Rethinking the Value of Business Ecosystems

Business is far from usual, it is transforming in front of our eyes. A business has to simply accept this is a changing world and business ecosystems are coming of age, perhaps adding more complexity but also to help bridge this transformation. The traditional silo mentality, the belief that your industry boundaries are immune to change and new challenges, is a grave mistake.

There is, or should be, a recognition that all businesses should find opportunities to coalesce into networked ecosystems. They need to open up to a far greater potential than is presently on offer to each individual entity, unless you have deep pockets (Apple), as well as so many app developers lining up to be part of their ecosystem, or patient shareholders (Amazon) continuing seeing growth but limited profit return, or inflows of revenue (Google), where you can invest in new, potentially huge but speculative, technology-related business concepts.

Ecosystems can offer so much connecting value out there to ‘form’ around.

We are witnessing a very radical change, driven by technology, increasingly disrupting and breaking down past traditional boundaries, partly built to defend positions so as to achieve economic scale. There is a new economic logic to build even greater scale, it involves greater complexity, yet its value proposition is to strive towards offer greater customer experience and satisfaction, where the solutions are valued highly in social and economic value. Ones that get closer to their connected expectations and daily needs for solutions to solve, in far better ways, than that are presently offered. Innovative design has become paramount to these new offerings.

The market dynamics are also changing. Those businesses with a different mindset of global trade and value proposition building will benefit. Risk is taking on different forms to capitalize on these changes. Today we can all be liberated through the exploitation of technology and new radical innovation design. In some ways, it has become a new ‘land grab’ panning for digital gold. We are at the point of building a new frontier that is calling for business change.

As we think through the impacts of the changes we need to reflect on some of its parts. Some of these are outlined here:

We are at a stage where regulators are scrambling to redefine policies, resolve the issues around different tax regimes, as they struggle to understand how the public should be protected or be made aware of all the changes taking place. The pace of change is creating significant regulatory lag as technology change is happening at a relentless pace. As opportunities emerge new forces are exploiting global trading. They are leveraging our shared private and public information and are busy exploiting the significant differences in dealing across national borders. Technology moving seamlessly across previously defined national borders requires a new world order. For business this is a time for building, not defending if you are looking to grow but it needs investment and managing risk in different ways than the past.

Technology has been the catalyst for this transformation of the business landscape.

Ecosystems have suddenly become of age, as they can be formed rapidly, they can enable cross-cutting innovation to be delivered in highly collaborative ways. They can, through shared platforms achieve closer relationship with the customer, to understand their needs and experience through increased collaboration, and engagement.

Everything has suddenly become more dynamic and this has enabled the pace of innovation to speed up for exploiting breaking opportunities. Technology has enabled business to scale up quickly, partly due to risk-sharing in technology exploitation and partly in these exploratory forms of partnerships. Collaborative insights have enabled businesses to explore spaces that were previously unable to be unlocked, without this greater collaboration and diversity in (solution) competencies. The business landscape has opened up, providing the potential to explore very different value opportunities.

Ecosystems can allow a business to evolve beyond its own (self-imposed) boundaries.

Supply chains are shifting into value webs jumping from products into services, that when combine with other like-minded collaborators and partners can offer radically different customer propositions. The concept of spanning and connecting through platforms enables collaborators to mutually design and share their ability, to build potentially superior services than in the past, ones that draw in the customer and lift the relationship and their buying experiences.These are reshaping business strategies if the value can be seized upon and exploited.

Assets are increasingly being moved from owning to sharing.

Open innovation has taken us into a more collaborative, connected world. As the ecosystem of partners builds its mutual trust and supporting system, it allows for a more open flow of assets, knowledge and intellectual property to flow throughout the connected ecosystem design. Businesses, through collaborations, are more open, agile and fluid. It is this fluid movement that is increasing rate of exchanges that are occurring between parties, requiring far more highly responsive reactions. This openness of exchange is challenging existing organizations greatly on how to open up their own island of expertise and offering, while protecting or building out their intellectual property.

Connecting and collaborating opportunities for business seem to be really powerful networks of value-adding effect, for finding new economic opportunity. This calls for some radical rethinking of the existing business and deciding the design of the future business.  This  calls  for thinking through a different designed structure for the business and different skills needed. The shifting from the current state to the future designed state is no easy task. It requires a radical redesign of the organization, as it significantly increases complexity and where any digital transformation has to center upon as the critical enabler to enable this shift.

The lag to all these changes occurring in the business world is determining the winners and losers.

