Market Enablement

Actively encouraging the growth of a competitive market around a component or service you care about.

"Encouraging the development of competition in a market"

• Simon Wardley

🤔 Explanation

What is Market Enablement?

Actively encouraging the growth of a competitive market around a component or service you care about. Instead of monopolizing, you enable others (even competitors) to enter, because a bigger market ultimately benefits you in some way. This strategy might seem counterintuitive -- why encourage competition? Origins: companies realized that a larger pie can yield a larger slice even if share % is smaller. Purpose: increase overall adoption of an activity to create network effects or drive costs down. Key principle is creating an ecosystem or environment where multiple players can thrive, often through open standards, shared platforms, or nurturing user communities. For example, releasing supporting tools, holding conferences, providing funding or data -- anything that lowers the barrier for others to participate. The enabler often has a plan to capture value downstream (e.g., selling infrastructure or being the broker in that enabled market).

Why is Market Enablement a valuable leadership strategy?

Market Enablement is a valuable leadership strategy because it can:

• Accelerate Evolution: Drive faster development and commoditization of components, benefiting the entire ecosystem.
• Expand the Market: Grow the overall size of the market, creating more opportunities even if your individual market share decreases.
• Reduce Costs: Encourage competition, which can lead to lower prices for components or services you consume.
• Increase Innovation: Foster a vibrant ecosystem where multiple players contribute new ideas and solutions.
• Establish Standards: Promote the adoption of open standards or platforms that you can leverage.
• Shift Competitive Focus: Allow you to focus on higher-value activities while others compete on newly enabled, often commoditizing, layers.

How does Market Enablement work?

Market Enablement typically involves one or more of the following actions:

• Promoting Open Standards: Championing or contributing to open standards that allow for interoperability and reduce vendor lock-in.
• Developing a Platform: Creating a platform that others can build upon, providing tools, APIs, and resources.
• Sharing Knowledge or IP: Selectively sharing intellectual property, research, or data that can help others enter the market.
• Investing in the Ecosystem: Providing funding, resources, or support to startups or complementary businesses.
• Fostering a Community: Building and nurturing a community of users, developers, and partners around the component or market.
• Lowering Barriers to Entry: Actively working to reduce technical, financial, or regulatory hurdles for new entrants. The enabling entity usually has a clear strategy to benefit from the larger, more active market, often by selling complementary products or services, leveraging network effects, or capturing value at a different point in the value chain.

🗺️ Real-World Examples

IBM and Linux Promotion

In the early 2000s, IBM invested significantly in promoting the Linux operating system. This move helped enable a competitive market for enterprise operating systems, challenging Microsoft's dominance. While other companies like Red Hat also benefited, IBM's strategy aimed to boost its own hardware and services sales, as a larger Linux market translated to increased demand for IBM's offerings.

Apple and the App Store

Apple's creation of the App Store for the iPhone is a prime example of market enablement. By providing Software Development Kits (SDKs) and a revenue-sharing model, Apple encouraged third-party developers to create applications. This vast app ecosystem significantly increased the iPhone's value and utility for users. While developers competed within the App Store, Apple captured value through platform fees and increased device sales.

Tesla's EV Patent Pledge

In 2014, Tesla announced it would not initiate patent lawsuits against anyone who, in good faith, wanted to use its electric vehicle technology. This decision to open its patents was aimed at encouraging other manufacturers to build electric vehicles, thereby accelerating the growth and adoption of the EV market as a whole. Tesla's expectation was to benefit from the broader ecosystem development, including charging infrastructure and consumer acceptance.

🚦 When to Use / When to Avoid

🚦 Market Enablement Strategy Self-Assessment Tool

Find out the strategic fit and organisational readiness by marking each statement as Yes/Maybe/No based on your context. Strategy Assessment Guide.

Landscape and Climate

How well does the strategy fit your context?

• Our map shows a component whose evolution could be accelerated by broader ecosystem participation.
• There's an opportunity to create or grow a market that would, in turn, benefit our core offerings.
• We can define or influence an open standard that would encourage wider adoption and interoperability.
• The current market for a necessary component is too small, too slow-moving, or too expensive.
• Our business model allows us to capture value from a larger, more competitive market (e.g., through complementary services, data, or scale).
• Competitors are hesitant to invest in growing the market themselves, creating an opening for enablement.

