The economics, structure, and behavior of platform ecosystems and organizations

The final realization of Zhang Riumin’s vision may require Haier create a consulting company to teach the underlying principles behind the Haier progression, and commercialize and generalize platforms like HOPE and COSMOPlat, and creating ecosystems like that of the Clothing Lifecycle initiative.

Whether Haier does that or not, the future that Drucker was hinting at in 2000 is coming, it’s on the horizon

The social evolution of business is accelerating, which is unsurprising: we live in a world that is accelerating, and only those businesses that adapt will survive:

  • The half life of business is shrinking, and is now less than seven years.
  • The number of public companies in stock markets is falling, and long-time market leaders, like General Electric, formed in early industrial revolutions, have fallen from prominence.
  • The most successful companies are becoming larger, through market dominance, influence, and acquisition, based on their leveraging platforms and ecosystem economics.

In this report, we've laid out an argument, based on the success of Haier and other platform organizations, that the most successful firms of the next era of global business will be built on the principles and properties of networked business, relying on the emergent value of this formula:

Networks + Platforms = Ecosystems

In this report, we've raised the provocative issue of whether horizontal organizational societies, supported by operational platforms can increase in efficiency as they scale, like cities do. Can they end run the bounds on growth that traditional, linear organizations are trapped by?

Indications from our contemporary business environment suggest that platform economics are, at the very least, the most dynamic model that we've seen, leading to the stratospheric growth of companies like Amazon, Alibaba, Google, and Haier.

But this revolution requires a shift in the thinking around leadership. As chairman Zhang has said many times, the biggest barrier to this transition is the mindset of management. Senior leadership must be willing undergo a radical change in what they do and how they lead.

The job of the senior leader is that of a gardener, growing a context in which the entrepreneurialism of all teams can find green fields to bloom and expand, and that the near magic of ecosystems -- where all are made better by the addition of more participants -- can become the dominant economic force.

And it is our job to take these ideas and spread them, and to help others make this necessary transition into the next era of business.

It’s just ahead, on the horizon.

Section 1, Social Evolution

Section 2, The Era of Networks

Section 3, Haier, Rendanheyi, and Zhang Ruimin’s Vision

Section 4, The Future of Networks: Platforms and Ecosystems

Section 5, On The Horizon