Research Area Business Ecosystems

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Understanding and applying ecosystems: two perspectives for organizations

What you can expect in this blog post

In the context of my research in the field of ecosystems in management (see my last blog post, among others), I repeatedly come into contact with organizations that use the concept of ecosystems for themselves. In retrospect, I have identified two perspectives on ecosystems, a “company-centered” and a “customer-centered” one. In the following article, I would like to give a brief insight into these two perspectives. First, I will briefly introduce the topic of ecosystems. I will then explain the two perspectives in more detail. Finally, I will give an indication of how organizations can use a combination of the two perspectives as part of a strategic analysis.

A look at Ecosystems

The fact that organizations do not act alone to create value is nothing new in itself. Even the production of a car by a large OEM is done by the OEM combining the offerings of various other suppliers. Nevertheless, this type of value creation construct is more likely to be a classic example of a supply chain, in which an organization specifies the modules it requires for an overall offering. The result is the product, in this case the car, which is offered to the customer. Another example of a value creation construct is manifested in the structure of a marketplace. Here, suppliers offer their individual products to end customers – in some cases organized on a central, possibly digital, marketplace. The individual product providers are in a competitive relationship with comparable product offerings. The end customer decides whether to use products separately or combine offers. One example of this is a physical marketplace, the weekly market. Customers can purchase different products from different retailers – whether they combine them into a meal, for example, is up to each customer.

Building on this description of “hierarchy” and “market”, Jacobides et al. (2018) describe the construct of ecosystems as the third form of possible value creation constructs. Here, the customer obtains a service from a focal company or individual modules from partners of this company in the ecosystem (Jacobides et al., 2018). Accordingly, the ecosystem describes the structure of different organizations that are necessary to implement a common value proposition. This value proposition often differs from the products offered in “traditional” value creation constructs. There is a refocusing from the individual product, e.g., automobile, to the goal of broader and deeper fulfillment of customer journeys. For example, Helvetia with its “home ecosystem” (Switzerland) (cf. Seehofer & Lechner, 2023) but also “myky” (Switzerland) (cf. Maicher et al., 2023) cover a whole range of starting points in customer journeys in the residential sector. To this end, they use their own offerings as well as combinations with partners for a joint service offering for end customers. In the area of health, Well Gesundheit AG uses a whole range of partners that are made available to end users via a central platform in order to simplify access to health for everyone (cf. Well Gesundheit AG, 2023).

The main difference between ecosystems and other value creation constructs is the existence of specific complementarities between the actors and the need for an orchestrator to align the actors involved towards a common goal (for more details, cf. Jacobides et al, 2018; Lingens et al, 2023; Vetterling & Baumöl, 2023).

In my opinion, the background to the emergence of ecosystems lies in various influencing factors. From my perspective, two essential ones are digitalization and technological progress, which enable a more efficient connection of a large number of players and drive the modularization of offers, as well as the increased demands of end customers for services.

Digitalization makes it possible to efficiently network a large number of players, e.g., through standardized technical interfaces (application programming interfaces). Furthermore, technical progress, e.g., through new intelligent systems, makes it possible to evaluate a large amount of data. This represents an important building block for ecosystems (Vetterling & Baumöl, n.d.). In addition, a further progressive modularization of offers is made possible. This in turn opens up new opportunities for organizations, as they do not have to present a complete solution at the customer interface but can contribute individual modules to an overall solution.

Furthermore, end customers are demanding increasingly complex solutions that are difficult for a single organization to create. As customers, we are used to being able to combine offers from different areas in one place. An example of this can be found on our smartphones. If you look at the applications you have on your smartphone, they probably come from a wide variety of areas (banking, messaging, leisure, etc.) and are still “ready to hand” in one place. We would like to see more of the same from other service offerings – for example in the area of housing, it would be great if various services, from interest in a property to financing and management, could be handled in one place. This is the basis for Helvetia’s home ecosystem, for example (Seehofer & Lechner, 2023).

For further consideration, we now want to focus on just one of the three value creation constructs mentioned (hierarchy, market, ecosystem) – the ecosystems. We want to define these based on Adner (2017) as a group of actors that can be further defined to create a shared value proposition, expressed through the goal of fulfilling complex customer requests and covering positions in a customer journey.

Two perspectives on the benefits of this construct

In my work with various organizations that deal strategically with the topic of “ecosystems”, two perspectives have emerged. In the following, I would like to discuss a “company-centric” and a “customer-centric” perspective.

Company-centered perspective

If we look at ecosystems, an analysis of individual organizations and their surrounding actors, which are necessary for the organization to achieve its value proposition, could be a perspective in the context of ecosystems. The focus here is on the individual organization or the mission that the organization wants to fulfil. This is the “goal” which consists of the individual modules provided by different actors. Different players contribute to the fulfillment of this goal. Universities or other educational institutions can also play an important role here, for example, as they provide support by training talented individuals.

