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Swiss Re Institute – Corporate Solutions Annual Forum, Grand Kempinski Hotel Shanghai, 14 May 2019Dr. Evangelos Avramakis, Head Digital Ecosystems R&D, Swiss Re Institute, Zurich
Competing in a world of digital ecosystems
Digital ecosystems: Extending the boundaries of value creation in insurance
2
Source: http://2.bp.blogspot.com/-3P4IjBDfTWk/UAwXvfgVW4I/AAAAAAAAHsI/NdX52Tt2s9E/s1600/DSC_0181.JPG
how would a tooth brush platform
look like?
Source: Love Jon (31.01.2018) How a toothbrush is made, www.electricteeth.co.ukhttps://www.electricteeth.co.uk/toothbrush-manufacture/
Source: Dowonsol (2018) Electric Toothbrush Motor High Frequency Ultrasonic Motorhttps://www.amazon.com/Electric-Toothbrush-Motor-Frequency-Ultrasonic/dp/B01NALNQBB 3
4Source: Wisdom Kids Toothbrush Spinbrush Power (31.05.2018)https://www.wilko.com/en-uk/wisdom-kids-toothbrush-spinbrush-power/p/0437356
Source: Wisdom Toothbrush Spinbrush Whitening Power (31.05.2018)https://www.wilko.com/en-uk/wisdom-toothbrush-spinbrush-whitening-power/p/0437355
55
6
…so why are (digital) platforms
so successful?
7
…because of key business and consumer network effects!
reducing
effortreducing
timereducing
costs
Source: Teixeira, T. S., & Piechota, G. (2019). Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption. Broadway BusinessVideo source: Pexels. 8
9
Network-Effect as key driver for digital ecosystems
9
NetworkEffect
Timeinitialgo to market
ramp-upgrowth &
features
new technologyentering the market
Network Effect (exponential)digital winner takes it all
commoditizationoccurs
Source: adapted from: Hinchcliffe D (2015) Why the Underlying Laws of Cloud, Social, and Digital Business Matter, dionhinchcliffe.comhttps://dionhinchcliffe.com/category/the-enterprise/enterprise-architecture/
Source: Cooper Hewitt (2018) Photorealistic rendering based off of concepts in the NACTO Blueprint for Autonomous Urbanism. Copyright © 2017 Bloomberg Philanthropies. Source: Cooper Hewitt Explores The Future of Mobility in New Exhibitionhttps://www.si.edu/newsdesk/releases/cooper-hewitt-explores-future-mobility-new-exhibition
let’s focus on mobility
10
connectedproducts / services
11
12
Disconnected platforms provide a number of frictions
potential frictions
Interface
Consumer(exposed risk)
ConsumerJourney
Application(Access)
Customer Jobs
Buying Using / Maintaining Selling
OfflineOnline
InvolvedEcosystemParties
Finance ServiceMarket-
place
Govern-ment
InsuranceRetail Market-
place
Market-place
Life Cycle Phases
OfflineOnline
Using / Maintaining Selling
13
Connected platforms reduces the number of frictions
Interface
ConsumerJourney
Application(Access)
Customer Jobs
InvolvedEcosystemParties
Digital Ecosystem
API
FinanceServiceMarket-
place
Govern-ment
Insu-rance
Retail Market-
place
Market-place
BuyingLife Cycle Phases
Consumer(exposed risk)
14
15Source: David Reich (31.01.2019) Partnering with Transit Agencies: Integrating Public Transportation into the Uber App. Uber (press release) – Footage: Pexelshttps://www.uber.com/newsroom/publictransit/
Source: Josh Constine (January 2019) Uber launches rider loyalty Rewards like credits & upgrades 9 cities. Techcrunch.comhttps://techcrunch.com/2018/11/14/uber-rewards/
digitalplatforms
16
Transport
17
Example: Grab digital ecosystem
GrabFamily
Grab share Grab hitch
GrabCar(premium)
Grab taxi
Grab rentals
JustGrab
GrabWheels
GrabPet
GrabCar
GrabCar(6-seater premium)
GrabCar(6-seater economy)
GrabCoach(9 to 40 seater)
GrabShuttle
GrabBike
Transport
Transport
B2CMarket Places
e-Markets
e-Markets
Transport & Logistics
Transport & Logistics
Delivery & Courier
Food Delivery
Food & Dining
Aggro
B2BMarket Places
Food Merchant-
Partner
GrabAds
Transport
Transport
18
Logistics
Cluster
Commercial(B2B)
Retail(B2C)
EcosystemDomain
Cluster
Insurance
Financial Services
powered by
Health
Health
Example: Grab digital ecosystem
19
B2CRetailCustomers
20
B2BBusinessCustomers
digitalecosystems
21
Variety of business setups and data insights
Knowledge of End Consumer
Digital
NonDigital
Business Platform“Disconnected”
Product / Service
Product / Service(Commodity)
Business Setup
Platform
Business Platform Ecosystem
Ecosystem
Digital Platform
“Connected”Product / Service
DigitalEcosystem
22
Digital ecosystems allowing producers to seamlessly integrate
Source: Tan B. et al. (2915) The role of IS capabilities in the development of multi-sided platforms: the digital ecosystem strategy of Alibaba. com, Journal of the Association for Information Systems
Producer /Supplier
Intermediary
Customer
Intermediary
Intermediary
“Traditional Economy” Digital Ecosystems
Further Stakeholderi.e. Service Provider, Advertiser, etc.
