This week, our Growth Inspiration takes on another truly collaborative note. One of the most rewarding aspects of our work at Ascent Growth Partners has been the opportunity to collaborate with experts from around the world. Talent truly knows no borders and when we collaborate with thought leaders and innovators, we have the opportunity to drive growth, at an even larger scale and realise greater impact.
The Peter F. Drucker School of Management needs little introduction and so, when the opportunity arose to have Roland Deiser, Executive Chairman of the Center for the Future of Organization, at the school, contribute to our 60th edition, we looked no further. Over our many discussions, I found Roland brings a fresh perspective into the study of business ecosystems and the growth and innovation they can generate. What follows is an abridged version of his recent thought piece on How to Succeed in Business Ecosystems – Setting the Stage:
To kick things off, I will focus in the first few weeks on a topic that has been at the heart of my research and that is equally close to the heart of many senior executives and companies have been working with: How to thrive in the new ball game of business ecosystems.
As digital technologies disaggregate existing industries and value chains, companies face transformation challenges and growth opportunities that require them to ‘jump’ across conventional boundaries that used to define their ‘space’. It is a new ball game indeed.
Over the last two or three years, the concept of business ecosystems has gained significant prominence, to the point that it is about to replace “digital transformation” as the buzzword du jour. The buzz is not surprising. As digital technologies disaggregate existing industries and value chains, companies face transformation challenges and growth opportunities that require them to ‘jump’ across conventional boundaries that used to define their ‘space’. They are forced to form novel alliances and partnerships to complete a value proposition, design a compelling business model, or gain access to a new market. In short – they have to become ecosystem players.
Once companies start to engage in business ecosystems, they soon realise that they have unleashed a beast that challenges the very cornerstones of their strategy and organisation. Ecosystems require massive cross-boundary collaboration, within and beyond an organization. This does not bode well with the silo culture we often witness in large corporations. Ecosystems shatter industry boundaries and the entrenched assumptions of the “rules of the game” – an assault on the cognitive maps of industry leaders. They require agile structures and decision rules that empower the periphery of an organisation, leaving the corporate center in an enabling role. They create a new level of leadership challenges as ecosystem governance follows very different rules than corporate governance which is regulated by an established legal framework. The list goes on.
Let’s first create a shared understanding of what we mean when we talk about business ecosystems. We define a business ecosystem as an interdependent value-creation network whose members collaboratively contribute to the creation and delivery of products and services. Such a network may include customers, suppliers, distributors, technology partners, joint ventures, strategic alliances, government agencies, research institutions, financing agencies, industry associations, and others who play a critical role in providing the value proposition to the market.
This definition implies:
- Interdependence and horizontal network structures are key features of ecosystems, which distinguishes them from traditional linear value chain models.
- Platform businesses are just one form of ecosystems. Ecosystems may include platform elements or not.
- Subsystems of an organization (such as functional areas, business units, projects, etc.) may act within ecosystems and/or create their own sub-ecosystems.
- Ecosystem analysis is complex and a matter of perspective; it reaches from understanding micro-relationships within and between ecosystem stakeholders to the recognition of global inter-industry dynamics. All levels of analysis are of strategic importance.
- Ecosystems are moving targets. They are fluid and dynamic. New entrants with new technologies may significantly change power equations.
I do not claim that this definition is better or more appropriate than others. However, as issues related to business ecosystem management continue to attract both scholarly research and practitioners’ attention. I hope you will join me on this journey.