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

I had read a few posts of Simone's on Medium (such as The 7 Key Principles of Platform Design, so I was excited to see that he would be speaking at the Haier Innovation Conference in January. We got the chance to talk over several meals in Qingdao (yes, I also spoke), and I suggested an interview might be rewarding, since we are both deep into the economics and practice of ecosystems in work. Our discussion was strongly influenced by our recent interactions with Haier’s CEO and Chairman, Zhang Ruimin.

Simone describes himself this way on his blog:

I am a self-starter, strategist, product and service designer interested in co-design, design thinking and innovation.

I investigate the reasons behind change, correlate things and understand to design relevant and consistent strategies and products.

A few years ago I created the Platform Design Toolkit: to help organizations of all kinds create shaping strategies, leveraging ecosystems, transforming themselves and the world in the process.

The Interview

Stowe Boyd: We talked a bit in Qingdao about the talk you gave there. One insight I had at the time was that the average western worker is unprepared to wrap their heads around the dynamics, politics, and metaphysics of ecosystemic organizations, and without that baseline understanding, adoption of the ecosystem approach to business operations is likely to be slow. Do you agree?

Simone Cicero: I definitely agree on acknowledging that the level of conversation one can have with Haier - and more specifically with Zhang Ruimin [Chairman and CEO of Haier] and his circle of reports - may be hard to imagine with European executives, I admit I speak more rarely with American ones. Western executives are definitely more concerned with numbers, shareholders’ expectations while when speaking with Zhang we always concentrated in exploring ways to unlock more potential from people and the whole ecosystem. I think Haier has this vision that to make a company successful in the future it needs to reinvent continuously and be able to let go the very idea of what it is now: the aim is always that of becoming interlaced and integrated with a much bigger economy of value, Zhang speaks about a federative organization - that’s why Haier also has this concept of ecosystem brand.

I think the question is twofold and it’s a bit contradictory. First, there’s a cultural gap: I’m not an expert of Chinese philosophy and neither culture, but my feeling is that a systemic and collective (ecosystemic) view of the world and the economy is more common in China than it is in Europe and the US. Secondly, Chinese business culture is definitely less concerned with protecting the status-quo and with granting everyone the acquired rights: it’s more likely to push everyone to perform at her best making the individual more responsible and independent in stretching the organizational reach. I think here lies the contradiction: we have a systemic business culture but not necessarily a mutualistic one. I may be wrong though.

Also, I think we need to acknowledge that Haier is likely one of a kind in the world and that not all Chinese companies are like that: indeed Alibaba is often used as a counterexample of not-ecosystemic thinking.

SB: Yes, I agree that Zhang and Haier are one-offs.

Zhang Ruimin is the most persuasive advocate for his philosophy of business, and at the same time, he hasn't provided us with a central set of writings that clearly lay out what his vision is. He's more like Bob Dylan than Peter Drucker, in that regard. Dylan's written dozens of songs about love and loss, but never an analysis of the human heart or the narrative arc of love. Meanwhile, Drucker laid out his ideas in practical management-speak in ways that made him accessible and transformative.

SC: My impression is that Zhang has been focused on his own, and his company’s, process instead of being focused on communication: maybe this is a parallel we can make with Bob Dylan, but it’s I think also an expression of the cultural differences between the west and China. I think many times western companies and executives focus too much on examples and stories, as if following practices, other’s paths or other’s stories could be a guarantee of success which - as we know - it definitely isn't! Companies often lack focusing on experimentation and continuous learning, which is instead something that seems the real focus of Haier and Zhang for the last 30 years. Indeed he’s been working on this company for more than 30 years, making it hard to discern his own path of management transformation from the company’s transformation.

When speaking with Zhang he gave me the impression that the company itself can be - somehow - seen as a systemic extension of his self, similarly to how Micro-Enterprises can at the same time as an extension of the entrepreneurs. Somehow I think Zhang didn’t have time to really provide a formula, stories, and examples so far: now, by the way, with Haier’s cultural institute they’re looking to provide the world with more information, though I think this needs to be seen more as a space for conversation than a monolithic organizational story. This is also part of the work we are trying to do together with Haier, with Boundaryless (our company) and Platform Design Toolkit (our methodology).

SB: I think you are right. Zhang is constantly extending his thinking about Rendanheyi and what it represents. Perhaps working with westerners like you, me, Gary Hamel, the Corporate Rebels, and others will shed new light on what it might mean outside of Haier?

SC: Definitely, I think we’re now on a global conversation now, though this is not just about integrating Chinese and eastern thinking. I think is more about finding new ways to have a conversation on organizational development and transformation that is not colonialist, neither industrial. A conversation that happens in the XXIst century.

SB: Perhaps one of the difficulties is that an ecosystem is a self-regulated 'assemblage' -- a term Anna Lowenhaupt Tsing offers from ecology in The Mushroom At The End Of The World -- an assortment of different species or individuals happening to each other at some physical location. Those species can be competitors or cooperating, or indifferent to each other. As she points out,

Patterns of unintended coordination develop in assemblages. To notice such patterns means watching the interplay of temporal rhythms and scales in the divergent lifeways that gather. Surprisingly, this turns out to be a method that might revitalize political economy as well as ecological studies.

I believe Zhang's vision is to create a platform that acts to exert an economic gravity, an ecological pressure that leads to Tsing's idea of 'convergent lifeways', so that systemically beneficial patterns become internalized by the participants and becomes self-sustaining without much management. Zhang uses the image of gardening as a metaphor for this.

I buy it, but I started with a degree in biology, and I've studied Taoism for forty years. I wonder what we would have to do if we wanted to really get a large number of folks to 'get it'. Is your workshop part of that?

SC: I think it’s definitely important to understand that embracing ecosystem-organizations deals more with preparing, nurturing and respecting the “soil” than actually gardening the plants. A bit like with biodynamic agriculture the idea is to let different plants to grow, and even if you go and eradicate the ones that you don’t like, letting them stay there and fertilize the soil.

“Gardening” an ecosystem organization implies some degree of creative entropy, as this process that is inherent to self-organization: you may have unintended sprouts grow and find their way in the market and you need to deal with it, some of them may not make it, end up in dying but the experiences related to building that sprout-micro-enterprises will again fertilize the soul of knowledge and experiences. As a gardener, you’ll need to make it possible, and you’ll need to allow the members of the organization to explore edges you may not consider strategic from the top. So yes it’s about gardening, but it’s not about the perfect, 17th century’s Italian gardens, made of symmetry and perfection, it’s about the abundance of biodynamic gardens.

SB: Right, as with Zhang’s vision of making his ecosystem open to participants who aren’t employees, but who can play economic roles on the Haier platforms and in ecosystems?

SC: I think from what I’ve seen in few examples of micro-enterprises, they’re really targeting the whole society: I’ve been astounded by the prominent and central role that is played in some of their new micro-enterprises, especially those focused on services, by independent professionals. I think they really get that idea of leveraging on distributed potential, and this is going to be very relevant - also in China - because all trends point out to a rising freelancing and independent workers economy.

SB: Thanks, Simone. I look forward to seeing you again in New York in March. [Simone is leading a two-day workshop in New York City in March 2019.]

SC: I’m very much looking forward, will be great to compare notes and share insights with North American platform shapers!


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