A design-led approach to embracing an ecosystem strategy

Embedding design thinking, methods, and tools from the outset of ecosystem development will help companies produce integrated ecosystem offerings that delight customers, stave off threats, and create new sources of value.

Business leaders around the world are increasingly turning to the ecosystem business model to achieve top-line goals such as growing core businesses, generating revenues from new products and services, and creating new value pools. The appeal of ecosystems — interconnected sets of services through which users can fulfill a variety of cross-sectoral needs in one integrated experience — has only grown as the global pandemic accelerated consumers’ migration to digital. Consumers are embracing this shift, with 71 percent saying they’re ready for integrated ecosystems.

Indeed, by 2030 the integrated network economy could account for 25 percent of the total economy — up from 1 to 2 percent today. A fringe topic just a few years ago, the ecosystem model is increasingly important and relevant. Customer demand is clear and measurable. Many companies of all sizes and industries have started developing cross-sector ecosystem offerings, and the financial markets have acknowledged the power of ecosystem plays.

Define the ecosystem strategy

Many business leaders don’t know how to select the ecosystems, or how to identify those opportunities with the highest value. Shaping the ecosystem strategy requires focused, design-led work in three areas:

Identify the most relevant trends. A mix of social, economic, and technological trends influence how consumers behave and what they need and want from their products and services. Forecasting is a powerful tool for understanding where these trends are headed. Designers can use trend forecasts to develop scenarios that envision how consumers across sectors and markets are likely to respond to changes, and how the company could expand its products and services beyond the core to better connect with consumers and serve them. Because they tend to be adept at divergent and convergent thinking, designers offer distinct value in these exercises and can help find innovative, expansive solutions.

Plan a desirable ecosystem and identify the value pools. An ecosystem strategy should focus on high-growth areas that align with the organization’s business ambitions and capabilities. Design-research methods such as ethnographic studies, coupled with quantitative research—for instance, market sizing and value-pool analysis—can help the company home in on the use cases, customer segments, and new products and services with the highest value, and assess whether it can address them.

Tightly define the core value proposition. When shifting to ecosystems, many organizations fail to leverage their distinctive advantages to crystallize the specific customer-value proposition. The most distinctive propositions sit at the convergence of customer data, market trends, customer experience, business ambition, and vision. A series of design-facilitated co-creation sessions that put all of these considerations on the table can be helpful in generating a list of potential propositions. Notably, these propositions should not be limited to a channel or market; rather, they should reflect consumer behavior trends that cut across sectors. The next step is to evaluate each potential value proposition on the basis of current business capabilities, customer needs, and growth potential. From there, business leaders can choose the core value proposition for their ecosystems, including estimates of their value.

Design the ecosystem

The new ecosystem design will need to start with the customer’s view and deliver on the agreed-upon value proposition and experience. To achieve this, organizations can consider three domains: consumers, sectors and partners, and products and services. Design has a central role to play in each.

Build the ecosystem

To achieve success with ecosystems, it is crucial to create a flexible and agile operating model that is capable of not only continually rolling out new solutions but also managing the entire portfolio of value propositions by addressing failures, branching out into new areas, and pivoting the focus along the way. Bringing designers together with business strategists, developers, and product owners to collectively solve problems and shape solutions leads to superior results.

Additionally, a new governance model can help ensure that design is truly integrated into the ecosystem operating model. It can clarify design roles, methods, and activities from strategy to ongoing delivery, outlining expected outcomes at each stage. Design role models and organization leaders need to continually reinforce the governance model and promote the value of a design-led ecosystem with ongoing training and education.

Source: https://www.mckinsey.com/