I recently got into a chat exchange between Google Gemini and myself on the present and future of Business Ecosystems. So editing this down into two major points
Firstly “why our old structures are no longer good enough” and then “are business ecosystems being overtaken?”
I worry more over the second question on the view of “I skate to where the puck is going to be, not where it has been. – Wayne Gretzky as within my advisory role it is necessary to anticipate movements in the business world to predict its future trajectory and be in the right place at the right time or at least try too!
So within our exchanges the realities and reassurances come out. Let me share these:
After a long discussion on identifying the leading Ecosystem organizations and how, where and why many are by adopting clear Ecosystem Business Models, achieving higher levels of growth and value we also explored common traits, distinctiveness and trade-offs, the present and future became dominating within this part of the exchange.
As we were exploring those “triggers” for specific organizations and “zooming in” on how we have entered a very different connected world, from linear to networked and organizations are not equipped in structures, understanding, their (rigid) hierarchy.
Or, are we simply in a more dynamic, adaptive world that needs to respond to changing needs and less able to (simply) shape events beforehand through “traditional planning” or stable environments. Have we left a predictable, more stable world and moving the needs of organizations to be “highly” adaptive and resilient to changing situations and what gives them this opportunity?
A most fundamental “meta-trigger” for the rise of business ecosystems.
The shift you describe – from a linear, predictable, hierarchically controlled world to a dynamic, networked, adaptive, and often unpredictable one – is the very bedrock upon which the necessity of ecosystem strategies rests.
This isn’t just a part of it; it is the fundamental context that makes ecosystem adoption an existential imperative for many organizations.
The “New Reality”: Why Our Old Structures Are No Longer Enough
- From Linear to Networked:
- Old World: Value chains were largely linear. Company A produced something, passed it to Company B, who passed it to C, and so on. Control meant controlling your direct upstream and downstream.
- New World: Value creation is now inherently networked. Customers expect seamless experiences that often cross multiple industries and providers (e.g., smart home services, integrated mobility, personalized healthcare). No single company can own all the nodes in this network.
- Impact: Rigid hierarchies struggle with these complex interdependencies. Information flow is vertical, not horizontal or multi-directional. Collaboration becomes difficult, and critical dependencies outside the direct chain are often ignored or poorly managed.
- From Stable Environments to Constant Flux (VUCA/BANI):
- Old World: Planning cycles were long (3-5 years), market research was conducted periodically, and competitive landscapes were relatively stable. You could “shape events beforehand” through traditional strategic planning.
- New World: We live in a world characterized by Volatility, Uncertainty, Complexity, and Ambiguity (VUCA) – or even Brittle, Anxious, Non-linear, and Incomprehensible (BANI). Disruption comes from anywhere, at any time.
- Impact: “Traditional planning” that assumes stability leads to rigid strategies that quickly become obsolete. Slow, bureaucratic decision-making in rigid hierarchies means organizations cannot respond fast enough to emerging threats or opportunities.
- From Centralized Control to Distributed Intelligence:
- Old World: The belief was that all critical knowledge, innovation, and decision-making power resided within the organization, at the top of the hierarchy.
- New World: Innovation is often happening at the edges, among startups, specialized tech firms, and even individual creators. The “smartest people” don’t all work for you.
- Impact: Hierarchical structures, by their nature, filter and slow information flow from the periphery. They are prone to the “not invented here” syndrome, missing crucial external signals and opportunities for collaborative innovation.
How Business Ecosystems Are the Organizational Counterpart to This New Reality
Business ecosystems are not just a business model; they are an organizational design philosophy that inherently mirrors and thrives in this dynamic, networked world:
- Embracing Networked Interdependencies:
- Solution: Ecosystems are networks. They are designed to manage complex interdependencies, fostering collaboration across organizational boundaries. An ecosystem orchestrator explicitly maps and leverages these connections.
- Driving Dynamic Adaptability and Agility:
- Solution: Ecosystems provide a mechanism for distributed innovation and rapid resource mobilization. You don’t have to build everything internally. When a new need or threat emerges, you can leverage partners’ specialized capabilities, allowing for faster experimentation and adaptation.
- Responding to Changing Needs, Not Just Shaping Events:
- Solution: An ecosystem acts as a collective sensor network. Partners, being closer to diverse customer segments and emerging technologies, pick up on “weak signals” more effectively. This allows the orchestrator to rapidly adjust their offerings.
- Overcoming Rigid Hierarchy Through Orchestration:
- Solution: Ecosystems demand a shift in internal culture from command-and-control to orchestration, influence, and enablement. Leaders must champion cross-functional collaboration internally to support external partnerships. They become “connectors” rather than just “commanders.”
The C-Level Imperative: Evolve or Be Outpaced
“This pervasive shift in the global landscape directly impacts our organization. Our traditional, hierarchical structures and linear planning approaches, while effective in a more stable past, are now becoming strategic liabilities.
- We risk missing critical innovation happening outside our four walls.
- We risk being too slow to respond to market shifts and competitor moves.
- We risk failing to meet evolving customer demands for integrated, seamless solutions.
The question is no longer just about whether we can afford to build an ecosystem, but whether we can afford not to evolve our very organizational DNA to reflect the networked, dynamic world we now operate in. Embracing an ecosystem mindset and strategy is not just about a new business model; it’s about ensuring our organizational fitness and relevance in this profoundly different connected world.”
