Success Factors for Business Ecosystems – An Analysis for the Banking Market Germany from the Orchestrator’s Perspective
The concept of business ecosystems has become established in the context of corporate operations in recent years (Fuller et al., 2019; Iansiti, 2005). In the financial services sector as well, companies such as Tinkoff Bank articulate the goal of building the most comprehensive, compelling, and innovative business ecosystem in the world (Tinkoff Bank, 2021). Business ecosystems seem to provide a particularly advantageous foundation in times of uncertainty and diverse customer needs (Greeven & Yu, 2020; Pidun et al., 2019). Both factors seem to be inherent in the banking sector and, accordingly, business ecosystems seem to represent a particularly exciting development in this sector.
Understanding Business Ecosystems
A business ecosystem describes a group of actors that influence and depend on each other to collectively create value (Adner, 2017; Jacobides et al., 2018; Kapoor & Lee, 2013). Amazon can be cited as an example (Pidun et al., 2019). The activities of the individual actors are organized around a common goal, or value purpose (Betz & Jung, 2021; Hein et al., 2019), with no single entity taking control of all resources – it is fundamentally an organization without a hierarchical structure (Jacobides et al., 2018). Often, companies that orchestrate value creation among the different actors are considered to play a prominent role (Iansiti & Levien, 2004a; Tee & Gawer, 2009). Even if this prominent role requires further analysis, it seems appropriate to focus on these so-called orchestrators as a first step when it comes to enabling business ecosystems. The question, however, is what factors are necessary for an orchestrator to be able to build a business ecosystem business model. The focus here is on the banking industry – even though business ecosystems are known not to stop at traditional industry boundaries (Autio & Thomas, 2014).
Success Factors for Business Ecosystems
Certainly, there are several factors that need to be considered in order to hold together a complex construct of actors, such as is found in a business ecosystem. In particular, the unique organization around a shared value purpose without hierarchical structures requires special skills (Betz et al., 2019; Jacobides et al., 2018). Currently, there is no comprehensive analysis of factors necessary to enable business ecosystems. In the following, I provide insight into the results my master’s thesis, which identifies such factors from an orchestrator’s perspective.
Looking at the current state of research, we can find insights into what factors distinguish well-functioning systems from others (among others: Knee, 2018; Zhu & Iansiti, 2019). In addition, other researchers have highlighted specific factors that can be considered important in the context of business ecosystems (among others: Adner, 2006; Gawer & Cusumano, 2008; Parker et al., 2016). Neither of these aspects can be directly interpreted as success factors in our setting, but they do provide the basis on which success factors can then be identified.
From an analysis of the various publications, I derived a total of six factors (I – VI) that can be seen as success factors for enabling business ecosystems and summarized them in table 1:
| No. | Success factor | Description | Sources (excerpt) |
| I | Clear Vision | – A clear vision is needed, among other things, in order to continuously develop the business ecosystem – It goes beyond the core value proposition and formulates not only what the purpose of the business ecosystem is in the present, but furthermore shows possible development perspectives for the business ecosystem – A clear vision could also be understood as helpful to align the different participants according to a common goal in the long run | (Cusumano & Gawer, 2002; Gawer & Cusumano, 2008; Valdez-De-Leon, 2019) |
| II | Governance Model | – In a business ecosystem, resources (these can be data, for example) are used by different entities – Rules and decision-making/enforcement mechanisms are needed to orchestrate the interaction of actors (e.g., question: If actors working together have different ideas, e.g., about pricing, how can their differences be resolved?) | (Boudreau, 2010; Parker et al., 2017) |
| III | Value Appropriation | – A framework is needed to distribute created value within the business ecosystem – Distributing created value is considered one of the key challenges for orchestrators | (Iansiti & Levien, 2004b; James Williamson & De Meyer, 2012; Nambisan & Sawhney, 2011) |
| IV | Community | – Orchestrators must be well connected with customers and providers – Customers are an important part of the value chain (consume and provide input to development) – Providers offer complementary services – including them in the development process in the business ecosystem creates additional added value | (Blazevic & Lievens, 2008; Cusumano & Gawer, 2002; Jacobides & MacDuffie, 2013; Nambisan & Sawhney, 2011) |
| V | Technical Foundation | – Interfaces must be defined – Support functions are needed (e.g. for technical connection) – Platforms are sometimes necessary as a basis | (Gawer & Henderson, 2007; Nambisan & Sawhney, 2011; Valdez-De-Leon, 2019) |
| VI | Communicate the Value-Added | – Communicate the added value to be created in order to solve the (possible) chicken-and-egg problem and initially attract sufficient customers and providers to the business ecosystem. – Communication of the added value should be directly addressed to the (future) stakeholders (e.g., offering a development environment that is as simple as possible for providers or a high level of convenience for customers). | (Isckia, 2009; Parker et al., 2017) |
An empirical examination of the banking sector in Germany reveals two aspects in particular that need to be considered by established banks (1) and in the context of the legal situation (2) when it comes to the fundamental development of new business models:
1) IT in the banking sector is in need of renewal. On the one hand, in previous update cycles, customer interfaces were frequently renewed, but background processes were neglected (Bramberger, 2019). On the other hand, malfunctions from the near past in particular show that there is potential for improvement (Bocks, 2020). As an example, one could cite IT malfunctions of various banks that led to problems in customers’ online banking.
