Creating and Capturing Value in Your Business Ecosystems: Michael G. Jacobides at TEDxThessaloniki

Summary

The script delves into the concept of business ecosystems and value creation. By drawing parallels with wine, coffee, and technology industries, it explores how different players—growers, shippers, or companies—capture value. The speaker highlights how differentiation, replaceability, and supply chain management drive success in today's sectors, using examples like Apple, Tesco, and Toyota. The key takeaway is that businesses, like individuals, are part of an ecosystem, where value creation should be prioritized over mere value capture. The speaker encourages thinking about long-term benefits, differentiation, and strategic positioning in both personal and professional contexts.

Takeaways

• 🍷 Who captures value in a business ecosystem is often not the producer but the actor who guarantees quality or differentiates themselves.
• 📜 Historical context, like the Napoleonic Wars, shaped the wine trade, demonstrating the importance of trust and certification in value capture.
• ☕ Coffee growers often receive minimal value compared to distributors and retailers, highlighting ecosystem organization as key to profit distribution.
• 🔑 Differentiability—being uniquely able to deliver what customers value—is central to capturing long-term value.
• 🛠️ Relative replaceability determines value: the less replaceable an actor, the more value they can capture in an ecosystem.
• 💻 Shifts in computing and technology sectors show that value moves toward roles that control critical or differentiable elements (e.g., software, semiconductors).
• 🚗 Car manufacturers maintain value despite outsourcing by controlling user experience, brand, and accepting legal liability, which reinforces trust.
• 📱 Modern tech products like the iPhone rely on complex ecosystems where value is created collaboratively but captured strategically.
• 💡 Value creation should precede value capture: delighting customers and creating genuine utility ensures sustainable advantage.
• ⏳ Short-term sacrifices, like taking responsibility for issues or investing in ecosystem management, lead to long-term dominance.
• 🌍 Principles of ecosystem value apply beyond business: individuals and organizations can increase impact by enhancing differentiability and reducing replaceability.
• ⚖️ Focusing solely on exclusionary tactics or political connections for value capture is unsustainable compared to creating real value within the ecosystem.

Q & A

What is the main concept discussed in the transcript?

The main concept discussed is the symbiosis within business ecosystems, focusing on how value is created and captured within these ecosystems. The script uses examples from wine, coffee, telecommunications, and technology to illustrate how different players contribute to and benefit from these ecosystems.

Why are the names of Portuguese port wines British?

The names of Portuguese port wines are British because British merchants (shippers) dominated the trade of port wine during the Napoleonic Wars when French wines were scarce in the UK. These shippers built strong reputations for the wines and controlled the market, making themselves the trusted source for quality.

How did Napoleon Bonaparte influence the wine trade?

Napoleon Bonaparte's wars led to a shortage of French wines in the UK, pushing British merchants to turn to Portuguese wines. The British shippers used their power to certify quality and influence consumer preferences, creating a strong market for port wines. Napoleon's nephew later formalized the classification system for French wines to protect the interests of French growers.

What is the significance of 'differentiability' in business ecosystems?

'Differentiability' refers to the ability of a company or product to stand out in the eyes of consumers. In the context of business ecosystems, it’s about creating something that appeals so strongly to customers that they are willing to pay a premium for it, even if the product itself isn't necessarily superior to others.

What role do shippers play in the port wine trade, as compared to French wine growers?

Shippers played a crucial role in the port wine trade by not only transporting the wine but also by certifying its quality and building trust with consumers. They became the key actors in determining which wines were considered valuable, while French wine growers focused on producing high-quality grapes but were not as involved in creating consumer-facing value.

What economic principle did Karl Marx contribute to the understanding of business ecosystems?

Karl Marx’s principle of 'relative replaceability' helps explain how value is captured in an ecosystem. Marx argued that when labor is abundant, its value decreases, and capital (which is less replaceable) becomes more valuable. This concept is applied to understand how power dynamics in ecosystems shift value towards those who control scarce resources, such as capital or differentiated products.

How has the value in the computing sector shifted from 1980 to 2005?

From 1980 to 2005, the value in the computing sector shifted away from hardware manufacturers like IBM and Dell toward software companies like Microsoft and semiconductor manufacturers like Intel. This change was driven by the standardization of hardware and the increased importance of software and operating systems in determining the value of computing devices.

Why do car manufacturers keep most of the value in the car industry despite outsourcing production?

Car manufacturers keep most of the value because they maintain control over the brand, the customer experience, and legal liabilities. They differentiate their products based on features and branding, and they assume responsibility for recalls or defects, which strengthens their position in the market. Despite outsourcing production, their role in managing the customer relationship and product reliability remains central.

How does the example of Tesco's response to the burger scandal demonstrate value creation in business ecosystems?

Tesco's response to the burger scandal demonstrates how taking responsibility and managing potential damage to trust can secure long-term value. Although Tesco did not produce the burgers themselves, they took accountability for the issue, preserving customer trust and maintaining their position in the supply chain.

What is the 'toothbrush test' that companies like Google use when developing new products?

The 'toothbrush test' is a question that companies like Google ask when evaluating new products or services: 'Is this something that people use every day as part of their routine?' The idea is that a product needs to be integrated into daily life and provide real value to become essential, which helps in structuring an effective business ecosystem around it.