Organisational Readiness (Doctrine)

How capable is your organisation to execute the strategy?

• Our organization has a long-term strategic vision that values ecosystem growth over direct control in specific areas.
• We are capable of influencing or contributing effectively to industry standards or open platforms.
• We have the resources (financial, technical, personnel) to support market enablement activities (e.g., tool development, community management, funding).
• Our leadership is comfortable with the idea of helping potential competitors if it serves a larger strategic purpose.
• We have a clear plan for how market enablement will ultimately benefit our organization.
• We possess strong communication and relationship-building skills to engage with ecosystem partners.
• We are prepared to handle potential risks, such as loss of direct control or enabling stronger competitors.

Assessment and Recommendation

Strategic Fit: Weak. Ability to Execute: Weak.

RECOMMENDATION
Consider alternative strategies or address significant gaps before proceeding.

Use when

You stand to gain from the overall expansion of a market more than from hoarding a niche. This is common if you monetize volume or adjacent services. It's ideal if an activity is currently too nascent or niche — by enabling competitors, you validate and grow the space (a 'rising tide lifts all boats' scenario, especially if your boat is well-placed to capitalize).

Avoid when

Your advantage is narrow and easily copied — enabling a market could just create strong competitors that erode your business. Also avoid if investors/board aren't comfortable with the optics of helping competitors (this requires strategic vision). If you don't have a plan to capture value (like a platform or back-end play), you might just end up commoditizing yourself.

🎯 Leadership

Core challenge

The core challenge for leadership in market enablement is to successfully foster a thriving ecosystem that benefits the broader market (and thus indirectly or directly the organization) while strategically positioning the organization to capture sufficient value from that growth. This involves balancing the impulse to control with the need to encourage open participation, and navigating the risk that enabled competitors may outperform the enabler.

Key leadership skills required

• Ecosystem Thinking: Ability to see beyond the organization and understand the dynamics of the entire market and value network.
• Strategic Influencing: Skill in persuading other organizations, developers, and stakeholders to adopt standards or participate in the ecosystem without direct control.
• Long-Term Vision: Capacity to foresee the benefits of a larger, enabled market and commit to strategies that may not yield immediate returns.
• Risk Management: Competence in identifying and mitigating risks, such as enabling overly strong competitors or failing to capture value.
• Communication: Clearly articulating the vision and benefits of market enablement to internal and external stakeholders.
• Partnership Development: Ability to forge and manage alliances or less formal collaborations that support market growth.
• Patience and Persistence: Understanding that market enablement can be a slow process requiring sustained effort.

Ethical considerations

When enabling a market, leaders must consider several ethical dimensions:

• Fair Competition: Ensuring that enablement efforts genuinely foster a competitive landscape rather than subtly creating a new form of dependence or a disguised monopoly.
• Transparency: Being clear about the motives for market enablement and how the enabling organization intends to benefit.
• Impact on Incumbents: Recognizing that enabling a new market or new ways of competing can disrupt existing businesses and livelihoods.
• Accessibility and Inclusivity: Considering whether the enabled market will be accessible to a wide range of participants or if it inadvertently creates new barriers for some.
• Data Privacy and Security: If the enablement involves platforms or data sharing, ensuring ethical handling of user data and robust security measures.
• Unintended Consequences: Proactively thinking about and monitoring for unforeseen negative impacts of the market's growth or the way it is enabled.

📋 How to Execute

1. Identify the Target Component/Market:

   • Pinpoint a specific component, service, or nascent market segment that, if evolved or expanded, would provide strategic value to your organization. This often involves areas that are bottlenecks, too costly, or have insufficient solutions.

2. Define Strategic Objectives & Value Capture:

   • Clarify what your organization aims to achieve (e.g., accelerated component evolution, reduced costs, increased adoption of a complementary product).
   • Crucially, define how your organization will capture value from the enabled market (e.g., through services, premium features, data insights, increased sales of other products). Without this, you risk enabling others at your own expense.

