TRADITIONAL PRINCIPLES of business strategy are derived from military warfare — the art of winning battles and conquering enemy territory. These principles have served many firms well. Corporations that mastered them developed a sustained competitive advantage and dominated. In the past two decades, however, incumbents have seen a new breed of competitor gradually occupying top spots in the most-successful company rankings. Admired companies such as Airbnb, DoorDash, Spotify and Alibaba reinvented the rules of strategy by deploying a new model: the business ecosystem.
An ecosystem can be defined as ‘a dynamic group of largely independent economic players that create products or services that together constitute a coherent solution.’ Traditional companies have started to understand the threat, embrace the opportunity and launch their own business ecosystems.
For example, agriculture machinery manufacturer John Deere, founded in 1837, is leading the race to building the most comprehensive smart-farming ecosystem. Retailer giant Walmart has become a serious competitor of Amazon with its Walmart Marketplace. And Maersk, the 118-year-old market leader in container shipping, is disrupting its own industry with digital platform solutions. These are not rare examples — we found that more than half of the largest companies in 2021 had seriously engaged in ecosystem business models.
However, there are still a surprisingly small number of successful incumbent ecosystems. We have identified eight major shifts (four shifts in mindset and four shifts in operating models) that traditional companies must embrace to become successful ecosystem players.
Ecosystem Mindset Shifts
The new opportunities and challenges of ecosystem business models require a change in the mindset of how to approach strategy and competition. Incumbents must move from perceiving business as warfare to recognizing the prospects of joint value creation. This involves four major mindset shifts.
A business ecosystem can enable value propositions that no individual company could achieve alone.
To identify opportunities for ecosystem models, companies must concentrate less on optimizing current operations and exploiting existing capabilities and more on uncovering unmet customer needs and
