8 Dimensions of Business Ecosystems - GARTNER

CIOs need to think about strategy, relationships and value exchange when considering digital ecosystems.

Your dynamic business ecosystems may sometimes create partners from competitors, at least for a little while. When BMW and Toyota need to develop key technologies, such as batteries, they may join together and then later go on to compete in the marketplace. Apple, Fitbit and Garmin created an ecosystem focused on fitness and apps. In a less-competitive ecosystem, groups such as a government, charity and a community group might collaborate on health or public policy because each entity has a shared interest and goal.

“Digital business drives dramatic changes in organizations’ business ecosystems, making them larger, more complex and essential to strategy,” says Betsy Burton, vice president and distinguished analyst. “CIOs and IT leaders must shift and expand their mindset and approach to focus on their organization’s strategy and execution within their business ecosystems from an outside-in perspective.”

Ecosystems enable organizations to respond and exist in an increasingly digital world, assuming that CIOs and senior IT leaders consider the eight dimensions when making strategic decisions about how to participate and when to change tactics.

Dimension 1: Ecosystem Strategy

Bottom line: Every organization exists in multiple business ecosystems. These business ecosystems are dynamic networks of entities interacting with each other to create and exchange sustainable value for participants. The challenge is deciding how your organization will survive and thrive in its ecosystem.

Know that ecosystems can emerge organically or deliberately. Organic business ecosystems are created based on evolving industry, government and market trends. Deliberate business ecosystems might emerge in a more planned manner — for example, Amazon’s ecosystem of sellers, buyers, advertisers and collaborators.

Decide what role your organization will play in these ecosystems: Leader, disruptor, niche player, orchestrator, or something else.

Dimension 2: Degree of Openness

The degree of openness within ecosystems is driven by strategies, common goals and shared interest. An ecosystem may be public, private or a hybrid. Many organizations actually participate in a hybrid of public and private ecosystems.

The openness of an ecosystem has two implications. The degree of change is dependent upon the possibility of new entrants and disruption to relationships and value. It will also define the nature of the relationships in the ecosystems and how they are formed and maintained. It will define the nature of collaboration and competitions.
Dimension 3: Engagement of Diverse Participants

With increased connectivity, organizations will need to figure out how to integrate things like smart advisors and artificial intelligence into their ecosystems.

CIOs need to understand that the diversity of an ecosystem and the roles that people, businesses and things play will change and evolve depending on the situation. For example, the primary person in an ecosystem may be a business customer, and then, suddenly, a smart advisor will take over the roll. This constant situational change will determine how solutions are defined and supported.

Dimension 4: Types of “Relationships”

With 7 billion people and more than 30 billion devices connected to the internet by 2020, interconnection will create an ecosystem challenge. Digital platforms — wherein participants with different goals and objectives are connected on a commission basis — are how most companies are mediating relationships in ecosystems. The platform provides the core integration, application and management services for participants. For example, Outdoorsy connects camper owners with those looking to rent campers.

Dimension 5: Form of Value Exchange

In addition to monetary-based value exchange, ecosystems may dynamically leverage information, reputation, services, and other non-monetary forms of value. For example, Boeing collaborated with 50 vendors to create the 777 aircraft. Ecosystems enable companies to exchange products and services for information or analytics. It’s important to understand the changing definition of “value” that ecosystems create.

Dimension 6: Diversity of “Industries”

Ecosystem expansion can result in unexpected partnerships for organizations. Partners could include organizations within the primary industry, adjacent industries or, most unexpectedly, far-neighbor industries outside of the business’s industry (i.e., travel and healthcare).

Dimension 7: Complexity of Multiple Ecosystems

Large organizations will most likely be involved in multiple ecosystems. The key is to understand how these ecosystems interact, identify potential fractures and overlaps, and acknowledge constraints and implications. Keep in mind that some overlapping ecosystems will create a new ecosystem, while other overlaps will highlight redundancy.

Dimension 8: Technologies

Discussions about ecosystems can be overwhelming, but CIOs should keep in mind that they are responsible for the technology that will enable the business ecosystem strategy now and in the future. Leverage a digital business platform (i.e., open APIs, analytics, security capabilities, etc.) Success will require a strategic integration of technology, information and business processes.

Organizations that do not work toward understanding their business ecosystems risk falling into a participatory role only, enabling other competitors or partners to take the leadership role and thus define the rules for engagement in that ecosystem.

Specifically, CIOs must:

• Proactively reach out to collaborate with business counterparts on how and why to integrate ecosystems to improve the overall corporate strategy.
• Ensure any customer-, partner-, employee- or supplier-focused applications or solutions being developed today are at least considering these future business ecosystems
• Make sure to set aside development budget every year for the next five years for the most critical customer-, partner-, employee- or supplier-focused applications, solutions and supporting infrastructure to enable change to reflect evolving ecosystem strategies.

 SOURCE: https://www.gartner.com/smarterwithgartner/8-dimensions-of-business-ecosystems/

Three simple steps to becoming a successful ecosystem player

• Ecosystems of connected organisations are emerging in a variety of industries and geographies to unlock new business value.
• To stay relevant for tomorrow's business reality, organisations should embed this kind of engagement into their strategy.
• Opportunities for new business ecosystems can be found in customer and market pain points.

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.

Where
to start?

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.

1. Build ecosystems
into your strategy

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

2. Find a
sweet spot

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:

• What customer pain points could be solved? In Singapore, the United Overseas Bank uncovered a problem in the car buying process: the amount of paperwork and time between salesperson and customer for a car loan application. Together with seven dealerships and a C2C marketplace, they launched a digital financing solution for car buyers.5 Once you've identified a problem area, consider how your customer data could be leveraged to offer personalised experiences and alleviate that issue. Mercedes-Benz, for example, is connecting all its new cars with Amazon Echo or Google Home, and once a user has driven away from home, the device performs a 'goodbye routine' to warn users of potential hazards (for example, if the iron was left on) or to provide convenience features (such as automatically adjusting the central heating).6
• What market pain points could be addressed? When looking into joining or creating new ecosystems, it is important to look over the walls of your existing customer base. To assist the 3.6 million Americans who miss doctor appointments each year due to lack of reliable transportation, Uber introduced Uber Health, a collaboration with healthcare organisations designed to provide reliable, comfortable transportation for patients and allowing healthcare professionals to schedule rides for patients.7
• Could the risk of digital transformation be mitigated? To anticipate potential change in demand for cars due to the popularity of ride sharing, Volkswagen engaged in a joint venture with ride-sharing app DiDi. The two companies are working together on a car-sharing service featuring environmentally friendly vehicles.8 DiDi is also collaborating with 31 other organisations in the DiDi Auto Alliance, which aims to transform the main business model in the Chinese automotive industry and shape the future of smart mobility.9

3. Select the right
business ecosystem model

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

Strength
in numbers

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

Source: https://www.digitalpulse.pwc.com.au/business-ecosystems-competition/?utm_campaign=5824bf6073a6a33a4005bc60&utm_content=5dfb1bdb3c706c0001026fa4&utm_medium=smarpshare&utm_source=linkedin

Fanky Christian
IT Infrastructure Specialist
SmartCity, IoT and Robotic

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