Delivering on Purpose: Business Ecosystem Orchestration in Practice

Introduction

An EY Beacon Institute study on purpose in business found that ‘the public discourse about “corporate/ organizational purpose” has increased fivefold since 1994, [and is] now trending at an exponential rate that surpasses the rate of public discourse about sustainability.’ Yet, while the discussion on purpose increases, there remains a distinct lack of practical approaches to implementing and ultimately delivering on corporate purpose.

There can be little doubt that this implementation gap is partly explained by the fact that delivering a purpose, like solving a social or environmental problem, is inherently complex. Many external stakeholders and natural factors may have a strong influence on the key targeted outcomes. Consequently, any methodology that claims to help an organization deliver its purpose needs to acknowledge and address this complexity. It should provide a way not only to understand the ecosystem of stakeholders, their objectives, capabilities, relationships, and challenges but also to propose a meaningful way to engage them through means that can help to deliver the organization’s purpose. In other words, if traditional companies can afford to keep a firm-focused perspective, purpose-driven organizations have no choice but to adopt an ecosystem-focused perspective, with purpose at the centre of their ecosystem.

Chapter 6 explored the relationship between corporate purpose and business ecosystems. This chapter will focus on the practitioner’s perspective and outline a concrete methodology for organizations genuinely seeking to implement and deliver on a meaningful purpose by putting it at the centre of their value-creation model. We call this methodology ‘ecosystem orchestration’. It is important to note that this methodology is not a peripheral sustainability or corporate social responsibility framework: it is an approach to business model design and implementation. It may lead to questioning the organization’s current business model and practices. Therefore, it is likely to generate some level of discomfort, as would be expected of any significant collective transformation. On the other hand, it creates a unique opportunity for the organization to clarify its purpose, which can be used to identify and orchestrate collective growth opportunities within its business ecosystem.

The methodology relies on an eight-step iterative process and this chapter will cover each one of them with the objective of providing the key ideas and tools to implement them in practice.

1. Establish your purpose

2. Design your purpose metrics

3. Identify the stakeholders relevant to your purpose

4. Map their objectives, capabilities, relationships, and pain points

5. Select the key strategic pain points in this ecosystem that your organization wants to address

6. Measure the baseline performance metrics: design and implement the performance metrics to track your impact on the key strategic pain points

7. Identify, test, and implement interventions addressing these pain points

8. Measure the impact of your interventions on both the purpose and performance metrics.

The process is not as linear as this list of steps might seem to indicate. It allows and encourages multiple interactive feedback loops between the different steps, which is to be expected of any dynamic design process.

Establish your Purpose

The objective of this first step is for an organization to crystallize a purpose statement that will be a powerful asset in driving their business model. To do that they need to specify a meaningful problem to be solved.

The term ‘organization’ in this case refers to any business unit or group of business units that can undertake to solve the same challenges. In some cases, market contexts can be so different that a range of purpose statements are needed for business units in different countries. In other cases, the same company operates in very different product and service categories and cannot reasonably be expected to have the same purpose statement for all of them. Mars Inc., for example, has both a confectionery business and a petcare business that have understandably distinct purpose statements.

A purpose statement should not be confused with other corporate statements, such as corporate values, mission, vision, or brand positioning, although there may be some overlap. Indeed, it is not impossible to build a purposeful business based on a mission-style positive description of existing activities (‘Science and industry for a better life’, for example) or a restatement of shared values (‘Become the most mutual company in the world’). However, a purpose that is framed as a meaningful challenge—one that specifies a problem to solve and implicitly or explicitly defines a target population (‘To bring effective proposals to the problems of nutrition / malnutrition’)—better provides the level of clarity and tension needed to build a purpose-driven business model.

As the discussion of purpose in Chapter 6 also suggests, such a purpose statement can be effective because it is based on a proper understanding of the challenge from the perspective of the target population (‘outside-in perspective’). In addition, the outcomes it aims to improve could theoretically also be measured by external stakeholders (‘objective purpose metrics’). It also provides a constructive role for the organization’s financial profits: delivering this type of purpose sustainably and at scale can only happen if the key activities are profitable; otherwise it becomes merely another cosmetic charity stunt that gets terminated at the first financial difficulty. This means that financial performance plays the role of a ‘sustainability’ metric rather than that of main performance metric.

