Business Ecosystems is a phrase you hear often throughout your work week. However, more than likely the first time you heard “ecosystem” probably was in elementary school. More than likely it would have been during an Earth Science class. Here you learned how plants, animals and other organisms all depend on each other. Hence, a healthy ecosystem contains living parts as well as non living parts like rocks, the temperature and humidity.
Along with these teachings, you would have seen pictures of nature and animals to illustrate how an ecosystem works together. Demonstrating that basically, without one part of the ecosystem, the whole geographic location would become obsolete.
Today, as adults we know there are many different types of ecosystems. While the ecosystems themselves are different, the functionality is exactly the same. Without one the system would fail or at the very least not thrive.
Starting in the early 1990s, James F. Moore developed the strategic planning concept of a business ecosystem. Mr. Moore used several ecological metaphors to suggest that companies need to coevolve with other companies. That “the particular niche a business occupies is challenged by newly arriving species.” What this boils down to is companies need to become more motivated in developing mutually beneficial relationships with their customers, suppliers, and even competitors.
We have seen business ecosystems develop over the years, especially in the field of information technology. Some have excelled and created extremely strong business ecosystems that companies are eyeing with envy, while others slowly disintegrated. The one thing that we are constantly aware of is how heavily we as businesses depend on our ecosystems. For many of us, it is how we offer our clients the best possible solutions and or services. But why is it so important?
Well to put it simply, it has proven to be the most effective working business environment in the 21st century. Being part of a business ecosystem gives companies the ability to leverage technology and expertise as well as research. Not to mention it allows a competitive edge over the competition. It also drives new collaborations that offer support to social and environmental challenges that are now facing society. Not just locally but on a global level.
Business ecosystems are based on combined companies and their value chains. They create and/or deliver a complete solution by means of a product and/or service. This is done by establishing which are the most beneficial channels. For example, companies within the ecosystem and coordinating all these contributors to create the end solution. Usually there is one core company or facilitator at the heart of this type of ecosystem. There job is to act as a project office and managing the ecosystem. This makes things much easier for the end client. By working with the core company you get full access to the ecosystem and expertise it provides.
The Core Company
Think about buying a brand new car. There is not just the company that designs the car and one that sells the car. There is a company for each piece of the car. One sells the upholstery for the interior, one sells the software, the sensors, the engine etc. etc. That itself is an ecosystem. But you don’t go directly to each key player and then turn around to build the car yourself. No. You go to the car dealership.
The car dealership will work with you to ensure that you are getting exactly what you want. They will keep your budget in mind and let you know if something you want will bring you over budget. They will keep on top of things to ensure the manufacturing goes smoothly. Their main concern is to make sure you as their client get the car you want. And to ensure it is within the budget.
It’s as simple as the salesman saying “Sure. We can handle that. Come back in 8 weeks and the car will be ready.” You come back in 8 weeks to the dealership and TA-DA! There is your new beautiful car and you drive away. You as the client do not need to deal with the upholstery company, the engine guys, the sensor distributors… none of it. You just pay for your car and off you go.
It’s the same when doing business with a core company or facilitator within an ecosystem. Usually large scale projects take a lot of money, a lot of time and several companies to complete. It’s a long drawn out process that in the end is well worth it.
What a Core Company does
Like the person buying the new car, the client goes to the core company to discuss what your needs are. You establish what your business goals are and when you need it completed. The core company works with you to develop your solution using the best of the best from within their ecosystem.
The Core Company is the car dealer. They are the ones handling the companies specializing in all of the areas you need for your end solution. They know their ecosystem and can ensure companies are all working on your project accordingly. If problems arise, which let’s face it happens, they are able to handle them with their great communication and management capabilities. This way as the client, you don’t have to worry about the everyday ins and outs.