IoE

Blockchain and business ecosystem design

What if… all information, data, property rights, and monetary values could be transferred securely, cost-effectively and comprehensibly in decentralized structures? This could see new business models and market opportunities emerging. One of the drivers behind these new kinds of structures and ecosystems is the emergence of Blockchain. Because transactions in this digital ledger are recorded chronologically and publicly, certain market participants lose their reason to exist. In particular, the numerous intermediaries who have been lucrative from their transaction-based business models over the years.

If you want to survive, you should take heed and change now, because the value streams are being redefined, right now. Blockchain technology allows radical innovations across all industries and innovative start-ups, and companies are increasingly relying on a new central capability – the design/redesign of business ecosystems.

Decentralized ecosystems

For the new design paradigm, a traditional way of thinking about differentiation and business model design will no longer be adequate. The digital business ecosystems work differently:

It is not centralistic customer-supplier networks in the classical sense that are oriented towards a company, or serve a linear customer experience chain. Digital business ecosystems often have no center and many partners act equally in the network. Companies that have already successfully designed business ecosystems, are generally strongly focused on the user/customer.

The goal of such a system is for the business ecosystem partners to create value through a coordinated value system that is accepted by all.Together, they can define cross-industry offers. In the end, the ecosystem should deliver the maximum benefit for all partners, mostly supported by new technologies, such as blockchain.

The user/customer is also central here, benefiting from the simplicity and positive experience of the coordinated range of services. Well-known digital ecosystem designs from the last decade come from companies like WeChat, Amazon or Apple.

In the case of the blockchain, it is not only a matter of mastering a new technology but also of rethinking our current market role, value streams, and existing business ecosystems. This is a complex system in which many elements have to be (re)designed.

Black ocean strategy

In the singular view of a business model in the past it was sufficient to think in the blue ocean model (Mauborgne & Kim). In this view, the creative and cross-border redefinition of market services was central in setting us apart from the competition. The goal of a “black ocean” strategy, however, is to make market entry impossible for competitors. The existing rules are changed, new framework conditions created, and an “unfair advantage” built up and used accordingly.

A haven for business ecosystem design are projects where blockchain is used as enabler technology. The new distributed networks enable processes, and use existing business models to revolutionize value streams and transactions. Well-known business model designs quickly reach their limits here, as they mainly focus on the primary business of a company, and only look at the company’s own direct customers and suppliers. A multidimensional view of the partners in the ecosystem, along with their value streams, is often missing.

How to design a business ecosystem

The business ecosystem design follows the mindset from “design thinking” which has experienced a revival in the design of digital transformation in recent years. Many companies have even set themselves the goal of aligning their principles with the design thinking mindset. This relies on a strong customer/user focus, an iterative approach and co-creation to finally test prototypes with the potential customer, and to build the first minimum viable products resourcefully.

The main steps from start-to-MVE (Minimum Viable Ecosystem):

As mentioned before, the central starting point in business ecosystem design is the customer/user with their needs, based on a defined problem statement. We use our well-known design thinking tools such as customer experience chains, customer profiles and personas. Then, the design of the ecosystem usually takes place on two levels: customers/users and business, including the associated technologies and platforms. Our business ecosystem model has a total of ten stages which are broken down into a “virtuous design loop,” a “validation loop,” and a “realization loop.”

Always note that effective business ecosystems are designed such that all partners benefit from the value streams. 

How do we start in the virtuous design loop?

1) Determine the core value proposition

2) Determine and describe the partners in the business ecosystem

3) Arrange the partners in the different areas of the ecosystem map

4) Define the value streams and connect the partners with the value streams

5) Create awareness of the advantages and disadvantages of each partner

6) Multidimensional view of the business models of all partners in the target business ecosystem

7) Design/redesign the business ecosystem

What happens in the validation loop?

8) Look at the decision-makers and potential team members in the business ecosystem

What happens in the realization loop?

9) Form a motivated team for the design of the new business ecosystem

10) Build the business ecosystem step by step with an MVE

Summary of core capabilities in business ecosystem design

A mature digital ecosystem has the following characteristics:

  • Focused on the user
  • Loosely coupled and designed for co-creation
  • Consisting of networked and decentralized system elements
  • Coordinated and accepted value systems of the actors
  • Cross-industry offers
  • Designed for maximum benefit for all participants
  • Step-by-step development of a MVE


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    About The Author

    Chief Innovation Officer

    Dr. Michael Lewrick has had different roles over the last few years. He was responsible for strategic growth, acted as Chief Innovation Officer and laid the foundation for numerous growth initiatives in sectors that are in a transition. He teaches Design Thinking as a visiting professor at various universities. With his help, a number of international companies have developed and commercialized radical innovations. In his new book release, “The Design Thinking Playbook”, he postulated with his colleagues from Stanford University a new mindset of converging approaches of design thinking in digitization. Currently, he focuses on the Design of Business Ecosystems for Blockchain applications in the Crypto-Valley Switzerland.

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