Article The Problem with Legacy Ecosystems (Wessel, Levie & Siegel, 2016)
6 important questions on Article The Problem with Legacy Ecosystems (Wessel, Levie & Siegel, 2016)
Why is it that so few of the powerhouses of the 20th century are leaders in the new data-driven
world?
Because all companies’ internal systems are set up to support their existing business models. These
systems are well established and extremely difficult to change, and they often conflict with the needs
of digital business models.
Software transforms customer relationships
The success of successful companies is built on an ability to reach further into a customer’s world
than competitors do.
The ability to connect more personally with customers creates a huge opportunity for companies to capture data about the market, supply new products/services and build extremely defensible network effects and feedback loops.
- Tesla equips its cars with sensors and software to understand how customers drive and to
offer them autopilot functions
However, transforming a customer relationship is not simple; it requires doing things differently up
and down the value chain.
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Most corporate strategists fail to grasp that software alone will not transform their business model. Not only software need to change but also how products are distributed and serviced.
- when companies use digital technologies to form new relationships with customers, software development is only part of the process.
- Sometimes this is because companies seek to change customers’ behavior at various points in the customer journey.
- Sometimes it is because delivering value involves using the data collected to supplant former partners.
- In either situation, business models and channel strategies must change in unison—requiring tough decisions that can upset long-standing partners.
The best way to manage the transition from one business model to another:
2. Develop better metrics
3. Create commercial opportunities for partners
3. Create commercial opportunities for partners
- There is no way to avoid negative impacts on some of your ecosystem partners.
➢ Example: HBO might have to go around a cable company’s set-top box and deliver apps
directly to consumers.
- Where possible, it is vital for firms to create new opportunities for both themselves and their partners. As the overall economic pie gets bigger, firms can offer more pieces to others in the value chain.
- Whatever your business, creating commercial opportunity for your partners is a powerful tool in helping them embrace your vision.
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