BreakThrough Study Idea

Surviving in an Ecosystem: Evolving Into a Uniquely Fabulous Niche PlayerKazuyuki Motohashi

<Series 4 / complete>

2019.03.12

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Part 3 discussed how IoT can be the key to success for SME to improve productivity. Collaboration with universities and public research institutes is essential for the implementation of IoT. Likewise, collaboration is one of the most important points of open innovation. The final section of this interview discusses how companies need to adjust their thinking when they are trying collaboration.


From One-on-One to Multiple Groups

SME have always had a one-on-one business relationship with major company clients. Even if they have multiple clients, that same one-on-one relationship applies to each customer. Collaboration with universities, like I talked about earlier, is usually happening in this same one-on-one pattern.
But I think we’re going to start seeing more cases of multiple companies and schools joining together to form a group, and doing business in a way that improves the value of every group member.

Of course, I have an example. As you probably know, the American company Apple Inc. uses iOS as the system software for iPhones. This fundamental program is an operating system for smartphones. OK, but that’s not enough to make it a competitive product. So Apple invited other companies to make apps based on its standard iOS platform. They understood that if more unique and interesting apps are available, the more appealing the iPhone becomes.
Company groups in collaborative systems like this work inside “ecosystems,” just like plants and animals. The “ecosystem” in my example uses a shared platform, provided by a central “keystone player,” and other companies that provide the different apps are called “niche players.”

Companies will need to make large adjustments in their behavior and way of thinking when they transition from a one-on-one relationship to an ecosystem. SME usually fill the role of niche player, but what exactly does that demand? As the ecosystem grows, it’s likely that more and more niche players will get buried and forgotten. What can niche players do to survive in an ecosystem?

Individuality Keeps Niche Players Alive

Inside an ecosystem, the keystone player’s role is not prioritizing the profits of their own company. Rather, they are guiding a greater plan to improve the profit performance of their platform as a whole. Chasing their own profits will lead to exploitation of niche players. Of course, those niche players will want to exit the ecosystem, which lessens the appeal of the keystone’s own product, and that will affect their sales.
So, it’s important for niche players to keep their individuality. If they can express their unique appeal, then they will not get buried among the many other niche companies on the platform, and they will continue to be preferred players.
SME usually fill the role of niche player inside an ecosystem, but I think it’s an ideal, welcoming environment for SME with unique technologies. This is because a platform is not on the same scale as an enterprise - the individuality of their technology will make or break their success. Unique niche players bring diversity to the platform, increasing its appeal, and improving the overall value of the system.

How can SME start getting involved in business ecosystems? Could it possible for SME to build their own ecosystem?

SME & Ecosystems

And if they can take that unique technology and understand the fundamental science, they can wield that technology as a weapon when they enter an ecosystem. I don’t think it’s really so difficult.
But many SME don’t actually understand the fundamental science behind their company’s own technology, and I think that most of them aren’t really working to create a clear gap between themselves and their competitors. SME in that situation should look into collaboration with universities and public research institutions, and use the academic partner as a hub to form their own loose group of companies. I believe that the university can fill the role of keystone player, and the leadership experience and personal connections of the professors will help build a new ecosystem.
Of course, the SME can also be the keystone player. Hamano Products, located in Sumida-ku, Tokyo, serves as the keystone player for its manufacturing venture incubation facility, Garage Sumida, using a platform of its own basic technology and a network connecting diverse outside industries. This manufacturing support network of skilled workers offers the latest digital processing equipment to turn the ideas of venture companies into reality. Ory Lab’s communication robot OriHime is one example of a venture company successfully creating a product.

Conclusion

Up to now, there was a tendency for SME to think of improving productivity as a matter of reducing the denominator (input) to focus on efficiency. But in the modern era of solutions, improving productivity will demand wide business development to increase sales and profits. Inside a business ecosystem, unique and interesting niche players can continue to thrive without being crushed by the scale of bigger companies, to become an element that increases the overall value of the platform.
In order for SME to survive in the future, they must further refine their unique technology, improve productivity, and continue to evolve in their own individual and wonderful way. The first step is to bring visibility to their company’s strengths in a scientific manner, and I think that IoT and data analysis could be a good point to start.

Interview Date: January 15, 2019

 

Series

Things VS Solutions: Different Approaches to Improve Productivity in Different Business Model Eras

SME Need Specific Strategies to Survive Open Innovation

Improving Productivity and Increasing Visibility of Strengths Through Academic Collaboration and IoT Tech

Surviving in an Ecosystem: Evolving Into a Uniquely Fabulous Niche Player


Kazuyuki Motohashi
Department of Technology Management for Innovation at the University of Tokyo

Joined the Ministry of Economy, Trade and Industry after finishing his Master’s degree at the School of Engineering, University of Tokyo in 1986. After working for the OECD, he accepted an assistant professor position at the Institute of Innovation Research, Hitotsubashi University in 2002. Next, he returned to the University of Tokyo as an assistant professor at the Research Center for Advanced Science and Technology in 2004. In 2006, he accepted his current professor position at the Department of Technology Management for Innovation, University of Tokyo. Meanwhile, he has also served as a World Bank consultant, OECD consultant, Research Institute of Economy, Trade & Industry faculty fellow, Japan Fair Trade Commission Competition Policy Research Center visiting researcher, National Institute of Science and Technology Policy (NISTEP) chief researcher, Stanford University Asia-Pacific Research Center visiting fellow, and East China Normal University visiting professor. MBA Cornell University & PhD Keio University School of Business and Commerce. Specialties include econometrics, industrial organization theory and technology management theory.

◇Best-Known Books
・“Alliance Management” Hakuto-Shobo Publishing Company, April 2014.
・“We Still Have Time: Reviving Industrial Competitiveness” Nikkei Publishing, February 2014.
・“Global Management Strategies” University of Tokyo Press, March 2013.
・“Japanese Bio-Innovation” Hakuto-Shobo Publishing Company, November 2009.

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