Rise of business ecosystems
Lately, you may have heard lots of talk about the idea of business ecosystems. This concept has become very popular in the last few years – but what is a business ecosystem, and how do they work?
In this post, we’ll explain what business ecosystems are and how they can help your small organization in a variety of ways.
What is a business ecosystem?
Firstly, what is an ecosystem? Effectively, it’s a collection of different organisms that interact with each other in the same physical environment. So, a business ecosystem is similar. The difference is that we’re talking about businesses instead of animals. Here, we have the idea that organizations are all part of an extensive system.
If we go into more detail, then it can be defined as a complex network of different companies that are involved in the delivery of a product or service. This network consists of suppliers, customers, distributors, competitors, government agencies, etc.
Every entity in a business ecosystem is affected by one another – this can be through cooperating with each other, or competing. The concept is that each organization evolves with one another to become more flexible and drive growth and success.
When it comes to understanding business ecosystems, there are seven key things for you to consider:
Firstly, your business needs to have a clear ecosystem strategy. By default, you’re probably already part of a business ecosystem without even realizing it. The trick is developing a strategy that lets you survive and get the most out of it.
Think about the specific role your company will play in the different ecosystems you’ll be a part of. Will you be one of the leading businesses that push forward new developments? Are you more of a supplier that helps orchestrate things? You may have different roles in various business ecosystems – just ensure you have a clear ecosystem strategy that lets you know where you stand and what you’re doing.
Degree of openness
How open is a business ecosystem? Is it wide open and available for the public to be a part of? Or, is it more of a private ecosystem with select participants?
It’s important to be aware of this as it can have a few implications on your business. An open ecosystem may offer the chance of more change because more organizations can be a part of it. However, it also may provide more disruptions and issues as too many companies are all working within the same system. Ultimately, the best approach is a combination of the two; it should be somewhat open, but with a degree of privacy.
Complexity of multiple ecosystems
Big businesses will probably be part of various ecosystems. This can be tough to manage, but the crucial thing to consider is how all the different systems work with one another. Some ecosystems may overlap, which could create new ecosystems for your business to be part of. Be aware of how certain ecosystems may have implications on others, and keep a clear strategy in mind when approaching all of them.
Of course, technology is the backbone of a business ecosystem. You need to have the right infrastructure in place to enable your business ecosystem. If you want to be successful, then you need to use technology wisely. Use it to support your business processes and allow you to carry out your role within the different ecosystems. So, effectively, you have to consider your roles, then figure out how to implement digital technologies that let you fulfil them. As a result, you support your business ecosystem.
Diversity of industries
Next, you need to realize that ecosystems can expand and grow as they please. From here, you will have a diversity of industries living within the same ecosystem. Therefore, you must be aware of the potential partnerships with organizations from entirely different industries to yours. A fantastic example of this is a travel agency partnering with a healthcare company to offer travel insurance. The two industries of each company are vastly different, but they’ve come together to form a partnership that benefits them both! So, just be aware that your business ecosystem doesn’t necessarily only contain organizations from the same industry as you.
Form of value exchange
Ecosystems will change the way that you look at the concept of value exchange. Typically, it’s monetary-based; you pay money in exchange for something. Within an ecosystem, ‘value’ can have a different definition. Your business might provide other organizations with your service in exchange for some critical information that can help you. No money is exchanged, but both parties receive a high level of value from the transaction. In essence, don’t assume that monetary-based value exchange is the only way that your company can benefit from a business ecosystem.
Engagement of diverse participants
Lastly, business ecosystems can change all the time. This means that the participants can also change. There’s a diversity to ecosystems that means roles can be altered, and things will evolve. As an example, let’s look at the idea of artificial intelligence. Previously, a physical person may have been part of the ecosystem. They make decisions, respond to other organizations, and so on. Now, they could be replaced by an AI system that automatically does their jobs for them. As such, your business needs to figure out how to integrate artificial intelligence – and other new introductions – into the ecosystem.
The bottom line is that you will have a diverse range of participants within one system. So, you must know how to engage with all of them and how they shape the decision-making process.
Understandably, the idea of business ecosystems can be complicated. Hopefully, we’ve given you plenty of info to understand what they are, and the key things to think about. In general, being part of a business ecosystem is a good thing. You’re surrounded by other organizations who help you evolve – either through cooperation or competition. It can be far more beneficial than shutting yourself off from everyone else and trying to do things all by yourself. This is why business ecosystems have become so popular; people see that they do help organizations grow and improve.