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The term “ecosystem” sounds intuitive, even almost trivial, today. However, are “ecosystems” as a concept and strategy applied to the business world indeed as straightforward as they seem? Are ecosystems the new silver bullet of business strategy?
Before you prescribe yourself a strategy based on ecosystems, consider the following possible side effects
- If you create ecosystems, be aware that they might also become populated by competitors. As nature can be brutal, so can ecosystems become highly competitive. Not only might rivals enter the ecosystem that you built up, but also your current collaborators might change sides and become your competitors. Ecosystems are not only about collaboration but also competition, as James Moore, who introduced the term “ecosystem” in the business context, pointed out in his 1993 article.
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The co-evolutionary nature of ecosystems might furthermore mean that your company might one day be no longer alone in the driver’s seat. Others might want to “drive” as well – or even eject you entirely from the the ecosystem that you created.
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Ecosystems are powerful instruments in today’s economy. However, there is a risk that they could become such entangled webs of interdependencies and interlocked coalitions of (mutual) interests that they escape the control of its members. At worst, you could end up in a situation, where you can neither change, direct, or even leave the ecosystem.
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Ecosystems are not simple instruments for optimizing your own organisation. To access resources of others (e.g., physical resources, time but also ideas) requires reciprocity. Ecosystems thus require balancing self-interest with the interests of others, your profits with the value demanded by the other members of the ecosystem, and finally, responsibility for your organization with that for the entire ecosystem. Ecosystems may help to cope with today’s complexity, but in doing so they create their own challenging decision-making situations.
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Ecosystems might enrich your company – but is that a price worth paying if their boundaries become so tight that important outside stimuli cannot reach them any more? That instead of becoming hotbeds of innovation turn into “closed societies”?
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Ecosystems might require changing the model and image of your organization. In the organizational chart, the environment and its ecosystems have no representation. Opening the organization to ecosystems requires a different concept and image of your organization.
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Not all ecosystems are good. The Mafia is an ecosystem, as are the buyer and sales representative of two different companies who collude to reach their annual targets. Ecosystems require not only sound business plans in Excel spreadsheets but also values, moral behavior, and clarity about the overall purpose.
Drucker Forum 2019
Ecosystems offer themselves as the natural symbol and paradigm of an interconnected and global economy and society. However, we need to become better aware of what we mean by “ecosystems”, how they function, and what the intricacies involved are. Only then will ecosystems be able to fulfill our expectations and succeed in becoming a useful instrument for companies.
This blog entry is a summary of a longer article on LinkedIn accessible here.
About the Author:
Wolfgang Lassl is a management adviser at Pure Management Group, Austria, writer, and educator. His latest books are The Viability of Organizations Vol. 1 – Decoding the “DNA” of Organizations and The Viability of Organizations Vol. 2 – Diagnosing and Governing Organizations (Springer Nature 2019)
This article is one in the Drucker Forum “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems”, taking place on November 21-22, 2019 in Vienna, Austria #GPDF19 #ecosystems
Thank you for reminding us of the possible downsides. Do you have any suggestions how to keep it in the positive, to encourage the positive in ecosystems?