Companies can no longer survive using the old business model and doing what they’ve done before, only better, faster and cheaper. That’s why, according to authors Ralph Welborn and Sajan Pillai, companies are falling off the Fortune 500 list and this “topple rate” has accelerated. In their new book, Topple – The End of Firm-Based Strategy and the Rise of New Models for Explosive Growth (Greenleaf Book Group Press, May 29, 2018), Welborn and Pillai describe the new business landscape and how companies can go about discovering previously unseen components, connections and explosive growth opportunities.
Pointing to the most successful and explosive growth leaders of today — Tencent and Tesla, Amazon and Alibaba, Gilead and Google, Microsoft and Martin Marietta Materials — they show how each used an “ecosystem” perspective to determine where their customers spend their time, energy and monies, and to define new ways in which to engage with them. The new strategic questions to ask start with: “Where is value being created and destroyed in the ecosystem you and your customers are engaged in?” and “How do you shape, influence or fit into that ecosystem to capture that value?”
Importantly, capturing value within a business ecosystem requires capabilities, products and services beyond those any one company can provide. For example, Airbnb and Uber both found ways to capture explosive growth opportunities through tapping into today’s sharing economy to meet market needs. For Uber, this includes connectivity through mobile carriers, banks or credit card companies for payment transactions and car owners for transportation. Airbnb developed a similar business model for meeting lodging needs. Both were able to accomplish explosive growth by solving a specific customer or market problem from the customer’s perspective.
Getting to an ecosystem mindset requires reassessing the foundations of value upon which a company is based. The authors point out the need to “excavate back” to the essential assets that support what the company does. By finding where value is being created (or destroyed) within the ecosystem that they operate within, the company then must orchestrate other players who, together, have the capabilities to “own” that market opportunity.
Not only can this ecosystem-centric approach to business strategy open up new opportunities for companies, it can help to solve what the authors refer to as “wicked” problems — those for which the economics don’t make it possible for any one organization to tackle alone. They provide examples from within the medical industry to show how incentivized groups, including pharmaceutical companies, government agencies, medical clinics and other stakeholders, have set out in an orchestrated fashion to address antimicrobial resistance (AMR). Each achieves greater value — in the form of economic value, health outcomes and more — through a collaboration that provides products, services and capabilities.
Topple makes the case that different types of organizations with a range of capabilities can respond more quickly and effectively to changing market needs, and to society’s wicked problems, than a single organization with a smaller set of capabilities. In this way, if one wins, we all win.
Learn more at www.topplebook.com.