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The New Approach to Innovation Through Asset Discovery

Understanding the modern asset mix

· THE ASSET MIX,INNOVATION

One of the big changes in business over the past decade has been in the way a company designs its asset mix.

When thinking about business platforms, the asset mix is central to how a service is defined. You need to explore your assets and those of the groups that might make up your ecosystem. You need to rethink how you use assets.

Why would we bother doing it when the goal is to develop a platform strategy?

Platform businesses can add new value to existing markets or they can reorganise and restructure markets. Often they do both.

And critical to that activity is the way in which they exploit assets and nurture relationships with third party ecosystems who own an asset that is more or less central to success.

This can sometimes be difficult to understand so I'll take it step by step.

Focus on assets

Making use of third party assets is almost the definition of the new business platform.

All of the most successful business platforms manage the exploitation of other people's assets, sometimes in support of their own sales efforts, often times as organisers or creators of new market structures.

The first of these is best exemplified by Apple.

1. In the early days of the App Store, Apple's intention, with the promotion of third party apps, was solely to support sales of the iPhone and the iPad.

The company had no strategy to make app sales a new line of business - it happened but it happened organically. And far more important, apps made the iPhone a blockbuster product.

2. In Uber's case it exploits the vehicles of people who have time to make money by offering rides. Uber is a particularly narrow kind of platform with an ecosystem that consists overwhelmingly of drivers.

I have analysed the ecosystem of Airbnb and there we see a much more complex ecosystem, numbering about 25 different types of activity supplied by third parties.

There are many different types of business platform (Airbnb is vastly different from Uber which is different again from Apple) but the distinction between different asset uses and asset mixes is an important one.

It is important because in developing a strategy you have to decide what type of assets you are going to exploit.

That in turn leads to a process of discovering what type of ecosystem you are going to rely on, organise and promote.

Supply Chains as an Analogy

This idea, that the firm is made up on many contingent organisations, is not new. From the 1980s onwards many manufacturing companies reorganised into supply chains.

Put that another way, many products in the market were suddenly made by a complex web of companies that would specialise in various levels of components.

Shifting from production to supply chain management was a significant organisational change but it seemed relatively straightforward for leadership teams to embrace.

Again, thinking about products like the iPhone, they are made up of components that can be highly specialised and yet offer a distinct commercial advantage.

The iPhone's camera lens, the chip design for the camera, the display of images and even the glass that go on the front of the iPhone are all products that companies other than Apple have researched, developed and produced.

Very often firms will have to compete for components like these. Without supply chain mastery, their capacity to create superlative products is compromised.

Enterprise transformation as an asset play

The enterprise leadership team today has a heavy load of innovation. The Internet of Things, AI and Machine Learning, digital, blockchain and so on. The business platform is one of these decisive changes.

Business platforms come with a culture of extreme agility, or adaptability. The reason for that is the way executive teams are able to delegate important areas of innovation to the ecosystem.

If Apple had been left to create all its own Apps, then its management would have been incapable of focusing on developing and marketing the iPhone.

Ecosystems take on the risk and responsibility of innovating for a much more granular customer base (see our article on customer segmentation). They let companies function with extreme economies of scope, selling multiple forms of value, often to micro-segments.

The business platform assumes you can develop the responsive culture of today's best companies (see our article on FLOW).

If that is in your grasp - and certainly you need great change makers to make it happen - then the next step is to explore:

A. Your own assets. We typically find that organisations have assets that they do not recognise as such. Those assets could be data, IP, relationships, reputation, underused skills and so on. Identifying your assets is a precursor to point B.

B. The assets of your ecosystem. What is your ecosystem? Discovering the assets around you that might be ripe for exploitation is a work of imagination. It is an important ideation process that we can take you through.

Some ideas, ahead of us meeting:

1. Analysis. You can analyse your business environment in search of underused assets and you can imagine a different type of market structure to help you in the imagineering of new opportunities.

In retail in the UK, 2018 sees the launch of a new platform that excludes supermarkets from the retail channel mix. Direct to home delivery built on exceptional logistics.

It is hardly a new idea but logistics have come a long way in the past decade (no pun intended). Overnight or same delivery is now a reality. Small package delivery is the norm. Inevitably somebody would attempt a platform to disintermediate the retailer.

2. Ecosystem examples. By discussing examples of business platforms you will further supercharge your own ideation around assets and ecosystems.

3. Data and other intangibles such as trust. The Dutch telecom operator KPN realised it had a number of assets it could exploit as it reflected on the development of Cloud services, a potential threat to its own data centres:

A. It was unique in having a national fixed, mobile and data infrastructure

B. It was unique in having an existing relationship and convening power with the major infrastructure providers like the Airport, the maritime ports, road infrastructure

C. It had experience of large-scale data processing. In fact, you could argue that the telecoms carriers were the first of the highly scaled data companies, as they managed the flow of telephone calls for decades, along with customer account data, location data, image files and so on.

D. They were trusted by big businesses and by consumers.

Conclusion: They could launch Cloud services that would actively integrate the data sources of different entities and provide a massive value-added layer on top of pure storage or compute.

What makes you and your environment unique?

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