The theme of Digital transformation is prevalent in the technology sector. Decision makers are now being challenged to go further and create digital and technology ecosystems that encompass customers, employees, developers, suppliers, and even extended networks of related businesses.
Yet, frustratingly for business leaders, there a few agreed definitions of ecosystems that they can centre around for common understanding and therefore is at risk of being dumbed down. Constant references to ecological ecosystems try to aid understanding but often end up diluting what business ecosystems are. It may be more helpful to think of business ecosystems as business communities (but that also can be easily diluted).
At its most basic level, I would argue the fundamental point about any business ecosystem is about value creation.
It is about meaningful interactions. How people can meet, share, collaborate, form teams, even experiment in order to grow together and build trust. It is also possible to add technology in these interactions not just as a platform but also as a contributor.
With shared and common goals that lead to clearly defined business outcomes – these are the fundamental building blocks of value creation and a successful business ecosystem.
Why are business ecosystems more important now than before?
The answer is that they are not more important than before, they are just as important today as they are in history. It is how society recognises value today that throws business ecosystems into sharp relief.
This societal change recognises that even micro changes can matter. From the simple and single moment to being the spark that creates momentum for seismic events. This can sound fanciful, however you can look back in history for evidence.
One could look at Bill Hewlett and Dave Packard who formed a simple ecosystem with a single idea in a garage to build micro oscillators, it was this spark that formed one of the largest PC manufacturers in the world.
Elon Musk with co-founder Greg Kouri formed X.com that later evolved to PayPal. This was start of e-transactions that have shaped nearly every facet of the way how consumer transactions occur today. Both have gone on to build an ecosystem involving thousands of people with a single vision to ultimately colonise Mars.
Culture is critical
As previously stated, business ecosystems start with people and how they interact together. This makes culture the most important factor of all, indeed when distilled even further it is fundamentally about trust.
Brand permission to experiment, test existing assumptions and strategies and even allowing a degree of failure are critical to an effective business ecosystem. On the other side of this coin, a relentless pursuit of value must also be shared by every member of the ecosystem.
It is this balance that will be the single biggest contributor to an ecosystem’s success or failure.
Digital & business ecosystems must attract people to join them
Gartner stated in their 2017 CIO Report that “in digital ecosystems, 79% of the survey’s top performers indicate they participate in a digital ecosystem vs. 49% and 24% for typical and trailing performers, respectively.”
Putting aside the market analysis, the basic premise of any ecosystem is whether anyone is attracted to use it. It must have meaning and an effective user experience to be adopted and then grown. This is the lifeblood to survive, even the most effective technology will be for nothing without it.
Technology is so intertwined with business strategy and success that the creation of business technology ecosystems is primarily a business problem not a technical one.
Matching the balance of good IT practice whilst giving as much control to the business is a delicate balancing act but one that can provide significant competitive advantage. I would argue that this challenge is synonymous with tackling the issue of IT Debt discussed here. These two topics are distinct from each other but not separate. Creating effective ecosystems is a vehicle to dealing with IT Debt whilst concurrently delivering huge value – if it is user-first.
This topic is discussed in my TV series, “The Cloud Show” featuring Carolyn Mumby (CEO of Eledecks) and Nathan Lowis (from DataDog), please watch the episode if you would like to learn more and engage with us on Twitter using #TheCloudShow.
What are your views and do you think organisations will be able to manage this challenge effectively or will the status quo remain?