Review: McKinsey's recent article on ecosystems
In "Ecosystems and platforms: How insurers can turn vision into reality", McKinsey provides a good blueprint for making ecosystems happen. While the article is focused on the insurance sector, the approach presented works equally well for the banking or non-financial services industries.
I'd like to offer three additional aspects worth considering. First, I have always struggled with “setting bold visions” as the sole starting point for any strategy. Equally important - and consistent with the Richard Rumelt school of strategy - is a hard examination of the core competitive challenge that the business seeks to overcome, how creating or joining an ecosystem could help overcome that challenge, and some initial principles of how the ecosystem would need to be constituted. Especially in inherently conservative businesses, this nuance will help derive a strategy that is actually capable of execution.
Second, and on execution, it is easy to talk about technological excellence, modular platforms, APIs, etc. McKinsey is right to showcase the success of an online insurer in this regard. Yet for most legacy insurers, flexibility remains out of reach as they continue struggling with the complexity and age of their legacy IT infrastructure, organizational structures and belief systems. The question is whether the capital base of the legacy firms is sufficient to compete against nimble newcomers.
Third, it is at the "scale and operate" stage where the rubber hits the road. It simply isn't sufficient to review ecosystem plays and grow additional use cases. If a firm is to orchestrate its own ecosystem, it needs to find, staff and resource the right target operating model so it can interact with and nudge along the ecosystem's supply- and demand sides. The right alliance- and ecosystem-centric technology is critical for successful implementation. For example, allianceboard helps tracking goals and successes across partners, engages ecosystem partners in decision-making and provides the right analytics to ensure profitable growth of ecosystem outcomes. All partners in the ecosystem can access and contribute to allianceboard, providing a consistent view and aligning the leadership and ecosystem execs of the ecosystem's driving organizations. Integration with internal ERPs and CRMs provides even better data and analytics for rapid decision-making across partner organizations.
McKinsey's article is well worth reading. Get in touch with me here to explore how to apply ecosystem thinking to your business or to learn more about allianceboard's technology.