The Marketing Journal
  • About
  • Interviews
  • Articles
  • Videos
  • Book Reviews
  • Views
  • Subscribe
“Networks and Platforms: The New Means of Value Creation” – Christian Sarkar

“Networks and Platforms: The New Means of Value Creation” – Christian Sarkar

March 10, 2020

As the leading management conference in the world, the Global Peter Drucker Forum serves as a conduit of powerful ideas and insights for both business and society.  In 2019, the conference theme was The Power of Ecosystems

My observations are from the Plenary Session 2, Day 1, from the Global Peter Drucker Forum, 2019. Chaired by Adi Ignatius, Editor-in-chief, Harvard Business Review Group, the panel included: Vinton G. Cerf, VP and chief Internet evangelist, Google; Michael G. Jacobides, Professor, London Business School; Miriam Meckel, Founding publisher ada, Handelsblatt Media Group; Amy Webb, Founder, Future Today Institute; Professor Stern School; Zhang Ruimin, CEO and Chairman of the Board of Directors, Haier Group

The Biggest Risk for Business: Focusing on the Product

Adi Ignatius started with the intriguing statement that the biggest risk for companies now is to focus on their product, an idea he attributed to panelist Zhang Ruimin. “If companies are not thinking about a broader ecosystem of customer experience they’re going to be left behind.”

So how should we think about ecosystems?

Marc Jacobides explained that while we might speak of ecosystems in metaphoric and playful ways, it is firms like Haier that are creating a “dense web of relationships that are operating across their own boundaries whose power rests on structured sets of collaboration.” Opportunities for value-creation emerge because technology allows us to revisit how we add value and reorganize the value chain.

Vint Cerf expressed that as an engineer, he wanted “stability, interoperability and the ability to adapt to change.” Google has reorganized itself internally to “make the ecosystem work well.” It has created a core group focused on “making the ecosystem function technically and uniformly,” he explained.

Will Platforms Survive?

Adi then asked: “Do you think the current platform model will survive?”

Miriam Meckel suggested that there were two pathways. One, a continuation of the current platform monopolies which will continue to grow via network effects and create “gargantuan wells of data”; if this continues, she surmised, there will be a bifurcation of the Internet based on politics – with a Western internet and a Chinese internet with its social credit system.  Two, the “breakup of Big Tech” – as proposed by Elizabeth Warren – which will create a more competitive landscape with more viable platforms emerging. This model could encourage public value creation opportunities, she implied.

Vint Cerf insisted that there was a third way, beyond monopoly and competition, which was collaboration and cooperation. He said there was a path that allows collaboration and cooperation, even while you compete with each other, but where you don’t feel trapped in a particular piece of an ecosystem.  His example was Kubernetes, the open source container orchestration system for automating application deployment, scaling, and management.

What is an Ecosystem Brand?

Adi asked Zhang Ruimin: “You’ve called Haier an ecosystem brand. What does that mean for your business strategy?”

He started bluntly – “We all need to transform into ecosystem companies or we won’t be able to survive.”  “Haier,” he explained, “has been one of the been ranked as one of the largest white goods manufacturers in the world, but now we want to transform into a major ecosystem.  In the future I think single standalone products are no longer valuable. What’s more valuable is a user case scenario where all of the appliances are connected together.”

Users want the best experience – a total experience.  He continued, “Haier is working on an Internet of food which connects oven, microwaves, stoves, and refrigerators; the connected appliances talk to food producers and cook and recipe providers so that our users are not simply using the appliances but accessing the best food ingredients and the best recipes so it’s about the experience of food. Partners join us because they can grow 15% (per annum) in China using the Haier ecosystem as a channel. This means that we are no longer fighting alone but fighting together for our users.”

Ruimin saw two trends for the future: one, where products are replaced by integrated use-case scenarios and, two, where ecosystems overlap and cover different industries.

Ruimin said that deal sizes might be sixty thousand dollars instead of a few hundred dollars, showing the value of this approach.

To demonstrate this, Haier uses its experience stores to showcase the ways in which products are embedded into the daily life of the consumer.  The smart home has a smart kitchen, a smart living room, and a smart balcony.

More intriguing is how Haier then engages the consumer in an ongoing “conversation” to continuously improve the living experience. Most customer relationships end with the sale, but here the relationship actually begins after the sale!

SIDENOTE: Inspired by Ruimin – Philip Kotler and I came up with the idea of an “Internet of Purpose” at this very moment.

How Should Companies Prepare for the Future?

Adi then asked: “How should companies prepare for a future where they may have to participate in ecosystems?”

