Business ecosystems, a new way to revolutionize existing business paradigms, or a vacuous phrase used loosely as nothing more than a decorative idiom?
The answer to this question lies in the manner businesses are deriving value out of their ecosystem. While some employ the right means and measures, many use adulterated approaches as they fall prey to the myths diffused in the business arena, ultimately jeopardizing their professional interests and goals.
Identifying these myths can be crucial to extracting value from business ecosystems. Here are the top 5 myths you need to know:
Most companies feel the need to establish an ecosystem without analyzing whether they actually need it or not. Incorporating ecosystem engagement into corporate strategy is a choice and not a compulsion. As a matter of fact, many successful enterprises like EssilorLuxottica do not rely on business ecosystems.
The choice is contingent on factors such as:
Companies, on the basis of all these factors, can evaluate whether they need a dynamic business ecosystem or a classical analyze, plan, and execute approach that relies on static supply chains.
So, it is evident that companies making ecosystems under duress are only creating problems for themselves. Considering the end goal and its nature is essential prior to creating an ecosystem.
Business ecosystems call for open collaboration. However, the extent of openness varies. Truth is, any kind of openness comes at the expense of control, and there are a few robust ecosystems that are comparatively closed in regard to either data along with intellectual property or fresh participants.
For example, Rio Tinto has created an ecosystem of companies that have been working together to manage data and create value in a collaborative manner. However, the value here does not come from maximizing the number of participants. Actually, data is openly shared, but within a selective group.
So, openness is welcome in the cases where exploration is key. However, cases where the priority is to have more control to create value, openness should be implemented within a diminished boundary.
For quite long, ecosystem and digital platform were considered inseparable. Consequently, this forced many business owners to ignore the broader range of options ecosystems proffer.
For example, famous pharmaceutical firm Novo Nordisk that established a huge non-digital ecosystem concerning diabetes, by engaging the China Ministry of Health, the Chinese Medical Association, physician & patience groups, universities, and other nongovernmental organizations, now earns $1 billion diabetes-related sales in China alone.
In essence, digital platform isn’t necessary for an ecosystem to thrive. With the advent of technology such as enterprise integration platforms, enterprises can facilitate orchestration of partner entities in a complex ecosystem without the need of going digital.
Considering ecosystems to be constant is folly. Highly complex in nature, ecosystems allow participants to have access to a high degree of autonomy where the roles are constantly changing. For example, PayPal aligned its entire focus on building relationships with its 13 million merchants. It considered banks as clear competitors. But, with banks changing their payment technology framework and big shot Amazon offering payment and banking services, PayPal had to rupture its original static mindset by working with a multitude of previous competitors, such as Citi, Chase, and Barclays etc.
Companies that perceive ecosystems as constant adopt deductive, static approaches that fail to comply with the dynamic, emergent character of ecosystems. Broadly, ecosystems represent a confluence of changes, and one needs to pay heed to it in order to drive maximum value.
Don’t confuse ecosystem with egosystem. Orchestrating a business ecosystem requires several remarkable assets, including a strategic perspective, colossal brand structure, a new-age platform that has the ability to scale, monetary assistance & other resources, and an end-objective, to name a few.
Hence, companies, even the leading ones, ought to pay attention to these factors before planning to orchestrate a business ecosystem.
To conclude, enterprises need to obliterate such pervasive myths, no matter what may have been their genesis. This will not only help them grow in terms of revenue, customer bandwidth, and productivity, but also help them handle never-ending disorder and disruption.