The health of society relies heavily on the way businesses are run. According to research, the average US employer will spend 90,000 of his or her life at work. How we spend that time deeply impacts our own mental health. A new business model has emerged based on what Erich Joachimsthaler, CEO of VIVALDI, one of the world’s largest independent global strategy and business transformation firms, calls the interaction field. His latest release, The Interaction Field, The Revolutionary New Way to Create Shared Value for Businesses, Customers and Society,* outlines his ideas in detail. Curious about the concept and its ability to influence our well-being through heightened collaboration and shared value, I had a cyberchat with him recently to find out more.
How did you come to develop the interaction field concept?
Erich Joachimsthaler: I have been in business during some of the most important eras of our times. In 1994 when I arrived in the U.S., Amazon was founded and ecommerce became a new technology. This was followed by Google and search became a new technology. Then came social media and the iPhone which created companies like Facebook and Apple, as we know it today. Today we are in the midst of a third wave of technologies from cloud computing, artificial intelligence and machine learning and so many more. These new technologies have all achieve one thing: they connect everything – people, companies, things, anywhere, anytime. Today we live in a world of hyperconnectivity that is still growing exponentially. I believe we are only at the beginning of understanding what this means for people, brands, companies and society. These changes motivated me to work on interaction fields.
How do interaction field companies create shared value and how are they fundamentally different from other kinds of companies?
The new technologies created the hyperconnected world we live in today and this has set up new and enormous powerful opportunities for innovation and value creation. One type of innovation is new business models, especially digital business models such as platforms or ecosystems. Uber is a platform that connects drivers with riders. OpenTable is a platform that matches people who want to eat out with restaurants that still have an open table. Hinges, Bumble, and Match.com have become popular dating sites.
Source: Erich Joachimstaler, used with permission
Digital ecosystems are the next evolution from platforms. AirBnB is an example. At its core, it matches hosts or anyone that has a spare room available with travelers or guests. There are a number of services around the accommodation from cleaning services, to financing, but it also offers experiences, adventures, and restaurant bookings through partners who collaborate based on a digital system of data, technology and analytics, hence the term of a digital ecosystem. Ecosystems have developed in nearly every industry from automotive, banking to manufacturing to waste management.
I believe that these business models are merely transitional models. The next evolution are interaction field companies. In contrast to platforms and digital ecosystems, interaction field companies aren’t just another form of competition, also known as platform competition or ecosystem competition, but interaction field companies built on collaboration, engagement, and participation of a large set of stakeholders that all create shared value for everyone. Interaction field companies are not about disruption but about solving some of the most intractable and wicked challenges and problems we have as consumers, as businesses and brands, or as society at large.
What are the key elements of an interaction field? Favorite examples?
There are three: nucleus, ecosystem, and market makers. Take for example the John Deere interaction field. At the core is the nucleus, the interactions between John Deere and the farmers powered by a digital network, and drawing on a host of technologies including weather monitoring sensors, telemetry, AI and machine learning, that collect, aggregate and analyze data and share insights, and that enable farmers to monitor crops in real-time, improve yield, reduce costs, identify water irrigation issues and help conserve water and other resources.
The more frequent these interactions and the richer the data exchanges with many farmers, the higher the potential impact on farm productivity. A second layer of creating value comes from the ecosystem. These are the data-driven interactions between the nucleus and others such as seed or crop manufacturers or fertilizer companies, software developers, technology suppliers and other stakeholders that directly affect farm productivity. The third layer, called market makers, consists of entities that exert influence on value creation in the interaction field. This could be data-driven interactions with government agencies such as the USDA, academic research centers or even competing tractor companies, all with a shared interest in advancing overall farm productivity. When the architecture of the digital interaction field is well designed across the three layers – nucleus, ecosystem and market makers – it creates a collaborative system that enables enormous shared-value creation.
Give an example of an interaction field company solving major social and economic challenges. Does that include the pandemic?
I like Flatiron Health, started by two 24 years old college friends. Flatiron Health is an example that shows that an interaction field company can be built even in complex industries such as healthcare, where patients share incredibly sensitive information but do so for the greater benefits of everyone. Flatiron Health is now a Roche Pharma company that brings together patients, care providers in cancer hospitals, and even competing pharmaceutical companies and regulators like the Food and Drug Administration. Over two million cancer patients, and 2,500 clinicians in 800 unique sites of care share “research-grade” data with the larger healthcare and pharmaceutical community regulatory bodies such as the FDA or the National Cancer Institute. Competitors participate including 14 of the top 15 life sciences company.
Flatiron Health significantly cut the average years of FDA approval for new drugs or therapeutic solutions, cut the cost of care at cancer hospitals, and has let to much more effective treatment of cancer patients, helping people live with a serious condition such as cancer, giving them some more years of quality life, and even saving their lives.
The pandemic has taught us that many of our most challenging problems can be solved only through collaboration and not through disruption. Nobody does it alone.
Big tech platform companies started out with the intention of “making the world a better place”. Not so. Do you see any interaction field companies in the Big Tech space finally stepping up to do so?
There is a lot of noise about it out there. Press release, speeches, announcements and proclamations abound but I believe it is too early to tell. Let’s walk the talk. We are early in this revolution of how business and brands can create value through collaboration, engagement and participation instead of the frequently proselytized forms of disruptive competition.
Why do you think digital transformations have largely failed?
They have failed because of our lack of imagination, creativity and courage or guts. Most often, digital transformations have merely been massive financial investments in technology and efforts to catch up, to close the gap or to enable efficiencies of global operations along the supply chain or to solve for a few pain points along the consumer journey. These are perhaps necessary things to do but they are also merely incremental steps of improvements.
The only worthy goal of commitment is to create new and shared value for everyone, and to solve for some of the intractable and wicked challenges that we as people, as humans and as a society face. In my book, I have been writing about many traditional companies and startups that are pushing these goals from Alibaba and Ant Group, to John Deere, Haier, Discovery Health, Kloeckner Metals, LEGO, Mars Petcare, to Tesla and Waymo. They inspire me.
As it says in the well-known quote: The only thing worse setting a goal and not achieving it is setting the wrong goal AND achieving it, by Tom Ziglar. So, let’s set our sights on the goals of creating shared value for everyone through participation, engagement and collaboration and build interaction field companies.
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