Minimum Viable Ecosystem
The MVE is the least complex ecosystem that allows participants to learn about a more complex, future ecosystem with the least effort
Today, I found myself on the trail of a powerful concept that extends well beyond the IoT context where I discovered it.
Stacey Higginbotham, in her Stacey on IoT newsletter, wrote a lead story, For IoT, think about creating a minimum viable ecosystem. This, as you might imagine, caught my eye. She wrote,
There is a ton of talk in the hardware world these days about creating a minimum viable product (MVP) that you can show to customers or investors before investing big money — and time — into a final device. The idea is that you’ll learn a lot through the creation process and even more from how customers interact with the device, learnings that might influence its final design.
However, I recently had a conversation with Pilgrim Beart, who brought the concept of a minimum viable ecosystem to my attention. Beart is CEO of Device Pilot, a company that provides business intelligence from various different devices in one place. With the internet of things, companies are no longer trying to create a product to offer value, but rather establish relationships between companies and individuals to create value. But to understand how those relationships should develop means that product designers need to think about not just a device but how to establish relationships between entities that will work with a device.
I followed the thread Stacey offered, which led to an interview by Pilgrim Beart with Gaye Soykök, Head of Emerging Technologies at Legal & General.
PB: When I first read your brief but intriguing LinkedIn post (All you need is a Minimum Viable Ecosystem…), I understood that you were extending the concept of the Minimum Viable Product, and expanding to apply not just to a new product but to whole new ecosystems. I think it has great relevance to IoT and it resonated strongly with the experiences I shared in my Tedx talk. So how did you come across (or invent?) the idea of a Minimum Viable Ecosystem?
GS: I was thinking, “How do we create the value today in a more complex landscape? What should you do and what shouldn’t you do, and therefore what do you need others to do?” As the complexity increases, design, implementation and structure become a bit vague, ironically. I think we might need to put our architecture hat on to create new things in this complex new landscape.
PB: By “architecture”, do you mean technical architecture?
GS: No, I mean the value modules, like partners, capabilities, etc, and how these all fit together.
PB: What do you understand by “ecosystem”?
GS: I used to be an architect and architects follow a layered approach. I see:
Value (at the top)
People (organisations, society, governments)
Services, or my favourite concept — jobs-to-be-done (JTBD) e.g. emptying bins or caring for the elderly
Implementation at the bottom (technology, APIs, contracts, liability, etc)
(This is another case where I think vertical models are less helpful than horizontal models, as shown with the concentric circles I introduced in Lee Bryant on Digital Leadership, and On Emergent Leadership. But I digress.)
PB: What is viability then?
GS: Minimum Viable is application when we’re trying to do something new. There’s indeed a close analogy with MVP: we don’t just create products anymore — a website, an app. Maybe it’s my luck, but almost always these days it’s more complicated than only a product and it takes several different players to deliver and create value. “Viable” means that it’s enough to test an idea. And if the concept works not just technically but for adoption, then it’s viable enough, so it takes off and grows by itself. It’s an organic metaphor.
PB: Yes, that “taking off” is what many IoT use cases need right now. Often, the first application has to pay the costs, e.g. smart streetlights in a city have to pay for the network, but then subsequent applications in the same ecosystem can ride on the back of that investment and quickly get returns — so the ecosystem as a whole starts to take off. So, smart cities may need to some things to sponsor that first application in order to reap the ecosystem benefits more quickly.
Perhaps the smart city example could be reinforced with the example of Uber building the minimum two-sided ecosystem for ride hailing, the application and services to allow the rider to connect with the driver, to complete the ride, and the driver and Uber getting paid. Later on, Uber Eats extends the initial ecosystem and adds restaurants and food-buyers, making it a multisided market, and increasing opportunities for the participants: that’s the ‘taking off’ in Beart’s words.
I want to pull one observation of Soykök’s out:
[MVE is] more complicated than only a product and it takes several different players to deliver and create value. “Viable” means that it’s enough to test an idea. And if the concept works not just technically but for adoption, then it’s viable enough, so it takes off and grows by itself. It’s an organic metaphor.
What he is getting at is that you need to pull together the smallest working model of an ecosystem — with the fewest possible participants, interdependencies, interactions — that validates the premises about delivering value to all participants, starting with (but not ending with) the end user.
I don’t think minimum viable ecosystem is at all limited to the IoT context, just as minimum viable product isn’t limited solely to lean startups, which was the context that Eric Ries was thinking about when he introduced that term, originally. Ries’ definition from 2009 is this:
The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customerswith the least effort.
By extension then, I offer a take on minimum viable ecosystem, leaving out some of Ries’ methodology:
The minimum viable ecosystem is the least complex ecosystem that allows participants to learn about a more complex, future ecosystem with the least effort.
This includes learning about the interdependencies and interactions between ecosystem participants, like customers, partners, and governments, and specifically, how value should be shared.
At that point, I clicked through to the ‘brief but intriguing LinkedIn post’ by Soykök that attracted Beart in the first place, All you need is a Minimum Viable Ecosystem… It reads like a Zen koan or a chapter of the Tao Te Ching. Here it is in almost its entirety:
What if I say to be able to create the next of your business forget what you know?
Start from your minimum viable ecosystem.
Ditch design thinking for ecosystem thinking.
Ditch transformation for evolutionary.
Think ecosystem business models. i.e. Ren dan Heyi 人单合一
Ditch industrial systems, get inspiration from biological ones.
Start from network values, then node values.
Does not make sense? Shall I write even more?
I guess I am unsurprised to find Soykök has been influenced by Haier’s Rendanheyi, the operating philosophy championed by Zhang Ruimin over the past years.
I’ll restate and reorder his manifesto, as I understand it:
Forget what you know.
Replace design thinking with ecological thinking.
Replace business transformation with business evolution.
Replace industrial systems thinking with biological systems thinking.
Replace conventional business models with ecosystem business models (like Haier’s Rendanheyi).
Start from network values as a whole, then participant values within the whole.
Start with the minimum viable ecosystem, learn as much as possible, and share the learning with the members of the ecosystem.
Let go and let it grow.
And I’ll leave you with a one-line insight from Stacey:
Building a minimum viable ecosystem starts with seeing the whole forest, not just a single tree.
And especially not just the tree you happen to be sitting in.