Planning in the Business Ecosystem
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The document discusses the importance of understanding the corporate ecosystem in business strategy, highlighting how companies are interdependent and must plan for the future based on their relationships within that ecosystem. It emphasizes conducting a vulnerability assessment to identify potential disruptions and mapping relationships to strengthen ties with critical organizations. Companies like Edgetek exemplify how navigating these complex relationships can facilitate success and sustainability in a rapidly changing environment.
Planning in the Business Ecosystem
- 1. Planning Your Business Strategy in the Corporate Ecosystem Maya Townsend, Partnering Resources, CIO What happens when you discover that your biggest client is the innovation and loyalty that come from engaging people cannibalizing your product? This happened to one along the value chain. international technology company. It threw the leadership into an intense conversation about strategy. They emerged The flip side, of course, is that organizations engaging in from the discussion with new resolve: to plan for the future deep collaboration tie their fates to the success of the based not just on the company, but on the ecosystem in ecosystem, not just their own success. For example, if which it operates. Microsoft were to go under, there would be a lot of companies in trouble: systems integrators, value-added The concept of the corporate ecosystem has appeared in resellers, software trainers, and so on. technology journals for years. Simply put, it's the idea that today's companies are embedded in multiple, complex Mapping Your Ecosystem relationships that make them interdependent on each other for success. But it's only recently that corporate leaders are realizing that an ecosystem is more than a concept. The If your company's fate is intimately tied to that of other ecosystem has intense implications for how companies organizations, some of which are your competitors, you're plan for the future, and they ignore those implications at going to think differently about their success. To bring this their own risk. thinking into your next planning effort in a productive way, start with a simple vulnerability assessment. The Complex New World of the Ecosystem The purpose of the vulnerability assessment is to identify the companies, industries, organizations, and issues upon Traditionally, executives worried about competition from which your organization depends in order to be successful. rival firms. It was a straightforward world: the firm controlled Brainstorm the events that could disrupt your its resources, advantage derived from a company's assets organization's operations, impede its ability to deliver or and organizations made money based on their ability to undermine its profitability. deliver value within their supply chains. Let's walk through the process with the hypothetical Today's organizations look very different. Rather than EdgeTek Corporation. EdgeTek produces ancillary stand-alone players battling for market share, companies hardware, most important, the cords that connect MP3 form networks and alliances and collectively deliver value to players to car stereo systems. EdgeTek's ecosystem-the their customers. Consider these recent aggregations: organizations with which it has interdependent relationships-includes its assembly plants in China, car • Novell joined forces with IBM on an ambitious open- manufacturers, MP3 manufacturers and even local source project while collaborating with IBM rival universities that provide a source for new talent. Microsoft to boost Windows-Linux interoperability. • Salesforce opened its Force.com developer site, Here's the initial list of potentially disruptive events for building interdependencies with organizations as EdgeTek: varied as CRMfusion, with six employees, and Electronic Arts, which earned $3.1 billion in 2007. • An increase in defects at the Chinese assembly plant • Keane provides application outsourcing services to forces recalls or increases production costs Miller Brewing Company, creating a dual-sourced IT workforce with staff from both Keane and Miller. • Shipping disruptions delay delivery to distributors • MP3 players lose popularity and market share, reducing demand for company's cash cow By creating deep alliances, each of these organizations • Changes to MP3 technology force product realizes value beyond that which it could deliver reengineering independently. In fact, Siebel Systems' founder, Tom Siebel, attributed his company's explosive growth between 1997 • Direct partnerships between MP3 player and 2000 to its web of relationships. A web of consultants, manufacturers and carmakers diminish the need for technologists, system implementers, and suppliers EdgeTek's products collaborate with Siebel to bring their products to market. • Unionization of Chinese workers causes work Not only does Siebel incur lower staff costs, it also gains stoppages and production shortfalls
- 2. • Product tampering brings negative publicity and While mapping, look at not just at organizations, but also imposes recalls individuals. Who specifically can be influential? This is • Recession decreases market for luxury items where a network analysis can come in handy by identifying the strength of relationships between your • Decrease in qualified labor inhibits ability to achieve company and those critical to the organization's future. sales quotas • Loss of leadership talent inhibits company's strategic growth Perhaps the organization has good connections with universities but only weak ties to local communities. Or perhaps the company's network shows strong connections With the list of disruptive events in hand, the next step for to local organizations but weak links with government EdgeTek is to determine the likelihood any of these events regulatory and support agencies. With this information, a will occur. MIT professor Yossi Sheffi and MIT Center for company can put plans in place to develop the relationships Transportation and Logistics director James B. Rice Jr. that will help sustain the company in its ecosystem. have recommended creating a map with two axes: probability of risk and consequences of risk. We've Mapped Ecosystem Risks: Now What? Here's what that map might look like for EdgeTek: What does understanding your corporate ecosystem mean practically for corporate leaders? You must look beyond your own company. You can't live in a bubble. You need to be aware of what's happening in the outside world, particularly in ecosystem organizations. Furthermore, you need to become competent at hypothetical thinking. For example, what if that potentially disruptive event occurs? What would the corporation need in order to respond? You must pay more attention to relationships within your ecosystem. Get in front of the people with the power to significantly impact your organization's health and sustainability. Not only do you need visibility, you also need strong relationships, not just with stated partners, but also with the entities that have the power to significantly disrupt or sustain your business. If that means taking more Risk Map for "EdgeTek Corporation" time with headhunters, supply chain partners or union groups, so be it. It may also mean taking the time to Looking at the map, we see a high probability for five discuss the state of the industry with ecosystem partners, events. Of those, four have severe consequences for the cosponsor conferences, hammer out mutually beneficial organization. That's where EdgeTek must focus its attention. deals, or find ways to collaborate with competitors. The next step is for EdgeTek to identify the players associated with each event. Whose actions can precipitate You must be flexible. The beautifully articulated plan the event? Who can influence it while it's under way? Who developed last year might not work when the business can help clean up the aftermath? environment changes. When a fire at a Philips Electronics plant in 2000 slowed delivery of cell phone chips to For example, in the case of "lack of qualified labor," we customers Nokia and Ericsson, Nokia dispatched 30 might identify players as: employees to Philips to help restore operations. Was deploying resources to Philips in Nokia's plan? No, but it achieved the results Nokia needed: getting its products to • Local universities that provide a source for high- market and achieving its sales plan for the year while potential employees; Ericsson faltered. • Local communities that develop opinions about the value of working in EdgeTek plants and encourage or Ecosystems aren't going away. Instead, they're becoming discourage community members to work for EdgeTek; increasingly complex as companies become more deeply • Local trade unions that advocate for labor training, entangled and supplement their core competencies by compensation and safety; developing strong alliances and partnerships. The good • Job training programs that build workforce skill and news: For those with foresight and creativity, your knowledge; ecosystem can help your company thrive. • Government education departments that influence the quality and extent of learning provided to citizens; Maya Townsend is founder and principal consultant of Partnering • Government trade bureaus that can provide incentives Resources. For more information, visit for companies seeking to train and hire unemployed www.partneringresources.com or e-mail maya@partneringresources.com. people. © 2007 CXO Media Inc.