Ecosystem Mindset

Everyone has heard about the need to have a customer focus and to provide a positive experience in all interactions throughout their journey with the company. Well, the ecosystem mindset is a concept that stems from customer focus, but I often say it’s “customer focus turbocharged” or “customer focus 2.0”.

Ecosystem mindset

Ecosystem mindset means making decisions that create value for all actors on a platform.

I learned this principle at Gympass. It was so important for the company that ended up becoming one of the corporate values. On the Gympass website there is the following description for this term:

Ecosystem mindset

We make decisions that create value for our Gympass ecosys- tem and help us achieve our mission.

The vast majority of companies have more than one type of customer. At Gympass, we had companies and their HR departments, their employees, and the gyms. At Locaweb, we had small business owners and their website developers. At Conta Azul, they were small business owners and their accountants. At Lopes, we had the person buying the property, the person selling the property, and the broker, who was facilitating the buying and selling transaction.

When I say that a company needs to have an ecosystem mindset, it needs not only to focus on the customer but to understand that it:

• Probably has more than one type of customer;
• Needs to focus on all these types of customers;
• Needs to understand and positively influence the relationships between these customers.

That’s why I say the ecosystem mindset is “customer focus turbocharged”! In my opinion, all companies should have this principle. Often, I encountered CEOs and product heads who claimed they did everything for the customer, that the entire company was customer-centric. However, when I delved deeper into this topic, I often discovered that the customer they referred to was either the one paying for the services or the end consumer, and the other interlocutors were treated only as “necessary evil”.

When I joined Gympass in 2018, this value was not yet part of the company’s organizational culture, and there were certain imbalances in focus, energy, and resources. At that time, Gympass already had 800 employees, but the product development team, including product managers, designers, and engineers, had only 30 people. These individuals were organized into four teams, with three focused on the end-user and one focused on gyms, to handle integrations between their systems and the Gympass system. When there was a need for product development for HR in companies, we would take one or two people from the teams focused on end-users and allocate them to address that specific need, and then they would return to their original team. There was clearly an imbalance in the energy of product development for the end-user, gyms, and HR. We addressed this by creating a product development team focused on HR in companies and reinforcing the product development team for gyms.

When I joined Lopes, our marketing was 100% focused on generating more leads, more people interested in buying or renting properties. However, when viewing Lopes as an ecosystem that interacts not only with those buying a property but also with those selling a property (developers and owners) and those facilitating the transaction (franchises and their brokers), we realized that we needed to divide our marketing efforts in order to communicate with all these audiences.

The next example I’ll give regarding the ecosystem mindset is the implementation of the live classes product that Gympass created during the COVID-19 crisis.

Diversifying — and digitalizing — a product portfolio

During the COVID-19 pandemic, we diversified — and digitized — our product portfolio in record time. In less than a month, we transitioned from an offline product (access to gyms and studios) to four products, three of them completely digital:

• Access to gyms and studios: Access to over 50,000 gyms and studios in 14 countries.
• Gympass Wellness: A package with over 60 applications for those seeking options to improve physical and mental well-being (from nutrition to therapy sessions).
• Live classes: For those who enjoy group workouts or want the sensation of a class with their gym peers.
• Personal trainers: For those who prefer a more personalized approach and like to exercise at their own pace.

As mentioned in the chapter “Deliver early and often”, Gympass Wellness was a crucial tool for addressing the problems and needs of our users and corporate clients during the crisis. I believe that without this product, Gympass would have suffered greatly from customer cancellations. Gympass Wellness was our first 100% digital product.

Live Classes: the second digital product

With Gympass Wellness, we were able to meet the needs of our corporate clients and their employees. What about the gyms? When they were closed, they were losing revenue. On the one hand, their direct customers, who paid monthly fees, were no longer visiting them, so these regular gym-goers were likely to cancel their subscriptions. On the other hand, those gym users who used Gympass to frequent them would also not go to the gym while the lockdown was in place, causing a loss of revenue for the gyms.

Since our corporate clients and their employees were well served by Gympass Wellness, we could have “folded our arms” to the situation of the gyms. After all, they were a cost for Gympass, and that was a time when cost containment was very important.

However, by employing an ecosystem mindset, we understood that we could not leave the gyms without support. The crisis would eventually pass, and the gyms were and would continue to be essential to Gympass’s business model. Because of this, to assist our partner gyms, we decided and implemented two solutions in record time:

1. We provided gyms with a white-label app so that they could offer it to all their customers, whether or not they were employees of Gympass clients, allowing gyms to deliver value to their customers, helping them stay active at home;
2. We provided a platform for gyms to schedule and broadcast live classes for all Gympass users, allowing them to keep their instructors employed while providing Gympass users with exclusive content. This platform is called Live Classes.

