TLP310: See What Others Miss

Ron Adner is the leading strategy thinker on the topic of business ecosystems. He is the author of The Wide Lens: What Successful Innovators See that Others Miss and a new book, Winning the Right Game: How to Disrupt, Defend, and Deliver in a Changing World. Ron shares important insights on the language of strategic alignment to help you navigate the new world of coalitions and ecosystems. If your new value proposition requires rewiring your relationships - you’re in an ecosystem where there is interdependence. It takes a new language to teach new strategies, and the rewards can be great. Listen in to see if you should be shifting your perspective.   Key Takeaways [2:10] Much of what Ron writes is on how to think about innovation and make sure you are doing the right work. He stresses efficient, effective action. [3:24] What kind of shifts will disrupt your ecosystem? Modern disruptions change the ecosystem, for example, making a change in how healthcare is delivered and changing the boundaries of industries. [7:11] The COVID-19 pandemic disrupted the work ecosystem. It’s a virus; it’s supposed to stay in its healthcare box. It broke through boundaries to affect international relations, trade, supply chains, and more. An ecosystem disruption requires an ecosystem response. Ron shares a link for listeners to read Chapter 1 of his book, for free, to learn about the challenge we are all facing. [10:45] In 95% of conversations where people use the word “ecosystem,” you could substitute the word “mishmash,” with no loss of meaning. Ron claims there is a lack of structured thinking about ecosystems. He shares a specific definition of ecosystem, and how it connects to whether or not your new value proposition requires rewiring relationships. [12:53] Hans Rosling wrote in Factfulness about the secondary and tertiary effects of the globally important decisions we make. Ron says people can’t confidently discuss third-order consequences. His work is built on the structure of interdependence; understanding the system that is implied by a value proposition. Think about the structure of the system that needs to come together for the proposition. [16:35] Ron believes that if we can think more broadly about the set of parties we are going to interact with, a lot of things become easier to see. It requires flexibility and true empathy for the counterparty’s position. [18:36] When writing his book, Ron discovered that the structure of interdependence is changing. It’s necessary to know what the changes are. In Jack Welch’s GE, it was clear what the industry was and easy to rank who was number one. Today, all sorts of parties are on the same game board playing different games. Choose the game you want to win! Winning the wrong game can feel a lot like losing. [21:05] Meeting the clients’ needs better than the competition was the traditional execution lens and it is still needed. But is that all that’s needed? Is your ability to deliver on that promise entirely within your capability set, or are you going to be relying on other parties and partners to do something to enable you to deliver, not your product or service, but the value proposition that you’re making? [22:50] Is it better to follow the traditional execution of the value proposition? It depends on whether you have easy access to the abilities and resources needed to deliver on that proposition. If not, you need an ecosystem of partners that can do something to enable you to deliver on the value proposition. And you need to put them on the same pedestal to maintain the value proposition. [23:45] Ron shares a case study from Michelin, and their run-flat tire. They didn’t invest enough in their service garage partners and the product collapsed. Critical partners are just as important to strategize for as your end consumers. [24:50] Jan cites Steve Justice, former program director for Lockheed Martin, saying, “You’ve got to stand in the future. And if people are laughing at you, you know you’re far enough out there, that you’re standing in the future.” [25:48] Ron suggests asking, “What do we need to get there?”, “Who do we need to get there?”, “How do you align them?” He explains the differences between a project and an ecosystem. In an ecosystem, your partners may not know that you’re planning to rely on them. In a project, everyone knows who the manager is. In an ecosystem, there is no hierarchy of authority. You rely on strategic alignment. [28:48] An ecosystem that’s functioning well is one that’s in balance. [29:42] Chapter 6 of Winning the Right Game is an attempt to understand what individual leadership means when you’re playing in the ecosystem game. There is a distinction between the execution mindset required to succeed in a setting where the leader puts his organization first, and the alignment mindset required to align different organizations into an ecosystem coalition, putting the coalition first. [33:27] Jim refers to Joseph Pine and James Gilmore’s concept of the experience economy, where the experience, not the service, is the greater value proposition. Ron talks about Amazon and Alexa’s value proposition for the smart home and how they surpassed Apple, Google, and Microsoft to lead in smart homes, and how Tesla surpassed GM in electric cars. [37:25] Some leaders can’t make the jump from leading others to leading the organization. Ron says there are different categories of leaders. We need execution people in industries. For others, building coalitions comes more naturally. Most of us are not at the top of the organization. Ron describes a mindset that is helpful for middle executives in choosing the projects they want to be in. [41:22] The language of strategy is inadequate for today’s tasks. Ron suggests using the chapters of Winning the Right Game to communicate what underlies your strategy. Use the new language of strategic alignment to educate the people below and above you in the organization. [46:04] Ron summarizes. Chunks of the world operate in an industry mindset. Chunks of the world are shifting toward an ecosystem situation. First, figure out what side of the world you are in. Use the industry toolbox for industry. If your opportunity relies on a new set of collaborators and a new mode of collaboration, use the new ecosystem strategic alignment toolbox. If you get it right, rewards are great. [50:02] Jim invites listeners to visit and closes with a Stanley A. McChrystal quote that leaders should be like gardeners, creating and maintaining a viable ecosystem in which the organization operates.   Quotable Quotes “The key in a difficult world is efficient, effective action.” “Classic disruption … was a study of identifying substitute threats while they were still off the radar. … All that disruption was really a technology substitution.” “When I talk about an ecosystem disruption, it’s this disruption that doesn’t change the technology within a given box. It changes the boundaries that used to define these boxes that we can think of as traditional industries. That, I think, is what we’re seeing, more and more.” “An ecosystem response is one where a coalition of actors is pulled together. ” “When I talk about an ecosystem, I have a very specific definition in mind. … It’s the structure through which partners interact to deliver a value proposition to an end consumer.” “The ecosystem, then, is anchored not in any given actor, not in a firm, but in a value proposition and the structure through which multiple partners interact.” “Whenever you have a value proposition that requires a rewiring of relationships, that’s when you’re moving into this ecosystem world, which, I will argue, requires a new strategy toolbox to draw from.” “When you have a new proposition that doesn’t require rewiring [relationships], you don't need to worry about this ecosystem stuff. You can go back toward traditional tools.” “Your challenge is not just winning but choosing the game you want to win. The threat, of course, is that you can win the wrong game, and winning the wrong game can feel a lot like losing.” “Can you execute in a traditional execution way, or do you need to rely on an ecosystem? Why do we see firms relying on partners? It’s because they don’t have easy access to the capabilities or the resources.” “How is it that great people are succeeding in one setting and being less successful in the other?” “In the real world, if you're in a room and you’re the only person with the right answer, you're totally useless. Your job is to get everybody else to the right answer, and that requires language.” “It’s not saying there’s a new world order or everything has changed. It’s saying some things have changed and perhaps you’re in a situation that might be different but it doesn’t mean everything is.”   Resources Mentioned Sponsored by: