Image via CrunchBase
John Donahoe must have been reading the book of Jobs somewhere over the past 12 months. In a short space of time eBay has begun to take on a wholly different character. In place of the auction and shopping site they now look like a business capable of a new kind of elasticity based on a business platform and business ecosystem strategy. Have they caught the Apple bug?
Donahoe has put in place the building blocks for a new type of business infrastructure, in fact a new operating system for the firm. Making a success of it requires new business skills that a great leader like Apple's Steve Jobs was able to propagate within his organization.
We'll see if Donahoe can do the same. It is deeply fascinating to see it roll out. It is the business revolution that Jobs, Bezos and a few other leaders have been charting over the past decade.
What does it consist of? Plenty of things but one I want to concentrate on: the shift to a different type of resource.
3,000 developers turned up to the X-Commerce conference last week where eBay announced "a new kind of open platform". Back in the summer eBay acquired Magento which already had a thriving business ecosystem of "extension" or app builders. And of course it owns PayPal which last year began its drive to revolutionise payments, through a developer ecosystem.
These represent the new enteprise resource pool, quite different from when resources equalled hiring people and buying in extra computing power. This is resource attraction and management in place of investment and resource allocation.
The eBay model had already become outdated before Donahoe took over:
Donahoe's mission is to reinvigorate a company that remains dominant in online auctions, but is vulnerable to increased competition from large rivals, such as Amazon.com and Google, as well as smaller e-commerce sites like Etsy, which specializes in handmade crafts. EBay is also facing slowing growth.
GigaOm recently summarised the spate of acquisitions made by eBay:
With its pickups of RedLaser and Milo as well as its recent purchases of WHERE and Fig Card, eBay has been assembling the components for a deeper push into commerce, especially local transactions. RedLaser allows eBay to insert itself into comparison shopping as mobile consumers use their smartphones to help them shop. Milo helps connect users to the local inventory of products around them.
With WHERE, eBay got not only a local guide for mobile users but also a location-based ad network and a deals service called WHEREBuys. That allows eBay to engage a user through an ad or deal; then, by integrating with PayPal for payments, it can close the loop on the transaction and theoretically charge a premium for it. Fig Card, a competitor to Square, also helps merchants accept mobile payments, which can include PayPal. And combined with GSI, which provides e-commerce infrastructure for large retailers and brands, eBay has solutions that appeal to both small and large companies.
The acquisitions though are detail whereas the organization Donahoe has created is highly conceptual.
There is a new way of scaling businesses that Donahoe has adopted. It is part of the transformation of business rather than just an innovation.
That element is the need to attract, assemble and manage independent resources at scale. The 3,000 developers who attended the X.com conference are the key to eBay's success but so too is Donahoe's power of persuasion.
Donahoe has to convince them that there is more profit and sustained growth to be made by developing for eBay's properties than for Apple, Amazon.com, Android or many other such opportunities or at least that eBay should be a significant part of their product mix.
And therein lies one of the key aspects of business transformation.
Whereas in the past companies had to pitch in with substantail direct investment and resources to develop their business, they must now attract, assemble and manage a large community of independent third parties who must be prepared to take on significant business risk on behalf of the sponsor company.
Whereas in the past companies had to pitch in with investment and planning skills to develop their business, they must now attract, assemble and manage a large community of independent third parties who must be prepared to take on significant business risk on behalf of the sponsor company.
The skills associated with attracting, assembling and influencing new ecosystems are not well documented - we're accustomed still to seeing business in terms of traditional resource acquisition and allocations skills.
But the primary skills of an elastic enterprise reside around relationships of persuasion rather than control. Nick Vitalari and I have been documenting this change in the Elastic Enterprise.
One of the new developments we are noting is that leaders need a different skill range. One of those we have called "sapient leadership", in part to indicate leaders need to be seen by their peers as especially prescient and smart, a factor that played strongly to Jobs' existing industry relationships from his earlier and varied career.
Time to find out how wise people think John Donahoe is.
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