Mohammed Retmi, Head of Regional Domains & Partnerships, Orange Business Services
Ecosystem business models help to enhance the performance of your organisation, accelerate innovation, and drive transformational growth more quickly. Increasingly, companies that are part of ecosystems outperform those that are not and reap benefits in terms of new product and service innovations and operational efficiencies. Ecosystems comprising the right partners are now essential to success.
‘Ecosystem’ is one of those terms that you hear a lot in business but if you asked different people for their definition, you would probably get a wide variety of answers. While the answers would be similar, it is important to be clear about what an ecosystem is, what it does, and why it is important.
As in the natural world, an ecosystem has members that must work with, for, and around each other to keep the system stable, productive and interoperative, and ideally driving collective benefits. Similarly, a business ecosystem comprises multiple members who work, create, and share in pursuit of collective value and benefits. Ernst & Young defines an ecosystem as “a partnership between two or more entities that creates more value than any individual participant could create on its own”.
But while ecosystems have become essential to driving business forward, they are not something that spontaneously happens. They can be expensive and complex to establish and potentially risky to launch. And worse, most ecosystems simply fail. Research by Boston Consulting Group found that while 90% of global companies have plans to expand their ecosystem activities in 2022 and beyond, the same research found that fewer than 15% of ecosystems are sustainable in the long run.
However, ecosystems deliver measurable financial gains: a study by EY of over 800 business leaders whose companies leverage at least one ecosystem business model found that ecosystems make up on average 13.7% of their total annual revenues, drive 12.9% in cost reductions, and generate 13.3% in incremental earnings.
Building your ecosystems successfully
It is one thing to want to develop an ecosystem or be part of one, but another thing to do it right. One approach is to establish a dedicated partner office that is designed to evaluate and assess partners who might work within the ecosystem and put in place a strategy that ensures maximum outcomes for all. The partner office should include a team that carries out a partner assessment program and business reviews. It interfaces with the partners in the ecosystem to make sure communication channels are always open and information sharing is prioritised.
The partner office also oversees relationships between partners, monitoring levels of executive engagement and peering, and keeps an eye on the shared market vision. Partners can track and review go-to-market initiatives like channel community management and co-branded events, and constantly seek to foster co-innovation in the ecosystem through a partner forum or an open lab. Everything should be designed to help entities and partners develop joint goals and ambitions, while all growing and becoming more profitable.
In the MEA region, we have worked to build ecosystems around key business areas to help drive us and our partners forward together, and we focus on the areas of network, cloud, data, AI and security, all comprising expert partners who bring something valuable to the table.
The innovation factor
Ecosystem business models can have direct benefits for your company and your immediate ecosystem partners, but you can also drive supplemental benefits that can impact entire markets and value chains. They’re a way to connect large enterprises with small start-ups and disruptors who might help you think differently about a project. That’s the way to fostering innovation and leveraging different kinds of expertise and ideas from different types of companies.
Research from Ernst & Young found that 85% of executives believe ecosystems are the most effective way to connect large companies with small disruptors to drive these new ideas and innovation. This can be done by partnering with companies that are related, but adjacent, to what you do. For example, e-commerce players and online retailers partnering with more traditional brick-and-mortar retailers to give customers a more-rounded experience, or technology companies like ourselves working with new economy start-ups.
Work together to achieve more
In my view, ecosystems made up of progressive, strategic partners are vital to ongoing business success and to keeping your offering fresh and your customers satisfied. It is a view that seems to be shared: according to Accenture, 63% of executives believe ecosystem participation allows businesses to innovate, while 58% say they expect to see an increase in revenue growth from their ecosystem participation. McKinsey predicts that by 2025, nearly one-third of total global sales will come from ecosystems built of cross-industry players working together to create solutions.
If you’re not already using ecosystems to your organisation’s advantage, you would be advised to do so quickly or risk your company being left behind.