Thanks to rapidly evolving technology, it has never been easier for organisations to cross traditional industry and geographic boundaries and capture new sources of revenue. Digital business ecosystems, networks of organisations that provide integrated services to consumers in a way they could not have done on their own, provide a win-win scenario for customer and business alike.
These ecosystems leverage digital technologies and customer data to offer personalised and frictionless services, and are popping up in almost every industry and disrupting existing landscapes. In turn, customers are embracing the integrated services these ecosystem players are offering, and increasingly expecting their interactions with traditional companies to be just as personalised and frictionless.
As the Fourth Industrial Revolution exponentially increases technological innovation, customer expectations and changes the nature of scale and capability, going it alone is no longer an option for business. It’s time for the individual company to think bigger — and make some new friends.
There are many examples of companies building and participating in expanding business ecosystems. Gaming company Tencent branched into the Chinese banking industry in 2014, launching WeBank, which combines new technology with innovative implementation, including using facial recognition to grant loans.1
Indonesia-based Gojek is another example. Starting off as a call centre connecting Indonesian consumers to courier and two-wheeled ride-hailing services, they expanded into e-wallet solutions, food delivery, car maintenance, video streaming, personal care, home cleaning, ticket selling and more.2 To do this, Gojek took steps to both acquire ventures and partner with other organisations. For instance, Google Maps enables the Gojek GPS services, while Singaporean DBS bank offers digital payment options to Gojek’s ride-hailing users.3*
Considering the disruption ecosystems are generating, and the seemingly unlimited business value they are unlocking, ecosystem engagement should be on every organisation’s agenda. But where do you start? Here are our top three recommendations.
Ecosystems need to be embedded into organisational strategy for the greatest chance at success. It should be an essential part of how you think about the future of your business and how you plan transformation programs. Employees in each layer of the organisation should be encouraged to think about partnerships, to be empowered to share ideas with higher management, and to put structures in place to transform those ideas into living partnerships.
Ping An is an example of an organisation that has built on its ecosystem strategy. Starting as an insurance business, the Chinese company has created five ecosystems: in financial services, healthcare, auto services, real estate services and smart city services. They even invest 1 percent of their revenue into new technologies (AI, blockchain and cloud computing) to further build up their focus areas.4
While you work on embedding ecosystem engagement in your corporate strategy, start brainstorming potential opportunities. Begin from the end user’s perspective and ask yourself key questions, such as:
Whether your purpose is to make the lives of your current customers easier, to tap into new customers or to anticipate new competition, there are three models that you can consider when it comes to the kind of ecosystem you are interested in.
Firstly, there is a takeover model where organisations buy another player to broaden their scope of activities. Swedish furniture business Ikea, for example, acquired TaskRabbit, an online platform that links users with trusted freelancers, to offer an easy furniture assembly service to shoppers.10 When buying furniture, Ikea customers can now choose a date and time for a TaskRabbit member to assemble their new furniture.
Next, there is the collaboration model, where companies join forces with partners to launch new service offerings. Ikea is collaborating with both UNYQ, an industry-leader in personalised prosthetic devices and Area Academy, an educational eSport company, to explore how personalisation and home furnishing can change gaming and life around it – addressing appearance, ergonomics and mobility.11
Finally, there is the investment model, in which an organisation invests in smaller players. This model is popular in the financial services industry in Australia, where organisations are buying a stake in smaller players in anticipation of future needs. Westpac bank, for example, is investing in startups through their Reinventure fund, with the ultimate goal to extend the scope of its current activities.12
As companies face an ever-transforming business landscape, the ability to compete is becoming harder. Even companies that are digitally mature and able to get to market quickly face shifting economies of scale, ever increasing sophistication of technology and changing customer expectations. Being the ‘one and only’ to deliver a unique customer experience is becoming less and less realistic.
Instead, companies must now think about more than just themselves. Building out, investing in or joining greater ecosystems allows you to capitalise on the offerings that other organisations provide, and this combination of products and services — that could never be achieved by one company alone — becomes a welcome differentiator.
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