How do you grow a business these days? Keep doing what you always did, a little better each year, for incremental organic growth? Okay. Buy your way to growth through mergers and acquisitions? Maybe. But we face a new business reality – Western markets are saturated, there’s more competition from Asia and elsewhere, corporate profits are in decline, and business as usual doesn’t cut it any more. There is a third way though – digital ecosystem management (DEM). Today, more and more top companies are digital, creating growth by curating their own digital ecosystems, where the expertise and innovation of others builds more value and drives rapid growth for everyone involved.
Sounds good, but what is a digital ecosystem?
A company creates a digital ecosystem when it is able to orchestrate and manage a network of partners, customers, developers, and others. All parties work in pursuit of their own objectives, but by working on a shared business platform, their efforts all contribute to a common cause. To the average, traditionally experienced board member, that may sound both hard and abstract. Not to mention that entrusting so much of your company’s fate to the hands of third parties goes against traditional corporate instincts. But 40 percent of the world’s top 30 brands are now platform businesses that manage digital ecosystems around them. When leaders begin to understand that DEM is such a powerful business model – and is the path back to double-digit growth – their questions quickly change from why to how.
But is digital ecosystem management really the answer for my business?
When people think of digital ecosystems, they tend to think of tech companies and start-ups, and those players definitely led the way. But all businesses now – old or new, big or small – are awash in a sea of data. Whether they sink or swim depends on how well they can use software and technology to create a compelling connection to their customers. To quote Jeff Immelt, CEO of GE, “you wake up one day and realize the locomotive you used to sell is a data center and you have to change”. It becomes less a question of whether to invest in an ecosystem, and more one of what sort of ecosystem you want to control. Look at the top performers, and you see a variety of different approaches. But look closer – in each successful case, the nature of their ecosystem aligns to the company’s core business. For example:
- Apple’s core business is selling premium hardware, so its restricted ecosystem aligns to its need to protect the perceived quality and user experience of its products.
- Google’s core business, on the other hand, is data-driven advertising, so its perceived openness serves to proliferate and diversify data sources.
Of course GE, Apple, and Google are huge, but DEM is not just for the big fish. Pebble came from nowhere to become the biggest smartwatch company in the world in just two years. On the back of a smart Kickstarter campaign, it created an instant, invested community and a dynamic digital ecosystem.
What’s in the way?
There’s nothing to fear but fear itself… Well, fear and that great tangle of IT spaghetti in most organizations. Or so it seems, for the good news is that you don’t have to untangle the spaghetti to start building your digital ecosystem. In fact, it’s possible to deploy a light-touch, technology-agnostic overlay that can transform even complex, multi-vendor architectures into the platform upon which you orchestrate and manage your ecosystem. You need good understanding and insight in your company to achieve this – so there’s never been a better time to hire a chief digital officer who knows the value of common platforms. And it’s high time to find a partner who can help you use digital to build customer experience, optimize internal processes, and most of all take the next transformational step to creating and curating your own ecosystem, fully aligned to your core business.
What’s the rush?
The wave has started. There are mobile apps and sensors everywhere capturing vast amounts of data and information that will affect every business. The Internet of Everything is coming fast and companies like Cisco estimate that there will be 20 trillion dollars at stake. But the wave is gathering speed – businesses that aren’t in position in time will miss their chance to ride it. Simply optimizing what you do won’t be enough. While DEM is relevant to all businesses, at BearingPoint, we see particular benefits right now for telcos, utilities, automotive companies, and government-backed smart cities. Now is time when the right advice and informed action can put you at the center of your own thriving ecosystem and return you to real growth.