Ecosystems will rule the world

The increasing complexity, uncertainty and speed of change within our competitive economic world requires new ways of working. Not only to survive as a company, but also to make a difference, follow the changing pace, anticipate with creativity and create market leading initiatives to become/remain successful in a global economy. Building and leveraging on ecosystems as well as collaboration between the various network partners will become prerequisites for future success. These ecosystems can be very variable in time and need to be aligned with the business strategy. How they are used, strongly depends on the state and purpose of the strategy.

According to Adner and Kapoor (2009), business ecosystems are a value-oriented network, composed of numerous stakeholders and represented by transactions between the stakeholders (Bertassini et al., 2021). An article published in the Journal of Business Research (Gueler and Schneider, 2021) argues that “business ecosystems are an important form of inter-organisational cooperation and a potential driver of a company’s success. Strong ecosystems strike a balance between their actors’ cooperative value contribution and competitive value appropriation.” In order to preserve sustainable innovation, collaboration between key ecosystem partners is a must. This corresponds with McKinsey’s research, arguing that by 2030 the integrated network economy could account for 25 percent of the total economy […] with global revenues of $70 trillion.

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An open debate is crucial

The current challenges in terms of sustainability, circularity and climate change will only be tackled if companies work together. Collaborating in (and beyond) value chains will create trustful partnerships that lead to added value for the individual members as well as joint added value. Being part of an ecosystem represents a major benefit for companies as it gives them access to a vast amount of knowledge and experience of the individual members. Relationships within such an ecosystem should be characterised by trust, integrity and commitment – key elements to create a sustainable ecosystem. This will enable members to have an open debate about distributing commonly generated value amongst the partners as the generated value is not always directly proportional to the costs incurred for it.

Setting up circular economy models

The following is essential when setting up circular economy models:

  1. Ecosystems can apply circular actions at four different levels:
    1. Product level (recycling, redesigning, remanufacturing…);
    2. Process level (optimising, less resources, rescheduling…);
    3. Service level (second life model, use-as-a-service, predictive maintenance…);
    4. Dematerialisation level (virtualisation, validation…) according to the degree of dependence on the various digital technologies.
  2. There are three drivers that promote circularity in ecosystems associated with digital transformation: virtualisation, supply optimisation and product optimisation.
  3. Different types of ecosystems adopt different strategies. Whereas the transaction type focuses on dematerialisation and providing access, solution ecosystems focus on optimising products and processes.    

Does my company fit in an ecosystem?

Today there is evidence that companies that implement an open innovation culture (together with other companies within and beyond their sector, knowledge institutions and governments) are more competitive as they can work faster, are more resilient and have a higher influx of creativity. To be a successful member of an ecosystem, a company should typically have 4 main capabilities:

  • Absorptive capacity for learning from partners in the ecosystem;
  • Multiplicative capacity for duplicating absorbed knowledge to multiple products, processes and services;
  • Transformative capacity to use knowledge from other sectors in your own sector, leading to game changing effects;
  • Integrative capacity to combine multiple learnings into integrative learnings for innovation support, taking your own development to other contexts;
  • Relational capacity to maximally use relationships, make them stronger and create/strengthen the mutual trust between the partners in the ecosystem. This results in a higher value creation and in being able to adopt a role as natural orchestrator of the ecosystem(s).

Ecosystems as a barometer

Looking into the future, investment funds will also look for companies that can create or are already part of a strong ecosystem that supports their product and service developments. These companies will be valued in a different way as they are considered future-proof and are helping to tackle the global sustainability challenge and doing their part in changing the world.

“If you want to create a future-proof company, make sure you are part of an ecosystem.”

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Dirk Torfs - CEO
Auteur

Dirk Torfs - CEO

Dirk Torfs is CEO of Flanders Make since 2014. Dirk is a Civil, Mechanical and Electrical Engineer as well as a Doctor in Applied Sciences (KU Leuven). He has over 20 years of experience in management positions in the Flemish industry and is Professor of Quantitative Decision-Making for the Executive MBA programme of the Flanders Business School.

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