6 Lessons Learned at the CxOs Ecosystems Summit Hosted by Google Apigee
At a recent UC Davis Graduate School of Management alumni mixer in San Francisco, I overheard Professor Hemant Bhargava mentioning to an alum that he will be speaking at the CxOs Ecosystems summit hosted by Google Apigee.
I asked Professor Bhargava if I could shadow him at the summit and that is how I landed the opportunity to attend this amazing invitation-only summit on a rainy California day at Google in Sunnyvale. (Lesson: Always keep an ear and an eye out for opportunities like these and ask your professors to give you a chance to go to such events—you might just get lucky).
The agenda was packed with blockbuster speakers, including Professor Hemant Bhargava, Sam Ramji, Andy Bodea, Professor Rahul Basole, Chet Kapoor and Anant Jhingran. Google’s hospitality was top notch. I am envious of those who work at Google. I wonder how any company can beat Google to become a better place to work. I could go on and on about how cool their culture is, but without digressing, let’s get back to the summit.
The summit audience was mostly CxOs from top companies. I have probably attended over 100 summits and organized and hosted some of India’s most impactful summits and I completely understand what it takes to put together an event of this scale with such influential people; so kudos to the organizing team. I had a ball interacting with these senior managers from top companies throughout the day—and lessons learned came from both inside and outside the sessions.
So what are ecosystems and platforms?
Google suggests ecosystems to be a “biological community of interacting organisms and their physical environment.” It also suggests “a complex network of interconnected networks.” In business we refer to the latter when referring to ecosystems. The environment for this interaction in this complex interconnected network is called the platform.
The goal of the summit was to help large companies identify the opportunity to build and own these platforms in order to be the ecosystem builder in their specific business. Good examples of ecosystems are Lyft and Visa.
Now let’s take a deep dive into what I learned at the summit.
1. Not an Ecosystem Yet? Those Who Embrace Platform Thinking Will Beat You.
Professor Bhargava kicked off the summit with his keynote. This slide above from his presentation was one of the most impactful slides of the day. It lists the top five companies by market cap in 2007. Most of these companies were traditional businesses. Fast forward to 2012, and two of the top five companies were platforms. By 2017, all of the top five companies by market cap are platform companies. With the advent of Internet and democratization of knowledge, it is imperative for companies to create an ecosystem, not only to connect their products and clients but also to build a marketplace that brings together demand and supply.
Besides these quantitative shifts in market value, there is something qualitatively different about the platform phenomenon . It represents a change in the fundamental purpose and rules of business. Tom Goodwin observes this with precision in his famous quote:
“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.”
2. The Fundamental Rules of Business are Changing.
Over the last 10 years, we have seen the introduction of new rules of business. Since the industrial revolution(s) a business/ company has been an entity that made (or distributed) something that provided value to the customer, and did so by assembling a vast array of resources that typically involved fixed costs and long-term commitments in order to get economies of scale. An example of this type of traditional business is Marriott Hotels.
Today, the purpose of a business (at least the platform way) is to enable and coordinate others who create value for each other, i.e., to assemble an ecosystem of partners and manage them. This approach brings up an incredible combination of scale, speed, and simplicity, but without massive investments, fixed costs, rigid commitments and contracts. For example, compare Marriott to Airbnb. Let’s look at the growth rate of both of these companies.
Some of the best examples of companies that have built successful ecosystems are Uber, Lyft, Facebook and Apple. The company that hits the ball out of the park is Google (Andriod), which brings me to the next lesson learned.
3. Developers > Supply or Demand.
Ecosystems need to consider the demand and supply side but the developers ensure success. The second session featured a panel from Google who offered insights into their community building efforts with the Google Developer groups.
The panel underscored how important it is to create a developer-inclusive approach while building ecosystems. The reasoning to create an ecosystem is lost if no one is using it. To maximize the returns of an ecosystem, the company has to empower developers and people across the world to build applications for the ecosystem.
A great example of this is Android, which has embraced ecosystems in their DNA. They successfully built a place where there was supply and demand but the app developers were the ones who defined how people like you and me interacted with our phones. So bottom line, companies need to pay attention to the developer community, nurture them and then go a step forward and empower them to utilize their ecosystem and platform.
4. Community Management is Going to be the New Product Management.
About five years ago, Silicon Valley was abuzz about product managers who became the backbone of superfluous products built here.
However, with ecosystem thinking, Sam Ramji correctly pointed out that a company is only going to be as strong as the community it serves. Community management is going to be a focus for a large number of companies in the coming year. If you are someone who understands communities and is interested in bringing multiple stakeholders together to make a system click, I suggest that you start moving your career in the direction of community management.
5. Visualization Can Convey large market complexities easily to all stakeholders.
Over the last several months studying in the UC Davis Master of Science in Business Analytics program, I have become interested in data visualization. It is amazing to know that effective visualization can help to look at problems, build a hypothesis and arrive at solutions.
So when Rahul Basole spoke at the summit about the importance of ecosystems, he had my attention with an array of visualizations. The next 30 minutes felt like I was in a planetarium. Remember that feeling gazing up to see the Milky Way and the colorful stars? That stellar experience and inspiration helped Basole tell a story of how companies have evolved and how the ones who built ecosystems have come out ahead.
He uniquely showcased the importance of ecosystem thinking. He showed that delivering insights to business leaders as visualizations provides a much greater buy-in, compared to just presenting the numbers.
6. The Four Pillars of Ecosystem Building.
Google’s Anant Jhingran delivered an energetic keynote that defined the next steps for the CxOs. Jhingran defined the four pillars that companies need to focus on while ecosystem building:
- Focus on the Core
- Attract Developers
- Act with urgency
No one has ever been able to get to the pinnacle without investing. Technologies that we take for granted today are a result of large amounts of time and investments into these companies.
To stay on top of their game, large companies today need to start reinventing themselves. Just a few days before the summit, at a Meetup organized by my fellow UC Davis MSBA students, I met a product manager for API cloud integrations at Google. He said something that struck me:
“Back in the early 2000s, Blockbuster’s stock was on the DJIA, the top 30 stocks that show how Dow Jones is performing. But in just three years a small startup crushed the business that Blockbuster held so close to themselves; it was called Netflix. Five years later, another product called online streaming demolished the DVD business as a whole. The only difference was Netflix was the company to reinvent itself to do streaming. The rest is history.”
The moral of the story is that if companies do not invest in beating themselves, a competitor will.
Jhingran built a simulation into his presentation that highlighted the importance and hierarchy of each of the four factors.
A sense of urgency is something that has resulted in groundbreaking innovations over the years—from the 1960s battle between the Soviet Union and the U.S. to landing a man on the moon, Tesla’s audacious disruption of the auto industry and Apple’s iPhone changing the way we communicate—and work.
When companies are built at a rapid pace, it is important that they start moving towards an ecosystem approach as soon as possible. Jhingran made this point: If you are late, then give everything you have and focus on your strengths.
The summit taught me a lot about company culture and what it takes to build a sustainable, world-leading company.