Interpreting Ecosystems:
An Overview

This is part 5 of our 10-part blog series on Ecosystems. You can find the other blogs in the series here.

Ecosystem-driven business models isn’t a new concept. We’ve seen some of the biggest brands inspired by these models. The success of companies like Amazon, Google, and Alibaba has only increased the focus on ecosystem-driven business models in the recent years. This is because these models allow businesses to meet a larger share of customers at ease, co-innovate offerings with partners, tap into each other’s strengths and drive better customer value.

So, what is a business ecosystem?

James Moore defined a 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 co-evolve 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 an ecosystem leader is valued by communities because it enables members to move toward shared visions to align their investments, and to find mutually supportive roles.”1

The idea of business ecosystems can be better understood with keywords such as– community, interactions, value creation, stakeholders, shared vision, etc.

Keeping all this in mind, we can define an ecosystem as a business model with the following characteristics:

  1. An economic and interconnected dynamic group of businesses and the external environment.
  2. Delivers value to its different stakeholders (including customers, partners, employees, regulators, and shareholders).
  3. Has a defined set of rules and a governance mechanism for its interactions usually defined by an ecosystem orchestrator or a set of central players.
  4. Can evolve in a sustainable way.
  5. Has shared ownership for assets and data and involves both collaboration and competition.
  6. A shared vision that drives it forward to cater to customers better.

Using the same set of characteristics, we can understand why the Internet, which is certainly one of the biggest ecosystems2 we have, is not a business ecosystem because it is not an economic community. And that is also why Uber is a business ecosystem.

While the concept of a business ecosystem is clear, it is important to differentiate business ecosystems from business communities and business marketplaces. Similar to how communities consist of the living organisms in an ecosystem, and is a subset of an ecosystem, in the same way, business communities are the group of organizations and do not consist of the external world that it operates in.

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1The Death of Competition: Leadership & Strategy in the Age of Business Ecosystems; Page 26; James F. Moore; 1996; Harper Business; ISBN 0-88730-850-3