6 Steps to Kickstarting Your Ecosystem (Part 1)

6 Steps to Kickstarting Your Ecosystem (Part 1)

Published 25th February 2021
Melody Tay

HQ Asia Editor

Published 25th February 2021

Have you heard of Alibaba or Amazon? The answer is likely a raised eyebrow, because who hasn’t heard of them?  Their secret to success? Ecosystems.

Co-authors, Professors Arnoud De Meyer and Peter Williamson write in their book, Ecosystem Edge, that a successful organisational strategy for the future will depend on how well you proactively lead your ecosystem. With the world becoming more complex and uncertain, ecosystems may well be the path to continued innovation and creating new value.

In Part 1 of this article, we will explain why an ecosystem strategy matters to you and your organisation and give you 6 steps for kickstarting your very own ecosystem.

What is an Ecosystem Strategy, and Why Does it Matter?

An ecosystem strategy is when a business proactively catalyses, shapes and leads an ecosystem of partners in ways that will help your business cope with uncertainty, disruption and rapid technological change[1].

There are three reasons[2] why ecosystem strategies matter to the success of your business. One, ecosystem strategies promote joint learning. Successful ecosystems bring together partners with diverse capabilities and thus generate more learning across the network quicker than any single organisation.

Two, ecosystem strategies allow companies to grow and diversifyThey also allow companies the opportunity to lead and influence beyond one’s own company. An ecosystem leader helps to align partners towards shared goals, and by actively doing so, it can also ensure long-term, sustainable returns.

Three, ecosystem strategies unlock a great degree of flexibility. Unlike traditional joint ventures where partners and their roles tend to be set in stone, ecosystems can continually evolve and restructure in response to changing circumstances. Partners can adjust in concert with one another to create new customer value and revenue streams to adapt to a changing environment and in crises.

Plan for Ecosystem Success: Three Questions to Think About

When starting to plan an ecosystem strategy, there are three main questions to consider:

First, start with what you have. It is likely that you are already in some kind of ecosystem and are already working with some partners. Take some time to think about this ecosystem: Does the ecosystem deliver more value to the end user than any company can single-handedly provide [3]? Do you and your partners have a shared purpose? If it does, great! You’ve already got a clear purpose and value proposition for your ecosystem. If it doesn’t, start thinking about what new value you and your partners could potentially bring to the customer – does it save customers time? Can it create a more personalised and integrated experience for the customer?

Make sure you are not wasting your effort building an ecosystem that doesn’t offer real value.

Next, think about your organisation’s strengths and what it can offer to the ecosystem. What is your company’s keystone? A keystone is an element or activity in the ecosystem that you can own and control, on which the ecosystem’s ability to create value for customers depends. For example, owning the e-platform that brings businesses to customers, like Lazada, Shopee or Alibaba; or a specific software application; or a highly-skilled and niche talent pool.

Lastly, have you set up the right "tollgates" in the right places through which you can collect a share of the customer value that the ecosystem creates? Tollgates usually come in the form of account registration or gated content that helps you collect data that would benefit your business and that of your partners.

6 Steps to Kickstarting Your Ecosystem

6 Steps to Kickstarting Your Ecosystem

Now that you have identified the new value your ecosystem can bring, it’s time to bring in your partners. It won’t be easy in the beginning, when the ecosystem’s success is yet to be seen and the benefits of joining are uncertain; however, it is very possible. Here are 6 steps to kickstarting that journey [4]:

1. Demonstrate that you really believe in the ecosystem

It is not enough to simply announce you want to build an ecosystem. You need to demonstrate a credible commitment to working alongside partners and to co-creating the ecosystem with them. Show potential partners how you will share your knowledge and capabilities and build the tools that they will need to achieve success as an ecosystem. If you are a large company, make sure they know you are not trying to command and control them. Let them know that you want to grow with them and would allow the ecosystem to evolve in ways beyond your control if it creates more value.

2. Co-opt foundation customers

To ensure the success of your new ecosystem, you will need initial customers. There are two ways to go about doing this: hunting for a foundation customer or creating an attractive “honey-pot” that will bring in a critical mass of customers.

A foundation customer is one that has a need that existing solutions cannot satisfy and is willing to invest resources to co-develop innovative solutions. To find one, you will need to do your research, reach out beyond your network, and be persistent in showing that you want to work with the customer to create a solution that works for them. It may take a while, but finding a good foundation customer can make or break your ecosystem.

The other way is to create an irresistible offer to attract a critical mass of customers to get the ecosystem going. Whether through offers, promotions or free knowledge that was not easily accessible before,  your “honey-pot” needs to bring in a large group of customers quickly.

3. Develop and share a roadmap for the ecosystem

Now, make sure you have an initial roadmap that shows your potential partners how they can fit into, contribute to and benefit from the ecosystem. Lay out how you think the ecosystem will develop going forward and encourage your potential partners to contribute to the shared vision. Don’t be too prescriptive with the roadmap, however, because the ecosystem will keep changing and developing; but ensure that there is a framework and clear signposts of growth.

4. Communicate the value of joining

First, you need to know what set of capabilities will be necessary to get the ecosystem started. Listening to foundation customers is a great way to find this out. Then, search for the right partners that can fill those gaps. When you approach each potential partner, use every edge you have to attract them – your branding, capabilities, knowledge, customer base – and show them a clear value proposition that is customised to their needs.

5. Shrink the entry barriers

Sometimes, there are organisations that want to join, but because the barriers to entry are too high, they hesitate. Thus, make sure that you are actively working on lowering these barriers to entry. These could include waiving joining fees, building standardised interfaces that make it easier to communicate or even going to the geographical region where your potential partners are.

6. Look for partners that bring their own ecosystems

Even with a clear vision, demonstrated commitment and low barriers to entry, it would still be challenging to bring in all the partners needed for your ecosystem. One way to tackle this challenge is bring in partners with their own sub-ecosystems that can help your ecosystem get off the ground and running!

To succeed in an age of disruption requires access to capabilities and experience outside your organisation. Whether you are looking for more customised solutions to meet customer demands, seeking to scale quickly or pushing for more innovative ideas, an ecosystem strategy could be your answer.

In Part 2 of this series, we will look at what mindset and skills a CEO will need to successfully lead an ecosystem.

This article is adapted from ‘Ecosystem Edge’ by Arnoud De Meyer & Peter J. Williamson. Some of these ideas were sharpened in discussion with Singapore Business Leaders Programme participants from 2011 – 2017. To have a deeper understanding of ecosystem strategies and how to implement them, watch our Trailblazer series here

[1] De Meyer, A., & Williamson, P. J. (2020). Addressing the Disruption Imperative. In Ecosystem Edge: Sustaining Competitiveness in the Face of Disruption (pp. 4). Stanford, CA: Stanford Business Books, an imprint of Stanford University Press.

[2] Ibid, (2020). The Roots of Ecosystem Advantage. (pp. 31-33).

[3] Ibid, (2020). Monetization. (pp. 136-139).

[4] Ibid, (2020). Kick-starting A Virtuous Spiral. (pp. 59-76).

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