Table 8.1 captures some of the key differences between a purpose framed as a meaningful challenge and other types of corporate statement.

Design the Purpose Metrics

Once an organization has crystallized its intent to solve a meaningful challenge, it requires the proper metrics to track its performance against this objective. The most important criterion that purpose metrics should fulfill is the following: measure outcomes, not inputs.

While it is understandably essential for an organization to track the input resources (e.g. budget, people, equipment, and material) mobilized for a given activity, progress against a purpose can only be adequately measured as an outcome from the perspective of the target populations (e.g. for malnutrition: percentage of protein- or iron-deficient children; for healthcare: disease incidence, number of healthy years of life, etc.). Good purpose metrics measure external phenomena, not internal resources.

A more comprehensive resource to measure purpose metrics can be found in the EVPA’s Impact Measurement (EVPA 2019). The Practical Guide to Measuring and Managing Impact (EVPA 2019) is a recommended reading to explore the topic in more detail. Figure 8.1 illustrates the key distinction between inadequate internally focused and proper externally focused metrics. For this chapter, and more generally within the Economics of Mutuality, only the last two levels, outcomes and impact, are acceptable purpose metrics.

Identify the Stakeholders

Once an organization has established its purpose, it needs to build a working knowledge of the key stakeholders that have a relationship with and can have an influence on the given purpose. These are all the external organizations, institutions, and communities who either can have an impact on or be impacted by the challenge the organization has chosen to tackle.

The link between purpose and an ecosystem of stakeholders has already been explored in Chapter 6. This link is fundamental for this step in the process: the purpose defines the boundaries of the ecosystem. It allows the organization to determine who should be considered as part of the ecosystem of stakeholders, i.e. who should be considered a potential target or partner for possible future interventions.

For example, a fictive pharmaceutical company without a true purpose beyond becoming or staying the leader in its category of products (diabetes-care medicine, for example), may decide that only doctors and insurance companies should be targets for their activities as they are the main decision-makers influencing their commercial success. On the other hand, an organization such as Novo Nordisk’s Cities Changing Diabetes®, aimed at holistically addressing the impact of diabetes on the population, has to consider all factors and influencers of the disease’s incidence, its management, and the patients’ quality of life. This requires them to consider many additional stakeholders as part of the ecosystem defined by their purpose (Figure 8.2). As type 2 diabetes is strongly linked to diet and lifestyle factors, any stakeholder with a meaningful influence on lifestyle or food environment is relevant to the purpose, which includes actors in the following areas: nutritional labelling laws, transportation infrastructure and its influence on exercise, retail, food manufacture, restaurants and cafés, tap water quality and its influence on sugary drinks consumption, the cultural barriers to healthcare access that may be disproportionately affecting certain communities, etc.

Map Stakeholders’ Objectives, Capabilities, Relationships, and Pain Points

Once the ecosystem of stakeholders has been identified, the next step is to conduct appropriate field research in order to collect the following information for each one of them:

1. Objectives What role do they see for themselves in the ecosystem? What are they trying to achieve? What are their aspirations? How do they measure their own success?

2. Capabilities What are the skills and assets that each stakeholder has access to?

3. Relationships Whom does this stakeholder meaningfully interact with? Who is important to them? Who are they important to?

4. Pain points What are the biggest challenges, fears, concerns, and frustrations that this stakeholder experiences while trying achieve their objectives and play their role(s) in the ecosystem?

The outcome of this strategic research stage is called an ecosystem map, laying out the purpose, the stakeholders, and their characteristics. The ecosystem map is the primary input to the next phases of the

process where the organization will (co-)design and test specific interventions aiming at improving the relevant outcomes in the ecosystem by addressing strategically selected pain points.

The key objective of the ecosystem mapping step in the process is to build an ‘outside-in’ perspective by using research techniques that are designed to identify and understand the stakeholder’s objectives and challenges exclusively from their perspective, with as little contamination from prior internal ‘knowledge’ and assumptions as possible. This can be surprisingly difficult for companies to achieve because their internal expertise and market research capabilities tend to be understandably focused on the firm’s current business model and activities. For example, a pet-food manufacturer, whose historical research was focused on pet-owners’ shopping and feeding behaviour, may find it surprising when ethnographic research identifies separation guilt (i.e. their pet stays indoors the whole workday or is left behind during holidays) as the biggest pet-owner pain point. The manager may find it even more surprising that pet-food access, quality, and choice are practically never cited as pain points for pet owners in most developed markets. That by no means invalidates their business model of course, but it strongly suggests further growth opportunities outside the strict perimeter of food manufacturing and distribution that deserve to be explored.

