Our structures and institutions are increasingly challenged by rapid innovation in science and technology. As Klaus Schwab stated in his book Shaping the Fourth Industrial Revolution, we face the task of understanding and governing 21st-century technologies with a 20th-century mindset and 19th-century institutions. One such institution is our vertically-oriented industry structure. We are in the early stages of An Ecosystem Evolution, where the boundaries between industries are completely blurred. The creation and capture of value is increasingly horizontal in nature, ultimately giving Rise to a Finite Set of Ecosystems.
As this shift occurs, our strategies are iterative in nature and guided by a constantly evolving view of emerging ecosystems. At the heart of this work lies Ecosystem Models. These models provide a range of possibilities inherent in emerging ecosystems, and identify three critical facets:
STAKEHOLDERS: value creation and capture are increasingly a multi-stakeholder phenomenon. Identifying existing and potential stakeholders that contribute to and/or benefit from participation in the ecosystem is a critical first step. These stakeholder’s cross industries, provide an ability to co-evolve capabilities, and in many cases represent coopetition. The multi-stakeholder dynamic is a core tenet of the network orchestration business model, driving significantly increased business performance. This occurs primarily because the value creation performed by the ecosystem reduces the company’s marginal cost.
VALUE PROPOSITIONS: that which attracts and retains ecosystem participants directly and indirectly. Value propositions are viewed across three categories: core, extended, and emerging. The core represents the value creation and capture of an early stage ecosystem – or an existing value chain that is evolving towards a network orchestration model. The extended level of the ecosystem introduces an opportunity set that delivers additional value and brings more stakeholders into the ecosystem. The emerging level represents the future of the ecosystem. Collectively, the model drives our strategic direction.
VALUE EXCHANGES: this element of the model depicts both the how and the type of value exchanged between participants. Value takes the form of good & services, money & credits, information, or intangible value.
These models will never be static, as the uncertainty of our environment will surely deliver constant shifts. But seeing a view into a range of possibilities, embracing a culture of incessant rehearsing, and building resilience through an adaptive core, positions us to shift as the shifts occur. Ecosystem Thinking must replace our traditional firm-centric views. As we look across these three levels, offering, business model, relationship, divestiture, and acquisition strategies become clearer in the context of where an ecosystem is heading.
An example can be found in the emerging Mobility Ecosystem. Here is a rough example of a Mobility ecosystem model:
As traditional players embrace platform business models, current aspects of mobility will evolve towards ecosystems. These ecosystems are a microcosm of the ultimate Mobility ecosystem that emerges through consolidation. An example of an early travel-related ecosystem is depicted in the diagram below. This view represents a potential path for airlines: the ecosystem driver for a segment of this emerging broad ecosystem. As it forms, some traditional airline revenues will disappear – but a broad opportunity exists in a multi-trillion dollar ecosystem for replacement revenue and growth.