A simple guide to tracing the evolution of an ecosystem
The evolution of business ecosystems is a subject of constant fascination, not least because every company aspires to create one or join someone else’s. Over a series of articles, we’ve discussed and dissected the differences between ecosystems and platformsidentified the main players in an ecosystem and provided a “ecosystem canvas», a logical framework to map the workings of the ecosystem. In this article, we take a closer look at how the evolution of a business ecosystem might be captured.
Quite simply, we offer you a timeline that captures changes in the ecosystem’s unique value proposition, competitors, and monetization strategies. The timeline, which accompanies the ecosystem canvas, can also document changes in key players: the orchestrator, core partners, technology enablers, add-ons, and resellers. Canvas and timeline are free to download here.
When you’re creating your own ecosystem or looking for one to join, you might find our ecosystem canvas calendar useful for pitching to your investors or business partners. This will help you keep track of key elements of your business model and identify pivots, especially when starting out with a platform before building it into an ecosystem.
In the beginning there was a platform
It might be better to explain how the ecosystem canvas timeline works with a concrete example. Take Grab, Southeast Asia’s largest ridesharing and delivery company.
Grab started life in 2012 as MyTeksi, a taxi booking mobile app in Malaysia. Over time, Grab’s business evolved into an ecosystem offering diverse services through partners and add-ons. At the end of September last year, Grab had 22 million monthly active users. Its business model is typical of ecosystems: start with a platform at the core, then add diverse offerings that meet multiple customer needs.
Between 2012 and 2017, Grab continually swelled its stable of travel-related services while expanding into Singapore and Indonesia. More recently, in 2017, it launched ride-sharing services aimed at large groups (GrabCoach) and families with young children (GrabFamily). Also in 2017, Grab signed a partnership with Singapore Airlines (SIA). Consumers traveling in six Southeast Asian countries could book Grab rides through SIA’s mobile app. Additionally, KrisFlyer members of SIA and Grab’s GrabRewards loyalty programs could convert their GrabRewards points into KrisFlyer miles.
Despite Grab’s rapid growth, including the launch of a food delivery service (GrabFood) and a cashless payment system (GrabPay) in 2016, until 2018 its overall value proposition relied primarily on the sophistication of its travel platform offerings. Revenue came from fees taken from trades negotiated through Grab’s app.
Extension to additional services
2018 was the year Grab significantly expanded its business model after Uber exited Southeast Asia. After acquiring Uber’s business in the region, Grab first launched Seize financial, a fintech platform encompassing payments, GrabPay and other financial services. As part of this venture, Grab signed a partnership with Chubb, the largest publicly traded P&C insurance company in the world. Grab’s telematics, data, and machine learning capabilities have been used by Chubb to develop personalized, cost-effective insurance products that cover accidents, hospitalization, loss of earnings, and other needs of 2, 6 million Grab partner drivers across Southeast Asia.
In the same year, Grab further expanded its business model, this time in deliveries. It has developed a partnership with HappyFresh, an online grocery service linked to a network of supermarkets and stores. Orders placed with HappyFresh will be delivered by GrabExpress.
As part of the ecosystem canvas, Chubb and HappyFresh would be defined as Grab’s main partners as they brought unique capabilities and value propositions (personalized insurance products for private rental vehicle drivers in the case of Chubb) and access to a large customer base (in the case of HappyFresh).
2018 will prove to be a frenetic year for Grab, which continues to increase its value propositions with complements while expanding its business model. The first was a payment partnership with UOB. Bank of Singapore credit and debit cards earned customers cash back when used to pay for transport, food delivery and other Grab services. UOB also sold investment products to millions of Grab users. Other add-ons added in 2018 included bike rental providers such as Anywheel and PopScoot through the new GrabCycle app.
Last year, Grab Financial launched “Grow with Grab”, a suite of services covering marketing, automation, inventory and logistics for small and medium businesses in Southeast Asia.
From platform to ecosystem
Digital business ecosystems create value by integrating platforms and services. One such mechanism in the case of Grab is GrabRewards, which is extended to all users of Grab’s flagship mobility services as well as customers of its micro, small and medium enterprise network. Think of GrabRewards as honey that creates cohesion between companies in the ecosystem, enticing consumers of one player to patronize others. By the end of 2018, Grab had over 300 add-ons across Southeast Asia, including top brands such as Cathay Cineplex, Spotify, Deliveroo, McDonald’s and Starbucks.
Changes in Grab’s value proposition have inevitably altered its competitive landscape. At first, Grab competed with Gojek and Uber. In 2014, he was also in a race with local taxi companies. 2016 introduced food delivery companies like Deliveroo as well as payment service providers. Two years later, foodpanda and similar entities joined the fray when Grab expanded its value proposition to “deliver everything”.
Needless to say, the monetization of Grab strategies have proliferated since the days of the company as a mouthpiece. Until 2018, revenues were driven by fees imposed on transport and delivery orders. Since 2018, Grab has also monetized its targeted products and promotional campaigns, collecting fees from companies in its ecosystem like a marketing agency would.
What has remained unchanged all these years is Grab’s central role as orchestrator of its ecosystem. The company is also his technology enabler, providing all the IT and cloud infrastructure needed for its ecosystem to date. Its acquisition of Uber’s Southeast Asian operations and payments provider Kudo in 2017 helped. None of his companies use resellers.
Here is the journey of a great app from ridesharing service to a large business network encompassing mobility, delivery and financial services mapped in a simple table. We hope the ecosystem canvas timeline can also help you, aspiring ecosystem builders, chronicle the evolution of your own business.
Andrew Shipilov is Professor of Strategy and John H. Loudon Professor of International Management at INSEAD. He is the director of Management of partnerships and strategic alliances as well as the co-director of Building partnerships and digital ecosystems programs.
Francesco Burelli is a strategy consultant at Arkwright and a learning coach – for strategy, digital transformation, innovation and fintech – at INSEAD.
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