Through this Live Classes system, we paid gyms for each person who watched a transmitted class, thus generating a revenue opportunity for gyms even with their doors closed due to pandemic restrictions. Additionally, we gave them the opportunity to access potential students who were not in the same city. Since the classes were broadcast live on the internet, anyone from anywhere could participate.

With Live Classes, we created our second digital product.

Personal Trainers: the third digital product

Live Classes provided a platform that we referred to as 1:N, mean- ing that one instructor could provide guidance on physical activity for N users. Soon, we realized that we could create another product based on the structure we had developed for Live Classes. In addition to offering physical activity guidance in the 1:N model, we could also offer it in the 1:1 model, which characterizes the typical work of a personal trainer.

As it was a more personalized model, we chose to offer this option for the higher-tier plans of Gympass. Additionally, we provided an opportunity for fitness professionals to have an extra income. With the creation of this new product, we added our third digital product to our portfolio, which we called Personal Trainers.

If it weren’t for our ecosystem mindset, we wouldn’t have created either Live Classes or Personal Trainers. We were able to under- stand that we had different types of customers (companies, their employees, and partner gyms) — and understanding that, for each of these customer types, we delivered different value, as well as comprehending how each interacts with the other, and that was the key to maintaining our focus on helping each of them, even during the COVID-19 pandemic crisis.

Using the ecosystem mindset in any company

At first, we might get the impression that the ecosystem mindset only applies to companies that are a platform or a marketplace, as discussed in the chapter on Business Models. After all, this type of business typically has an ecosystem with more than one type of customer and interactions between them.

This is evident in the case of Gympass, as described earlier. It’s also the case with Lopes, where we have the buyer or renter of a property, the person selling or renting the property (the developer in the case of off-plan property or the owner in the case of a ready property), and the intermediary, which includes brokers and the franchises they belong to.

In the case of Conta Azul, initially, we perceived our business model as SaaS (Software as a Service), selling access to financial management software for small businesses. Over time, we began to recognize that accountants play a crucial role in the financial management of companies. We started considering them as part of our ecosystem, initially as a sales channel and later as an integral part of what we began to see as the Conta Azul platform. This platform connects small business owners with their accountants and everything they need to run their business. At Conta Azul, we evolved from a simple product vision with a single type of customer to a platform vision with two types of customers (business owner and accountant) and their interactions. In this case, once again, the ecosystem mindset proves to be a valuable principle for understanding different customer types and their relationships, thus identifying opportunities to enhance these relationships.

However, for certain types of products and companies, one might get the impression that the ecosystem mindset doesn’t apply. Some companies and products seem to have only one type of customer, not an ecosystem of customers. As mentioned in the introduction, since mid-2022, I have been using my over 30 years of experience as a full-time executive leading technology and digital product development teams to help more companies and individuals connect technology and business through training and consulting in product management and digital transformation. Exposure to more companies, people, products, and business models has brought several interesting learnings, one of which is that even a company with a single product and a single type of customer can benefit from the ecosystem mindset.

One of my clients is a company that develops software for managing notary offices. During the kickoff session, where I presented the principles of digital culture, I was discussing the concept of the ecosystem mindset but mentioned that it might not be so applicable to them, considering they only had notary offices as clients. At that moment, someone pointed out that their system helped their clients (the notary offices) better interact with customers in need of their services. Consequently, the ecosystem mindset was indeed a principle that made a lot of sense for them.

Therefore, even a company with a single product and a single type of customer can benefit from the ecosystem mindset principle, as their customers do not exist in isolation. They interact with other people and businesses, and the product can be part of that interaction, demonstrating that we don’t just have one type of customer but an ecosystem to care for.

Case study: Tok&Stok

Founded in 1978 by the French entrepreneurial couple Régis and Ghislaine Dubrule, who had recently arrived in São Paulo, Tok&Stok revolutionized the market by introducing the concept of ready-to-deliver furniture with innovative design. In 2012, it became part of the Carlyle Group, and by 2019, it had 54 stores and 5 kiosks in 33 cities across 20 states in Brazil and the Federal District. In 2022, it was named the most admired retail company in the furniture segment in the country by IBEVAR. However, by February 2023, the company faced a debt of approximately 600 million Brazilian reais and sought the assistance of Alvarez & Marsal, a firm specialized in corporate restructuring and judicial recovery processes.

