Establishing An Effective Business Ecosystem
A company cannot flourish as an independent entity in the business domain. It exists as a part of an entire ecosystem. A player ecosystem is defined as the network of organizations that includes suppliers, distributors, competitors, customers, government agencies, etc. All these organizations are involved in delivering products and services through competition as well as cooperation. In a business ecosystem, each entity of the ecosystem affects others and is also affected by the other entities, which creates a constantly evolving relationship. Each entity in the business ecosystem must be flexible and adaptable to stay, just like in a biological ecosystem.
Understanding The Business Ecosystem
Advancing technology and increasing globalization have changed ideas related to the best ways of doing business. A business ecosystem concept helps companies to understand the profitable strategy in the rapidly changing environment.
In effect, the business ecosystem consists of interlinked companies that dynamically interact via competition and cooperation to grow their sales and survive mutually. An ecosystem includes different partners like suppliers, distributors, consumers, government, processes, products, and competitors. When an ecosystem thrives, the participants develop behavior patterns that streamline the flow of ideas, talent, and capital throughout the system.
A Company’s Stand In An Ecosystem
A company’s leaders carry out numerous mindful exercises to be successful in this world of digital ecosystems. First, a company must consider what role it can play. A company is likely to play multiple roles in overlapping ecosystems too. There are three primary roles that it can play. These are as an ecosystem orchestrator, modular producer, or consumer.
Ecosystem Orchestrator: These companies connect several stakeholders and create a shared value for the whole community. They take on risks, complexities, and challenges of stakeholders. They enable each other to make and sell products and services throughout the ecosystem.
The modular producer: The company playing this role monetizes its value in multiple ecosystems. One example of modular produce is PayPal. This online payments system provides financial services used in diverse digital ecosystems. Its core service aims to meet the needs of buyers, consumers, sellers, and businesses.
A consumer: A company acting as a consumer extracts value from an ecosystem. It can be a person or an enterprise. For instance, when one pays for an Uber ride, he/she is a consumer in the transport ecosystem orchestrated by Uber. Consumers can even be producers. The company that purchased goods at Amazon can also sell those goods on the online marketplace next week. These both are ecosystem stakeholders.
The boundaries between the role that a company plays are fluid. Firms can play multiple roles in multiple ecosystems, creating an overall business model portfolio. For example, Apple makes products like phones and computers while also hosting a third-party applications marketplace. Also, Microsoft sells software, hosts a cloud computing platform, and makes video game consoles. This shows how a single company can play several different roles in a business ecosystem.
Creating An Effective Ecosystem Strategy For The Company
With those three primary roles in mind, executives then take three steps for developing an ecosystem strategy for their firms:
1. Identifying a suitable business ecosystem for the company
Here, experts analyze their current business and answer questions like where it plays, who the partners and customers are, and the emerging threats and opportunities. After this, they develop visual models showcasing how the operations fit into the existing and emerging ecosystems. These models identify the stakeholders a company engages with, the value propositions the party delivers, and the value exchanges in terms of goods, services, credits, information, and intangible assets.
2. Determining the company’s role in the business ecosystem.
Here the experts draw models of ecosystems, including existing ecosystems and potential ones. Other steps include delineating the value propositions, core interactions, stakeholders, conditions that accelerate change, and various obstacles.
To be an ecosystem orchestrator, a company must build a platform that creates significant network effects. This needs an initial focus on core interactions that attract stakeholders to your venue. For example, for Uber, the exchange is between passengers looking for drivers. As a modular producer, a company must grow and monetize its offerings without additional orchestrating interaction with other partners.
Notably, a company plays multiple roles, such as an orchestrator in one ecosystem and a producer.
3. Determining methods to monetize the company’s role in the business ecosystem
This step involves examining the core capabilities and determining whether the company has assets that it hasn’t monetized yet in an ecosystem. It is essential to decide on how one can create value from those assets. This ecosystem modeling exercise enables an organization to articulate precisely the way it captures value from further participation. In this case, the discount does not necessarily have to be revenue; information flows and intangible value can also be just as significant.
Every company plays a crucial, distinct role in its ecosystem. The business world is deeply interconnected; several entities are dependent on each other, providing optimum benefits. A company can play a different role in a diverse ecosystem. For instance, it can act as a producer for one company while a consumer for another. The article mainly points out the characteristic features of each of these roles and also mentions the strategy used by the industry experts to decide the best possible position for the concerned company. This is a crucial step as it straightaway decides the profit that a business will reap out of a business ecosystem. To perform this role-deciding step with utmost efficacy and accuracy, businesses hire companies like ours to conduct this step for them.