Digital Platforms
Outside box - platform providerInner box - platform owner/sponsor
23
Digital ecosystems economic rationale (1/2)
Asset builderseg Ford, Walmart, Exxon, Boeing
make one – sell one
Service providerseg Humana, Accenture, JP Morgen Chase
hire one – sell one
Technology creatorseg Microsoft, Oracle, Medtronic, Pfizer
make one – sell many
Network orchestratorseg Ebay, Uber, Alibaba, Amazon,JD
many make – many sell
Source: Barry D. Libert, Megan Beck, Jerry Wind (2016) The network imperative – How to survive and growth in the age of digital business models. Harvard Business Press
Networkorchestrator
Networkorchestrator
Networkorchestrator
Networkorchestrator
24
Digital ecosystems economic rationale (2/2)
25%
20%
15%
10%
5%
0%
20%
12%
8%
6%
2%
0%
10%
4%
10%
6%
4%
2%
0%
8%
75%
50%
25%
0%
Assetbuilder
Serviceprovider
Technology creator
Assetbuilder
Serviceprovider
Technology creator
Assetbuilder
Serviceprovider
Technology creator
Assetbuilder
Serviceprovider
Technology creator
Sales growth (year over year) Return on Assets (RoA)
Gross profit margin Multiplier (price/revenue)
Source: Barry D. Libert, Megan Beck, Jerry Wind (2016) The network imperative – How to survive and growth in the age of digital business models. Harvard Business Press
Example: GE Predix digital platform
25
B2B Application
B2BInterfaces
(Apps)
26
Digital Platform
OfflineOnline
GE Predix industrial platform
• Lower risk of cost and time overruns
• Reduce sources of error• Build apps quickly• …
Oil & GasWater &
WindSolar &Power
Example: GE Predix digital platform
27
MiningHealth-
care
Oil & GasWater &
Wind
Powergene-ration
Tranpor-tation
OfflineOnline
Digital PlatformPlat-form
Service
Solar &Power
Manu-facturing
Auto-motive
Auto-motive
Intelligentenviron-
ment
Aviation
Scheduling &logistics
Operationsoptimisation
Asset performance management
Field force management
… …
Oil & GasWater &
WindSolar &Power
B2B ApplicationB2B Application
B2BInterfaces
(Apps)
Example: GE Predix digital platform
28
…so why are digital ecosystems
so successful?
29Source: Barry D. Libert, Megan Beck, Jerry Wind (2016) The network imperative – How to survive and growth in the age of digital business models. Harvard Business Press
…because of key business and consumer network effects!
reducing
effortreducing
timereducing
costs
"The companies that have truly built network-orchestrating organizations
don’t just do one thing differently;
they do everything differently!- from leadership to recruiting to production to
advertising."
30Source: Barry D. Libert, Megan Beck, Jerry Wind (2016) The network imperative – How to survive and growth in the age of digital business models. Harvard Business Press
Thank you
31
Dr. Evangelos AvramakisHead Digital Ecosystems R&DSwiss Re Management LtdMythenquai 50/608022 ZURICH, SWITZERLANDDirect +41 43 285 49 73 E-mail: [email protected]
ch.linkedin.com/in/avramakis
xing.com/profile/evangelos_avramakis
flipboard.com/@eavramakis
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