Between 2020 and 2022, Victor Almaraz served as the Group Product Manager at Tok&Stok, leading products for the B2C Channels community (digital channels and the final customer journey in physical stores). Until 2020, the e-commerce platform displayed products with two prices: the “home” price, including delivery and assembly at the customer’s home, and the “store” price, a cheaper option for customers who picked up the furniture themselves, brought it home, and handled the assembly. No customer research was conducted to understand how customers perceived these two prices. In mid-2020, the management decided to eliminate these two prices, leaving only the equivalent of the store price, the cheapest option, and offering delivery and assembly as separate services. The primary goal of this change was to increase revenue by having more customers appreciate the value of these additional services. However, this objective was not achieved, and there was no clarity on why.

Faced with this situation, Victor spoke with customers who were not opting for the additional furniture assembly service. Through this research, he discovered that some usability improvements could be made in the checkout process but would have little impact on the outcome. Most customers who declined the assembly service did so because they considered it a hobby or already had a trusted person for assembly.

This case study illustrates the lack of an ecosystem mindset, an understanding of the customer, their problems, and motivations. If there were a greater ecosystem mindset, the team probably would not have invested time in this change, which ultimately did not generate the expected results for both Tok&Stok and its customers.

Recommendation

Customer focus is a widely spread principle, but it is often misunderstood. I’ve seen many companies exclusively focus on the paying customer or solely on the end consumer, and this approach yields poor results for both the company and the various types of customers, including the intended focus.

On the other hand, companies are increasingly embedded in more complex ecosystems that involve two or more types of customers, and we must pay attention and focus on all of them.

Take a moment to reflect on your business and map out who your stakeholders are. Do you really have only one type of customer, or are there multiple types of customers? How does your company interact with each different type of customer? Are you giving proper attention, focus, energy, and resources to each of them?

Even a simple business like Gyaco, my consulting and training company in product management and digital transformation, has two types of customers: end consumers who consume the content and training I publish and the companies that hire me for in-company training and consulting to assist with their digital strategies.

Summing up

• Ecosystemmindsetmeansmakingdecisionsthatcreatevalue for all actors in a platform. It is “customer focus” in a turbocharged version.
• To practice the ecosystem mindset, a company needs to understand that it likely has more than one type of customer. It must focus on all these types of customers and understand and positively influence the relationships between these customers.
• At Gympass, during the COVID-19 crisis, after introducing Gympass Wellness to all its clients and their employees, a significant part of the ecosystem was still suffering: the gyms. It was the ecosystem mindset that guided Gympass to create the Live Classes product, allowing gyms to continue operating even with closed doors. The ecosystem mindset also enabled us to create a new product, Personal Trainers, to generate extra income for fitness professionals.

Digital transformation and product culture

This article is another excerpt from my newest book “Digital transformation and product culture: How to put technology at the center of your company’s strategy“, which I will also make available here on the blog. So far, I have already published here:

• About the book
• Part 1: Concepts
• Chapter 1: The so-called digital transformation — Project and Product
• Chapter 2: Uncertainty and digital transformation
• Chapter 3: Types of company
• Chapter 4: Type of company vs digital maturity
• Chapter 5: Business models
• Chapter 6: Agile, digital and product culture
• Part 2: Principles
• Chapter 7: Deliver early and often — Measuring and managing the productivity — Case study: Dasa Group — Case study: Itaú Unibanco
• Chapter 8: Focus on the problem — O Famoso Discovery de Produto — Why the “business demands => IT implements” model does not work — Case study: Magazine Luiza
• Chapter 9: Result delivery — Outsource or internal team? — Case study: Centauro
• Chapter 10: Ecosystem mindset

Workshops, coaching, and advisory services

I’ve been helping companies and their leaders (CPOs, heads of product, CTOs, CEOs, tech founders, and heads of digital transformation) bridge the gap between business and technology through workshops, coaching, and advisory services on product management and digital transformation.

Digital Product Management Books

Do you work with digital products? Do you want to know more about managing a digital product to increase its chances of success, solve its user’s problems, and achieve the company objectives? Check out my Digital Product Management books, where I share what I learned during my 30+ years of experience in creating and managing digital products:

• Digital transformation and product culture: How to put technology at the center of your company’s strategy
• Leading Product Development: The art and science of managing product teams
• Product Management: How to increase the chances of success of your digital product
• Startup Guide: How startups and established companies can create profitable digital products