Strategic Ecosystems Management: The New Wave of a Sales Profession

Why read this article?

Just when the industry stabilizes on a profession called Strategic Alliances, suddenly a new kicker! A new profession. A new buzz word, a new jargon. This "advanced level" article explains the next wave of a profession called Strategic Ecosystem Management. The article also explores what it is, why there will be a demand for it and how it is different from Strategic Alliances. The next article(Part 2) will cover how to ride that shift and overcome challenges.

Who benefit from reading this article?

Sales, Presales, Biz Dev, Strategic Alliances, Partnership managers and Management. If you need to know more about Strategic Alliances as a profession, you can read up this article.

1. Ecosystems = New Business Rule of the Digital Age

I have alluded to the graphic below several times in other articles. The rules of the Digital Age are different. Business Ecosystems and Platform ecosystems will be the new wave. If Oracle and Microsoft, two arch enemies can announce their partnership to work together - Strategic Cooperation is albeit the new wave!

2. What is the term "Ecosystem" or "Business Ecosystem" in Strategic Alliances?

Let's get out of buzzwords, dictionary or Wikipedia meanings. The first thing we need to know is - what is a "System"?

Let's go to Biology 101 for a moment, before we get to Business 101. A system has a particular dedicated function. It is resilient and it is outcome driven ( Example- you cut your finger and the circulatory system gets into action to heal it). The system takes the help of multiple organs, tissues, cells etc to make things work. Got it? Now, let's go with Business 101.

Business Ecosystems are exactly that. a) They are "Outcome Driven"; b) They offer a unique "Specialized Value". c) They take the help of "Multiple and Independent" things/parts organized into a system to make the "whole outcome" work; d) Parts of the Ecosystem don't conflict with each other. e) The parts work together in continuity so the outcome can be repeated as many times as needed; f) The parts are connected and if one part starts to slowly fail, the others in the system start taking the load from the failed functions and build resilience.

If thats too much of jargon - here is the thumb rule: Business Ecosystems are about delivering a continuous strategic outcome. Systems are about tactical outcomes and enable a strategic outcome.

Strategic Ecosystems Management is typically a multi-platform, multi-partner, multi-integrator and multi-management that needs to work together to create a strategic outcome continuously. A multi-party or multi-player deal is NOT an ecosystem, although the deal could be a strategic one. Let's go through an example.

Your car's gear box totally looks like an ecosystem. Things work together, they are resilient, repeatable, delivers specific outcomes when you switch gears, the parts are different and they don't compete at all among each other. But - you the driver ( or business ) wants "Business Outcomes" i.e. the driver needs the car to move from Point A to Point B.

Successful Strategic Alliances is the Gear Box. The shift in gears provide an outcome like a system.

On the other hand, Strategic Ecosystems like the picture below is a bare minimum structure of systems to move from Point A to Point B and repeat the outcome continuously:

It is the "Repeatable Business Outcome" that defines Strategic Ecosystem Management against Strategic Alliances. Strategic Alliances are way tactical. There is a reason we need to put the word "management" in Strategic Ecosystems Management - as the outcomes need to be "managed" continuously.

3. Examples of Ecosystems:

1. AWS or Azure or the likes of Oracle/SAP etc partnering with a large retail giant to offer the entire retail buying experience for a customer - is a Strategic Business Ecosystem. Why? There is a business outcome. Let me clarify to make a point. The graphic below explains the Customer Buying Cycle. It's called the Infinity Loop.

CEO's of large cash rich companies understand the power of Ecosystems very, very well and thats why they buy new companies all the time. Although it may appear as a strengthening of a stack or up-sell/ cross-sell strategy - it is perhaps really about controlling ecosystem plays. Below map is of a software application suite and acquisitions Oracle made to conquer the "Buying Cycle" ecosystem. Whatever maybe the marketing message - the real interest is to create a platform suite of products that incrementally empower the "End User" i.e. the Customer Buying Cycle, which really is an outcome driven Ecosystem play. Got it?

2. AWS or Azure, McKinsey or Deloitte, Accenture or Capgemini...all of them know about the power of Ecosystems. Why? Because of the "power of control". If they can control a business outcome, they know they are valuable to, or for a specific C level customer. Let me explain.

