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Building a digital business is about building an ecosystem, not just a few isolated initiatives that have no impact on each other, the business as a whole or your external networks.Digital Business Ecosystem - 01

In biology, an ecosystem “is a community of living organisms (plants, animals and microbes) in conjunction with the nonliving components of their environment (things like air, water and mineral soil), interacting as a system.” Source: Wikipedia

So, in a digital business ecosystem that is focused on amazing customer experiences, both living (people) and non living (strategy, process and technology) interact as a system along with external networks of suppliers, vendors and customers. In essence, as a digital executive, you are building a system. Leave an essential part out, and the system is not complete.

The concept of a business ecosystem first appeared in Moore’s May/June 1993 Harvard Business Review article, titled “Predators and Prey: A New Ecology of Competition”, and won the McKinsey Award for article of the year. Moore defined “business ecosystem” as:

“An economic community supported by a foundation of interacting organizations and individuals—the organisms of the business world. The economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organisms also include suppliers, lead producers, competitors, and other stakeholders. Over time, they coevolve their capabilities and roles, and tend to align themselves with the directions set by one or more central companies. Those companies holding leadership roles may change over time, but the function of ecosystem leader is valued by the community because it enables members to move toward shared visions to align their investments, and to find mutually supportive roles.”

An ecosystem is not just the company as a whole. It may include, suppliers, vendors, customers, and many other external components. Businesstermilology.com defines a business ecosystem as:22a0b-digitalbusinessecosystem

A strategic planning model, popular since the development of information technology, whereby a network of suppliers, distributors, competitors and customers all work through competition and cooperation to advance sales of products.

In a Harvard Magazine interview with Rosabeth Moss Kanter, Arbuckle professor of business administration, in HBS’s general management unit, and chair and director of the Harvard University Advanced Leadership Initiative, she discusses the development of the business ecosystem.

I chose “enriching” carefully because it not only means richer nutrients in your garden, but also the sense that we want continued prosperity. We want more people to feel they have rich lives and opportunity ahead. That is important.

In the mid 1990s, I worked on helping communities around the country adapt to disruptions from the Internet and globalization—trends that were very good for the prosperity of the country overall, but had communities worried about being left behind. I developed the idea associated with this transition from the industrial to the digital in World Class: competitive communities had to reach the highest standards in the world because your customers and employers now knew what the highest standards were, and didn’t necessarily need you to access them—they could go even outside their country. Those developments pointed to networks and larger systems—what cities and regions and small businesses needed to do to remain prosperous.

Many times we implement initiatives without looking at them holistically and from a systems point of view. Isolated initiatives may produce some short term results but never achieve the totality of results that a complete system can together. In this world of building a digital business, careful evaluation should be given to how the initiative fits in to “the whole” system. If it doesn’t fit, it may not be optimized to produce the best results.

Consider creating a killer web site that is housed at a hosting facility that doesn’t have the infrastructure in place for pages to be rendered fast. What good does it do to produce the site and the content if it can’t load properly on any device a customer is using? What if it is optimized for PC’s but not mobile devices? If most of your customers are coming to your content from mobile devices, they won’t know what you are trying to say.

Here are the key ideas:

  1. Think in terms of ecosystems. Initiatives (projects) should be considered as a part of an ecosystem (including external factors).
  2. Manage the digital business in terms of a network of people
  3. Shift from static to dynamic notions of value
  4. Design the digital businesses for radical change
  5. Open the culture of the organization beyond traditional departments
  6. Tap into collective intelligence of the “open culture” with collaboration tools