Considering a Business Ecosystem? Focus on Six Key Competencies
The rewards of a business ecosystem strategy can be appealing. Business ecosystems, which Deloitte defines as “dynamic and co-evolving communities of diverse actors who create and capture new value through both collaboration and competition,” offer opportunities for enhanced capabilities, diverse distribution channels, and access to new markets, among other benefits.
“Ecosystems are dynamic and co-evolving communities of diverse actors who create and capture new value through both collaboration and competition."
The decision to join the ecosystem economy might seem obvious, but it’s not one that should be taken lightly. Successful participation in a collaborative network requires careful consideration. To deliver value to your end customer and extract gain for your organization, you need a foundation of solid company values and an internal culture that supports openness and continuous evolution.
Research
The Outthinker Strategy Network leadership team interviewed ecosystem practitioners— strategy officers from $1B+ companies across industries—to learn their best practices for participating in ecosystem models.
Based on strategy officers’ recommendations and lessons learned from ecosystem relationships, there are six key competencies to build if you want to take advantage of joining a business ecosystem. They are:
- Anchor in shared values
- Cultivate deep listening skills
- Partner with heterogeneous companies
- Practice co-designing
- Invest in training and upskilling
Anchor in Shared Values
Before committing to any relationship, it’s essential to know who you are and what you offer. Joining a business ecosystem involves entering into a series of decentralized arrangements.
“When a system becomes more decentralized, it needs to be anchored, and that anchor is values.”
Strong values provide a guiding light for a constantly evolving web of relationships. Once your organization is clear about its values, you will make better choices about the partnerships that align.
Cultivate Deep Listening Skills with Customers and Partners
Every business ecosystem practitioner we interviewed highlighted the importance of cultivating deeper relationships with customers as you navigate the world of ecosystems.
“No strategy (ecosystem or otherwise) will get you out of delivering a great product and great experience for your customer.”
Adam Zalisk, SVP, Amplify, suggests asking questions to determine how the customer experiences the ecosystem: Where do they see gaps? Where do they experience blurred lines?
When it comes to managing partners, Ken Eng, SVP group strategy and M&A for Macmillan, recommends assigning dedicated resources to understand the needs of each party involved and ensure they are reflected in decision-making.
Partner with Heterogeneous Companies
One major trend in the business ecosystem economy is that companies are now partnering with what would have once been considered unlikely candidates. Many strategy officers interviewed mentioned they are increasingly involved with competitors, industry outsiders, or startups. This is becoming completely normal.
To ensure alignment, choose partners that share similar values but that also complement your expertise and reach. Patricia Miron, former integrated strategy and operations GM for Microsoft’s US Small, Medium and Corporate Segment, advises being sensitive to partners’ needs. By acting in a way that serves partners, you benefit and expand the value of the ecosystem.
"Ask: 'How can we be more empathetic to our partners and what is best for their business?'"
Practice Co-designing
Ecosystem participants run into trouble when one member tries to extract an unfair share of value. To avoid this, even as an ecosystem orchestrator, listen and engage your partners in designing the overarching ecosystem strategy. If you’ve followed steps one through three, you’ve already selected partners who exemplify your mindset and values.
Sukanya Soderland, chief strategy officer for Blue Cross Blue Shield of Massachusetts, is aware of the delicate balance of ensuring that your vision aligns with the ecosystem’s vision.
"You'll need to understand the different value levers for each party in the ecosystem. Keep in mind that every customer interaction is viewed as part of the unified ecosystem brand."
Invest in Training and Upskilling Your Employees and Partners
Amidst the “Great Reshuffling” and a cutthroat war for talent, most companies are prioritizing training and upskilling for existing employees. In an ecosystem model, this is essential. A company not only needs to make sure its own employees are equipped with skills and knowledge, it also must take into account partners’ awareness of its brand value and what it offers to the ecosystem.
Tom Gallo, head of strategy and innovation at ABM Industries, commented, “Building technical capabilities internally is key in this environment where there isn’t a perfect solution.”
Best Practice
Your employees and your partners must be enabled to work, understand, and seamlessly share information to create the best possible customer experience.
Give as Much as You Get
Counterintuitive to traditional firm-to-firm competition, in the world of ecosystems, generosity is key.
"Generosity can be as powerful of a tool as direct strategic competition ... It’s a power that, as strategists, we don’t always think to use.”
In spite of past or present competitive relationships with your partners, in an ecosystem you are all driving toward better value for the customer. Therefore, don’t think about cutting the biggest slice of the pie for yourself. With a generous mindset, you are growing the pie for everyone.
"You need to give as much as you get out of the ecosystem.”
Conclusion
When done correctly, business ecosystems increase capabilities and value for all members. With players combining knowledge, assets, and reach, the potential to solve monumental problems is high.
By anchoring in your values, listening to customers and a diverse set of partners, and co-designing around an overarching strategy, you will set yourself up as a successful ecosystem contributor. Then, to maintain the benefits, invest in training inside and outside of your organization and consider how much you can give to support the ecosystem as a whole.
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