Building your business ecosystem - the journey
A business ecosystem is a model where a company is part of an extensive network, just like a product is part of any business. Individual companies remain both dependent and independent in an ecosystem. However, they cooperate to coevolve and satisfy customer needs.
“Companies that utilize business ecosystems will be better positioned to drive innovation and capital efficiency to create customer value.”
- Greg Sarafin, EY Global Alliance, and Ecosystem Leader
As we mentioned in our previous article, we learn, grow and evolve in our first ecosystem i.e. our family. Similarly, individual companies manage, expand and add value to their products and services in their business ecosystems. Together they raise awareness, reach new clients, comply with legal standards, etc. to grow in a healthy business infrastructure.
Individual and independent companies in an ecosystem follow a journey to know their role in it and learn skills to orchestrate and successfully target potential markets. The successful journey of building a business ecosystem consists of three major steps:
Defining the ecosystem strategy
Designing the ecosystem framework
Execution of the final plan
Defining The Ecosystem Strategy
The first step (creating and implementing strategies for a business ecosystem) is always the hardest. At this step, companies must study their customers’ needs and structure at least two-three plans accordingly. Clearly defined high-level plans and processes must be created at this stage.
Major points that must be taken into consideration before chalking out an ecosystem strategy are:
Competitors Analysis: Evaluating competitors’ strategies is necessary to know their weaknesses and strengths and further learn from their experiences. The goal of a competitive analysis is to gather insights necessary for developing better strategies.
Market Research: Studying the behavior and interests of potential customers and trends of future markets is required to develop Go-to-market strategies. The goal of market research is to find appropriate channels of communication, problems of the target audience, and other related information.
Ecosystem Mapping
Ecosystem mapping is defined as an exercise for landscape research, competitive scan, etc. to understand established and emerging competition.
Value and Vision: Defining the values and vision that best match the goals of the business ecosystem is a must for individual companies of a business ecosystem model. Growing the core business, expanding the network, and serving customer satisfaction must be the foundation of your values and vision.
What is a Business Ecosystem Value Map?
Value maps depict the companies present in the ecosystem and the relation between them. It indicates the source of value (financial, data, information, knowledge, regulation, etc.) flowing between companies and helps to understand how to build an ecosystem that works, how partners can benefit, spot new opportunities, and much more.
Designing The Ecosystem’s Framework
While designing the framework of any ecosystem, partner companies must define the promises that their business ecosystem will deliver to customers. A declaration statement that includes what the ecosystem stands for, how it will operate, and why it must be chosen will also be taken care of at this stage. In short, designing an ecosystem framework includes defining their value proposition.
A Go-to-Market Strategy (GtM strategy) that could specify how the business ecosystem will reach target customers and gain competitive advantage must be planned. Gtm strategies must be aligned with operating models to solve problems of the target audience, initial governance, communication channels, collective growth, and much more.
Before initiating the implementation of plans, companies must decide the type of marketing collaterals they are going to utilize for growing their business ecosystem. Marketing collaterals include everything from print materials like posters and brochures to social posts, blogs, and content published on digital media. To communicate the ecosystem’s or brand’s message, promote products and services, and improve their sales, collaterals must be judiciously decided at this stage.
Ideal Ecosystem’s Framework
The design of the framework must ensure that partners remain within legal and ethical boundaries while aiming to achieve their functional goals and fulfilling responsibilities.
Execution of Final Plan
Once the strategies are defined and the framework of the ecosystem is decided, the next step is to decide specific partners’ criteria. A successful business ecosystem is one in which every company knows its specific as well as collective role. On the basis of market feedback, decide what role each organization should play- leader, disruptor, niche player, orchestrator, or something else.
Both channel and strategic partners must be identified as per the roles decided. Channel partners must be identified, incentivized, and aligned to the goals of the business ecosystem while strategic partners need to be onboarded and trained to capitalize on sales and marketing opportunities.
Without deciding the targets and KPIs, planning execution of the business ecosystem is incomplete. Every company must have an idea and carefully chalk a plan of their targets and how as a whole ecosystem they can be successful. Individual targets must be closely aligned with the final top-level goals of the business ecosystem.
In a business ecosystem, every individual company must look beyond their own organisation and strive to work together for mutual benefits. Undoubtedly, the ecosystem is a complex web of partnerships but collectively every company must strive for excellence.
When a fire at a Philips Electronics plant in 2000 slowed the delivery of cell phone chips to the customers of Nokia and Ericsson, Nokia dispatched 30 employees to Philips to help restore operations. Was deploying resources to Philips in Nokia's plan? No, but it achieved the results Nokia needed: getting its products to market and achieving its sales plan for the year while Ericsson faltered.
Conclusion
Researches have shown that less than 15% of business ecosystems are sustainable in the long run. A few of the reasons discovered for the failure are weakness in the governance model, mismanagement of responsibilities, conflicts among ecosystem partners, reactions from consumers or regulators, difficulty in aligning every company with company goals, and many more.
The business ecosystem model is slowly gaining pace and would definitely have a scope in the future of work. The advent of the latest technologies, expanding marketplace, increasing scope of digitalization, the need for a collaborative environment, and dynamic changes in business infrastructure can be handled gracefully with innovative business ecosystems.
If you are also thinking of being part of a business ecosystem and start implementing a hands-on approach to untangle the complicated paths and accomplish your goals, then you need guidance on design and execution. You need some expert advice and professional help to get started and move ahead smoothly with your business ecosystem.
At Tydex we have over 20 years of experience in helping companies build their ecosystem in order to grow their revenue, acquire new customers, expand to new markets and innovate their products/services.
Contact us if you would like to learn how we can help you.