2) Banks are subject to special requirements with regard to the so-called “know-your-customer” principles (European Parliament & Council of the European Union, 2018, GWG §1 (1) (2)). Accordingly, these must be taken into account in all innovations.
The two additional aspects mentioned can be easily assigned to the success factors identified earlier. The aspect of IT capacities (1) falls under factor V – Technical Foundation. Special features related to know-your-customer principles can be subsumed under factor II – Governance Model.
During the analysis process in the master’s thesis, in which the data obtained from the literature (Table 1) was refined through expert interviews, one thing in particular stood out – the focus that should be placed on the customer across all success factors. For example, in the case of Factor IV, it seems particularly promising to maintain a close relationship with customers – this factor was focused on accordingly in the course of further consideration. The fundamental importance of customers is also emphasized by researchers such as Blazevic & Lievens (2008) or Fragidis et al. (2007).
So much for the factors that could be aggregated from the data available so far. However, there are other factors that are necessary for the exploitation of ecosystems as orchestrators in the banking industry in Germany:
VII) Challenging the Status Quo of the Organization Continuously
The first additional factor identified focuses on structural and behavioral aspects. To enable ecosystems, it is important to establish clarity at the process level – who does what, to where? After all, an ecosystem consists of various actors who are jointly involved in value creation. Furthermore, it is important to break through currently valid boundaries, paths must be taken that have not been taken before – especially in the banking environment, traditional business models are often followed almost stoically, so that no change can take place. The entire approach must follow a clear goal, in line with the overarching vision. Finally, the status quo must be constantly developed further – a good “renewal capability” of the ecosystem is needed, as one of the experts we interviewed put it. To create such renewal capability, the appropriate cultural course must be set[1].
VIII) Applying Existing and New Capabilities in the Sphere of Data to Create Value
Leveraging data is an important factor in generating and increasing revenue – particularly by enabling better recommendations for existing and potential customers (Sengupta et al., 2019). One expert in our sample provided a particular focus as follows: It is not important to simply engage with customers, it is important to understand them. To understand customers, it seems advisable to apply different ways to transform data into usable information.
So, all in all, eight success factors for successfully enabling ecosystems in the banking industry in Germany can be derived from an orchestrator’s perspective. The basis for this is formed by the refined factors identified in the literature research (Table 1) and then validated and refined in the course of expert interviews, as well as factors that were newly discovered. Accordingly, we can break them down in the sense that six factors originate from the aggregation of previous studies – often based on the analysis of industrial companies (basic success factors). Two further factors were identified by analyzing the statements of industry experts from the banking sector in Germany (industry-specific factors). A presentation of all success factors can be found in the following figure.
Conclusion
The eight success factors identified provide an overview of what an orchestrator needs to pay attention to in order to enable the exploitation of ecosystems. In the future, the factors could be refined by analyzing actors who are involved in enabling ecosystems and play the role of an orchestrator. In this context, an analysis of actors that are not among the frequently used examples from the technology industry (GAFA), but may even be based in the banking industry, seems particularly exciting. Tinkoff Bank could provide a good example of such an actor. Individual factors also offer approaches for more discrete analysis. For example, the idea of “governance” offers clear starting points for further investigation (what does governance mean in the context of a non-hierarchical construct?; what are the pricing mechanisms in an ecosystem?;…). Often, only the role of the orchestrator within the ecosystem is associated with successful business operations – an example can be seen in the anchoring of the corresponding position in Tinkoff’s strategy (Tinkoff Bank, 2021). However, focusing only on the role of orchestrator does not seem to be promising in every case, as specific skills are needed to perform the role, which are probably not present in every (current) participant in the banking industry. Although the orchestrator undoubtedly occupies an important position within an ecosystem, the competition for that position, as well as a company’s capabilities, may make it far more appropriate to take on the role of provider or contributor. Arguably, a successful business model is built less on the pursuit of a particular archetype than on identifying one’s competencies and leveraging them.
[1] Katharina Schache and Cedric Moser explain what constitutes an agile corporate culture and how it can be implemented in the articles Agile Corporate Culture – What’s It All About and How to Establish an Agile Corporate Culture in Banks.
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