3. Analyze the Ecosystem & Identify Barriers:

   • Understand the current players, potential entrants, and the barriers preventing the market from growing (e.g., lack of standards, high entry costs, missing tools, insufficient user demand).

4. Choose Enablement Mechanisms:

   • Select appropriate methods to lower barriers and encourage participation. This could include:
     • Open Standards: Championing or contributing to open standards.
     • Platform Development: Building a platform with APIs and tools for others.
     • Open Sourcing Technology: Releasing relevant IP or software.
     • Ecosystem Investments: Funding startups or complementary projects.
     • Community Building: Fostering user and developer communities.
     • Advocacy and Evangelism: Promoting the new market or approach.

5. Develop and Communicate the Plan:

   • Create a clear roadmap for your enablement activities.
   • Communicate the vision and benefits to potential ecosystem partners and the wider community. Transparency can be key to building trust.

6. Execute and Iterate:

   • Implement the chosen mechanisms. This may involve software development, community management, marketing, or partnership negotiations.
   • Monitor the market's response and the impact of your initiatives. Be prepared to adapt your strategy based on feedback and evolving conditions.

7. Foster and Nurture the Ecosystem:

   • Act as a steward for the growing market, at least initially. This might involve facilitating collaboration, resolving conflicts, or ensuring quality.
   • Encourage participation and contribution from diverse players.

8. Measure, Evaluate, and Refine Value Capture:

   • Continuously track metrics related to your strategic objectives (e.g., market growth, adoption rates, your own related revenue streams).
   • Refine your value capture mechanisms as the market matures.

📈 Measuring Success

• Overall Market Growth: Track the size, volume, or value of the enabled market. Is it expanding as anticipated?
• Ecosystem Vitality:
  • Number and diversity of active participants (e.g., new companies, developers, users).
  • Rate of innovation and new offerings within the ecosystem.
• Adoption of Enabled Component/Standard: Measure the uptake of the specific component, technology, or standard you are promoting.
• Achievement of Strategic Objectives:
  • Impact on your organization's goals (e.g., reduced costs for a consumed component, increased sales of complementary products/services).
  • Return on investment for enablement activities.
• Value Capture Effectiveness: Quantify the value your organization is successfully capturing from the enabled market, aligned with your initial strategy.
• Influence and Reputation: Assess your organization's perceived influence and reputation within the newly formed or expanded market.

⚠️ Common Pitfalls and Warning Signs

Enabling Stronger Competitors

You might inadvertently enable or accelerate the growth of a competitor who then outpaces your own organization, possibly by leveraging the newly open market more effectively or by having a better value capture model.

Failure to Capture Value

A critical pitfall is successfully enabling a market but failing to create or execute a mechanism to derive sufficient value for your own organization. The benefits might accrue to others while you bear the costs of enablement.

Erosion of Margins (Commoditization)

Expanding a market often leads to increased competition and commoditization of the enabled component or service. If your business model isn't prepared for potentially lower margins at higher volumes, this can be detrimental.

Poor Execution or Lack of Sustained Effort

Market enablement can be a complex, long-term endeavor involving coordination with multiple parties (industry groups, partners, communities). Insufficient resources, poor project management, or lack of sustained commitment can lead to initiatives stalling or fragmenting.

Misjudging Market Readiness or Interest

Pouring resources into enabling a market that isn't ready for adoption, or where there's insufficient interest from potential participants or users, can lead to wasted effort.

Loss of Control and Unintended Consequences

Once a market is enabled and open, it can evolve in unexpected ways. The enabling organization may lose control over the direction of development, standards, or quality, leading to outcomes that are not aligned with its original strategic intent.

Underestimating Resistance

Existing incumbents or entities benefiting from the status quo may actively resist market enablement efforts, creating significant hurdles.

🧠 Strategic Insights

Evolution and Market Acceleration

Market enablement is a powerful accelerator of component evolution. By encouraging competition and broader participation, it can rapidly drive a component from Genesis or Custom-built stages towards Product and eventually Commodity status. This acceleration benefits consumers and adopters of the component but requires strategic thinking from the enabler to ensure they also benefit.

