By: Paul Hobcraft
Today we have to “think China” when it comes to looking for the dynamism within Ecosystems and Platforms. They are leading, exploring and extending the thinking beyond our more limited ambitions in the West. It is the environmental conditions coming together or being explored and exploited that make China stand out in its dynamism in this area.
It is that combination effect of the government building, laying in ‘accepted’ guidelines and encouraging the infrastructure, it is the business entrepreneur and the social conditions that are enabling so much.
Dynamism is the quality of being characterized by vigorous activity and progress. It projects an energy, force, power and vigor and a strong desire to make something happen. It is the manifestation of these forces (conditions) that is constantly pushing the boundaries of our understanding of what is possible in the ecosystem and platform approach. The Chinese have found ways to experiment, develop and constantly create a real motion within the system.
The Chinese have found ways to experiment, develop and constantly create a real motion within the system.
We have been witnessing the dynamism and strength of their economy over a number of years. I started to visit China on a constant basis from the early nineties and each visit simply struck me was the sheer force of change occurring. You found it often hard to comprehend and wondered how so many people caught up in this were adapting and adjusting.
Each of us has a view on China, it sometimes perhaps confronts some of our Western values or sensitivities but we often make the real mistake of looking through our lens of the world and not stepping back and taking a wider prism to balance understanding and learn from this evolution, it fascinates me.
My fear is the West is either lagging or not running hard enough to keep any competitive edge for much longer unless it takes a more outwardly curious view of the world, after a decade or so of inward perspective and regain the real flair for innovation and creativity.
We are far too much orientated as incrementalists in the West. For me, one of the needs to understand, learn from and adapt is the way the Chinese are undertaking this ecosystem and platform design to harness the forces. It is not simply copying it is understanding the roots of this design to ignite our own creative juices.
Appreciating the ways of the Chinese
For me, one of the needs to understand, learn from and adapt, is the way the Chinese are undertaking this ecosystem and platform design to harness the forces. It is not simply copying it is understanding the roots of this design to ignite our own creative juices.
As you are aware from a recent post I enjoy reading Haydn Shaughnessy’s thinking, especially on Platforms. He released a new book in May of this year Platform Disruption Wave: A new theory of disruption and the eclipse of American power.
You might not agree with his contentious view on the eclipse of American power suggested in this book, but it is delivering a series of messages that we should take stock of and consider. Let me quote an early passage or two as it does paint the scene well:
“Chinese platforms are reshaping the economic system, and American platforms, in many cases, are the also-rans; whereas five years ago we needed to understand platform strategy, we now need to understand its power to disrupt whole economies.
One of my arguments is that Asian culture and it’s middle class, plus the decline of ours and the rise of the platform system are forging this epochal shift in power.
In fact, for 40 years, Asian innovation culture has contained an exceptional advantage: the ability to constantly improve. In contrast, the west has fallen in love with the hero’s journey. We are obsessed with entrepreneurial celebrity and riches and hero narratives when the real task is constantly to improve what we have.
Without a reversion to an ethos like that, we will struggle to deal with the disruption…..”
Conditions that give the Chinese a real competitive edge
1). The Social Conditions building and leveraging this part of the Chinese Dynamism
- The consumer in China is far more curious and open-minded to explore and experiment than we realize. Partly as it is a very recent phenomenon that consumerization has been available in China, offering real choice there still is a higher level of open-minded consumers.
- They have grown up suddenly on the effects of technology and love the idea of conveniences like one-stop and on-line shopping.
- They are increasingly open to new technology and the power of the mobile internet and are constantly seeking out the latest gadget, change or option to what they know, they have this open-curiosity, far more apparent than in the West, irrespective of what we see here, it is far more pronounced in Asia.
- The Guanxi effect is often spoken of. This is best described as the basic dynamic in personalized networks of influence (the relationships individuals cultivate with other individuals) and is a central idea in Chinese society. Social network penetration has become a natural extension of this.
- Lastly the realization by the Business operating in China the high value that very “sticky” high-frequency services like messaging are seized upon and are part of this extended network of exchange.
2) The Ecosystem Approach ‘feeds’ the conditions in the System
- The conditions created in China lend themselves to Ecosystems and Platforms whereas Business and Government has learned to leapfrog technologies.
- Often business has not been caught out by having a legacy in its system, conditions or approach, it tends to evolve and dispense building from scratch.
- The history of China and its evolution is edged in everyone’s mind but the recent period has been one of progress and ‘forging ahead’ with the Government designing and constructing the conditions.
- The learning and catching up has been built on the rapidly building of entirely new business systems that constantly push boundaries as technology and the learning then allows for this discovery.
- They have consciously drawn from the West (our simplistic view is ‘just’ copying) and adapted and rejected to fit within their environment.They are building unique business systems and ecosystems.
- They do possess a very exceptional entrepreneurial class, adapting within the system, bridging understanding of Chinese culture and Western approaches and blending these constantly.
- There is this constant need to push the boundaries, there is a boldness of integrating new business systems where speed is significant. With such a significant workforce of trained programmers, research investigators and technically savvy the ability to combine speed, scale and scope are forces that do combine in such a large domestic market.
