Redefined Interdependence in the Age of “Business Ecosystems”

An interesting culmination of ecological analogies to reiterate the nuances of strategic management in the age of technology curation

Business ecosystem is an upcoming buzzword in the management literature and there happens to be every reason for it to gain that prominence in the said parlance. Businesses are a strong network of multiple participants working together in tandem to be able to create, sustain and manage a desired value proposition, ensuing how each node within the ecosystem shares a symbiotic relationship with one another. Business ecosystem as an analogy is derived from the field of biology wherein the concept of ecology helps to create the understanding that today business have moved from adaptive stance to a more ecosystem-based stance. As per a study done by the BCG Henderson Institute reported that the word “ecosystem” appeared 13 times more frequently than it some decades ago. The testimony to this transition is the ever-growing inclination of organisations and corporations to build their self-sustaining ecosystems in an agile and ambidextrous way that not only supports the integrated network, but also aligns it with the externalities of their operating environment. Having said that, this “ecosystem building” is being considered as a full-blown strategic move by new age enterprises today, which redefines the way interdependence works in the age characterised by technology and innovation. It is an emerging trend in the field of management and is being highly valued by researcher, academicians and practitioners.

We are now slowly moving from the age of facts and opinions to the age of information curation and analysis. This allows business to change the lenses of how they view their value propositions. Technology and innovative/creative disruptions have allowed organisations to develop a systemic approach to ecosystem thinking. Following the analogy of the ecology concept, organisations are equally defined by the idea of evolution, growth and regeneration properties. This drawn from the idea of how humans evolve and develop over a period of time, whilst reinforcing the traits of efficient productivity and robustness in response. This is derived from the concpets of determinism and agency following the Darwinian theory 0f survival of the fittest. From a strategic standpoint, it is always a big question of the top management or the decision-making agents to demarcate what is strategic and what is not. This is where the ecosystem of view of the businesses helps to provide a resolution.

Ecosystems allows to clearly understand the actors and their roles and responsibilities for their deliverables. Ecosystem is equally an inherent part of the organisational culture, as it is something which starts at the top of the organization and following the top-down approach gets trickled down to each division and subdivision of the organisation as a translation of the strategic vision captured by the agents of the business ecosystem. Certain widespread example sin this regard could be Amazon, Microsoft, Apple, Uber, etc. as reported by a BCG study.

Business ecosystems allow cross interactions with other business ecosystems following how cross fertilisations work in biology, to sustain and bring synergy of better efficiency and uniqueness as a form of differentiation. From a management point of view, this entails the idea of having strong strategic alliances with and cross industries, which in turn enhances the competitive dynamics amongst firms and industries. Another interesting perspective to encapsulate here would be that of coevolution. Coevolution captures the interaction and reciprocal energy amongst species. In management, we considered the evolution and growth of the business ecosystems during the lifestyle of the organisation, and how organisations adapt to the changing market dynamics.

From a strategy point of view, it is advisable to always view organisations not as a standalone member but a part and an integrated nodal element of the business ecosystem interacting within its boundaries and outside its boundaries. Businesses are always considered to be the binding force of mobilising multiple set of resources at their disposal, from process, to people, to operations, to assets, to capital, to governance protocols, and so on and so forth. Again, to understand how important it is for business to follow a more structure route of building their ecosystems lies in the fact as to how it aids in the sustainable competitive advantage or the firms. With the culture of becoming a learning organisation today, the entities have found an interesting way to also spot the whitespace (an uncharted territory ready to be explored). As per a study by Deloitte, business ecosystems have opened new frontiers capturing novel elements of management such as supply chain value webs, design thinking, real time transformations, power of platforms, and a reimagined calculus of the corporate strategy. The implication, thereof is to on a strong sense of cooperation and collaboration. These models of arrangement are going to be sophisticated and marginally more complicated than before. It is imperative to acknowledge the beauty behind being able to attain advantage distinctively by merging complementary capabilities (ecosystem approach) than being an individual actor steering the opportunities and harnessing innovation and intelligence. Ecosystems for business have proven to be a healthy mechanism for innovation, learning and developing core philosophies for an organisation. Another subset or variant of business ecosystem is that of shared economy, but that happens to be more functional than business ecosystem which is a holistic consolidation or processes and practices. Technology has been avital source for change nowadays, and there has been a wonderful coming together of the physical and digital worlds.

Another interesting way to look at this is how business ecosystems have given the power to firms to solve the wicked problems. Wicked problems are difficult to solve issues that happen due to conflicting and unmanageable requirements of the environment. It nicely integrates speed and rate of change (momentum) and harmonise the process of co-creation (diversity).

Thus, in a nutshell it would be safe to say that business ecosystems are the new emerging aspect, which is not a strategic in nature but shall soon be the order of the day for enterprises, traditional and contemporary, both irrespective of the liability of age and size. But the question would still remain, how changeable are organisation in the breadth and width whilst sustaining their gravity of core competency?

Sonika Jha
Sonika Jha
Research Scholar (Strategy) FORE School of Management, New Delhi, India