In 1993, James Moore likened companies operating in an increasingly interconnected world of commerce to a community of organisms adapting and evolving to survive. Moore defined the business ecosystem as ‘an economic community supported by a foundation of interacting organisations and individuals — the organisms of the business world.’ Ecosystems are formed by different entities from government to trade bodies, to companies, to end-users.
Take, for example, a pension ecosystem; salary contributions are paid into an employee’s pension, that transaction travels around the business ecosystem, through the employer’s finance team or their outsourced payroll firm, the company’s bank, the pension provider and sometimes via the intermediary that sold the scheme to the employer. All of this is done through a complex web of data, money, people relationships and technology systems.
Business ecosystems are creators of value. Value is created and flows because of the deployment of services. So, if you want to increase the value created, improve and innovate the design of these services. However, this requires refocusing from outcomes for individual businesses to ‘ecosystem thinking’ and creation of value for all entities in the ecosystem. This mindset implies a different approach to ecosystem leadership.
Some of the benefits of ecosystem thinking
- New revenue. By taking an ecosystem view, a business can design new services that drive growth, thus creating new revenue streams. Existing capabilities can be stretched to offer services to different parts of the ecosystem. In short, the ecosystem view could replace the geographical view of strategic growth. In other cases, costs are optimised by taking a new approach to the design of services for business ecosystems.
- Highlight areas of weakness. For regulators or governments, an ecosystem perspective will identify areas of weakness or expose areas where resilience is needed. Equally, such a view can be used as a trigger to energise a system of social care or other areas in the public realm where a conscious effort in service design for these ecosystems could bring several advantages to citizens.
- Reduce the risk of investment. Investors (for instance, funds or venture capitalists investing in start-ups) who take an ecosystem approach to designing portfolios - where most services could add value - could reduce the risk of investment.
In light of these benefits, why do so many organisations focus so narrowly on optimising their own business and operating model instead of consciously designing for their ecosystems?
The simple answer is that ‘thinking ecosystem’ is challenging, given the complexity and often conflicting interests within B2B ecosystems. Such systems can be characterised as lacking the data, and often the incentives, to collaborate and work towards mutually beneficial goals. However, while challenging, the benefits are tangible and proven.
Engine Founder, Joe Heapy and Elisabeth Osta, a Visiting Fellow at the Judge Business School, University of Cambridge, have assembled a practical and accessible approach aimed at unlocking value within B2B ecosystems through a consideration of ecosystem services. With this approach, organisations can design new or optimised value-added services and realise positive outcomes for their business, the ecosystem and the end-customer.
A 10-point toolkit:
TOOL 1: Visualising the ecosystem as a network of customers and suppliers.
TOOL 2: Visualising actors and roles.
TOOL 3: Characterising the ecosystem players and their roles using ‘Design Personas’ and ‘Customer Missions’.
TOOL 4: Understanding value relationships and flows of value across a B2B ecosystem.
TOOL 5: Understanding the current services delivered by the ecosystem for end-customers using journey mapping.
TOOL 6: Spotting new service propositions and building a value-creating network.
TOOL 7: Spotting points of failure in the flows.
TOOL 8: Stress testing and enhancing reliance.
TOOL 9: Prioritising and sizing opportunities inside and outside the organisation.
TOOL 10: Redesigning roles for humans in the new ecosystem services.
