Planning Your Business Strategy in the Corporate Ecosystem
These days, what happens to your business partners can affect your success. A business strategy consultant explains how to take external risks into account when you plan for the future.
Wed, December 19, 2007
CIO — What happens when you discover that your biggest client is cannibalizing your product? This happened to one international technology company. It threw the leadership into an intense conversation about strategy. They emerged from the discussion with new resolve: to plan for the future based not just on the company, but on the ecosystem in which it operates.
The concept of the corporate ecosystem has appeared in technology journals for years. Simply put, it's the idea that today's companies are embedded in multiple, complex relationships that make them interdependent on each other for success. But it's only recently that corporate leaders are realizing that an ecosystem is more than a concept. The ecosystem has intense implications for how companies plan for the future, and they ignore those implications at their own risk.
The Complex New World of the Ecosystem
Traditionally, executives worried about competition from rival firms. It was a straightforward world: the firm controlled its resources, advantage derived from a company's assets and organizations made money based on their ability to deliver value within their supply chains.
Today's organizations look very different. Rather than stand-alone players battling for market share, companies form networks and alliances and collectively deliver value to their customers. Consider these recent aggregations:
- Novell joined forces with IBM on an ambitious open-source project while collaborating with IBM rival Microsoft to boost Windows-Linux interoperability.
- Salesforce opened its Force.com developer site, building interdependencies with organizations as varied as CRMfusion, with six employees, and Electronic Arts, which earned $3.1 billion in 2007.
- Keane provides application outsourcing services to Miller Brewing Company, creating a dual-sourced IT workforce with staff from both Keane and Miller.
By creating deep alliances, each of these organizations realizes value beyond that which it could deliver independently. In fact, Siebel Systems' founder, Tom Siebel, attributed his company's explosive growth between 1997 and 2000 to its web of relationships. A web of consultants, technologists, system implementers and suppliers collaborate with Siebel to bring their products to market. Not only does Siebel incur lower staff costs, it also gains the innovation and loyalty that come from engaging people along the value chain.
The flip side, of course, is that organizations engaging in deep collaboration tie their fates to the success of the ecosystem, not just their own success. For example, if Microsoft were to go under, there would be a lot of companies in trouble: systems integrators, value-added resellers, software trainers and so on.
