Swiss Re Institute – Corporate Solutions Annual Forum, Grand Kempinski Hotel Shanghai, 14 May 2019Dr. Evangelos Avramakis, Head Digital Ecosystems R&D, Swiss Re Institute, Zurich

Competing in a world of digital ecosystems

Digital ecosystems: Extending the boundaries of value creation in insurance

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Source: http://2.bp.blogspot.com/-3P4IjBDfTWk/UAwXvfgVW4I/AAAAAAAAHsI/NdX52Tt2s9E/s1600/DSC_0181.JPG

how would a tooth brush platform

look like?

Source: Love Jon (31.01.2018) How a toothbrush is made, www.electricteeth.co.ukhttps://www.electricteeth.co.uk/toothbrush-manufacture/

Source: Dowonsol (2018) Electric Toothbrush Motor High Frequency Ultrasonic Motorhttps://www.amazon.com/Electric-Toothbrush-Motor-Frequency-Ultrasonic/dp/B01NALNQBB 3

4Source: Wisdom Kids Toothbrush Spinbrush Power (31.05.2018)https://www.wilko.com/en-uk/wisdom-kids-toothbrush-spinbrush-power/p/0437356

Source: Wisdom Toothbrush Spinbrush Whitening Power (31.05.2018)https://www.wilko.com/en-uk/wisdom-toothbrush-spinbrush-whitening-power/p/0437355

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…so why are (digital) platforms

so successful?

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…because of key business and consumer network effects!

reducing

effortreducing

timereducing

costs

Source: Teixeira, T. S., & Piechota, G. (2019). Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption. Broadway BusinessVideo source: Pexels. 8

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Network-Effect as key driver for digital ecosystems

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NetworkEffect

Timeinitialgo to market

ramp-upgrowth &

features

new technologyentering the market

Network Effect (exponential)digital winner takes it all

commoditizationoccurs

Source: adapted from: Hinchcliffe D (2015) Why the Underlying Laws of Cloud, Social, and Digital Business Matter, dionhinchcliffe.comhttps://dionhinchcliffe.com/category/the-enterprise/enterprise-architecture/

Source: Cooper Hewitt (2018) Photorealistic rendering based off of concepts in the NACTO Blueprint for Autonomous Urbanism. Copyright © 2017 Bloomberg Philanthropies. Source: Cooper Hewitt Explores The Future of Mobility in New Exhibitionhttps://www.si.edu/newsdesk/releases/cooper-hewitt-explores-future-mobility-new-exhibition

let’s focus on mobility

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connectedproducts / services

11

12

Disconnected platforms provide a number of frictions

potential frictions

Interface

Consumer(exposed risk)

ConsumerJourney

Application(Access)

Customer Jobs

Buying Using / Maintaining Selling

OfflineOnline

InvolvedEcosystemParties

Finance ServiceMarket-

place

Govern-ment

InsuranceRetail Market-

place

Market-place

Life Cycle Phases

OfflineOnline

Using / Maintaining Selling

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Connected platforms reduces the number of frictions

Interface

ConsumerJourney

Application(Access)

Customer Jobs

InvolvedEcosystemParties

Digital Ecosystem

API

FinanceServiceMarket-

place

Govern-ment

Insu-rance

Retail Market-

place

Market-place

BuyingLife Cycle Phases

Consumer(exposed risk)

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15Source: David Reich (31.01.2019) Partnering with Transit Agencies: Integrating Public Transportation into the Uber App. Uber (press release) – Footage: Pexelshttps://www.uber.com/newsroom/publictransit/

Source: Josh Constine (January 2019) Uber launches rider loyalty Rewards like credits & upgrades 9 cities. Techcrunch.comhttps://techcrunch.com/2018/11/14/uber-rewards/

digitalplatforms

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Transport

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Example: Grab digital ecosystem

GrabFamily

Grab share Grab hitch

GrabCar(premium)

Grab taxi

Grab rentals

JustGrab

GrabWheels

GrabPet

GrabCar

GrabCar(6-seater premium)

GrabCar(6-seater economy)

GrabCoach(9 to 40 seater)

GrabShuttle

GrabBike

Transport

Transport

B2CMarket Places

e-Markets

e-Markets

Transport & Logistics

Transport & Logistics

Delivery & Courier

Food Delivery

Food & Dining

Aggro

B2BMarket Places

Food Merchant-

Partner

GrabAds

Transport

Transport

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Logistics

Cluster

Commercial(B2B)

