“In today’s rapidly changing business environment, very few organizations or people can make it alone. Hence, collaboration in ecosystems is here to stay”
“Chapter Motivation” Ecosystem Handbook
Collaboration in its various forms – networks, ecosystems and platform – are here to stay. Their value creation potential is huge: According to McKinsey the integrated network economy could represent a global revenue pool of $60 trillion in 2025. If that happens, the share of networked economy of the total economy would increase from about 1-2% today to approximately 30%.
Hence the questions:
- Is the figure big enough to start thinking about what you are going to do about ecosystems?
- Would this be the right time to start defining your ecosystem strategy and to take the first steps towards developing capabilities to create and capture value in the era of ecosystems?
If the answer is yes, please keep reading! We would like you to invite you to the discussion about the role of ecosystem strategy by introducing contextual understanding.
What is Contextual Understanding anyway?
So, if you are part of the C-suite or working in development function, ecosystems should probably be on your agenda. The next question is of course what that agenda should be?
We very much like Tharun Khanna’s introduction to contextual intelligence: The ability to understand the limits of our knowledge and to adapt that knowledge to an environment different from the one in which it was developed. Sounds simple, doesn’t it? Yet, in today’s VUCA (volatile, uncertain, complex, volatile) business environment it is anything but.
That’s why we have discussed and researched the ecosystem topic from various perspectives during the past months. And concluded that the following perspectives can be helpful in developing contextual understanding:
- External context is about understanding changes and disruptions in markets, customer needs, competitive landscape, regulation or resources including technology changes and availability of skilled workforce, to name a few. Understanding the external context and the ecosystems around us help predict the validity of our current assumptions.
- Strategic context typically includes mission, vision and strategy, operationalized through objectives and resource allocation. It should also include scenarios for renewing businesses and the new knowledge the organizations need to turn around their thinking and ways of working faster if something unexpected happens.
- Operational context is about organizational structures and leadership, organizational and individual capabilities optimized and aligned with organizations’ strategy and preparedness for the unknown.
Already the listed three levels of contexts present a challenge identified by Michael Jacobides, who claims that traditional strategy frameworks are of little value in the era of ecosystems.
Bringing ecosystems to the strategic agenda
Collaboration in ecosystems can play an important role by bringing foresight into strategic agenda and broadening our views about the opportunities and risks looming in our organizations’ horizon, especially beyond traditional strategy period of 3 to 5 years.
Even in the best of organizations, sometimes we only see what we want to see. And miss important points collectively. Take COVID-19 for example. It was identified as a risk by scientists years ago, yet the pandemic took us by surprise.
That’s where the ecosystems come to play. Being part of or leading ecosystems and can help viewing the external context more broadly. And support defining areas where your organization wants to play in the next let’s say 10+ years. In short, ecosystems can complement your view of the future and fill in the gaps where traditional strategy and the focus that come with it inherently fail.
While the collaboration between within one company is not always easy, working in the ecosystems can make it even more challenging. As Jacobides says: “Leaders should tackle key questions, including: How can you help other firms create value?” Not a typical question which is discussed in the boardrooms.
The broader view of the future calls for new collaborative capabilities. In the operational context learning to work with others may cater for many benefits such as new competences, compelling business models, better processes and more. For external context collaboration can bring perspectives not foreseen within own organization. Hence, activities that can enrich organization’s own views on choices for strategic context.
What are we proposing then? A framework where ecosystems have an important role to play in broadening your understanding of the external context, defining your strategic context and developing operational context aligned with them. That’s why we wrote the Ecosystem Handbook and continue research and hands-on work in various contexts and ecosystems.
PS: If you want to get started with your ecosystem strategy work, please check our services offering or get in touch with us.