Whether the analyzed construct is then really a “classic” ecosystem, still needs to be analyzed (for this, the complementarities would have to be analyzed, among other things). However, a “framework of thought” in the sense of “we as an organization are connected to the organizations around us” has often proven to be helpful. Specifically, adopting such a perspective can help to understand how external actors contribute to value creation, i.e., fulfilling one’s own mission, and how the organization can position itself within “its ecosystem”. A deeper insight into the synergies and dependencies of external actors becomes possible. At a deeper level, the individual players could then be evaluated more specifically, e.g., from a business perspective or through a more concrete risk assessment.

Illustration 1: Company-centered perspective
Customer-centric perspective

Let’s assume we are Pfefferminzia AG and now want to analyze how we can use the customer-centric[DV1]  perspective of an ecosystem for strategic analysis.

In the customer-centric perspective, the customer journey is placed at the center, which should serve as a gravitational point for the analysis within the framework of an ecosystem – the more complete coverage of such a journey was already mentioned at the beginning as the main objective of ecosystems. The central customer journey can be identified in different areas, e.g., housing and leisure. An initial consideration should be how the customer journey of customer X is structured. Subsequently, it makes sense to analyze which offers customer X already uses from which providers in connection with fulfilling the customer journey. This is followed by an analysis of the skills required to create the individual modules, i.e., offers. Derived from this, Pfefferminzia AG can now analyze its own capabilities and the possible offering of modules in this ecosystem. If it is a project to build a new ecosystem – based on the basic assumption that the customer journey is not yet covered by another value creation construct, only insufficiently by another value creation construct or because the market is considered large enough despite existing competition – it must be decided whether, for example, a digital platform is still required as a governance construct and how and by whom this should be set up and orchestrated.

Illustration 2: Customer-centered perspective

Combination of the two perspectives

Ultimately, the two perspectives can also be combined. Pfefferminzia AG could thus evaluate which connections to players it needs to enable its own mission and what role it plays in the customer journeys of end customers. Based on this, it could then derive a strategic roadmap – e.g., depending on whether it wants to maintain its position or whether “white spots” in the customer journey have been identified that need to be filled.

Further thoughts

Ecosystems are described by some as the “panacea” for organizations, albeit less so now than in the past. Sometimes you get the impression that everything has to be an “ecosystem”… I personally don’t think much of it. I share the assessment described at the beginning by Jacobides et al. (2018) that ecosystems represent a further construct, in addition to those already known, for value creation.

If an organization decides to take a closer look at ecosystems, the two perspectives listed here may offer a helpful starting point.

However, there are also some limitations to the ideas presented here:

First of all, these are observations that I have made in connection with my work. It is not (yet) a scientifically proven construct for analyzing ecosystems. Furthermore, my thoughts are based on observations in the B2C environment. A further analysis in connection with B2B has not yet taken place and may form other trains of thought.

Disclaimer

Chat-GPT-4 was used to create the graphics.

Bibliography

Adner, R. (2017). Ecosystem as structure: an actionable construct for strategy. Journal of Management, 43(1), 39. https://search.ebscohost.com/login.aspx?direct=true&db=edsinc&AN=edsinc.A481211770&site=eds-live&scope=site

Jacobides, M. G., Cennamo, C., & Gawer, A. (2018). Towards a theory of ecosystems. Strategic Management Journal (John Wiley \& Sons, Inc.), 39(8), 2255-2276. https://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=130771714&site=ehost-live

Lingens, B., Seeholzer, V., & Gassmann, O. (2023). Journey to the Big Bang : How firms define new value propositions in emerging ecosystems. Journal of Engineering and Technology Management, 69(July), 101762. https://doi.org/10.1016/j.jengtecman.2023.101762

Maicher, L., Lenoci, T., & Vetterling, D. (2023). Controlling-Erkenntnisse beim Aufbau eines Business Ecosystems. Controlling – Zeitschrift Für Erfolgsorientierte Unternehmenssteuerung, 05, 33-38.

Seehofer, T. M., & Lechner, C. (2023). EVOLUTION OF THE ” HOME ” ECOSYSTEM The Case of Helvetia. In The Case Center. University of St. Gallen. https://www.alexandria.unisg.ch/handle/20.500.14171/116354

Vetterling, D., & Baumöl, U. (n.d.). Networked business design in the context of innovative technologies: Digital transformation in financial business ecosystems. Journal of Financial Transformation – Capco Institute.

Vetterling, D., & Baumöl, U. (2023). Ecosystems als Quelle kundenzentrierter Wertschöpfung – Konzepte und Steuerungspotenzial. Controlling – Zeitschrift Für Erfolgsorientierte Unternehmenssteuerung, 35(5), 4-11.

Well Gesundheit AG. (2023). About us. About us.

Dennis Vetterling
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