The digital future belongs to companies taking an ecosystem approach that connects them with customers and partners in an interdependent way.
According to Dr. Peter Weill, Senior Research Scientist and Chairman Emeritus at MIT’s Center for Information Research, today’s customers seek out these ecosystems based on the critical outcomes or domains that define their personal and business journeys: starting a small business, opening an international office, optimizing crop yields, buying a home, and much more.
Dr. Weill recently sat down with Axway CMO Paul French for a video discussion of how companies can create ecosystems that can turn whole industries upside down, generating explosive new value and opportunities.
“We need to say goodbye to industries and hello to customer domains,” says Dr. Weill. “Customers want integration of multiple services to help with their outcomes. The big opportunity will be this focus on customer outcomes and partnering with others to deliver this.”
Dr. Weill highlighted MIT research showing that the highest-performing companies are joining and creating ecosystems.
Instead of focusing on specific products and services, they look at themselves as contributors to a much higher sense of purpose, delivery, and offerings.
Companies rated highest at delivering customer outcomes (and generating revenue from outside their core industries) are outperforming those who don’t by 28%.
Steps to a next-generation ecosystem
To build and maintain a thriving ecosystem, Dr. Weill added, companies must first clarify their purpose. They need to choose a way to get from where they are today to where they want to be. It’s a discussion that requires an organization’s leadership – from the Board on down – to understand the tradeoffs between new opportunities and today’s recurring revenue.
Watch Dr. Peter Weill explain the opportunities of a next-generation ecosystem in the video clip below:
Becoming digitally savvy
Steps toward a next-generation ecosystem, therefore, require the entire leadership to become digitally savvy. In other words, the Board and management teams need to speak a common language of digital transformation.
As an example, Dr. Weill cities the need for a corporate Board to understand that doing a core replacement and building an API layer are two different approaches with two different outcomes that will leave the technology landscape looking different.
“Being digitally savvy means having an understanding that the API layer doesn’t touch the underlying core systems, but it does create a set of APIs that connect to multiple channels,” he says. “A digitally savvy team will understand the difference, the costs, and the risks.”
Dr. Weill adds that digitally savvy companies embrace a different approach to innovation based on digitalizing core processes and entire business models. Overall, they take an open, modular, and agile approach to IT architecture that leads to more ecosystem-driven business models and revenue.
Research shows the top quartile of digitally savvy companies earn 59% of their revenue from new products and services, compared to only 18% for the bottom quartile.
“Only about 24% of Corporate Boards we surveyed were digitally savvy,” comments Dr. Weill. “But the companies with digitally savvy Boards performed 30% better across many different areas.”
Adopting a platform mindset
Dr. Weill also emphasizes that digitally savvy companies bring a platform mindset to creating new ecosystems. A platform architecture enables them to unify their ecosystem initiatives, avoiding what he calls “silos and spaghetti” while improving operational efficiency and leveraging the ability to scale new systems and services in a modular, incremental way.
“Pseudo-transformations or point solutions don’t add up to a big transformation,” he says. “The problem we’re seeing right now is that the transformation is stalling in a number of organizations because they have multiple efforts not coordinated.”
Using dashboards to capture value
In addition, a platform approach helps organizations integrate data for use in dashboards that capture operational, customer, and ecosystem value.
These dashboards can be critically important to change management efforts by giving all stakeholders access to agreed-upon metrics in real time. This gives the organization the data it needs to make course corrections.
Dr. Weill adds that digitally savvy companies have moved from a Command/Control style of leadership to a Coach/Communicate style that empowers teams and individuals. These organizations communicate their vision effectively across teams, clarify decision rights about what can be done and how, and use automation to make it easier for people to focus on transformation and adding new value.
“Employee experience and customer experience are highly correlated,” he says. “Anything we do to make it easier for employees to do their jobs, makes it easier for our customers.”
As a patron of the MIT Center for Information Systems Research (CISR), Axway engages with thought leaders like Dr. Weill to help our customers capture the full value of trends like digital ecosystems to move forward with confidence.
Download the Looking Forward 2023 report from Axway business, technology, and thought leaders and learn how API-first strategies are driving the success of digital ecosystems and other transformational initiatives.
Watch the complete video interview with Axway CMO Paul French and MIT CISR’s Dr. Peter Weill.