James Moore defined the term business ecosystem in 1993 as a network of organizations and individuals that co-evolve their capabilities and roles, and align their investments to create additional value and/or improve efficiency. Ecosystem relationships take many forms, such as alliances, intellectual property and data-sharing relationships, co-branding initiatives and other collaborative structures. These relationships are designed to create value that no single participant could achieve by itself. By leading an ecosystem and joining forces with other entities, aligning capabilities, sharing resources, driving collaboration, expanding knowledge and improving scalability, business ecosystems have become a key success factor in responding to disruption, accelerating innovation, responding to changing customer needs, being more agile, discovering new sources of value, and driving growth.
In 1997, James Moore authored The Death of Competition and Professors Adam Brandenburger and Barry Nalebuff wrote Coopetition; each signaled a shift in the paradigm for thinking about business strategy. At the time, the value chain model articulated by Professor Michael Porter—a static and linear relationship from raw materials through production processes to customers—was dominant, but academics were beginning to describe “value networks.” Moore, Brandenburger and Nalebuff took the ideas a step further, seeing business relationships not as zero-sum negotiations between customers and suppliers but as symbiotic relationships between entities that could collaborate as well as compete to accelerate innovation and increase growth.
That way of thinking—business as ecosystem—has become inescapable as global supply chains, online marketplaces for skills as well as goods, and remote work have become the world’s economic infrastructure. It’s an idea whose time has come, given new urgency by the drive to diversify supply chains to increase resiliency to supply shocks, whether motivated by political shifts, fracturing of too-brittle supply chains, or natural disasters. As the COVID-19 pandemic has demonstrated, robust resilience programs play a critical role in a business’s adaptation and survival in a crisis and beyond.
In today’s dynamic, connected, volatile business world, ecosystem thinking is increasingly seen as essential: in a recent EY study, 68% of corporate business leaders said that ecosystems and partnerships were the only way to succeed in the market.
The importance of resilience
In nature, many ecosystems have survived even catastrophic events, from oil spills and forest fires to droughts and flooding. What characteristics set them apart?
In business, some companies have been able to pivot and reconfigure operations at short notice during the recent pandemic, from restaurants that repurposed to sell food and supplies direct to consumers, to companies that redeployed agricultural drones to disinfect public spaces. What characteristics set them apart?