM IS CHANGING

IN THE MIDDLE BETWEEN COMPANIES AND MARKETS

Geoffrey Moore

“...the nature of the firm itself is changing: this changes are deeply disruptive to the hierarchical management structures and are changing the inner working of the firm itself.”

PLATFORMS: AN ANSWER TO A

CHANGING TECNO-SOCIAL CONTEXT

THE NEW POSSIBLE

“We’ve been seduced by the deep discounts, the monthly automatic diaper delivery, the free Prime movies, the gift

wrapping, the free two-day shipping, the ability to buy shoes or books or pinto beans or a toilet all from the same place. But it has gone beyond seduction, really. We expect these

kinds of conveniences now, as if they were birthrights. They’ve become baked into our ideas about how consumers

should be treated.”

Franklin Foer

THE NEW DESIRABLE

FAST

PERSONAL

RELEVANT

HUMAN

UBIQUITY

PRECISION

EXPERIENCE

EMPHATY

FAST

RELEVANT

PERSONALIZEDHUMAN

THE NEW DESIRABLE

We become what we behold.

We shape our tools and then our tools shape us

A SELF REINFORCING SHIFT

NEW EXPECTATIONS

NEW TOOLS

(PLATFORMS)

Providing personalization for each customer can be hard with industrial approaches: the cost of variants for small/niche customers may harm revenues and make it “unworthy”

WHY DO PLATFORMS WIN?

PLATFORMS MAKE THE LONG TAIL SUSTAINABLE FOR BRANDS

WHY DO PLATFORMS WIN?

Peer to peer helps create human & personalized (long tail) experiences in ways that are impossible in a centralized way.

With less bureaucratization and less capex required: through design.

PLATFORMS MAKE THE LONG TAIL SUSTAINABLE FOR BRANDS

“What assets were for the industrial firm, network effects are for the post-industrial firm”

Esko Kilpi

“The main mission of platforms is to make network effects possible”

“Platforms are the best means to flourish and create growth in low transaction cost environments, the same way as the industrial firm was the best means to flourish and grow in high transaction cost environments.”

Esko Kilpi

UNDERSTANDING WHAT A PLATFORM IS

WHAT IS A PLATFORM?

“...business models that allow multiple sides (producers and consumers) to interact [...] by providing an infrastructure that connects them”

Sangeet ChoudaryAuthor of “Platform Scale”

“...a governance structure that determines who can participate, what roles they might play, how they might interact, and how disputes get resolved plus additional set of protocols or standards typically designed to facilitate connection, coordination, and collaboration.”

John Hagel’s definition excerpted from:”Business ecosystems come of age”

WHAT IS A PLATFORM?

Aggregation Platforms - focused on simple transactions, connecting users to resources mostly in Hub and Spoke - middleman/gatekeeper - fashion (Eg: Apple, Airbnb)

Mobilization Platforms - helping people to “act together”, fostering long term relationships (Eg: Linux, Li & Fung)

Social Platforms - focused on social interactions, connecting individuals to communities, tend to foster mesh relationship networking (Eg: Facebook)

Learning Platforms: facilitate learning, bring participants together to share insights, foster deep/trust based relationships, help participants realize more together and hone their capabilities (Eg: World of Warcraft)

J.HAGEL’s TYPE OF OF PLATFORMS

WHY DO PLATFORMS WIN?

WHY DO PLATFORMS WIN?

Platforms support participants (individuals and companies) hone capabilities and improve performances providing an effective answer to the pressure coming from digital disruption

PLATFORMS ARE POWERFUL ENGINES FOR

LEARNING

THE PLATFORM DESIGN CANVAS 2.0

Used to map the overall platform’s dynamics, important resources and enabling and empowering potential - helps understand if the platform is doing its job of sustaining the ecosystem in value production with enabling and empowering services that the platform should provide

SKETCHING THE PLATFORM OVERVIEW

ROLES IN A PLATFORM

Platform Owners

Stakeholders Partners Peer Producers

Peer Consumers

players who owns the vision behind the realization of the market and ensure that the platform exists

entities that have a specific interest in platform success or failure, in controlling platform externalities and outcomes

professional entities that seek to create additional professional value and to collaborate with platform owners with a stronger relationship

entities interested in providing value on the supply side of the ecosystem/marketplace, seeking for a better performance

entities interested in consuming, utilizing, accessing the value that the is created through and on the platform

