What’s all that fuss about business ecosystems?

Magnus Hellström, Åbo Akademi University, Sari Mäenpää, Tampere University of Technology & Katri Valkokari, VTT

What is a business ecosystem?

In the outcome economy, the success of your innovation crucially depends on other actors in your business ecosystem and competitive advantage is built on the capabilities a company can access through it. Therefore, it is important to align the interests and the activities in the ecosystem.

The difference between a business network and a business ecosystem is rather vague, and perhaps more a question of different contexts and schools of thought. Typically, an ecosystem is understood as a broader entity, connecting a larger variety of actors and crossing industrial boundaries. In an ecosystem the actors concurrently both collaborate and compete with each other. That increases the dynamics of an ecosystem.

What are the basic elements of an ecosystem?

From a practical point of view, there are some salient aspects of an ecosystem:

  1. There has to be a holistic aspect to it (i.e. the system value is larger than the sum of its parts). This means that by organizing and doing things differently, an ecosystem can create more value based on the same input, be it through producing more innovations, competing with each other, or working more efficiently.
  2. This ecosystem level outcome entails increased interaction and interdependence between the involved actors. That is, firms are ever more dependent on each other to be successful. This means the firms ought to be viewed as a system of interacting parts rather than as individual entities.
  3. Ecosystems often span conventional industrial boundaries. Hence, they provide a cross-sectoral view to value creation rather than the narrower sectoral view that still dominates the economic debate today.
  4. Like in its biological role model, an ecosystem is dynamic and undergoes constant co-evolution and change from intentional and emerging actions of ecosystem actors. A business ecosystem does so to better fit in its environment.
  5. The existence of a unifying platform and even the absence of a clear focal company is a common condition for ecosystems.

The common notion that competition is moving from the firm level to the ecosystem level builds on these insights. In short, by acting or organizing differently, for example by establishing new connections or by deepening the collaboration between certain parts of the ecosystem, or by making greater use of digital technologies, things can be done better than in other competing ecosystems.

How does a business ecosystem operate in practice?

In the DIMECC REBUS program, business and innovation ecosystems have been studied from a number of different perspectives, which all illuminate the above five and some further aspects of business ecosystems. The case of the Baltic Sea logistics system highlights the need for data transparency in ecosystems and how an electronic marketplace constitutes a unifying platform. The case of Tieto examines different strategies for data integration platform and IT company’s roles and positions in a changing ecosystem. Seaside Industry Park case pinpoints the need for an external party supported systematic approach for co-innovation and knowledge integration through increased interaction. The information-sharing platform developed by Wärtsilä is showcased in boosting digitalization in an industry characterized by vertical fragmentation and vulnerable information logistics. Common to all of them is the importance of sharing knowledge and enabling the integration of knowledge from different sources, and organizations, in an effective and efficient way.

The fuss about ecosystems is strongly connected to the outcome economy and we urge more companies to think about which ecosystems they are involved in and how their innovations could benefit from and change that system.

Do you want to learn more?

More detailed stories on these cases and other results regarding the physics, chemistry and biology of business ecosystems can be found from the DIMECC REBUS final publication:

http://hightech.dimecc.com/results/final-report-rebus-towards-relational-business-practices

Welcome to REBUS final seminar 30th May at the MPD2017 days to hear more and participate to discussion!

https://www.dimecc.com/events/revolution-business-highlights-dimecc-rebus/

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