Blog

Kaihan Krippendorff shares an article that explores ecosystem collaboration and how companies are collaborating across the customer journey to venture into new areas of business.

In a 2001 commercial, a man sits at his desk in front of a MacBook computer (the Apple logo lets the viewer know). He starts nodding his head along with a rock song that plays from the speakers. The nodding progresses to a full body jam session, and the man adds the song (“Take California” by Propellerheads) to his list of favorites. It’s instantly uploaded from the laptop via USB to a card-sized device nearby. The song pauses as he grabs the device and pops in headphones. The music resumes, and he’s free to leave his desk and dance out of the room.

That commercial was the first for Apple’s iPod, a revolutionary MP3 player that could hold 1,000 songs in a pocket-size 6.5-ounce package. Before then, Apple made computers. The iPod was a pivot into consumer electronics. Even later, when the company would go on to produce phones and tablets, the question “What industry is Apple in?” was relatively easy to answer. If “Computer Manufacturer” didn’t quite fit the bill of the iPod and iPhone, “Technology” was an acceptable umbrella. It’s listed as such on the NASDAQ exchange.

This month, however, Apple’s new high-yield savings account attracted close to $1 billion in deposits in the first four days. Hold on a minute. The trend-setting company that used to make us dance around blaring pop songs is now acting like … a bank?

Ecosystems blur boundaries between industries

While the ability to deposit your money where you used to deposit your iTunes playlists may feel unexpected, Apple’s transition into financial services by partnering with Goldman Sachs is part of a larger pattern we’ve been following for a while. Through ecosystem collaboration, traditional industries are combining into something else. Columbia Business School Professor and Strategy Expert Rita McGrath calls them “arenas.” Miklos Dietz, senior partner at McKinsey, says the ecosystem economy will drive a new age of sectors without borders. Mohan Subramaniam, IMD Business School Professor of Strategy & Innovation, agrees it’s time to move past the boundaries of the Industrial Era to a new paradigm for the Digital Era.

The lines around industries were drawn by physical resources and supply chains, while arenas are driven by customer desires. According to McGrath, “An arena represents a set of resources that [a customer needs], with different players vying for those resources, each of whom may offer something quite different.”

Think about a customer buying a home. Of course, they need a physical dwelling. They will also need the financial services to take out a mortgage, appliances to reside in the home, and furnishings to decorate. For this reason, the “homes” ecosystem is reorganizing around customer needs—companies are collaborating across the customer journey, from the mortgage lender to the builder to the contractor who will redo the bathroom or the kitchen.

Key points include:

• Existing competitors in the industry
• Potential of new entrants into the industry
• Power of suppliers

Read the full article, It’s Time to Look Beyond Industry Boundaries, on Kaihan.net.