- With such a significant workforce of trained programmers, research investigators and technically savvy the ability to combine speed, scale and scope are forces that do combine in such a large domestic market.
- Then they have developed the ability to ‘see’ adjacencies, to make connections in the mind of the business entrepreneur seems to be more in sync with the needs of the consumer.
- They extend services, explore and exploit quickly then scale once they find a model that is working.
- The need seems to be driven by constantly improving it. This comes far more with engagement with the end-user, building in a response and quick learning. Whereas here in the West, we agonize often over the details, keep delaying the final product on the internal mistaken belief this is the way to minimize risk.
- In today’s world speed to market is essential and the ‘adapt as you go’ works if you keep the consumer as part of your evolving journey. It is valued far more so the ecosystem thinking operates as more holistic.
The Business thinking application to Ecosystems and Platforms in China
With only a ‘recent’ history of significant growth, with the little (present) legacy in IT systems and the encouraging of multiple start-up communities the ecosystem is ripe for evolution.
- As this entrepreneurialism takes hold we have seen emerge some very visionary leaders, not having the pre-conceived ideas shaped by education or past ways, they have wanted to translate the world in the ways they see it, a little like Steve Job’s makeup of curiosity, questioning and merging makes him such an iconic person in our thinking, in what was achieved.
- China and most of Asia has very strong top-down leadership, visionary and often the ones pushing the boundaries, tasking others to explore this. They provide the ‘safety net’ for exploration. If this is lacking then it is a very different story in Asian society, one fearful of taking any risk.
- This breed of successful Chinese business leaders does seem to enjoy constantly re-inventing themselves, at their core values and understanding to create ongoing new value. They inject and project this entrepreneurial mindset, they instill in their teams this wish to push boundaries. They strive to break boundaries of accepted practice, they see this as their evolving edge.
- When you look at many of the large Chinese organizations you see that digitizing the entire organization is not a vision, it is essential to achieve, it is part of the imperative to thrive. They are embracing digital transformation, entering into a change in open curious ways. In ways , we in the West seem to do, as we often just place constraints around the possibilities to protect the existing. Boundary spanning is seen differently.
- The drive towards growing ecosystem and platforms has been a top-down journey, undertaken by digital savvy leaders, embarking upon it with the entire organization.
- The value of big data analytics and AI are increasing core within the system to learn, gain insight and engage with the ‘points of engagement’ made constantly by the consumer.
- This knowledge is then rapidly absorbed and the system designs, experiments, learns and evolves, to this constant flow of change.
- The incredible resources to ‘call upon’ in skilled labor and especially its software and developer base is a truly competitive advantage
Banking in Ecosystem and Platform approaches for Chinese understanding
Haydn has written an excellent paper with Zenon Kapron on the banking changes going on in China. They explore The BAT (Baidu, Alibaba and Tencent) as highly scaled internet and mobile platforms with an IT architecture that is coincidentally primed for digital banking. The BAT are now banks. In fact, they are the world’s first true digital banks.
They provide this as a ‘teasing’ opener:
“Backed by a growing capital base that is never tied up in inventory, the financial platforms of China’s big tech companies are powered by big data, informed by automated feedback loops from customer activity, driven by business experimentation rather than IT, function at an unprecedented scale and operate at a new degree of service integration. All the while they are protected from global competition through China’s use of the omnipresent Great Firewall (GFW), selling to consumers who are captive to the China Internet environment”.
Go explore Chinese adoptions of Ecosystems and Platforms- they fish differently.
To investigate any of the following: of Alibaba, Tencent, Baidu, Alipay, or exploring Sesame Credit and how it works (part of Alibaba) and Taobao gives you a distinct understanding of the evolving power of some of the top Chinese platforms and ecosystem designs.
As Jack Ma said, the founder of Alibaba: “We are interested in catching shrimp, not the whales. When you catch
shrimp, then you will also catch the whales”
As Haydn writes, “Alibaba doesn’t hunt whales, the company never takes on western giants in their backyard. They play the long game, preferring to develop new markets as western institutions withdraw.”
The long game is very much part of Chinese thinking, presently their backyard is stacked against the Western firm to compete on equal ground. Understanding the ‘possible’ boundaries and learning to build and compete in Ecosystems and operate within multiple platforms is a global competitive imperative, we all need to compete in new ways.
There is a lot to learn and understand in exploring the approaches that the Chinese are taking in their thinking about what makes their Ecosystems and Platforms work. This is in delivering value, in extending reach, scope, and scale; speed is of the essence but they are constantly evolving and pushing the boundaries of what is known and accepted into the connected.
Understanding the ‘possible’ boundaries and learning to build and compete in Ecosystems is a global competitive imperative. Look out to see what is possible but in any Ecosystem design, you must learn to be highly adaptive and responsive.
By Paul Hobcraft
About the author
I simply enjoy researching innovation, applying this to provide novel solutions and advice, coaching and consulting to individuals, teams and organizations through my business, Agility Innovation Specialists. As an advisory business we aim to stimulate and deliver sound innovation practice, researching topics that relate to innovation for the future, as well as align innovation specifically to organizations core capabilities.I write and contribute different views on innovation and its management through my own blog, paul4innovating.com and contribute into the different and leading providers of innovation knowledge.
This article was first published at Ecosystems4innovators