Amy Webb pointed out that one of the challenges is based on how humans use language.  While we tend to speak in terms of metaphors, we need to get far more specific to address the issues presented to society by AI and Big Data. “There’s a lot of misplaced optimism and fear about this,” she said, “ with a lot of our cues coming from science fiction, where we’ve got very clear ideas of what the future might look like: for the most part it’s robots coming to murder us in our sleep, or robots taking our jobs.”

The real issue, she says, is that we don’t have a lot of transparency and clarity around data policy.  At the highest levels of business, she finds there is almost no discussion of data governance.  This is important, she explains, because “we’ve had a leadership vacuum in the United States over the past few administrations, while in other areas of the world, we currently have conflicting ideas of the future of data and AI.”

Webb’s concern: “what if some of these companies started trading on this proprietary data in a way that that might cause a new kind of an inflation that we’ve never seen before, a new kind of housing bubble or problem?”

Webb also brought up the tale of two internets – US vs. China, and with it her concern that we are witnessing a restructuring of the world economy and a future of deep uncertainty.

Organizing as an Ecosystem: The RenDanHeYi Model

“In the era of the Internet of Things, companies need to become ecosystem companies.”

With that statement, Zhang Ruimin began explaining the ecosystemic organizational structure of the Haier Group. “We have created a RenDanHeYi model which means aligning our employees with the needs of the user.”

Translated, “Ren” is employee, “Dan” is “user needs,” and “HeYi” is “the connection between each employee and the needs of each user.”

Ruimin explained how The RenDanHeYi model lets go of the traditional “command and control” management paradigm.  At Haier, the traditional management model has been replaced  to create a network of thousands of micro-enterprises, each a small team of about eight employees.

“Peter Drucker said that in 21st century companies everyone will become our own CEO.  This is what we are doing. CEOs have three powers: the decision-making power, the HR power, and the power to set compensation. We gave these three powers back into the hands of our micro enterprises.”

Ruimin also explained that when other companies came to study Haier, he would ask if they could give up the three powers to their people.  The answer was always “No.”

The only other companies we can think of that have done something similar and sustained it over time are the Semler Group (now Semler Partners) in Brazil and W. L. Gore & Associates, Inc. in the US.

This is the true meaning of “Leadership Everywhere,” the theme of next year’s Drucker Forum.

FURTHER READING:

  • Picking The Brain Of The World’s Most Radical CEO: Zhang Ruimin – Corporate Rebels
  • An Entrepreneurial, Ecosystem Enabling Organization – Simone Cicero
  • In the Ecosystem Economy, What’s Your Strategy? – Michael Jacobides
  • The Big Nine: How the Tech Titans and Their Thinking Machines Could Warp Humanity – Amy Webb
  • Mein Kopf gehört mir: Eine Reise durch die schöne neue Welt des Brainhacking – Miriam Meckel
  • What we need to do to fix the web – Vint Cerf

WATCH THE ENTIRE SESSION >>

About the Author

Christian Sarkar is an artist, entrepreneur, and consultant.  He is the founder of Double Loop Marketing LLC, a marketing consultancy, and Ecosystematic, an ecosystem mapping tool. He’s also the co-author of Brand Activism: From Purpose to Action, a book written with Philip Kotler, the “father of modern marketing.

This article is one in the Drucker Forum “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems”, taking place on November 21-22, 2019 in Vienna, Austria #GPDF19 #ecosystems

Related Posts

“Technology and the Common Good” – Christian Sarkar and Philip Kotler

B2B Marketing /

“Technology and the Common Good” – Christian Sarkar and Philip Kotler

“Wicked Problems” – An Interview with Philip Kotler and Christian Sarkar

B2C Marketing /

“Wicked Problems” – An Interview with Philip Kotler and Christian Sarkar

“Cultural Presence: The Social Function of Milan Design Week” – Barbara Dal Corso

Branding /

“Cultural Presence: The Social Function of Milan Design Week” – Barbara Dal Corso

‹ “81 Creativity Triggers To Energize Your Ideation Process” – Anthony Ulwick › VIDEO: “5 Keys to Cross System Problem Solving” – Panel, Global Peter Drucker Forum
A D V E R T I S E M E N T
A D V E R T I S E M E N T

