Ecosystems: The Future Of Work Or The Next Management Buzzword?
We were invited to the Imperial Palace in Vienna! If this sounds an unlikely place to do research on business trends, let me explain. This palace is home to the Drucker Forum, and we were invited by Haier as part of the research we are doing with them. This year’s theme was “The Power of Ecosystems. Managing in a network world”.
It’s good to remind ourselves that Drucker was famous for saying “Most of what we call management consists of making it difficult for people to get their work done”, and “Everyone can be a CEO”. We were curious to see how these ideas were addressed in the Ecosystem approach to doing business!
What are Ecosystems?
This apparently simple question was not given much attention at the forum. Yes, we learned Ecosystems are “vital”, “very important”, “good for everyone” and “absolutely necessary to survive”. But that says little about how they work, or what they are.
Julian Birkinshaw, Professor of Strategy & Entrepreneurship at the London Business School, warned we should be careful about using ‘ecosystems’ as a buzzword. Duly noted. So let’s try to explain them in a down-to-earth way, and invite your comments.
Here’s a simple interpretation. Ecosystems are open systems in which living organisms have struck a balance between resources and their consumption. In natural ecosystems, resources are transferred by organisms consuming each another, or benefiting in other ways. For example, a cow eats grass, then takes a dump and adds nutritients to the soil. The same is true for organisms that die. It’s not so good for the individual animal, but the ecosystem benefits.
Balance is key. If balance is disturbed by outside forces these can disrupt a larger Ecosystem. If you wonder how that could happen you should read this article that focusses on a different kind of buzzzzzword.
"Most of what we call management consists of making it difficult for people to get their work done." - Peter Drucker
Business Ecosystems are different from ecosystems in nature. Nobody benefits if a colleague takes a dump in the corner office! So, how do they work? According to examples shared at the forum, similar principles apply, and two components need to always present be in such a system. Zhang Ruimin, the CEO of Haier, made those components explicit:
- Ecosystems should enable companies to evolve together. They should focus on co-creation rather than competition.
- Value created in the ecosystem needs to be shared so everyone benefits. And we mean the whole system. That includes producers, users, suppliers, employees and anyone else involved with your business.
Zhang: “We don’t want to create a walled garden. We want to create a rainforest”. In a rainforest, while a tree might die, it still adds to the health of the ecosystem and enables other species to thrive. In a walled garden a few crops might grow, but they can be destroyed if some metaphorical snails find a way in.
As you know, we like theories, but we love seeing them in practice even more. Luckily, a few practitioners shared their experiences.
Haier’s Internet of Food
Haier has been researching ecosystem principles. One example is “The Internet of Food”. They designed and built a fridge that can recognize the ingredients you have, access a database containing recipes from your favorite chef, and then advise what you can cook with those ingredients. And if any are missing, you can order these from a shop nearby, and even have them delivered.
Haier provides the platform on which different businesses (some owned by Haier and some not) can collaboratively solve user problems. They believe these problems can be solved by successfully integrating resources from different industries. And with an average price of ~$60,000 for the appliance, it seems users agree with that reasoning.
Vint Cerf, VP and Chief Internet Evangelist at Google, argued that Ecosystems need to be a “Harmonized Group of Elements”. He used Lego as an example: although the pieces are different, they can fit together. Google is trying to emulate this approach in its cloud services, by making the clouds interact with each other to offer users more choice. This is instead of being stuck with one company/app/cloud service because you once stored data there, and hesitated to transfer it. Unfortunately Vint didn’t offer detail on how Google is realizing those ideals, which makes it hard to see how their approach works. Will they, like some other ecosystems, open up their boundaries for collaboration with other companies?
A completely different approach to the “ecosystem-approach” was that of Dutch health-care organization Buurtzorg. Founder Jos de Blok shed light on their approach. “Keep it small. Keep it simple. We have 15,000 employees, 50 back-office employees, 21 coaches & 2 directors.” The nursing teams have a maximum of 12 nurses (”Because we couldn’t find bigger tables at Ikea!”). They collaborate with patients, their families, and other care providers to get them up and running and independent again, as soon as possible.
