To survive in win-win business ecosystems, companies require new capabilities in developing strategies that incorporate partner success; in changing the nature and rules of relationships with partners; and in redesigning their operations and governance for effective ecosystem participation.
Companies once viewed themselves as isolated entities engaged in win-lose battles with opponents for the same set of customers. The technology-driven evolution of business has re-ordered the universe. Today, companies operate as participants in business ecosystems in which they engage with a broad and diverse set of partners in a range of different types of relationships. As described by Roland Deiser of the Drucker School of Management in California, a company’s business ecosystem includes participants as diverse as customers, suppliers, distributors, technology partners, joint ventures, alliances, government agencies, industry associations, and anyone else who plays a role in creating and delivering the company’s products and services.
Success within a business ecosystem, as opposed to the linear, value chain context of the past, requires different capabilities. Deiser identifies 9 capabilities for business ecosystem leadership grouped into three dimensions:
Strategic Dimension. Strategically, company leaders must abandon their former egocentricity and instead acquire decentration competence—the competence to think strategically at three different levels: their organization’s strategy, capabilities, and culture; the strategy, capabilities, and culture of their ecosystem partners; and the strategy, capabilities, and culture of the ecosystem as a whole. High-level strategic acumen is required to understand how to integrate a company’s individual strategy with the overarching strategy of the ecosystem, which is successful only by combining the contributions of all partners. Effective partner selection is thus another key capability.
Relationship Dimension. Ecosystems require companies to work with and through partners who are different and diverse in every way—different cultures, ownership structures, regulatory environments, customer segments, histories and more. The structure of partnership deals will be as diverse (joint ventures, open innovation platforms, and temporary project collaborations are just a few examples). To manage this diversity of relationships, organizations must be designed for maximum flexibility, agility, and speed, which require: polydexterity management (managers handling and resolving a wide variety of situations and contexts); innovative boundary leverage capabilities for productively leveraging traditional tensions at the boundaries between partners (What can be share? What should be protected?); and resourcefulness, the ability to identify resources outside of the company’s boundaries and also work with partners to develop a shared resource infrastructure. Operational Dimension. Success in ecosystems require operational capabilities that ensure high-performance relationships. Operational excellence is no longer only an internal matter; the company’s systems and mechanisms must also optimize the performance of the ecosystem’s partnership. Governance becomes dual governance incorporating internal and ecosystem governance (the latter dependent on diplomacy replacing formal power). Finally, digital maturity is essential for all participants in the system to make their contributions valuable to the ecosystem partners.
Winning in business is traditionally placed in the context of competition: defeating the opponent in a battle for supremacy. The strategic, relationship and operational capabilities required for competitive success, however, are anathema to success within business ecosystems, which is dependent on win-win collaboration as opposed to win-lose competition.
Shifting an organization from a 20th century super-competitor to a 21st century super-collaborator involves not a change of direction but a total transformation of the organization. Pulled together, the nine strategic, relational, and operational capabilities described above create a practical, detailed framework for achieving this transformation.
How to Succeed in Business Ecosystems: A Capability Framework for Business Ecosystem Leadership. Roland Deiser. CFFO report (2021).
Organizing for Business Ecosystem Leadership: Insights from Expert Conversations and a Global Survey. Roland Deiser. CFFO report (2020).
Further Relevant Resources:
Roland Deiser’s profile at Drucker School of Management
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