Both theoretically and in practical terms, service providers are the most crucial players in early technological markets, such as the one of 3D Printing technology beyond prototyping. But the strategic environment can be a jungle to navigate for the service providers, which also leaves adopting companies in doubt of where to go for technological and innovation assistance. In this post, I will illuminate the 3D Printing Service Provider ecosystem to provide input for crucial strategic considerations.
Service providers are essentially the centre of an emerging technological business ecosystem since they act as a buffer against the uncertainty and complexity. They do this by mediating between technology providers and adopters, while standards and best practices have not been established yet. It’s not a coincidence that major vertical integrations have happened from both sides of the image above, exemplified by GE’s early acquisition of Morris Technologies and the more recent acquisition of the analytic service provider Econolyst by Stratasys.
The 3 archetypes of 3D Printing Service Providers
In order to create a basic overview of the service provider ecosystem, we first need to agree on what we are talking about. Thus, 3D Printing Service Providers are defined as any company that provides services related to Additive Manufacturing, e.g. in the form of part production, technical integration or business consultancy. In the thesis “Strategic Management in the 3D Printing Industry”, we specifically applied a service provider perspective, where 3 archetypes were identified based on the different ways in which their business models create value: Value Chain, Value Shop and Value Network service providers.
Value chain service providers are Analogue to the classic “Legacy” service providers that have been around since the 80’s, mainly serving as an opportunity for adopting companies to outsource the production of 3D Printed parts. With a focus on cost-effectiveness and efficiency, this archetype has in the past typically served high end applications, while time and logistics are important parameters.
Value shop service providers work within identifying and analyzing problems, selecting specific solutions, implementing them and evaluating/controlling the results, e.g. “value-added resellers” of 3D Printing machines/equipment or business/technological consultants. They focus on valuable guidance and trust, whereas strong and long term relationships, high professionalism and local proximity are among important parameters.
Value network service providers generally seek the establishment and growth of a network, where the value is created by connecting different stakeholders in a system that optimizes interaction within the given domain, e.g. Shapeways, Quickparts, Thingiverse and some specific consultants with extensive networks of partners. Service providers with this type of business models are considered pivotal players running the infrastructure of a network, focusing on scale effects and profiting mainly from traffic, apart from specific enabling services.
Now, these are obviously a bit rigid archetypes and in reality a lot of companies display traits of more than one 3D Printing Service provider archetype. But should they really be doing that?
Let’s talk about cake
Niche, niche, niche. That’s basically all experts ever talk about when marketing in new industries, and 3D Printing is no exception. Why? Because with few standards, high complexity, uncertainty and a wide variety of offerings, delivering a compelling and sufficient offering that is superior to competitors in every category is very much easier said than done. At the same time, niche can be interpreted in different ways – it doesn’t necessarily mean one single product/service category, application or specific industry domain.
Especially in the case of a somewhat immature industry, the position (or role) you are aiming for in the business ecosystem is also a very crucial consideration to make. Why? Because the ecosystem is not yet fully developed and in many ways far from efficient.
When developing a new industry, it is important to focus on making the size of the total cake bigger instead of fighting for the same little piece of cake.
And what does that have to do with the archetypes of 3D Printing Service Providers?
– I’m glad you asked.
An unclear cake recipe
Beyond making sure that companies properly define their own strategic positioning, using these archetypes assist in sending a clearer message to potential clients. In the previously mentioned thesis, we found that service providers need to pay closer attention to their match with the 3 Archetypes and adjust their ecosystem position accordingly. Why? Because there’s a huge lack of efficient solutions in various areas of the ecosystem and it is inhibiting 3D Printing innovation!
As an example, a larger Danish manufacturer, who was among the firstmovers back in the 80’s to implement 3D Printing capabilities, have had to establish a sizeable internal project just to investigate an approach to create overview of potential applications in their context and decide who to collaborate with! Because apparently, no one has really established a sufficiently reliable, unbiased and well-connected service solution to help companies in this very important endeavour. This is partly a consequence of the fact that many 3D Printing Service Providers seem to be here there and everywhere, focusing a lot on technical aspects instead of defining a clear marketing strategy. Oops.
The ecosystem roles
First, we must get an idea of what different roles a company can pursue in a given ecosystem. “The Innovation Economy” by Davenport (2006) provides a good framework for understanding this concept via 4 different approaches to ecosystem strategy: Commodity, Physical dominator, Niche and Keystone (also covered by Harvard Business Review).
Keystone organizations play a crucial role in business ecosystems. Fundamentally, they aim to improve the overall health of their ecosystems by providing a stable and predictable set of common assets, from which other players can build their offerings. Often, keystone players are networked platforms that connects various domains of ecosystem.
A niche approach, which is applied by most companies in general, aims to develop specialized and often narrowly defined offerings. By leveraging complementary resources from other niche players or from an ecosystem keystone, the niche player can focus on enhancing its narrow domain of expertise.
The physical dominator aims to integrate vertically or horizontally to own and manage a large proportion of a network directly. A commodity player does not even deal with ecosystem strategies. Both of the two latter approaches are only really justifiable in industries with a firm level of stability – thus not likely an optimal choice in the 3D Printing Ecosystem (hello 3DSystems…).
Archetype ecosystem roles
If you’re really smart – and you probably are – then you might have already figured out that it makes sense for value chain and value shop archetype service providers to apply a niche approach, whereas for the value network archetypes a keystone strategy is right up the alley.
Value chain archetype: Niche approach
As this archetype is mostly focused on productivity and cost-effectiveness, a niche approach basically is the only way to go, since every different application, materials, sub-technology or industry domain requires very specific solutions – due to the lack of standards. Becoming the (perhaps local) authority within your niche of cost-effective part production or technical in-house implementation is thus key in order to create/sustain a competitive edge. The main stakeholders to focus on are potential adopters with similar traits, in order to tailor the solution properly and ensure a starting basis of demand – as well as the other service provider archetypes for two reasons: 1. Because the other archetypes typically have the customer contact due to becoming the point of contact in a domain or the establishment of strong relationships. 2. Because the other archetypes can allow themselves to focus more on exploration activities, which is not the focus of the value chain archetype – they need access to new insights in order to stay ahead of the game.
Value shop archetype: Niche approach
By focusing on a narrow niche segment of highly specialized expertise, value shop service providers can really help overcome some of the barriers, for instance in terms of cost-benefit analyses, research, software automation and technology development. Also for the value shop, becoming an authority in the chosen domain/context is really important. Furthermore, collaboration with the other archetypes is crucial: They need the value chain archetypes to help build the total offering while value network archetypes grants access to beneficial new partnerships, intellectual resources and connections to new customers.
Value network archetype: Keystone approach
Being multi sided platforms and network hubs, the overall aim of value network archetypes should be to become a point of reference and network managers in order to enhance the overall health of the ecosystem or ecosystem domain they are operating in, so that partnering companies thrive and they can profit from the increased traffic. Connections to the other archetypes are naturally of paramount importance, but not just that – all stakeholders relevant to the defined ecosystem have to be highly involved. That’s the main focus of the value network archetypes, whereas supportive and enabling services to be offered can be co-created with the network of partners they serve. It is not an easy job, but it is a strong position to be in if managed optimally.
Of course, a prerequisite for an optimal ecosystem scenario is that everyone fully understands and at least to some extent also applies the concept of coopetition and ecosystem strategy, which currently is… Well, a mouthful.
But if you’re a company aiming to adopt 3D Printing capabilities, be sure to look for service providers to partner up with that are at least close to staying within just one of the archetypes. They are usually the ones that really know what they’re doing and can meet your specific needs.