Buurtzorg’s IT system supports transparent interaction between families, caretakers and patients, to create a community around each patient. This leads to customized, really unique care. When one patient mentioned that there were no races for older people, nurses organized a “walker-race” on an official racetrack. The result? A lot of elderly people practiced hard to compete. This helped their overall physique. But most of all, it was a bonding experience for nurses, patients and families.
Buurtzorg’s role in this is that of enabler, making sure that there is enough autonomy for employees to take the initiative, and then by providing resources and tools for sharing information.
The nursing teams at Buurtzorg have a maximum of 12 nurses, because they couldn’t find bigger tables at Ikea!
Can I ask you something?
It was really interesting to hear these examples. But unfortunately, most panels ended without much discussion or critical questions. We felt that was a missed opportunity, especially at an event that was named after someone who was famous for helping CEO’s by asking them the right questions. Asking questions is absolutely essential if you want to challenge the status quo and give people new insights, doing that will ultimately lead to change.
Question the buzzwords!
So, the next time someone introduces you to a “vital”, “very important”, “good for everyone” and “absolutely necessary to survive” way of organizing, such as the Ecosystem approach. Make sure to question how all stakeholders benefit, or if it’s simply a strategy used by a single company to acquire more and more resources, thereby disturbing the balance.
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I am still trying to find out where exactly Drucker said "everyone is a CEO"... He did say: "The knowledge worker cannot be supervised closely or in detail. He can only be helped. But he must direct himself, and he must direct himself towards performance and contribution, that is, toward effectiveness"... but that's a far cry from "Everyone-a-CEO."
Also - please see: https://www.druckerforum.org/blog/?p=2365
Hi there. I’ve been following Corporate Rebels for a while now and was very impressed and enthusiastic about your work. Finally when I get to travel to look at some businesses doing great things making their employees happy I wrote to you guys seeking some guidance. I was very disappointed in the automatic response which basically says you’re too busy to get back to me, or anyone else, trying to contact you. Your own ecosystem seems to be not in balance and I’m wondering therefore what went wrong with Corporate Rebels?
Hi Robert, sorry to hear you're disappointed! You're right, we do get loads of emails and answering all of the questions we receive individually would indeed take loads of time, but most of all, it wouldn't help anybody but you. And of course in some cases helping just one person can be enough, but we suspect that there are more people with similar questions. That's why corporate rebels invested in creating a forum where everybody can ask questions and learn from each other. Have you tried posting your questions there as well?
Interesting but it seems to me we are picking up only the "nice and idealistic things" from the rain forest. There could be a harmony but there is every day hunting, killing, running, surviving. If you are weak, you serve as food for predators. This is also a rainforest. My point is, don't close ourselves to the idealistic view of the world, we have to be also strong to protect the harmony from the predators who can easily disturb us and create a disbalance. Strive for creating the ecosystem but have tools and be ready to protect it.
"Question the buzzwords" - sure, I will:
Using the term Ecosystem is weird in my opinion.
Maybe even useless.
When we need a translation from its original semantics (biology) into a Business context, it's already doomed to be a bad idea.
Tons of misunderstandings emerge real quick - and already have.
You explained it:
"Business Ecosystems are different from ecosystems in nature."
So let's stop using that term.
Just my 10 cents :)
I'm not sure if using the ecosystem term is useless, especially not when used as a metaphor. At the Drucker Forum Amy Webb explained that metaphors are basically shortcuts in your brain, allowing you to understand things easier and quicker. The quality and accuracy of those metaphors are of course essential. So adding a big disclaimer when you use a metaphor, to help remind the reader/listener that the thing you describe is not "exactly like" but "rather similar" to the metaphor, in my mind can be a helpful tool to get your message across.
@Christian: Bruce McTague pointed this out to me regarding the Drucker quote!
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As part of our collaboration with Haier - one of the world's most pioneering companies - we research and share how they work. Recently, we chatted with leaders of the company, including Zhang Ruimin (CEO of Haier), Kevin Nolan (CEO of GE Appliances - the US part of Haier) and Yannick Fierling (CEO of Haier Europe). In this post, we share the recordings.