The easiest way for most organizations to build a good quality ecosystem map is to partner with an agency with strong social sciences capabilities (e.g. anthropology, sociology, behavioural sciences) who have experience in conducting clinical interviews or ethnographic research. These skills can usually be found in qualitative research agencies, universities, or design firms. The key selection criteria for the research partner is its ability to provide an unbiased view of the stakeholders’ pain points, independent of the firm’s current products or services.

In short, pain points are subjective expressions of frustrations, concerns, fears, or challenges. They are revealed through careful stakeholder-centric qualitative research, not through rational analysis in a meeting room. They are usually best summarized by sentences starting with ‘I’ or ‘we’ from a stakeholder’s perspective. They can be thought of as symptoms of underlying breakdowns, typically in some kind of infrastructure or in relationships among or between stakeholders.

Let’s take an example from a recent malnutrition project in rural India.

• A mother living in a rural village in India says: ‘It is very hard to see a doctor, I have to get my husband or brother to drive me to the neighbouring public hospital, then I have to wait for more than six hours while everyone there is ignoring me.’ This fits the quality requirements for a pain point. It expresses clearly the difficulties and frustrations from the perspective of the mother, and is a telling symptom of potential underlying breakdowns (from healthcare and transportation infrastructure to relationship with doctors, nurses, and administrative staff).

• In contrast, the insight that ‘Mothers are not aware they or their children are malnourished; they are not properly educated on this important health aspect’, while it concerns directly the stakeholder ‘mothers’, is by no means a pain point of the mothers. It is not viewed from the mothers’ perspective. In this case it is a pain point shared by local and national public services, as well as NGOs trying to tackle malnutrition.

To complete the ecosystem map, once all the pain points are identified, it can be useful to classify them according to the following categories. (These are covered in more detail in Chapters 9, 10, 11, and 12):

1. Human capital related These are all the pain points related to the health, well-being, skills, and education of the stakeholder. For example, a key pain point expressed by veterinarians in a petcare project was, ‘I was trained to heal animals, not run a business. I really hate the administrative part of my job, and it takes more and more of my time.’

2. Social capital related These pain points reflect degraded relationships and trust breakdowns. In the same petcare study, veterinarians have complained that ‘customers (pet owners) do not trust me like they used to; they come with loads of bad information from Google or from their breeder or friend, and they question my recommendations.’ Similarly, breeders have complained that ‘pet owners do not trust me and do not understand why I have to charge hundreds or thousands of euros for a purebred puppy or kitten.’

3. Financial capital related These are the pain points directly related to income, purchasing power, and economic value repartition. To keep the veterinarian example, one such pain point was expressed as, ‘Given the years of study and the amount of hard work I put in this job, I really don’t earn enough to make it worth my while. If could start over, I would not be a vet and I would not recommend this career to anyone. Better to open a car repair shop, you would make more money.’ Sometimes a complaint about a financial issue (e.g. price) might reflect a different type of tension in the relationship between stakeholders. When, for example, pet owners ask, ‘Why do I have to pay 70€ here but the same intervention is 45€ at a different vet?’ it is directly linked to a financial transaction, but it may better reflect a frustration with price and quality transparency, and was confirmed by our research to be a symptom of a significant trust deficit between pet owners and healthcare providers, eventually classified as a social capital pain point.

4. Natural capital related The mapping and understanding environmental challenges linked to any activity in the ecosystem will be better covered in Chapters 9 and 12. In the meantime, if a stakeholder expresses concerns about environmental challenges or access to a raw material, we can easily classify the related pain points in this category. For example, in our Petcare study, many pet-food manufacturers have expressed concerns about the future of protein-sourcing.

Select Strategic Pain Points

Typical ecosystem maps have a dozen stakeholders and more than a hundred pain points. One single organization is not likely to be able to coordinate action across all of them. Therefore, it is essential to select a strategic subset of pain points to address as a priority. Depending on the organization’s context, culture, and leadership structure, this selection can be made as a top-down management decision, voted for collectively, or as a bottom-up process. In our experience, the third option enables a higher level of engagement from the rest of the organization.

