Metaphor take-down: ‘Goldilocks’ or ecosystem economics?

What’s the best metaphor for thinking through how to share value in business model innovation – Goldilocks or ecosystem?

I’m currently working through the economics of a business model innovation. The details will come later; suffice to say a company is looking at moving from selling consumer products  to selling services.

One of the key differences is that service will be utterly dependent on a distributor. What’s more, on a distributor that is very worried about being cut out of value capture. The distributor might respond aggressively and try to stop the new service early if they think medium-term their finances and strategic position are weakened.

The immediate metaphor that sprang to mind for me was ‘Goldilocks’. The innovating company must find a way to share value but neither too little (in which case the distributor will block), nor too much (so the innovator gets too little value) but just right.

The implication here is a spectrum from 100% innovating company to 100% distributor, with a viable zone somewhere in between. But I wonder if that is right.

Julie Meyer of Ariadne Capital talks about ecosystem economics (TM, apparently):

“We believe that the companies which will win in this next era will be those companies who understand their role in their ecosystem, and are able to maneuver or position themselves in a role to organise the business model in the multi-stakeholder environment in which we operate today.”

Of course this is a great way to think of many on-line businesses. Many are digital ‘platforms’ for other businesses, think of the sellers and buyers on eBay, or the content providers (apps  / music / film / books) and retailer customers for iTunes.

It’s a different sort of metaphor with different implications. There is a notion of many actors, and the ones that will win are those who can harness that multitude. There’s less a sense of binary interaction, more mutual co-development for the success of the whole ecosystem.  Both metaphors imply it is better to collaborate; the ecosystem one has more associations  with all winning bigger through that collaboration (but that might just be me).

Why does this matter? Well, metaphors are ways we support our reasoning. The metaphor we helps us think, but also biases the conclusions too. Choosing your metaphor part-chooses your conclusions too. (See the introduction to Gareth Morgan‘s brilliant Images of Organisation for a brilliant discussion of this (you can read the intro in the Look Inside feature).) So, its best to pay attention to the strengths and weaknesses of what you’re choosing.

As with many choices on metaphor, neither Goldilocks nor ecosystem are ‘wrong’. But, my instinct on which will underpin the better analysis it is ‘understanding the the role in ecosystem’ that seems superior.

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