The graphic below is complicated (and difficult to see from mobile devices), but worthwhile understanding as it is an entire business function map of a company. The Vertical Columns show stacking of business functions that work together to create business outcomes - typically for CXO or SVP's. The functions use software applications that offer information to create the business outcome. (For example Human Capital Management is a function that uses multiple applications to create outcomes and employee user experience). Do you also see how McKinsey positions themselves against Deloitte based on the outcome of an Ecosystem focused on their sweet spot? Similarly check how Accenture's technology arm positions themselves against Deloitte. Yes, sometimes or perhaps most of the time, these "positioning" lines are blurry just because of the sheer size of these business functions, but in general all these companies are trying to grab an Ecosystem to provide outcomes. Outcome = Control = $.

Let's look at what the Azure's and AWS's are doing? They want to take all /as many apps to the cloud to offer outcomes. The more the apps in the cloud, the bigger is the spin, the bigger is the web of roping in the ecosystem. So, More is the control, Better is the outcome! It works like a feedback loop. Ecosystem plays are REAL. Pundits will say that this is all about "Positioning". Yes, but positioning against what? It is against a certain ECOSYSTEM that offers outcomes to someone. The main question is - is there a demand for Strategic Ecosystems Management professionals?

4. Strategic Ecosystems Management - Is there a demand?

Do customers really want to be sold on the power of Strategic Ecosystem Management? Albeit they do! No one is looking for hammers and nails anymore. They want a hole in the wall. It's all about outcomes, not the tools! Product companies believe their hammer or nail or technique.... errrr... sorry.... their product is the best. But, honestly...businesses really care about outcomes to become more agile.

What can Walmart.com do to compete against Amazon.com? Be more "agile" what else? The "Titanic" needs to be nimble. This is exactly what Netflix did. Took the hassles away by moving to the cloud and focusing on outcomes. Their content + user Experience and the cloud is the ecosystem delivered for $15/month. Similarly Walmart.com offers a 1 day delivery. Yes they do. Agility is the mantra.

What is the biggest challenge for the Big Businesses? It is responding to market changes - but fast, very fast! (That's why Sumo Wrestling as a sport is nearly dead and Boxing thrives). Exactly why Alibaba, a 100% digital model and ecosystem play for the buyer is making tons of $.

5. Strategic Ecosystems - Is the demand for real?

Little over 4-5 years back, several CXO's of SaaS companies declared "Cloud business will wipe out the GSI's services business". In fact, at some point several GSI practices believed that to be true. The path to the cloud was truly "cloudy".

Nothing can be far from the CXO's opinion. Let's look at Accenture's employee count. FY2016-300,000 ; FY2017 - 380,000; FY2018 - 450,000; FY19 - 490,000. Wow! What a paradox from what was predicted. The entire service industry is growing. But why?

Here is why? There's really three truths. What you think, what others think and what it really is.

Delivering outcome based Ecosystems have three synergistic components. People, Process & Technology. Most Product/Software/SaaS companies just focus on the "Technology" piece. They assume GSI's are all about "People offering services" and body shopping. In reality, todays GSI's focus on the real Strategic Ecosystems component that delivers agility and outcomes - i.e. Process. Customers are aware they need to simplify their processes, cut the steps down, streamline it to become agile and measure it effectively to control it better. No benefit in Process = No Tangible gain in Cost Saving or Agility.

GSI's like Accenture is bringing People, Process and Technology together and delivering outcomes on Systems and Business Ecosystems. HR outsourcing, Content outsourcing, Recruitment Process Outsourcing, Treasury and Disbursal outsourcing, Budget Management, Workflow as a service etc etc are just some focus areas that are increasing the services business of GSI's. Now do you see why Accenture's employee count is increasing by 50,000 or 60,000 year on year? It will further increase because of RPA( Robotic Process Automation - like Blue Prism, UiPath, Ant.works, Automation Anywhere etc) which will automate sub processes.

CONCLUSION:

1. Strategic Ecosystems Management is slowly becoming a BIG business.
2. There is demand in the market, total need for outcomes and consequently agility will drive Strategic Ecosystems Management.
3. It will require Strategic Alliance professionals to understand and build multi-layered products, services and licensing models and step up the game to be the Strategic Ecosystem Management professionals. How? Next article!