How Do Companies Create Value from Digital Ecosystems?

Emergence of the Digital Platform Ecosystem 

A digital ecosystem is a platform that “implements governance mechanisms to facilitate value-creating mechanisms between the platform owner and an ecosystem of autonomous complementors and consumers”. The essence of this is the integration of different expertise within a common core for the purpose of enhancing services and outcomes. 

For OEMs to participate in a digital ecosystem, they must be set up to offer the support and services that the ecosystem demands. This means avoiding the risk of being trapped into a commodity corner through active collaboration and superior service offerings. Software is a major component in these ecosystems, meaning that OEMs need to reinvent their models to have competence operating in that area. It also means data is no longer just a by-product of the machines or parts they create, but a differentiator in how they evolve available services, such as using real-time data to offer predictive maintenance to customers.  

As a notable example, we’re seeing this dynamic play out in the automotive industry. In conventional car-making an OEM was focused on the mechanical and electrical layers and had few, if any, touchpoints with the driver using the end product. Now, in a world of smartphones, apps and sensors, the OEM can understand how their product is being used and offer valuable recommendations to the driver, including safety information, guidance on lowering fuel consumption and the availability for car upgrades. The data emanating from these digital touchpoints becomes the fuel for ongoing relationship building and product improvement.

Establishing a closed feedback loop presents insight into how customers are using your product, which then enables you to offer complementary services on top to assist them in getting maximum value from their investment.

2. Use your ecosystem to fill the gaps in your own capabilities  

In the digital economy, no single business has the broad range of knowledge and capabilities to handle every aspect of developing new, digitally oriented products. Collaboration in areas such as R&D, process automation, product management, data integration and supply-chain management extend beyond the competency of a single ecosystem participant. This is where finding complementary partners can help to fill those gaps based on proven expertise and ensure seamless end-to-end integration and better end-user experience.

3. Work with partners to offer more dedicated and innovative services in line with end-user needs 

Across industries, we’re seeing a shift from a make-and-sell product approach towards a more service-led business model, enabled by IoT and user data. This helps OEMs to avoid commoditisation, innovate faster and better respond to customer demand. 

By defining areas where your specific expertise is unique in the market, you can then map against the capabilities of your partner network to identify where there might be an opportunity for new and differentiated service offerings. These blended services can be tested in the market and evolved based on evident customer demands, which then becomes a driver of new and recurring revenue streams.

Working together as part of a thriving ecosystem, we can help OEM businesses design their own services based on two-way interactions with their customers and identify opportunities to stand out in the market and create value for the long term.

Discover more about building your own digital ecosystem at the Management Perspectives hub, along with a wealth of blogs, podcasts, webinars and reports create to help executives master the next step on their digital transformation.