Strategy as Ecology
Marco Iansiti & Roy Levien
By Shereen El Sammaa
Outline
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Business ecosystem-Briefly
Assessing health of your company’s ecosystem-How
healthy are you?
Determining your place in it-Keystone, Dominator,
Niche Player
Developing a strategy to match your role in it-Match
your strategy to your environment
How useful an Analogy?
Implications of Ecosystem perspective
What is a Business Ecosystem?
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Typical business ecosystem includes:
Traditional suppliers & distributors
Companies to which you outsource business
functions
Institutions that provide you w/ financing
Firms providing technology needed to carry out
your business
Makers of complementary products
Competitors & Customers→ when their actions &
feedback affect your processes & products
Assessing Your Ecosystem’s
Health
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So what is a healthy ecosystem?
What are the indications that it will continue
to create opportunities for each of its domains &
for those who depend on it?
Three Critical Measures of Health:
Productivity
Robustness
Niche Creation
So…
How can you promote the health &
stability of your own ecosystem,
thereby helping to ensure your
company’s well being?
It depends on your role-current &
potential-within the network
The three main roles
Keystones, Dominators, and
Niche players
Match your Strategy to Your
Environment
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Company’s choice of ecosystem strategy
governed primarily by the kind of
company it is or aims to be
Choice also be affected by business
context in which it operates:
General level of turbulence
Complexity of its relationships w/ others in the
ecosystem
If your business…
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faces rapid & constant change, & by
leveraging the assets of other firms, can
focus on a narrowly & clearly defined
business segment → Niche strategy
is at the center of a complex network of
asset-sharing relationships & operates in
a turbulent environment → Keystone
Strategy
If your business…
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relies on a complex network of external assets
but operates in a mature industry → Physical
Dominator Strategy
chooses to extract maximum value from a
network of assets that you don’t control →
Value Dominator Strategy
is a commodity business that operates in a
stable and mature environment& operates
relatively independently of other
organizations → Ecosystem Strategy is
irrelevant (although that may change soon)
How useful an Analogy?
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Strong parallels between Business Networks &
Biological Ecosystems-large number of loosely
interconnected participants that depend on one another
for their effectiveness & survival
Ecosystem healthy → individual participants will
thrive and vice versa
Crucial hubs that assume the keystone function of
regulating ecosystem health
Keystone-Sea Otter, Dominator- sea urchins, Niche
Players-variety of invertebrates and plants
How useful an Analogy?
(cont’d)
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Analogy isn’t perfect-sunlight & nutrients vs.
technology
But to be perfect, an analogy has to be so simplistic
that it would offer little real insight
Use of term “ecosystem” rather than “community” →
clearly signals that we are discussing a complex
system & working w/ a biological analogy
Vivid terminology helps managers focus on features of
modern business networks, often ignored by
conventional theories
Underlie many drivers of success & failure
Implications of Ecosystem
Perspective
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Central importance of interdependency in
business
Importance of integration
Broad scattering of innovation across a
healthy ecosystem
Taking action w/o understanding impact on
its many neighboring business domains, or
on ecosystem as a whole
More Than Strategy
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Implications ripple throughout whole
organization, not only strategies
No longer possible to design or conceive of a
product in isolation e.g. music players,
cameras, computers, etc… all merging
functions
Creates opportunities for innovation & product
development
In a healthy ecosystem → New products can
leverage the capabilities provided by existing
products
The fact is that…
Users no longer care much about
identity or features of their products,
only about how they fit in with &
enhance the systems of which they are a
part
Thank You