View: Three Ways To Leverage Digital Ecosystems
By Mike Walker
As we closed a tumultuous, chaotic and just plain extreme 2020, I find that it has fundamentally changed how business is done going forward. A healthcare crisis brought on by Covid-19, an economic decline and social unrest have ushered in a heightened urgency for digital technology adoption that will establish a new normal. Our society has become dependent on the technologies that permeate our professional and personal lives to the point where many believe it has become a fundamental human right to access information over the internet.
Today's leaders are faced with an overwhelming challenge that they will need to outmaneuver. Many leading organizations are embracing the uncertainty and are using it to leapfrog their digital transformations. Many are leveraging digital ecosystems to create a foundation for the future, strengthen business interactions and embrace digital technologies like artificial intelligence (AI), blockchain and the Internet of Things (IoT).
Digital ecosystems are the next trend to hit the "buzzword bingo card" — meaning, I'm hearing about them quite a bit these days, but few people have a consistent point of view on how to harness their power. I first encountered this approach over five years ago when I was at a research and advisory firm. It was used sparsely and only from leading organizations that prided themselves on their use of the latest innovations.
Now, as noted by McKinsey& Company, digital ecosystems could represent $60 trillion in global revenue by 2025. Organizations have a tremendous opportunity to take a concept that has a 2% global market share to approximately 30% by 2025. To take advantage of this opportunity, I recommend the following:
1. Proactively Modernize Your Customer Relationships
2020 has irrevocably changed how organizations' customers expect to interact with products and services. The results of these crises are a fundamental shift in attitudes and behaviors toward accepting digital solutions and the rising expectations of distant interactions.
Organizations must learn from 2020 and take action to redesign how we create the experiences that people want and will want by leveraging digital ecosystems to create new connections and interactions that were not possible before.
Start with these digital ecosystem recommendations to get started:
• Create a platform for a multisided business model (MSBM). Digital ecosystems provide a platform for organizations to shift to an MSBM. Conduct business-envisioning workshops with your business leaders to quantify MSBM economics when traditional customers have more than one value exchange. Examples of successful MSBMs include Apple, Amazon, Microsoft, Alibaba and Facebook.
• Shift to humanistic interactions. Ideate with your business leaders, partners and customers to proactively challenge transactional relationships. Build a series of "what-if" scenarios that reimagine how your organization interacts with customers when you have always-on technology that is integrated into people's lives.
• Contextualize products and services. Tap into the enormous amount of information being generated from new or existing digital sources like IoT sensors to create products and services that are contextualized, providing new insights and experiences.
2. Embrace New Worker Expectations And Productivity Trends
Over the past year, organizations have undergone a dramatic transformation of the workplace. I've found that most organizations are experiencing this disruption to their operations, employees and business partners. Health and safety are the predominant trends in the workplace.
We may never go back to an all-in-person working environment. Instead, we might opt to focus on hybrid work environments. As an example, a November 2019 report from Zapier revealed that 74% of knowledge workers "would be willing to quit their job to work remote."
Surprisingly, taking an ecosystem-based approach embraces these new expectations and trends in the marketplace. Start with these digital ecosystem recommendations to get started:
• Enable workers to get back into the action. With 83% of employers telling SHRM "they're adjusting their business practices in light of the pandemic," there is quite a bit of change. Connecting medical records, building software, temperature checkers and safety equipment will be vital to getting workers back in the office. Leveraging solutions like GE Wellness Trace can provide employers with visibility and confidence of safe working environments.
• Modernize for productivity. Digital ecosystems can make harvesting information and harnessing the power of AI to create new insights to employees. One example of many is the Microsoft Productivity Score tool, which claims to improve employee productivity.
3. Use Digital Ecosystems To Accelerate Digital Transformation Initiatives
Even prior to an eventful 2020, many organizations had digital transformation on their list of priorities. Now, those digital priorities have been elevated to shift to the new way business is done. If Covid-19 has demonstrated anything, it's the importance of digital readiness. According to Gartner, Inc., 69% of boards of directors say they "accelerated their digital business initiatives in the wake of Covid-19 disruption."
To adapt to the current and future changes, organizations must build the necessary digital infrastructure that can allow them to embrace a digitized world and stay current in the latest technologies. With many companies shifting to become digital-first, it's no secret that digital ecosystems could become one of the prominent business models for companies around the globe.
There is a growing interest to digitally evolve more rapidly, be more compliant and address the rising consumer expectations as well as the onslaught of diverse and novel startups challenging the status quo. Start with these digital ecosystem recommendations to get started:
• Illustrate how digital ecosystems can accelerate emergent business model designs. Take time to create a blueprint that shows how digital ecosystems provide the foundational layer to emergent business models like the gig economy, data-driven economy, on-demand economy or MSBM.
• Use as a launchpad for digital transformation initiatives. Create a digital ecosystem platform reference architecture that shows how to onboard technologies such as AI, IoT, blockchain and many others.
Mike Walker is Sr. Director of Applied Innovation at Microsoft and a member of Forbes Technology Council. Bringing paradigm-shifting digital transformation through emerging technologies. Connect with Mike on LinkedIn.