Why Every Company Has to Become an Ecosystem Player

First of all - A MERRY CHRISTMAS TO ALL MY LINKED-IN READERS & TO THEIR FAMILIES. MAY THIS CHRISTMAS DAY FILL YOUR HEART WITH LIGHT AND GUIDE YOU TO A PROSPEROUS 2025.

I have been asked a number of times in classroom at IIFT and in other B-school - "Sir What is an ecosystem?" This question arises due to an unfortunate circumstance - the ecosystem concept COMPLETELY GOES MISSING FROM CURRENT STRATEGY TEXT-BOOKS and even other strategy related subjects like Branding strategy, Operations strategy, Strategic Leadership, Strategic Finance. The textbooks still commence with obsolete 20th century concepts - where companies were SOLO RANGERS

History: -

Ecosystems have existed since the time of Roman Empire and Egyptian, Asyrian and Sumerian empire and later the Turkish empire and British empire. If the former USSR can be viewed as an empire - a giant ecosystem existed, then. Here an ecosystem developed within the countries under the empire and trading of goods. Of course! The empire exploited the constituents and flourished - but a system of trade existed within the empire. Today the former empires have been replaced by the trading blocs like EU, ASEAN, NAFTA and WTO as overseer of global trade. So, this is an ecosystem at a MACRO ECONOMIC LEVEL.

Definition: -

An ecosystem with respect to today's PLATFORM BASED business strategy can be described as a system where: - more than ONE PREVIOUSLY DISPARATE AND SINGLE INDUSTRY & IT'S PLAYERS ARE JOINING HANDS TO BUILD A GIANT PRODUCT AND SERVICE PLATFORM.

Example: -

The E-Commerce industry is the most developed modern digital ecosystem. Spurred by the Covid-19 crisis three previously disparate industry players - a) the mom & pop retailers b) the large physical supermarkets of the pre-covid era c) IT industry players - joined hands to build a giant E-Commerce ecosystem. Millions of previous Mom & Pop small retailers do business in a dual mode - a) catering to local consumers within 5 km radius physically as they did before b) they have become part of the supply chain for players like ZEPTO/BLINKIT. Many large super- markets of the pre-covid era joined hands to form one big player - and become an online retailer - powered by AI algorithms. The evolution of AMAZON as the world's largest e-commerce giant can be traced to the merging of three previous disparate industries. Even smaller and domestic players in India - who have switched to online retailing are evolving in a similar fashion. Those who did not join this evolution FELL BY THE WAY like Big Bazaar.

Distinction between an ecosystem and a value chain: -

Another frequent question I face in strategy classes! An ecosystem is a HORIZONTAL INTEGRATION OF INDUSTRY PLAYERS TO CREATE NEW CUSTOMER VALUE PROPOSITION.

WHEREAS A VALUE CHAIN IS A VERTICAL OPERATING MODEL FROM UPSTREAM TO DOWN STREAM WITHIN AN ECOSYSTEM.

ECOSYSTEM DESIGNS THE CVP - OR THE VALUE WHEREAS VALUE CHAIN CAPTURES THE VALUE. In e-commerce industry when the value chain matured - 10-minute deliveries commenced and companies like ZEPTO emerged. But this took 4 years since covid crisis for the value chain to mature starting from the online deliveries that commenced at the pandemic outbreak in late 2019 on a mass scale and flocking of consumers in super-markets stopped.

Why Every Company Needs to Become an Eco System Player Today

In this age of mass-personalization It's impossible to deliver value as a standalone player and it's beyond A SINGLE COMPANY'S CORE COMPETENCIES. A digital platform-based ecosystem enables COMBINING AND A RECOMBINATION OF OLDER COMPETENCIES TO DELIVER NEW VALUE.

Here is a glimpse of what is happening -

a) In automobile industry - IT, Electric Motor makers, EV Battery makers and the large legacy OEMS - FOUR HISTORICALLY DISPARATE INDUSTRIES are joining / have already joined to create a new ecosystem

b) In Pharma industry - a) Genomics b) Bulk Drugs c) Bio-Tech - Three historically disparate industries have joined hands

c) In Banking - a) IT b) traditional banks c) stock market/forex market/wealth management players have joined hands to create the FINTECH ECOSYSTEM - once again three historically disparate industries!!

THE FUTURE OF ENERGY GENERATION

Here the three players are in three stages of evolution: - a) The Li-Ion battery makers are already in the market and jostling with each other to get a share of the OEM EV pie - THIS IS ALREADY A RED OCEAN AND MANY BATTERY-MAKERS WILL FIZZLE OUT IF THEY CONTINUE TO PLAY IT SOLO b) The Solar Energy - Battery Energy Storage System has just began to evolve and is known as the Solar-BESS industry now and some big names like Tata Power Solar and Reliance are already in the game - more to enter!! c) The Green EV charging stations - as charging the EV using thermal power is never a sustainable solution - are yet to surface

So! we have an interesting scenario here in the energy sector! One solo player is busy playing the soccer of competition! Lionel Messi Versus Christiano Ronaldo! The second solo player is a baby who is exploring the football field. The third - yet to come into existence! The third player - IS THE FINAL ECOSYSTEM when a) Battery Makers b) Solar Energy generators finally join hands on a big scale to build the VALUE CHAIN OF THE SOLAR-BESS sector and the outcome of the value chain - will be the Green EV charging stations

Conclusion

The days of solo players are or were practically over before the pandemic outbreak. Unfortunately, majority of the strategy textbooks still portray a company as a solo ranger and emphasize outdated strategy frameworks suited to the industrial era.

PLATFORM BASED AND ECOSYSTEM BASED STRATEGIC THINKING IS YET TO BECOME A BEST PRACTICE AND PERVADE MBA CLASSROOMS.