SUPPLY DEMANDIMPACT

KEY ROLES

TWO MACRO TRANSACTION TYPES, EXCHANGES AND SERVICES

Peers and Partners in the platform should be able to exchange value in peer to peer. Multiple, coordinated transaction-exchanges make up more complex experiences: here’s where design is key

EXCHANGES

TWO MACRO TRANSACTION TYPES

Channels and contexts allow exchanges to happen inside the platform with negligible friction. They are key to allow value creation: the platform should actively create and improve them all the time

CHANNELS & CONTEXTS

THE ESSENTIAL TOOLS

Exchanges happen between peers (and partners) through channels (more formal) and context (more intangible, informal).

EXCHANGES

THE ESSENTIAL TOOLS

The right side of the Canvas is used to model all the P2P dynamics, peers exchanging value with partners and other peers in p2p fashion, through the channels and contexts designed for that, sharing value and currencies.

THE RIGHT SIDE

TWO MACRO TRANSACTION TYPES

Support services (empowering and enabling) must be provided by the platform to support producing participant’s (peers and partners) continuous performance improvement (through learning)

(SUPPORT)SERVICES

TWO MACRO TRANSACTION TYPES

Continuous performance improvement is key: the most successful platforms help consumers become producers and producers become partner

LEARNING

TWO MACRO TRANSACTION TYPES

In many cases platforms provide “complementary”, traditionally organized (industrialized), services for peer consumers

They complement the value exchanged; they represent strong single user utility

(CENTRALIZED)SERVICES

THE ESSENTIAL TOOLS

The platform provided services can be towards producers and consumers.

Each service cluster on the canvas is linked to the entities (consuming and producing peers and partners) on the right.

COMPLEMENTING WITH PLATFORM PROVIDED SERVICES

THE ESSENTIAL TOOLS

THE LEFT SIDE

The left side of the Canvas is used to model all activities that the platform needs to put in place to support value creation and complement consumption in the ecosystem.

THE ECOSYSTEM CANVAS

Used to map all actors in an ecosystem and what role they play in it

MAPPING ROLES

THE ECOSYSTEM’s MOTIVATION MATRIX

Used to dig deep into the motivation that push entities in the ecosystem to participate: tracks the advantages in participating (needs met, opportunities provided, positive outcomes) and what each entity can “give to” others

UNDERSTANDING MOTIVATIONS & INCENTIVES

PLATFORM DESIGN TOOLKIT - BORN IN 2013 TO HELP DESIGNERS

THE PLATFORM DESIGN TOOLKIT 2.0 (DRAFT)

A revision of the type and set of key ecosystem entities

A bigger set of canvases 3 Essential2 Advanced

More holistic point of view ADVANCED

ESSENTIAL

LET’S REFLECT FOR A MOMENT: THE KEY TAKEOUTS OF PLATFORM DESIGN

Long tail customer can be profitable with peer to peer

Platforms help brands serve long tail customers: peer to peer transactions help create customized experiences in ways that are impossible for brands to provide traditionally

Humanize services with peer to peer

Peer to peer is the best way to humanize service personalization achieving mass market personalization going beyond marketing options overload

Shaping strategiesA market galvanizing shaping strategy is essential to conquer and transform markets: designing incentives matters more than building technologies

Enabling a learning process is key

Learning is an essential trait of platform shaped markets: in times of performance pressure, a learning process becomes the key product you're offering on a platform

Centrally provided services can complement peer to peer interactions

On platforms is the combination of centrally organized services and peer to peer transactions that makes the value proposition

PLATFORM DESIGN TOOLKIT - SOME OF THE ADOPTERS AND EXPLORERS

This is an EXECUTIVE SUMMARY:

Know more about the Platform Design Toolkit, get in touch with us and register to the Platform Design Newsletter at:

WWW.PLATFORMDESIGNTOOLKIT.COM

Thanks

Know more about the Platform Design Toolkit, get in touch with us and register to the Platform Design Newsletter at:

www.platformdesigntoolkit.comhello@platformdesigntoolkit.com

Thanks

Picture Credits:

NOAA Photo Library https://goo.gl/0gUQTH

Eduard Lefler https://goo.gl/T7GwHv