Once a strategic subset of pain points has been selected, we have found it very useful to map them on a simple impact x agency matrix. See Figure 8.3.

• Impact How important is each pain point for the overall purpose? Pain points are usually symptoms of underlying breakdowns in the ecosystem (inadequate infrastructure, adverse cultural factors, degraded relationships, etc.). How much do these underlying breakdowns contribute to the overall challenge the organization is trying to address (the purpose)? The ‘impact’ dimension must be assessed independently of the organization’s assets, it is a purely externally focused exercise.

• Agency How relevant are the organization’s assets and capability relevant in tackling each selected pain point? How much can the organization do about it? The ‘agency’ dimension describes the distance between the external pain points and the organization’s internal assets and capabilities.

1. High-impact, high-agency pain points are opportunities for direct intervention by the organization. These are important pain points (high impact) and the organization can do something about them (high agency).

2. High-impact, low-agency pain points should not be ignored or deprioritized (high impact), but since the organization cannot act alone on them (low agency), they constitute important partnership opportunities. The organization should then look within the ecosystem map for stakeholders with relevant capabilities.

3. Low-impact, high-agency pain points are best described as distractions. It is tempting for the organization to try to address them as they can do something about them (high agency), but it is where discipline should be applied in focusing on the high-impact pain points in order to allocate resources to solving the problems most relevant to the purpose.

4. Low-impact, low-agency pain points can naturally be de-prioritized.

Measure Baseline Purpose and Performance Metrics

The notion of purpose metrics was introduced earlier in this chapter. It is critical to establish a baseline by measuring them before any specific intervention is put in place. This will allow for proper tracking of progress against the stated purpose of the organization.

The same baseline needs to be established for what we call performance metrics, which are the second family of metrics involved in this methodology. While purpose metrics are independent of the activities of the organization and are measured exclusively on the target population(s) related to the purpose, the performance metrics are linked to the subset of strategic pain points selected in Step 5 and to the related interventions (Step 7). They can be measured anywhere in the ecosystem and reflect the financial, human, social, and natural resources that may be created, used, and transformed in the ecosystem. They will be covered in detail in Chapters 9, 10, 11, and 12, including practical guidelines on how to deploy these measurement capabilities.

The key idea behind these metrics is that performance has multiple dimensions and is not limited to financial aspects. Each pain point has been classified in one of the four capitals (human, financial, social, natural) and can therefore be measured using the principles and techniques covered in Chapters 9, 10, 11, and 12.

One of the critical, often overlooked, requirements for a proper impact measurement framework is the use of control groups that would be included in the baseline and follow-up metrics assessment but would not receive the interventions.

Design Ecosystem Interventions

Once the priority pain points have been identified, the organization is ready to start (co-)designing and testing interventions.

By intervention, we mean anything the organization starts doing, stops doing, or does differently with the express purpose of addressing the prioritized pain points. Since these pain points have been prioritized with their impact on the organization’s purpose as the main criterion, addressing them will naturally contribute to delivering the purpose.

Designing an intervention means answering the following questions:

1. What pain points is it addressing and how?

2. What relationships is it mediating and improving?

3. What capabilities and partnerships does it require?

4. How does it contribute to the economic sustainability of the

   ecosystem?

The actual design process will differ from one organization to the other, from one culture to another. We are sharing some our team’s best practices below:

• Include both internal and external stakeholders in designing and testing potential interventions

• Use design thinking facilitation methods

• Use the ecosystem map as the key source of inspiration, and include

  the research agency that built it in the ideation workshops

• Expect your initial intervention designs to fail. Identify quick, cheap in-market experiments that can be conducted to verify/falsify the key hypotheses behind each intervention as fast as possible so you can improve them iteratively and quickly. The Lean Startup® approach is a useful one for this aspect.

We will use the used-car company case study1 (henceforth referred to as UCC) to illustrate some key characteristics of successful ecosystem interventions. Please refer to the detailed case study in chapter X.

1. It can be a simple product of service: having identified the trust deficit between the buyer and the seller, specifically around the condition of the car, they have created a car inspection service that acts as a trusted third party and creates transparency for the buyer on the condition and quality of the car.

2. It can be a more indirect value creation: through their car-dealer franchise, UCC has been able to collect a large enough sample of transactions to be able to create a used-car price benchmarking service, which then addresses the trust deficit between buyers and sellers, leading to a larger number of transactions.