Retail(B2C)

EcosystemDomain

Cluster

Insurance

Financial Services

powered by

Health

Health

Example: Grab digital ecosystem

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B2CRetailCustomers

20

B2BBusinessCustomers

digitalecosystems

21

Variety of business setups and data insights

Knowledge of End Consumer

Digital

NonDigital

Business Platform“Disconnected”

Product / Service

Product / Service(Commodity)

Business Setup

Platform

Business Platform Ecosystem

Ecosystem

Digital Platform

“Connected”Product / Service

DigitalEcosystem

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Digital ecosystems allowing producers to seamlessly integrate

Source: Tan B. et al. (2915) The role of IS capabilities in the development of multi-sided platforms: the digital ecosystem strategy of Alibaba. com, Journal of the Association for Information Systems

Producer /Supplier

Intermediary

Customer

Intermediary

Intermediary

“Traditional Economy” Digital Ecosystems

Further Stakeholderi.e. Service Provider, Advertiser, etc.

Digital Platforms

Outside box - platform providerInner box - platform owner/sponsor

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Digital ecosystems economic rationale (1/2)

Asset builderseg Ford, Walmart, Exxon, Boeing

make one – sell one

Service providerseg Humana, Accenture, JP Morgen Chase

hire one – sell one

Technology creatorseg Microsoft, Oracle, Medtronic, Pfizer

make one – sell many

Network orchestratorseg Ebay, Uber, Alibaba, Amazon,JD

many make – many sell

Source: Barry D. Libert, Megan Beck, Jerry Wind (2016) The network imperative – How to survive and growth in the age of digital business models. Harvard Business Press

Networkorchestrator

Networkorchestrator

Networkorchestrator

Networkorchestrator

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Digital ecosystems economic rationale (2/2)

25%

20%

15%

10%

5%

0%

20%

12%

8%

6%

2%

0%

10%

4%

10%

6%

4%

2%

0%

8%

75%

50%

25%

0%

Assetbuilder

Serviceprovider

Technology creator

Assetbuilder

Serviceprovider

Technology creator

Assetbuilder

Serviceprovider

Technology creator

Assetbuilder

Serviceprovider

Technology creator

Sales growth (year over year) Return on Assets (RoA)

Gross profit margin Multiplier (price/revenue)

Source: Barry D. Libert, Megan Beck, Jerry Wind (2016) The network imperative – How to survive and growth in the age of digital business models. Harvard Business Press

Example: GE Predix digital platform

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B2B Application

B2BInterfaces

(Apps)

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Digital Platform

OfflineOnline

GE Predix industrial platform

• Lower risk of cost and time overruns

• Reduce sources of error• Build apps quickly• …

Oil & GasWater &

WindSolar &Power

Example: GE Predix digital platform

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MiningHealth-

care

Oil & GasWater &

Wind

Powergene-ration

Tranpor-tation

OfflineOnline

Digital PlatformPlat-form

Service

Solar &Power

Manu-facturing

Auto-motive

Auto-motive

Intelligentenviron-

ment

Aviation

Scheduling &logistics

Operationsoptimisation

Asset performance management

Field force management

… …

Oil & GasWater &

WindSolar &Power

B2B ApplicationB2B Application

B2BInterfaces

(Apps)

Example: GE Predix digital platform

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…so why are digital ecosystems

so successful?

29Source: Barry D. Libert, Megan Beck, Jerry Wind (2016) The network imperative – How to survive and growth in the age of digital business models. Harvard Business Press

…because of key business and consumer network effects!

reducing

effortreducing

timereducing

costs

"The companies that have truly built network-orchestrating organizations

don’t just do one thing differently;

they do everything differently!- from leadership to recruiting to production to

advertising."

30Source: Barry D. Libert, Megan Beck, Jerry Wind (2016) The network imperative – How to survive and growth in the age of digital business models. Harvard Business Press

Thank you

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Dr. Evangelos AvramakisHead Digital Ecosystems R&DSwiss Re Management LtdMythenquai 50/608022 ZURICH, SWITZERLANDDirect +41 43 285 49 73 E-mail: Evangelos_Avramakis@swissre.com

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