The term "business ecosystem" was first introduced by James F. Moore in his 1993 Harvard Business Review article "Predators and Prey: A New Ecology of Competition." Moore's article argued that the traditional model of business competition, which viewed companies as standalone entities competing for market share, was no longer sufficient in a dynamic business environment. Instead, Moore proposed a new model that viewed businesses as part of a larger ecosystem, with each company interacting with and affecting other companies in the ecosystem.
Today, the term is widely used to describe the complex network of relationships and interactions between companies, customers, suppliers, and other stakeholders that shape the business environment. The concept has been expanded to include the role of technology and innovation in shaping business ecosystems, and it continues to be a major area of research and discussion in the business world.
When I was at Cunningham Communication in the late 1990s,I had the opportunity to work with Ron Ricci and John Volkmann as they developed a strategic communications framework called Leadership Momentum. A core tenet of the momentum model was the idea that ecosystems – or the potential to build ecosystems – were a driver and predictor of market momentum and a significant contributor to mass perception and the inevitability of a brand.
Working with startups and Fortune 1000 companies over the last 25 years, I have learned one important lesson if you want to grow your company: all leaders need an ecosystem.
The Architecture of the Ecosystem
Businesses that want to stay ahead of the competition need to think beyond their own products or services. They need to think in terms of an ecosystem, a system of interdependent organizations that work together to create value for the customers they serve. By driving an ecosystem, companies can put themselves at the center of a system of economics, where all organizations in that ecosystem benefit and share the same vision.
Companies that are perceived as market leaders have a distinct advantage over their competitors, as they are seen as being more trustworthy, more innovative, and more customer-focused. To create this perception, companies need to put themselves at the center of a system of economics, where they are driving an ecosystem that creates value for all stakeholders.
In nature, ecosystems are defined as communities of organisms that interact with one another and their environment. They are made up of a complex network of relationships between different species, each with its own unique role to play in the ecosystem's overall health and stability. Similarly, a corporate ecosystem is a system of interdependent organizations that work together to create value for the customers they serve. Each organization in the ecosystem has a unique role to play, and its success is tied to the success of the ecosystem as a whole.
A corporate ecosystem can be thought of as a value chain, where each organization plays a specific role in the creation, delivery, and consumption of a product or service. For example, a company that produces a software product may have partners who provide complementary products or services, such as hardware, installation, training, or consulting. By working together in an ecosystem, these organizations can create a complete solution that is more valuable to customers than any one organization could provide on its own.
In addition to creating value for customers, driving an ecosystem can provide numerous benefits to the companies involved. For example, an ecosystem can help companies:
- Build brand integrity – By working with other companies in the ecosystem, a company can increase its brand reputation and trust with stakeholders. I call it the brand equity effect, whereby you actually can leverage the brand success of others as your ecosystem grows.
- Access new markets - By partnering with other organizations in the ecosystem, a company can tap into new markets or customer segments that it may not have been able to reach on its own. Tangential revenue opportunities can be created through ecosystem channels.
- Increase efficiency - By sharing resources, knowledge, and expertise, companies in an ecosystem can work more efficiently and cost-effectively toward the same goals and vision. Ecosystem partners will use their money to market the ecosystem solution. Case in point: Apple. Apple built the “i”-ecosystem with thousands of apps, software developers, home devices, and accessories supporting the Apple-centered system of economics. Apple has benefited tremendously from the ecosystem which supports its products.
- Foster innovation - By collaborating with other companies in the ecosystem, a company can access new ideas, technologies, and business models that it may not have been able to develop on its own.
- Reduce risk - By diversifying its partnerships and revenue streams, a company can reduce its reliance on any one customer or supplier, reducing its overall risk. A successful ecosystem is revenue-enabled.
Building an ecosystem is essential if you want to be considered a leader in the market. By driving an ecosystem, companies can build brand equity, access new markets, increase efficiency, foster innovation, and reduce risk. In today's dynamic world, companies that focus solely on their own products or services risk being left behind. By driving an ecosystem, companies can create a competitive advantage that is impossible for competitors to replicate.
A market leader takes responsibility for market direction and the evolution of the solution for customers. You cannot lead from a vacuum. Building a business ecosystem is a critical strategy for growth.