1. The Ecosystems Of Organisations

Question 1

What is the difference between a market and an industry?

Answer 1

A market consists of all the buyers and sellers of a good / service.

An industry is concerned with the production of goods / services, and serves the needs of a market.

Question 2

What is the ‘traditional view of markets’ and the ‘adversarial approach’?

Answer 2

Environments in which commercial dealings take place between different parties, i.e., buyers pay for products and services, and sellers provide products and services.

The adversarial, competitive approach meant companies were focused on making sales, growing market shares and increasing profits.

Question 3

What are stakeholders?

Answer 3

People, groups, or organisations that can affect or be affected by the actions or policies of an organisation. Each stakeholder has different expectations about what it wants and therefore has different claims upon the organisation.

Question 4

What are Porter’s Five Forces (1980) and how does this relate to adversarial environments?

Answer 4

1. Threat of potential entrants
2. Bargaining power of suppliers
3. Bargaining power of customers
4. Threat of substitutes
5. Rivalry among existing firms

As the competitive forces intensify their increases the level of rivalry. As profits reduce, this leads to adversarial environments, where companies are incentivised to compete harder to earn a profit (which is earned by outmanoeuvring competitors).

Question 5

What is an ecosystem?

Answer 5

A complex web of interdependent enterprises and relationships aimed at creating and allocating business value. Ecosystems tend to be broad, potentially spanning multiple geographies and industries, including public and private institutions, as well as consumers.

Question 6

Who are the key participants in an ecosystem?

Answer 6

1. Government bodies / regulators
2. Orchestrators
3. Producers
4. Consumers
5. Infrastructure suppliers

Question 7

How are ecosystems challenging regulatory frameworks?

Answer 7

1. Speed of change - e.g., data sharing, innovation and collaboration
2. Innovators finding ‘back doors’ - e.g., gig-economy and avoiding employment legislation
3. Ecosystems demanding that regulators in the ecosystem evolve too
4. Global nature of ecosystems - e.g., organisations operating in them are increasingly likely to transcend the legal frameworks in one country

Question 8

What is mutuality?

Answer 8

An enhanced level of coordination with formally or informally shared ideals, standards or goals

(Davidson et al., 2014)

Question 9

What is orchestration?

Answer 9

The coordination, arrangement, and management of complex environments

(Davidson et al., 2014)

Question 10

How does cooperation and collaboration present opportunities?

Answer 10

Cooperation and collaboration allow for participants to enhance their existing offerings and improve internal capabilities.

Cooperation is intended to facilitate idea sharing.

Collaboration is intended to fuel creativity and innovation to develop competencies and capabilities.

Question 11

What is the main argument in favour of ecosystems?

Answer 11

Strong ecosystems help deter potential new entrants from entering certain industries and markets as they lack the necessary relationships with existing participants.

Question 12

What are digital business platforms?

Answer 12

They facilitate the creation of ecosystem environments as they provide a virtual space in which participants can interact with each other.

Question 13

How is value created in traditional markets? - Porter’s Value Chain (1985)

Answer 13

Organisations predominantly focus on the activities that they undertake when producing or delivering products / services.

Porter’s Value Chain illustrates the activities that organisations undertake in a traditional market and how these combine to add value to the end customer:

Support activities: (1) Firm infrastructure; (2) HRM; (3) Technology development; (4) Procurement

Primary activities: (1) Inbound logistics; (2) Operations; (3) Outbound logistics; (4) Marketing & Sales; (5) Service

Margin represents the excess the customer is prepared to pay over the cost for.

Question 14

What is Porter’s Value Network? (1985)

Answer 14

Involves a product being exchanged between parties in a sequential order. As the product passes through each, each participant undertakes activities which add value to the end product.

Supplier > Organisation > Distributor > Customer

The focus is to cover respective costs and make a return by selling on to the next party.

Question 15

Why may some be reluctant to embrace ecosystems?