Shifting Value Chain Dynamics

Successfully enabling a market can significantly alter value chain dynamics. The enabled component may become commoditized, shifting profit pools to other parts of the value chain. Organizations that enable markets often aim to capture value in these adjacent areas, such as through services, data, complementary products, or by controlling a new, critical interface.

Creating vs. Capturing Value

A central theme in market enablement is the tension between creating value for the ecosystem and capturing value for one's own organization. Effective strategies involve finding a sustainable balance. Too much focus on value capture can stifle ecosystem growth, while too little can make the enablement effort altruistic but strategically unsound for the enabler.

Second-Order Effects and Ecosystem Attractors

Market enablement can create strong second-order effects. A thriving ecosystem around an enabled component can attract more users, more developers, and more investment, creating a virtuous cycle. This can make the ecosystem itself a significant competitive advantage, even if the original component becomes a commodity. Consider how enabled markets can become "attractors" for talent and innovation.

The Role of Openness

The degree of "openness" (e.g., open standards, open source, open data) is a critical lever in market enablement. More openness typically accelerates adoption and ecosystem growth but can also make value capture more challenging. The strategic decision lies in finding the right level and type of openness that aligns with the organization's goals.

❓ Key Questions to Ask

• Strategic Alignment: How does enabling this market align with our broader organizational strategy and long-term goals?
• Value Capture Mechanism: What is our explicit plan to capture value from the enabled market, and how sustainable is this mechanism?
• Ecosystem Health & Control: What level of control do we need versus what level of openness is required for the ecosystem to thrive? How do we prevent negative unintended consequences (e.g., a single player dominating, low quality)?
• Competitive Landscape: How will enabling this market change the competitive landscape? What are the risks of empowering current or future competitors?
• Resource Commitment: Do we have the necessary long-term resources (financial, technical, human) to successfully execute and sustain this market enablement strategy?
• Risk Assessment: What are the primary risks (e.g., execution failure, value capture failure, reputational damage), and how will we mitigate them?
• Exit Strategy/Evolution: What is our long-term vision for our role in this market once it is successfully enabled? Do we transition, scale back, or double down?

🔀 Related Strategies

• Open Approaches - Often a key method used to enable a market, such as by open-sourcing technology or promoting open standards.

• Alliances - Forming alliances with other organizations can be a way to collaboratively enable and grow a market.

• Harvesting - Once a market has been successfully enabled and matured, aspects of it might be harvested.

• Standards Game - Market enablement often involves playing a standards game to encourage widespread adoption of a particular technology or approach.

• Cooperation - Working with other players, even competitors, is fundamental to many market enablement initiatives.

• Exploiting Network Effects - An enabled market can lead to network effects that further accelerate adoption and growth.

• Industrial Policy - leveraging government support and regulatory measures to stimulate market formation and accelerate adoption.

• Press Release Process - using strategic announcements and PR campaigns to build awareness, align stakeholders, and signal market direction.

• Undermining Barriers to Entry - lowering or removing obstacles for new participants to broaden the ecosystem and drive early market activity.

• Talent Raid - attracting critical expertise to build capabilities and seed the ecosystem with skills essential for market growth.

• Artificial Competition - creating perceived alternatives to spur adoption, validate demand, and encourage investment in a nascent market.

⛅ Relevant Climatic Patterns

• Higher order systems create new sources of worth – trigger: enabling a market lets new value chains emerge.
• Efficiency enables innovation – influence: standardised components lower barriers for participants.

📚 Further Reading & References

• "The Innovator's Dilemma" by Clayton M. Christensen - While not directly about market enablement, this book provides deep insights into how markets evolve and how incumbents can be disrupted, which is relevant context for why and how one might enable new markets.
• "Platform Revolution: How Networked Markets Are Transforming the Economy—and How to Make Them Work for You" by Geoffrey G. Parker, Marshall W. Van Alstyne, and Sangeet Paul Choudary - Explores the dynamics of platform business models, many of which rely on enabling an ecosystem of producers and consumers.