So what about evolutions?
It’s crucial to acknowledge that the business landscape is never static, and what’s “most powerful” today is always subject to evolution. So will Business Ecosystems be overtaken as the core approach to organizational design?
Are Business Ecosystems Being Overtaken?
Ecosystems themselves are evolving, and new approaches are often building upon or within the ecosystem concept, rather than replacing it entirely.
No, Business Ecosystems are not in their fundamental premise being overtaken or replaced. The core principles that make ecosystems powerful – distributed innovation, network effects, value co-creation, and adaptability – are arguably more relevant than ever in a hyper-connected and rapidly changing world.
However, the nature and mechanisms of these ecosystems are constantly evolving, particularly with the rise of new technologies and organizational paradigms.
Here’s what’s emerging and how it relates:
- AI-Native Business Models & Autonomous Ecosystems:
- Evolution, Not Replacement: AI isn’t an alternative to ecosystems; it’s a powerful accelerant and transformer of them. AI allows for hyper-personalization, intelligent automation of interactions, predictive analytics for demand and supply, and real-time optimization of network operations.
- Emerging: The concept of “autonomous ecosystems” where AI agents (digital entities) can interact, negotiate, and transact directly (e.g., in the “Economy of Things” where smart devices auto-negotiate energy or logistics). This pushes orchestration to a new level of complexity and decentralization.
- Impact: This enhances the power of ecosystems by making them more efficient, intelligent, and scalable, potentially reducing the need for human intervention in routine coordination.
- Web3, Decentralization, and DAO-driven Ecosystems:
- A Different Model of Trust & Governance: Web3 technologies (blockchain, smart contracts, NFTs, DAOs) introduce new ways to build trust, establish governance, and distribute ownership within an ecosystem, often without a central orchestrator in the traditional sense.
- Emerging: Decentralized Autonomous Organizations (DAOs) can create peer-to-peer ecosystems where rules are coded, and decisions are made by collective consensus, potentially disintermediating traditional platform owners in some contexts.
- Impact: While still nascent for most large-scale enterprise applications, Web3 challenges the notion of a single, dominant orchestrator and explores truly distributed value capture. It shifts the discussion from “how much control does the orchestrator have” to “how is trust established and value shared transparently across the network.”
- “Purpose-Driven” and Regenerative Ecosystems:
- Beyond Profit: Increasingly, ecosystems are not just about economic value, but about solving grand societal challenges (e.g., climate change, biodiversity loss, equitable access). These are often “co-opetitive” where competitors collaborate for a shared, higher purpose.
- Emerging: New business models are appearing that prioritize ecological value co-creation and measurable biodiversity performance, rather than purely financial returns.
- Impact: This expands the definition of “value” within an ecosystem and can drive collaboration among unlikely partners, fueled by shared sustainability or social impact goals.
- Specialized “Micro-Ecosystems” and Vertical Niche Platforms:
- Focus, Not Breadth: While the large generalist platforms (Amazon, Apple) continue to grow, there’s also a rise of highly specialized ecosystems focusing on deep vertical problems (e.g., niche B2B platforms, specific industrial digital twins).
- Impact: These might not achieve the sheer scale of the giants, but they offer intense value within their niche, proving that “ecosystem” isn’t just for the biggest players.
Why Ecosystems Remain Fundamentally Powerful (and aren’t being “overtaken”):
- They are the organizational framework for complexity: AI, Web3, and other emerging technologies enable new types of interactions and value creation, but they still require a structure that allows diverse actors to connect, collaborate, and exchange value. That structure is inherently ecosystemic.
- They provide interoperability and scalability: Whether it’s data exchange between AI models or transactions on a blockchain, an underlying framework for standardized interaction (a form of ecosystem) is still necessary for scale.
- The “Orchestrator” Role Evolves, But Doesn’t Disappear: Even in decentralized models, there’s a need for community builders, protocol designers, and entities that set initial rules and attract initial participants. The nature of “control” becomes more about influence, reputation, and robust governance, rather than direct command, but leadership is still critical.
- The “Can We Afford Not To?” Challenge Persists: Regardless of the specific technological flavor, the fundamental inability of a single, vertically integrated company to innovate at the required speed, scale, and breadth remains true. The “most powerful mechanism” is defined by its ability to overcome this inherent limitation.
Conclusion for the C-Level and a helpful clarification for me
Gemini replied:”You’re absolutely right to challenge whether ‘ecosystems’ are the final word. The truth is, the concept of an ecosystem – a dynamic network of interdependent actors co-creating value – is not being overtaken. Instead, it’s being profoundly transformed and supercharged by emerging technologies like AI and Web3.“
It is not technologies that replace ecosystems; they enable new, more intelligent, more decentralized, and more efficient forms of ecosystems. They push us to think beyond simple transactional platforms to truly autonomous, purpose-driven, and highly adaptive networks.
Our imperative isn’t to pick between ‘ecosystems’ or ‘AI’ or ‘Web3.’ It’s to understand how AI and Web3 are the next-generation tools that will allow us to build, participate in, and orchestrate even more powerful and resilient ecosystems.
“Those who master this convergence will redefine competitive advantage in the decade ahead.”