Answer 15

1. Fear of the unknown
2. Cost of developing or using digital business platforms or embracing new ways of working
3. Counter intuitive to work with and share ideas with others
4. Concerns that ecosystems are a passing fad

Question 16

Driving force behind emergence of ecosystems: Customer needs

Answer 16

1. Changes in customer preferences: e.g., customers demand a ‘one-stop shop’ service offering
2. Expectations changing as customers become more empowered; less inclined to remain loyal; greater levels of personalisation; focus on service is important
3. New competitors emerging; challenging ‘brick and mortar’ stores; emergence of crowdfunding

Question 17

What are the factors driving customer demand in the digital age?

Answer 17

1. Contextualised interactions
2. Seamless experience across channels
3. Anytime, anywhere
4. Great service
5. Self-service
6. Transparency
7. Peer-review and advocacy

Question 18

How can complacency be avoided?

Answer 18

1. Design thinking - adjust mindset from offering a single product to a broader range of experiences
2. Experiential pilots - adept to monitoring customer behaviours to better understand their openness to new experiences
3. Prototyping - launch early generations and gain feedback
4. Brand atomisation - products designed in a way to be more widely distributed, on multiple platforms

Question 19

What type of environments do advanced technologies create?

Answer 19

1. Connected and open - removing barriers that hinder customer engagement
2. Simple and intelligent - data captured about individuals
3. Fast and scalable - compete on a larger scale at a faster pace

Question 20

What is crowdsourcing?

Answer 20

Obtaining information from a large group of people that can be used to better inform and help others

Question 21

What are the three components of participants in an ecosystem?

Answer 21

1. Role: the part the participant plays
2. Reach: ability of participant to extend their activities
3. Capability (or key value proposition): the activities undertaken by the participant

Question 22

What are the three components of interactions in an ecosystem?

Answer 22

1. Rules: the informal / formal principals governing conduct (often enforced by orchestrator)
2. Connections: linkages across the ecosystem which connect data / information / knowledge
3. Course of interactions: speed and direction of exchanges of value among participants

Question 23

What are the four ecosystem roles?

Answer 23

1. Experience provider: create personalised ‘customer-centric’ products / services. E.g., bespoke interior design services
2. Asset providers: provide or manage assets. E.g., location data for car information systems to vehicle manufacturers
3. Process providers: manage the process. E.g., app to allow customers to make reservations with different restaurants
4. Platform providers: create environments. E.g., online marketplace

Question 24

What are the four types of ecosystems? (Complexity and orchestration)

Answer 24

1. Shark tank: Low C / Loose O
2. Wolf pack: Low C / Tight O
3. Hornet’s nest: High C / Loose O
4. Lion’s pride: High C / Tight O

Question 25

Strategies for ecosystem archetypes

Answer 25

1. Shark tank: constant differentiation and brand loyalty; constantly build relationship with participants
2. Wolf pack: build brand and defend their position; differentiation; build relationship with orchestrator
3. Hornet’s nest: keep offering relevant; be responsive; develop internal capabilities
4. Lion’s pride: align objectives with orchestrator; communication with participants; challenge and take over role of orchestrator

Question 26

What are the cost of embracing operating as an ecosystem?

Answer 26

1. Developing competencies and capabilities: training programs; developing organisational processes
2. Build brands: brand management; advertising and promotional campaigns
3. Develop new products and services: market research; cost of developing (R&D)
4. Build relationships with participants (especially orchestrators): cost of monitoring relationship; enforcing SLAs; cost of compliance

Question 27

What are the risks of embracing operating as an ecosystem?

Answer 27

1. Failure to identify suitable partners to build relationships
2. Ability to add value is reduce should the organisation fail to develop competencies and capabilities
3. Willingness to share knowledge not be easily understood or well received by key personnel
4. Joining the wrong ecosystem
5. Risk of confidential information being unintentionally shared
6. Reputation damage