Enterprise Evolution Model — The Modularisation of the Value Chain

Yes­ter­day was a great day: I could wit­ness the oper­a­tional­iza­tion of my enter­prise pro­to­col evo­lu­tion model. Nobody at the MunichRe sym­po­sium specif­i­cal­ly talked about the model. How­ev­er, the symposium’s theme “Mod­u­lar­i­sa­tion of the Insur­ance Value Chain” actu­al­ly is the oper­a­tional­ized ver­sion of it. Here’s my per­spec­tive on the next evo­lu­tion­ary phase of com­pa­nies: enter­pris­es will be orga­nized like mod­u­larised pro­to­cols: Enter­prise Evo­lu­tion Model — The Mod­u­lar­i­sa­tion of the Value Chain.

In my model, I describe the evo­lu­tion of the enter­prise as a devel­op­ment from the enter­prise as an insti­tu­tion, over the enter­prise as a plat­form to the enter­prise as a protocol.

Since enter­pris­es move slow­ly and need time to evolve to anoth­er level, today many top man­agers still dis­cuss the impact of com­pa­nies with plat­form archi­tec­tures, and the so-called plat­form econ­o­my is a rel­e­vant topic of many board meet­ings. Look­ing beyond, how­ev­er, some enter­pris­es have already left — or even leap-frogged the plat­form evo­lu­tion­ary level, and are mov­ing towards the pro­to­col level. A rather inter­est­ing aspect: this devel­op­ment can hap­pen with or with­out the enter­prise real­iz­ing it: it‘s not that clients call and con­grat­u­late the key account man­ag­er to have made it to the next evo­lu­tion­ary level. And nei­ther the company‘s prod­uct or risk man­agers can con­clude this par­a­digm shift from the mar­ket accep­tance of the company‘s prod­ucts or the bal­ance sheet or P&L: the busi­ness might be run­ning appar­ent­ly perfectly.

Exoge­nous Shocks Are Trig­gered By Exoge­nous Shocks

Most par­a­digm shifts are trig­gered by exoge­nous rather than endoge­nous shocks. In the last decades, play­ers in var­i­ous indus­tries have expe­ri­enced new com­pe­ti­tion by con­tenders they had never heard of before — most­ly from the tech­nol­o­gy space. Ama­zon (retail indus­try), Pay­Pal (finance indus­try), Uber (taxi indus­try), Apple (tele­coms, watch, music, movie, photo indus­tries), are per­fect exam­ples for tech­nol­o­gy com­pa­nies shak­ing up tra­di­tion­al indus­tries in a few year‘s time.

To scan the com­pet­i­tive hori­zon and to pro­vide enter­pris­es with the nec­es­sary infor­ma­tion, know-how, and spir­it to look into the unknown, is the respon­si­bil­i­ty of inno­va­tion depart­ments. Yes­ter­day, MunichRe‘s inno­va­tion depart­ment had invit­ed indus­try, sci­ence, and tech­nol­o­gy rep­re­sen­ta­tives to a full-day sym­po­sium on the mod­u­lar­i­sa­tion of the insur­ance value chain. Being an insur­ance out­sider, I myself expe­ri­enced a very steep learn­ing curve. For this oppor­tu­ni­ty of per­son­al devel­op­ment alone, I have to thank the MunichRe team for invit­ing me!

Mod­u­lar­i­sa­tion Leads To The Pro­to­col Level

Over the course of the day, fully packed with insight­ful talks and inspir­ing con­ver­sa­tions in between, I had my Heure­ka moment: the process lead­ing to my enter­prise evo­lu­tion model‘s pro­to­col level can be described in bet­ter, much more oper­a­tional words: it‘s the mod­u­lar­i­sa­tion of (an industry‘s) value chain. What each par­tic­i­pant of the (re-)insúrance indus­try calls mod­u­lar­i­sa­tion is, in my words, the inte­gra­tion of an enterprise‘s DNA in each part of the value chain. This was my first insight.

To inte­grate an enterprise‘s DNA into a value chain can mean that the enter­prise owns the value chain, or it rather orches­trates it. As every bril­liant mae­stro does, the enter­prise has to make sure that the orches­tra sounds per­fect and deliv­ers exact­ly what the mae­stro wants to deliv­er: the key mes­sage to the audi­ence. And for enter­pris­es, this key mes­sage is what­ev­er they define as their brand equi­ty. Each par­tic­i­pant in the orches­tra, i.e. prod­uct depart­ments, own com­pa­nies, or exter­nal coöper­a­tion part­ners, has to deliv­er their parts result­ing in an orches­trat­ed holis­tic prod­uct and ser­vice experience.

Enter­prise Evo­lu­tion Model — The Mod­u­lar­i­sa­tion of the Value Chain

The process of mod­u­lar­i­sa­tion not only sup­ports the enter­prise to reach its next evo­lu­tion­ary level if active­ly and con­scious­ly exe­cut­ed, but it also makes the enter­prise much more resilient, by trans­form­ing the enter­prise from a com­pa­ny offer­ing prod­ucts and ser­vices to a com­pa­ny that is an inte­gral part of a com­plete industry‘s value chain — and many dif­fer­ent indus­try play­ers trans­port this DNA to customers.

I real­ly would love to dig deep­er into this and to have more con­ver­sa­tions about the mod­u­lar­i­sa­tion / enter­prise evo­lu­tion pro­to­col model. Thank­ful­ly, the MunichRe team wants to build upon yesterday‘s event and orga­nize a next level sym­po­sium — look­ing very much for­ward to it!

Fea­tured image: A pre­sen­ta­tion slide of Mag­dale­na Ramada

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