Steps essential for companies to become shapers
By Song Khee-hong
It is not difficult to imagine enormous benefits companies can enjoy if they can successfully shape an industry or a market. Shapers can create a new ecosystem and define the rule of competition.
They usually design how an industry makes money and position themselves at the center of the value creation activities. Microsoft and Intel played an important role in opening the PC era and enjoyed unparalleled value opportunities as the shaper of the desktop industry.
However, being a successful shaper is getting more difficult because many companies understand the potential value and try to find shaping opportunities. One example is smart phone and smart TV. Awakened by the power of operating system (OS) and platform, many players from different background are vying for the OS standard. Microsoft, Google, Apple, and Samsung are pushing their own OS and try to establish an ecosystem based on their platform. If companies continue interpreting the emerging opportunity to their own advantage, the likely outcome is that the idea never grows to a shaping strategy. The key to successful shaping strategy is openness and the ability to mobilize masses of players by sharing benefits with all participants.
Successful shapers distinguish themselves through the following steps. First, they formulate a view of the future that highlights how a broad industry or market is going to change and identifies the opportunities not just for themselves but for a wide range of participants. Sea-Land re-defined the shipping industry by inventing the steel container but opened the patent free-of-charge to make it a standard in the entire industry. Sea-Land didn’t try to monopolize huge cost saving opportunities but invited multiple stakeholders such as shippers, cargo companies, railway companies, and customs authorities to benefit from the innovation.
Second, shapers should develop a set of standards and practices that organize and support participants’ activities to make it easy and inexpensive for participants to develop and deliver their own products and services. This is where large companies with big assets have advantage over small innovators who used to be more flexible and agile. Who makes the shaping platform more attractive and convenient will distinguish successful shapers from failing ones.
Third, other companies won’t participate in a shaper’s proposed business ecosystem if they worry that the shaper lacks the conviction or capability for success, or that the shaper will eventually compete against them. To assuage these worries, shapers must signal their intentions through their actions.
Shaping strategy has a long history. There are many examples from early stages of industrialization. However, not many companies succeed to be a “shaper.” Managers need to pay more attention to how to act as a shaper before starting calculations for the potential gain they can expect when they become a shaper.
Song Khee-hong is the partner of Deloitte Consulting Korea.