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Ecosystems and platforms: The evolution of intelligent companies
Posted by Breggie Hoffman on 18 August 2022, 18:35 SAST
A lot about the more theoretical part behind the ecosystem thinking and its resulting challenges are shared in this article. Its connection and differentiation from platform use was explored in a conversation between author Matthias Walker and Prof Julian Kawohl.
Platforms and ecosystems are different concepts but are tightly linked
Following Julian’s definition, a platform is a business model facilitating transactions between different stakeholders. An ecosystem, however, is a broader concept, embracing many interconnected partners who wish to create shared value, either for business or human customers. On platforms, the owner is usually a single company orchestrating the transactions between the other players (providers, partners, customers…). On the other hand, the ecosystem offers more of an equal playground, where all players can have different roles (providers and customers, competitors…) and own different segments of the market (ie: a bank and an airline company) but they all share the same goal: create innovation, growth and value.
The ecosystem’s co-creators build a bigger value proposition by working together.
So both concepts of platforms and ecosystems are different but linked: “In order to create value, ecosystems need platforms to create traction.”
Companies are evolving towards ecosystems
Research still misses some lighthouse case studies on successful B2B ecosystems and how companies benefit from them. Companies are still reluctant to invest in ecosystems strategies because it takes time, risk and strong support from the leader and the board. However, McKinsey estimates that ecosystems will account for 30% of global revenues by 2025 and 7 of the 10 largest companies by market capitalization are ecosystem players — Alibaba, Alphabet, Amazon, Apple, Facebook, Microsoft, and Tencent.
Regulations and competition are drivers for companies to evolve towards ecosystems, as they level up entry barriers for new companies to access markets. This means growing incumbent companies or new startups need to cooperate with existing players. For instance if a big software company wants to address the healthcare market with a specialised software, they need industry knowledge from existing players.
They could buy it, or cooperate and use the ecosystem business model to set up the rules for sharing revenues, sharing data, …
Executives’ mindset can make a huge difference
Executives need to think differently. For instance, opening a customers database to your competitors is counter-intuitive. However, sharing your data with “partners” can allow your company to grow.
The real risk is to wait, because later, it will be too late. The world and technology move so fast that it becomes more and more difficult for CEOs to know when is the right moment to take a drastic turn in the company’s strategy.
Do you want to learn more about the challenges and trends of ecosystem thinking? Check out the whole article or listen to the Platforms 4 Future podcast episode via your favorite streaming platform.
This article was was written by Matthias Walter on Medium.com
https://digitalahead.medium.com/the-challenges-and-trends-of-the-ecosystem-thinking-1a668eda253a
Julian Kawohl, is a Professor for Strategic Management at the University of Applied Sciences in Berlin. He is also the founder of Ecosystemizer, a startup which helps managers with its framework and tools intuitively understand ecosystems, set up ecosystem strategies and position themselves in such ecosystems.
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