What problems can be solved by business ecosystems?

Manuel Audi: One is information asymmetry, which can be addressed by establishing a marketplace, for example in the municipal sector. This would be a decentralized, organized structure, an ecosystem based on a marketplace operated by a public entity. The participants are thereby enabled to be compatible in this local market.

Allocation problems can also be solved in this structure, for example through the establishment of local, logical chains by municipalities. Furthermore, coordination issues, i.e. ultimately the question of how contracts are created and how their fulfillment is monitored. Matchmaker models and predefined contractual standards can be established for this purpose, and there is no need for a dominant entity. Last but not least, there are trust issues that directly influence the behavior of end customers.

But the problems described can also be solved by centrally controlled networks?

Manuel Audi: Yes, and even quite effectively. At Amazon, for example, the solution to all these problems is provided in a single structure that we have described as type 2. One click and you don't have to read through a contract or the general terms and conditions. You rely on the processes being handled properly and the orchestrator monitors the reliability of the suppliers. Highly efficient logistics and user-curated information are provided. It is precisely this combination that makes Amazon so successful. This is an effective protection mechanism that works well from the perspective of the type 2 network.

You addressed the topic of “innovation” in decentralized systems. Why should a loosely coupled network provide a better framework for this than an efficiently organized platform?

Florian Weihe: The less hierarchically a structure is organized and the more customer interfaces it has, the more likely innovations will emerge. The large technology platforms are clearly faster and more innovative than linear, hierarchical partner networks. And type 3 ecosystems have even greater potential. Innovation is much less inhibited by rigid frameworks and the dictates of sales or controlling; instead it emerges from customer needs and the common value proposition.

In traditional structures, new ideas are often killed off because they are too expensive, put on hold because their time has not yet come or because they are not among the top three in comparisons and rankings. The problem is that with this logic, you can only optimize what already exists, but not really develop anything new. In decentralized, cross-industry and open ecosystems, the chances are higher that something new can emerge and survive. 

Does a minimum viable ecosystem (MVE), from which a vital, decentralized ecosystem can grow, also require a particular market environment?

Florian Weihe: An area such as smart homes, which is not yet structured by large players and highly automated relationships, can of course offer a more ideal environment than mobility, for example, where a few but very powerful players are already vying for position at the center.

More important than the industry environment, however, is the question of whether the minimum viable ecosystem even has the necessary properties for further development into a vital ecosystem. In addition to the lowest possible complexity, there should be a common value proposition of the actors that clearly goes beyond their individual 'value propositions'. Outlining this is by no means not trivial – you have to step out of the familiar frames of reference, i.e., you have to consider more than just another "upgrade" of a process or a product.. This keeps you in the safety zone of your familiar "playing field".

What could this look like in concrete terms, for example, in the case of the smart home?

Manuel Audi: Each networkable smoke detector or window sensor of the alarm system not only protects the smart home but also reduces the number of claims. For example, an insurer could work with a manufacturer of alarm systems to offer its customers a product that combines the benefits of smart home technology with those of insurance. In this case, a new value proposition would be created for the customer under the purpose “protection”. The customer would receive a suitable insurance policy directly with the alarm system as "embedded insurance", such as household insurance.

In addition to the time saved for the customer by having to purchase and coordinate the two products separately, this is also promising for another reason. In the medium term, the data from the alarm system usage can provide insurers with information that they can use to lower premiums and thus offer customers more favorable benefits. This would move us towards an ideal “win-win-win” scenario and would also create a basis for expanding the MVE with other suitable services.

But isn’t there a risk that the “embedded insurance” introduces restrictions and thus complexity into the MVE – for example with regard to questions of ownership and protection of customer data?

Manuel Audi: As a convinced European, I support the goal of data sovereignty. In line with this, the data essentially belongs to those who generate the data, i.e. the consumers, users – and this is not a restriction, but a catalyst of innovation for the future. Because business models would then have to be development that convince customers to make their data available. And that works better in a small, transparent type 3 ecosystems. I, as the customer, clearly understand the consequences. I consciously share my data and am actively involved in generating added value for me. And in the case of an embedded insurance service, there is also the fact that a customer need exists directly here, or is at least very obvious. Ultimately, however, the decisive question in this aspect is the question of trust. And trust comes from transparency and a dialog on equal terms.