What Comes After Social Networks and Cloud? Customer Ecosystems

Here’s an emerging pattern that we’ve been following for over a decade. We believe the time is right for these to begin to really take off.

Customer ecosystems self-organize around things that customers care about and need to get done, like manage their money, manage their health, design a winning product, take a family vacation, embark on a new career, or complete successful projects at work or in their communities. They’re customer-driven in that customers get to decide what activities and resources they need, who they’d like to have as suppliers, and what constitutes success. So, a customer ecosystem is a business network that’s aligned to help customers get things done—both the things they want to accomplish and the things they want to manage.

A number of visionary companies have been investing in and co-evolving these networks around their brands and with their partners. We’ve been following some of these customer ecosystems for a long time. They include:

• The customer ecosystem National Semiconductor built around its WEBENCH^® design tools
• The consumer and partner network that South Africa’s Discovery Insurance has built around its Vitality Wellness program
• The thriving global ecosystem that Zazzle has built around its custom printing business

Now it’s time to lay out the principles of what constitutes success.

What Are the Six Critical Success Factors for a Viable Customer Ecosystem?

1. Help customers achieve and/or manage something they care about.
2. Design for specific target audiences.
3. Provide a “secret sauce” that transforms customers’ ability to get things done.
4. Attract partners & suppliers who can contribute to these customers’ success.
5. Align the entire ecosystem to meet customers ’ success metrics.
6. Embed, co-brand, and be ubiquitous so customers will encounter and use your secret sauce no matter what their starting point is.

What do we mean by a “Secret Sauce?” For National Semiconductor, it’s a set of sophisticated tools that enable customers to configure, test, and optimize their electronic designs, including real-time information about parts availability and pricing from hundreds of suppliers and distributors. For Discovery Vitality, it’s a set of scientifically-based health and wellness indicators that health insurance customers are incentivized to meet, along with a vibrant network of health and fitness partners. For Zazzle, it’s the combination of their patented printing technology, their ability to leverage their customers’ creativity, and their deep understanding of how to create stores within stores within stores.

To be successful, you’ll need to truly change the way people are able to accomplish their goals and manage their activities. Otherwise, you’re just providing a step change, and it will be easy for customers to get things done without your help and for competitors to imitate. Most of the successful customer ecosystems we’ve found have developed and evolved their secret sauce over at least a decade. Not only do you have to transform how customers do things, but you need to co-evolve that enablement and learn as you do so. You can’t shortcut the 10,000-plus hours of co-evolution that are required to make a real difference in peoples’ lives.

Will You Miss the Next Big Thing?
It’s possible that we’re wrong. Maybe customer ecosystems will remain a little understood, esoteric niche market. We’re often so far ahead of the market that it takes years for people to start behaving in ways we predict. But here’s the question: Can you afford not to get started? What if we’re right, and you have the opportunity to build a sustainable brand franchise and vibrant ecosystem whose combined revenues and impact on peoples’ lives is a hundredfold what you could achieve through simple organic growth of your company? What do you really have to lose? All we’re actually proposing is a different way to think about how to design and implement your next customer-touching initiative.

The Next Big Thing: Customer Ecosystems
Six Secrets for Designing Business Networks Aligned To Help Customers Get Things Done
By Patricia B. Seybold, Patricia Seybold Group, January 12, 2012

Comments

[American]

The next big thing is WE-commerce, which will materialize as government-owned (partially or wholly) enterprises and/or large private customer-owned mutual corporations.

It will be interesting to see what the mix looks like in thirty years. I hope large customer-owned mutual corportions win the day, but when I look at society, I realize the caliber of people today probably isn't up to it. They will most likely repeat the failed Soviet experiment of the 20th century instead.

[Patty Seybold]

Adi,
I agree about "self-organizing".. In the examples I've tracked, the purpose and the goals are very clear.. what's "self-organizing" are the partners who wind up joining in because they have capabilities that customers actually need and value. This is where a CUSTOMER ecosystem varies from a marketing-driven partnership..

[Adi Gaskell]

Hi Patty,

I think you're pretty much spot on here and this use of social technologies will be a massive part of how companies operate in the next decade.

One thing I will state however is the importance of defining the purpose of your community at the outset. Whilst self organisation is great once that pricinple is in place, without it it's rare for a community to flourish.

This is where good community management comes in. They can ensure that both a strong purpose is created at the outset and that the community maintains that focus as it grows and emerges.