It is identifying the critical capabilities and being adept and agile enough in learning from these, to embed them into the changing culture. There is a critical need to be technology savvy, digitally adroit, highly analytical and fast to make the connections, to explore and exploit the ‘breaking’ opportunities. We are having to adjust our learning to have increased levels of higher human-centered approaches, through exploiting design thinking, to learn and adapt. Design thinking can provide a different thinking-through perspective to manage in more complex environments, break down barriers and overcome new hurdles to deliver new economic value. New economic value has to be ‘seen’ and believed in so people can engage and work towards making their change.

We are exploring new ways to think to extend the business ecosystem design

We are attempting to integrate in new ways the increasing needs and capacities of people, to capitalize on a myriad of choices with technology options and find new ways for business success. The approach needs to work around that of being viable, desirable and feasible, as the new value combination for new innovation, that design thinking contributes into. We are actually forging far more ‘upstream’ and trying to reverse the ‘downstream’ many of today’s business find themselves in, to regain real value propositions that can offer a more sustainable business future. We are searching for a new design thinking framing to contribute, see here and here on this and my recently released report discussing this.

We are learning to integrate ‘lean’ and agile’ far more into our approaches.

This is not just in writing code but in the whole way we set ourselves up to operate. As complexity rises we have to liberate resources from the regular, more mundane tasks and re-skill them for the new, more sophisticated designs that collaboration through ecosystems and platforms demands. We are attempting to build a new ‘playbook’ of managing within these business ecosystems. Everything has to be faster, adaptable and flexible, with early testing, validation, and proof of concept. We are building new business models designed for collaboration but clear enough in our economic value and position to want to compete and invest.

Ecosystem design will create new business opportunities. We need to make the business case

We are faced with a number of principal drivers of change, that I believe we need to consider for deciding upon in any decision to actively participate in business ecosystems. These are:

  1. The constant exponential of technology and its power to change is forcing up to change.
  2. The need to search and create new business models needs to be explored differently
  3. The shift in value chain building (e.g products to connected services) needs greater connections
  4. Moving from the present core into new industrial areas and geographical reach is becoming essential to navigating.
  5. The need to scale and increasingly be seen as globe or very local (glocal) is a pressure point not to be ignored
  6. The increasing need for collaborating and extracting external expertise contains increasing cost and investment.
  7. Demands by customers are shifting to expecting customer experience and engagement that we must provide
  8. The need to channel your resources into more productive value-added activities is essential as ‘good’ resources are growing in scarcity.

The need for radical innovation changes the present position

We need to become more ready to deal with the unknowns. We need to find the capacities to experiment and explore far more, building the diversity into our thinking that partners and collaborators can bring. We need to increase the risk appetite through better risk assessments, a deeper appreciation of where ecosystems and networks can significantly contribute and search constantly for new revenue and market building opportunities.

What we need to do is change our present constraints.

We have built-in constraints. They are holding us back. Boards and Senior Management have a lack of time, as they are often too busy, focusing on the day-to-day. They remain extremely nervous when they do not have clear lines of insight to make what they see as riskier decisions. Finally, they are struggling with their present organizational design to adjust and adapt to the changing external world, full of uncertainties. To dither, to put decisions off, to seek out more certainty is not a position of any strength, it is the catalyst to eventual destruction. We need to face these inbuilt constraints.

There is growing value in engaging in business ecosystems

The potential impact of engagement has a range of benefits that need exploring and answering:

  1. Ecosystem configurations enable the (one) business to offer more value to customers
  2. They attract, more often than not, new customer bases to go on top of the traditional base
  3. Ecosystem designs enable the business to create entirely new and different business opportunities
  4. The growth potential can improve being part of a “network effect” due to new propositions
  5. Structuring organizational design to leverage the value of collaborations gives greater flexibility
  6. Contributing your part to a bigger ecosystem design allows a depth of focus on the activities you do well
  7. You gain the ability to share market risks within a partnership of collaborators, committed to a shared vision and pursue new business opportunities that you could not afford on your own.
  8. You grow your capabilities as you co-evolve, align future investments and find mutually reinforcing and supportive roles to exploit opportunities.
  9. Ecosystems force you to become more proactive to thrive and perform, to master greater sophistication and complexity.
  10. The potential impact with customers valuing these connected experiences and being able to participate, engage and contribute opens up value-adding potential

Summary

The value of breaking down long-standing boundaries is occurring with or without you. Barriers are dissolving as more recognize the need and value of coalescing around a networked ecosystem. The chances for greater, more radical innovation to grow the business comes from exploring mutual opportunities to capture new economic value.

As you open yourself up to collaborating you open yourself up for greater learning and from this you can reshape your business design to adjust to this changing reality we are finding within a business; the need for designing our business into business ecosystems, to offer greater growth.

 

 

 

 

 

 

 

 

 

 

 

 

One thought on “Rethinking the Value of Business Ecosystems

  1. Pingback: Defining Ecosystems in Industry | Ecosystems 4 innovators

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