5 Ways to Harness the Value of your Ecosystem

No matter your industry or organization, you exist in an ecosystem: An integrated network that delivers a product or service through cooperation and competition. Multiple players make up business ecosystems: Think suppliers, distributors, government agencies, competitors, and ultimately, customers.  

Why does this matter?  If you activate your ecosystem, you can create more value for your organization and customers.

An Example

As a product and strategy executive, I’ve worked in all four players in the payments ecosystem: a bank, two payment networks, a processor, and a merchant. This broad background makes me an ecosystem activator. In my most recent role, for example, I architected the bank’s most lucrative payment network deal in its history, providing more than $135 million in incremental revenue, a 630% increase over the prior agreement. I was able to do that because I saw the deal from multiple perspectives.

Ecosystem activators draw on diverse experience and engage with the players in their business network to drive innovation, create value, and expand opportunities.  

Reinforcing Research 

Recent EY research reveals more and more companies consider their ecosystem strategy to be essential to their success. The data also illustrates companies that successfully manage and execute thoughtful approaches to their ecosystems outperform those that do not. 

EY’s isn’t a one-off study. Additional research by BCG and others reveal rewards from leveraging ecosystems. So as leader, what can you do to activate yours?  

First Steps

There are numerous ways to activate your ecosystem. But first, you need to start with two basic steps to lay the groundwork.  

Step 1: Define Your Ecosystem Participants. Ask yourself: Who are your upstream providers and suppliers? Business partners? Competitors? Who benefits from what you provide downstream? Then, determine their value: What does each participant add to the ecosystem? And what can their contributions teach you? 

Step 2: Understand What Makes Each party tick. How do they generate revenue? What are their challenges? What’s their vision for their part of the industry? (This is especially important if others in your ecosystem are infringing on your territory or wish to compete with you.) What are their key differentiators?

Getting Granular

With that foundation established, you can get more granular in your activation strategy. There are numerous ways to do that. But to get you started, here are five methods I’ve used, with examples to bring them to life:  

1. Dive Deep:  Go beyond the superficial to analyze and truly understand your ecosystem, including all the players and interrelationships. This provides opportunities to co-create and co-innovate with other players, accelerating innovation, inspiring differentiation, and expanding your product offerings.

   Example: A bank and payment network collaborated to bring a new Buy-Now-Pay-Later (BNPL) payment product to market. Instead of independently conceiving of the product and then negotiating how they would go to market with a compromise, from day one they combined their extensive knowledge to more quickly create a differentiated, more profitable product together.

2. Treat Your Players Like Strategic Partners: Be open in your communications, goals, expectations, and needs. By increasing transparency rather than encroaching on other players’ offerings and becoming competitors, you can create shared growth opportunities.

   Example: A neighborhood developer sought funding from Capital One to improve the community in poverty-stricken areas. By developing a shared mission, the developer and the bank moved beyond a traditional relationship to a strategic partnership. Together, they built an integrated long-term growth plan and determined optimal opportunities in certain neighborhoods. They even found ways to creatively leverage tax credits in ways the developer would never have discovered on their own. The strategic relationship has made a difference in underserved communities for 25 years and continues to flourish.

3. Negotiate: Learn the primary source of profit for other players in your ecosystem. This intel can help you give them what they need, while optimizing what you get from them. And it allows you to extract value from where you know they have more to give.

   Example: An executive at a consumer packaged goods (CPG) company took a senior role at a grocery chain. Her experience meant she understood what levers to pull when negotiating with CPG companies. And that drove more profitable deals than an executive from a competitive grocery chain could have achieved.

4. Cooperate and Co-Create: With deeper understanding of your ecosystem players’ processes and bottlenecks, at the very least you can find ways to cooperate. Better yet – you can find ways to co-create new offerings for shared customers. And in many cases, this allows you to move faster than your competitors and better serve your customers.

   Example: Healthcare practices have traditionally relied on siloed offerings. Yet recently, some providers’ strategies have evolved to collaborate with ecosystem players that are outside their specialty. For instance, a traditional pain-management specialist created a joint offering that includes an acupuncturist and a chiropractor for more holistic and effective treatments. The result? They expanded their patient base AND more effectively addressed their patients’ pain.

5. Expand Your Sales Channels: Look for opportunities to open new sales channels for existing products or services by moving up- or down-stream.

   Example: Roku made a name for itself by delivering streaming content via a low-cost device that connected to TVs’ HDMI port. It then expanded into a new sales channel by collaborating with TV manufacturers to become an integrated offering. Customers who bought certain TV brands received Roku automatically. This collaboration paid off: By 2021, Roku was the best-selling TV operating system in the U.S. and Canada.

Ecosystem Mindset Matters

#1 and #2 are givens if you want to activate your ecosystem. The rest are options that can be done concurrently and as noted earlier, are not exhaustive. But based on my experience – and that of other ecosystem activators – applying these approaches will make a difference in your organization’s success. And that of other players in your network. And in the best cases, your customers.  

Next Up: How to Infuse an Ecosystem Mindset in Your Organization

Creating an environment that embraces ecosystem activators is key to fully leverage their experience and expertise. In my next article, I’ll explain how you can find and hire ecosystem activators and how to ensure their diverse viewpoints are heard.

Written by Cristobel Von Walstrom.
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