Today’s modern business ecosystems consist of a dynamic group of independent players who get organized through a flexible governance model to jointly realize a specific value proposal. They get their driving energy from a shared purpose and passion, rather than solely a legal contract binding them together. The business ecosystem should be seen as a sparkling club, where other organizations want to join not by push, but by their desire to combine efforts and collaborate now and in the future.
Natural habitats are evolving, growing, and vanishing through a life-cycle of mutually beneficial symbiotic relationships. Like natural ecosystems, organizations compete for survival with adaptation and sometimes extinction. Therefore, they need to make a strategic decision to weigh their chances of doing things by themselves or together with others, often reaching for support from both collaborators and competitors.
In such a complex and uncertain world, should you as a business leader be left outside alone or proactively participate in the ongoing business ecosystems (r)evolution built on trust, purpose, and profound relationships?
Business ecosystems are nothing new. In old European medieval cities, merchants came together in fairs and exchanged different expertise, materials, and goods for a given period. Already in those days, open and trustworthy collaboration was the key to success and survival.
People (employees, customers, and stakeholders) make or break any company. I am confident that people make extraordinary things together. Like in nature, the strength of a business ecosystem is complementing the expertise of people that create products or services and capture value. As London Business School professor Rachel Botsman has well stated: “Currency of transactions is money, but the currency of relationships is trust.”
I believe in such a way to establish trust through people-centric data-driven business ecosystems creating value together for end customers. The Foundation for this type of lasting trustworthy relationship is a shared purpose amongst the business ecosystem and its partners.
The business ecosystem cannot be static but must adapt fast to external pressures and market changes. When a combination of players within the business ecosystem will change, its structural design needs to change. According to recent research, most sustainable ecosystems get their driving energy from a shared purpose and passion, rather than solely a legal contract binding organisations together.
The shared purpose is the key to the success of the business ecosystem. To be sustainable, the business ecosystem’s purpose must take simultaneously into account three important perspectives (profit, people, and planet) both from rational and emotional aspects. The purpose needs to be created and agreed upon with all of the ecosystem players and be verified with any entrant before and during the evolution of the business ecosystems.
By reaching beyond its organizational borders, working in a “borderless state”, a company can obtain access to a broader range of resources and capabilities, otherwise not possible nor available timely. When boundaries, roles, code of conduct, and responsibilities for ecosystem partners are clearly stated and designed, the business ecosystem is more flexible and resilient to changes in the market, possibly lowering business development risks, as well as, operating costs and total investments needed.
A business ecosystem orchestrator’s power over the overall system and its players is limited, often non-existent, and mostly based on the goodwill of all parties involved. Therefore, the ecosystem driver should emphasize the importance of proactive collaboration and open communication. The way of working within business ecosystems should reflect openness simultaneously adhering to the highest standards of integrity, as well as, being transparent with all the business ecosystems participants all time. Challenging, learning, and openness for retrospectives will keep the business ecosystem fresh and desirable for all stakeholders.
To validate international business leaders´ insights and focus on business ecosystems development, I conducted a quick survey targeted to my LinkedIn network – one kind of business mass social ecosystem – worldwide in early November 2021; The plan was to find out how they see the impact of ecosystems on their business now and in the future. The target audience was asked to answer two short questions in their native tongue and anonymously:
- How do you utilize the power of business ecosystems in your daily work?
- How do you see your business ecosystem changing during the next few years?
However, some interesting findings can be concluded from this quick qualitative AI- supported study evaluating respondents´discourse. The majority of respondents highlighted that they use their daily work business ecosystems first and foremost as a resource in expanding their business-related knowledge and competencies to be more attractive in the heavily competitive job market. From the self-development point of view, it was also concluded that ecosystems deliver a much wider perspective than respondents´ immediate coworkers could provide. This finding supports well the importance of acquiring an outside-in view to grow as an individual or an organization. The second priority was using business ecosystems as sales channels (with a clear linkage to earlier stated transaction platforms) or tackling staffing needs more efficiently.
As far as the next few years, the respondents viewed that ecosystem transparency will likely increase. Ecosystem networks will be crucial for knowing what skills to develop and how to use them, and in the post-covid world, cooperation and value co-creation will increase significantly. Outcomes might be more transparent core business processes, standards as well as the creation of co-competitive (simultaneous competition and collaboration) business environments.
The 7 Key Takeaways
The business ecosystem – like any living organism – goes through different phases and every setting is unique. MIT Sloan Management School research article “How business ecosystems rise and often fall” states that successful measures in the early stages of an ecosystem will be far different from those required in later stages, requiring that management teams continuously reassess and adapt their strategy. In short, the research found that each cycle requires specific leadership actions.
Every business ecosystem is unique in resources available, timing, and market conditions, often also luck. However, some clear generic guidelines and preventive actions can be outlined for any partner to operate, grow and scale faster within successful and sustainable business ecosystems.
- The ecosystem mindset shift forces leaders to think and act very differently regarding strategies, business models, leadership, core capabilities, value creation and capture systems, and organizational models.
- The competitive advantage is created within ecosystems increasing chances to discover new business models to capture value in a world of commoditization.
- The shared purpose is the foundation for a dynamic and co-evolving set of diverse actors with a collective ability to learn, adapt and co-create new value and business.
- The visionary cause drives mutually beneficial efforts through clear roles and responsibilities, a common roadmap, a code of conduct, and agreed costs vs. gains.
- The importance of diversity is reflected through multiple players of different types and sizes creating and serving markets together otherwise beyond their reach.
- The collective value created for common customers is the reason to exist. Controversial to the nature the business ecosystem requires orchestration
- The future success belongs to those companies who build, incorporate and nurture their ecosystem business models into the structure of their value creation strategy.
Reimagining your current and new partners through lenses of trust, shared purpose, and common cause to collaborate, and build sustainable new business models for mutually beneficial success is the goal. In the era of rising business ecosystems, we at Humap Consultation see that the question to ask yourself is not about what do you want to do with business ecosystems, but when will you act? You will choose to be in the driver’s or passenger’s seat in 2022?