As horizontal ecosystems become the primary means of value creation and capture, organizations will embrace various monetization strategies. Given the proven growth potential of platforms (the foundation of ecosystems) and the increasing collapse of Industry boundaries, the urgency to understand ecosystem dynamics is growing. Ecosystems enable producers and consumers to interact in ways that create shared value. In many cases, stakeholders will play either role at any given time – a phenomenon some have called side switching.
A critical decision is the role of an organization in the context of emerging ecosystems. Does an organization monetize traditional revenues in multiple ecosystems? Do ecosystems represent an opportunity to establish non-traditional revenue streams (e.g. monetizing data)? As the visual above depicts, leaders will emerge to drive these ecosystems – connecting the various stakeholders in ways that create shared value for the community. This in turn transitions the ecosystem driver from a role of primary value creator to one of value orchestrator. In so doing, marginal cost is driven towards zero, as individual nodes within the ecosystem absorb the marginal cost of value creation. This role holds the greatest growth and profit potential – but it is also the most challenging. Does an organization that has traditionally focused inward – with a siloed and firm-centric mode of operation – stand a chance as an ecosystem driver? Is it better to start as a modular producer, incrementally creating value in multiple ecosystems and monetizing that value?
Uncertainty adds a layer of complexity, as we witness the rapid emergence of micro-ecosystems (Smart Home, Smart City, Connected Car, Connected Health, etc.). I view these as micro-ecosystems, as they are an early manifestation of the ultimate ecosystems that replace our vertical structures. These eventual ecosystems will come together to enable our life experiences. What role will your organization play in that enablement? As these ecosystems increasingly focus on purpose and well-being, how will you embrace both a profit and purpose motive? It is incumbent upon us to understand this massive structural change and begin the mental model shifts required to navigate these emerging ecosystems. Two specific steps for leaders to consider are developing relevant Ecosystem Models and associated ecosystem canvases – a variation on traditional business model canvases.
Growth, rapid scale, near zero marginal cost, and a shift to purpose and well-being lie ahead – the race is on.