In the Ecosystem Economy, What’s Your Strategy?

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In an economy dominated by business ecosystems, how do companies maximize their chances of success?  We’ll reveal the latest world-class answers.

When Nestlé was preparing to go mainstream with Nespresso, its single-serving espresso capsule, it knew that users would need a machine specifically designed to work with the pod.  So, the company cultivated a network of manufacturers. It didn’t tell customers to buy a Jura, a Krups, or a Braun — it just decided which manufacturers could be on the list.  And because the capsule and its interface were patented, other manufacturers could not make Nespresso-compatible machines without permission.

Nespresso was creating an ecosystem: an orchestrated network spanning multiple sectors.  The firms involved work to shared standards, sometimes on a shared platform, to make their products and services compatible. And they create links among themselves that make it difficult for outsiders to break in.

As Professor Michael G, Jacobides explained recently in Harvard Business Review, designed ecosystems like Nespresso’s are increasingly important, owing to the convergence of three big structural changes in our economy. 

  • The first is an unprecedented rollback of regulations protecting firms that once had the exclusive privilege of serving particular customer needs. As those protections fall, organizations in other domains are free to partner to provide more-integrated offerings, as when accountancies team up with law firms. 
  • The second change is a blurring of the separation between products and services because of regulatory changes and digitization. The latter has also led to offerings with more-modular structures whose components can be recombined in new ways, which in turn has encouraged the rise of product-service bundles provided by networks of interdependent suppliers.
  • The third change involves technology that is revolutionizing how firms can serve their customers. Our dependence on mobile devices, along with the internet’s influence on buying patterns, has dramatically expanded the possibilities for linking previously unrelated goods and services—reinforcing the effects of the first two changes.

Given these shifts, it is less and less...

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