Recent Posts

  • “Technology and the Common Good” – Christian Sarkar and Philip Kotler
  • “Cultural Presence: The Social Function of Milan Design Week” – Barbara Dal Corso
  • “Wicked Problems” – An Interview with Philip Kotler and Christian Sarkar
  • “Dragon proofing your legacy brand” – Grant McCracken
  • OP-ED: “Autopsy Of a Brand: Tesla” – George Tsakraklides
  • “The 5th P is Purpose” – Christian Sarkar and Philip Kotler
  • “The CEO-as-Brand Era: How Leadership Ego is Fueling Tesla’s Meltdown” – Ilenia Vidili
  • “The Future of Marketing is the Quest for Good” – Christian Sarkar and Philip Kotler
  • “Questions for the New Year” – John Hagel
  • “Enlightened Management – An Interview with Gabriele Carboni”
  • “If you’re not thinking segments, you’re not thinking” – Anthony Ulwick
  • “Does Marketing Need Curtailment for the Sake of Sustainability?” – Philip Kotler
  • ‘Social profit orientation’ can help companies and nonprofits alike do more good in the world by Leonard L. Berry, Lerzan Aksoy, and Tracey Danaher
  • “Understanding Hallyu: The Impact of Korean Pop Culture” by Sanya Anand and David Seyheon Baek
  • “Go-to-Market (GTM): A New Definition” – Karthi Ratnam
  • “Jobs-to-be-Done for Government” – Anthony Ulwick
  • “The Power of Superconsumers” – Christopher Lochhead, Eddie Yoon, & Katrina Kirsch
  • “Zoom Out/Zoom In – Making It Personal” – John Hagel
  • “Regeneration or Extinction?” – a discussion with Philip Kotler, Christian Sarkar, and Enrico Foglia
  • “Climate scientists: concept of net zero is a dangerous trap” – James Dyke, Robert Watson, and Wolfgang Knorr
  • “The allure of the ad-lib: New research identifies why people prefer spontaneity in entertainment” – Jacqueline Rifkin and Katherine Du
  • “What is ‘ethical AI’ and how can companies achieve it?” by Dennis Hirsch and Piers Norris Turner
  • “How the US military used magazines to target ‘vulnerable’ groups with recruiting ads” – Jeremiah Favara
  • “Ethics and AI: Policies for Governance and Regulation” – Aryssa Yoon, Christian Sarkar, and Philip Kotler
  • “Product Feature Prioritization —How to Align on the Right List” – Bob Pennisi
  • “The Community Value Pyramid” – Christian Sarkar, Philip Kotler, Enrico Foglia
  • “Next Practices in Museum Experience Design” – Barbara Dal Corso
  • “What does ESG mean?” – Luciana Echazú and Diego C. Nocetti
  • “ChatGPT could be a game-changer for marketers, but it won’t replace humans any time soon” – Omar H. Fares
  • “If Your Brand Comes Before Your Category, You’re Doing It Wrong” – Eddie Yoon, Nicolas Cole, Christopher Lochhead

Categories

  • Advertising
  • AI
  • Analytics
  • B2B Marketing
  • B2C Marketing
  • Big Data
  • Book Reviews
  • Brand Activism
  • Branding
  • Category Design
  • Community
  • Content Marketing
  • COVID-19
  • Creativity
  • Customer Culture
  • Customer Engagement
  • Customer Experience
  • Dark Marketing
  • Decision Making
  • Design
  • Digital Marketing
  • Ecosystems & Platforms
  • Ethics
  • Go to Market
  • Innovation
  • Internet of Things
  • Jobs-to-be-Done
  • Leadership
  • Manipulation
  • Marketing Technology
  • Markets & Segmentation
  • Meaning
  • Metrics & Outcomes
  • Millennials
  • Mobile Marketing
  • Non Profit Marketing
  • Organizational Alignment
  • Peace Marketing
  • Privacy
  • Product Marketing
  • Regeneration
  • Regenerative Marketing
  • Research
  • Retail
  • Risk & Reputation
  • Sales
  • Services Marketing
  • Social Media
  • Strategy & Business Models
  • Sustainability
  • Uncategorized
  • Videos

Archives

  • May 2025
  • April 2025
  • March 2025
  • January 2025
  • December 2024
  • September 2024
  • March 2024
  • October 2023
  • September 2023
  • June 2023
  • May 2023
  • April 2023
  • February 2023
  • January 2023
  • October 2022
  • August 2022
  • May 2022
  • January 2022
  • November 2021
  • September 2021
  • July 2021
  • June 2021
  • May 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • October 2020
  • September 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016

Back to Top

© 2016-19 The Marketing Journal and the individual author(s). All Rights Reserved
Produced by: Double Loop Marketing LLC
By using this site, scrolling this page, clicking a link or continuing to browse otherwise, you agree to the use of cookies, our privacy policy, and our terms of use.
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish.Accept Read More
Privacy & Cookies Policy