3. It improves one or more relationships: the transparency created by the car inspection service and the car-price benchmarking have improved both the buyer–seller interaction but also the buyer– banker relationship. The banker, having a more reliable estimate of the value of the collateral, can lower its risk and grant loans more easily to the buyer.

4. Each intervention does not have to be monetized, but the combination of interventions needs to be economically sustainable: the car-price benchmarking service was offered for free, but it also removed a significant barrier to the growth of the whole ecosystem (trust deficit), leading to a positive economic outcome for many stakeholders: the dealers (more transactions), the banks (more loans), and UCC (more franchise royalties).

5. It is critical to identify and engage with partners to address the highimpact, low-agency pain points. UCC did not have the dealership management system it needed to support its franchisees and collect the necessary data to create the price benchmarking system. They engaged with a small, agile IT company that was looking to improve and sell their own point-of-sales system, and entered a mutually beneficial partnership where UCC was able to access an effective cloud-based point-of-sales system while being an extremely valuable stepping stone for their IT partner who could through their relationship with UCC improve the quality and relevance of their features and fund their growth. The cost stem map can be instrumental in identifying the kind of partnerships that would be valuable as it not only maps pain points but also capabilities, so when the orchestrator identifies high-impact, low-agency pain points, they can look for potential partners who have higher agency on these pain points and find a mutually beneficial way to engage them, as UCC did with their IT partners. This emphasizes the value of including external stakeholders in the design and testing of interventions.

The key message from this section is that addressing the right pain points in the ecosystem is the way to deliver both the organization’s purpose and sustainable economic value simultaneously.

Measure Impact on Purpose and Performance Metrics

This last step consists of tracking the purpose and performance metrics over time to assess the impact of the interventions and the progress against the purpose.

It is worth reiterating the importance of setting up control groups when measuring the baseline metrics. Only if we have proper control groups can we confidently attribute any impact to the interventions we put in place.

Conclusion

This chapter has outlined the specific methodology used in EoM to deliver on corporate purpose. It has shown how beginning with a meaningful purpose is the crucial starting point for both defining the ecosystem the business is part of and the development of interventions that address the problems and pain points of stakeholders. It has shown how an ‘outside-in’ perspective nurtured through the creation of an ecosystem map is a foundation for the development of strategic business interventions able to drive innovative value creation. Lastly, it has re-emphasized the importance of metrics both to measure impact and drive the performance of interventions. Without quantified knowledge of impact and progress, a corporate purpose will find its way into the implementation gap. Underlying the deployment of such a methodology, however, are some fundamental mind-sets that have been alluded to throughout the chapter but must now also be made explicit.

The first is that this methodology requires a firm to consciously de-centre itself from the system, so that it does not de facto—essentially out of habit—place its own version of reality, problems, and performance at the centre of the ecosystem. Second, the firm must embrace an ethic that seeks to create a mutuality of benefits for many based not on enlightened self-interest, but out of a commitment to delivering on the purpose. This means that a firm adopts the posture of an orchestrator not a dictator, leading on the basis of trust rather than fear or power. Third, when delivering on a purpose, complexity is unavoidable and should not be reduced, but it can be collectively managed through developing the right tools and partnerships. Once managed, that complexity can also become a source of inspiration, innovation, and the impetus for firms developing their purpose to solve meaningful challenges.

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Note

1. Disclaimer: the UCC business case is a very powerful example of ecosystem orchestration and building a business model by addressing ecosystem pain points. We must also recognize that the natural capital dimension was not specifically addressed in our report of the case study, only human, social and shared financial capitals were. Please refer to Chapter 9 for more specific illustration on how to address this dimension and integrate natural capital in your organization’s performance metrics.

Yassine El Ouarzazi has a background in engineering. He has fourteen years of experience in various business-analytics-related positions in the consumer finance, automotive, and FMCG industries. For seven years, he spearheaded Mars’ Evidence Based Marketing programme before turning to research in business model innovation. Since 2014, he has been developing and deploying Catalyst’s signature Economics of Mutuality process to help businesses bring purpose to life—from ecosystem mapping, to intervention design, to metrics. Yassine is from Morocco. He graduated from a French engineering school (Ecole des Mines de Paris) in 2000. He has a passion for technology and education (and has contributed as a volunteer to the French translation of https://www.khanacademy.org.

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