Chapter 1 Flashcards
The Ecosystems of Organisations
What is a Wolf Pack ecosystem?
Characterised by low complexity and high levels of orchestration.
New entrants can easily enter but the ecosystem itself is complicated. Key to success is collaboration.
What is a Hornet’s Nest ecosystem?
Characterised by high complexity and low orchestration.
New entrants will find it difficult to enter the ecosystem but competitors need to find their own way to capture value, ideally in a way that’s different from their competitors. Known as fragmented competition. As there’s high barriers to entry there’s often a limited number of competitors who tend to be large.
What is a Lion’s Pride ecosystem?
Characterised by high complexity and high orchestration.
Participants are seen to be more secure. The high levels of orchestration means the orchestrator will facilitate, monitor and remunerate participants’ actions within the ecosystem.
“Winner takes all” usually one major player at a time.
What is a shark tank ecosystem?
Characterised by low complexity and low orchestration.
Participants have to create value themselves through innovation and must capture value directly. Innovation can be anything which separates organisations from the competition.
What are the 4 types of ecosystem?
- Hornet’s Nest
- Lion’s Pride
- Shark Tank
- Wolf Pack
What are the two factors used to create a type of ecosystem?
- Complexity
- Orchestration
What is high complexity defined by?
A highly complex ecosystem could be when there’s a vast range of participants that requite a sophisticated central orchestrator.
Undertaking complex activities.
Obstacles that restrict entry into the environment.
What is low complexity in an ecosystem defined by?
Participants roles being easily replaced
What is tight orchestration?
When the orchestrator is able to influence the behaviours and actions of participants across the entire ecosystem.
What is loose orchestration?
When there’s no central orchestrator so participants act more independently.
What are Porter’s Five Forces?
- Competitive rivalry
- New entrants
- Buyer power
- Supplier power
- Substitutes
How can Porter’s Five Forces be used?
To understand how profitable an industry is and to understand the forces impacting the industry profitability.
If the forces are high the industry profitability is low. If the forces are low, the industry profitability is high.
Competitive rivalry
The force will be high and the industry less profitable when:
There are a lot of competitors
There’s little difference between the products
Competitors are strong
There are exist barriers to the market
New entrants
The force will be high and the industry less profitable when:
New companies can easily enter the market
New companies are likely to or intend to enter the market
It’s harder to enter the market when there are significant barriers to entry:
- High costs of entry
- Patents
- Customer contracts in place
- Cost advantages
- Strong brands
Buyer Power
The force will be high and the industry less profitable when:
Customers are large and provide a large proportion of company profits
Customers can switch between competitors easily
Supplier Power
The force will be high and the industry less profitable when:
There are few alternative suppliers
Cost of changing suppliers is high
Substitutes
The force will be high and the industry less profitable when:
Substitutes are easily available. Substitutes are products to which a customer can easily switch and still have their needs met. Needs can be met by different types of product.
That is a participant in a business ecosystem?
The organisations or individuals within the environment
What is a Business Ecosystem?
‘An ecosystem is a complex web of interdependent enterprises and relationships aimed to create and allocate business value. Ecosystems are broad by nature, spanning multiple geographies and industries, including public and private institutions and consumers.’
A network of companies, competitors, products and stakeholders, such as suppliers and customers. They work together in a way that makes the greater than their individual elements.
That is an interaction in a business ecosystem?
The services or products that are exchanged amongst the participants in the environment.
What three main elements separate an ecosystem from a traditional market?
- Mutuality
- Orchestration
- Value creation
What are the main benefits of being part of an ecosystem?
- Creating more value for customers
- Raising barriers to entry for potential new competitors
- Reducing production costs
- Reaching new customers
Participants.
The key questions regarding the role, value and reach of a participant
What is the participant’s role? - Exact role the participant is carrying out in the ecosystem with regards to their own business
What is their key value proportion?
- The capacity and value the participant provides
What is the participant’s reach?
- Whether the participant is able to scale up its operations.
Jump with the sharks
A shark tank is highly competitive and competitors need to continue to innovate to keep ahead of new entrants.
Roar with the lions
A lion’s pride has one market leader who must ensure that the factor that lead to their success continues to be relevant in a changing world.
Fly with the hornets
In a hornet’s nest, the smaller number of major compatitors must find their specialist niche so they can retain their position as one of the major players.
Dance with the wolves
In a wolf pack, the orchestrator supports all the participants to coordinate them to work together for mutual benefit, the role of the orchestrator being key to the success of all.
What are the three characteristics of organisations in ecosystems?
- Connected and open
- Simple and intelligent
- Fast and scalable
Characteristics of an organisation in an ecosystem
Connected and open
Developments in technology means more people have access. Participants can communicate and collaborate easily.
Characteristics of an organisation in an ecosystem
Simple and intelligent
Developments in technology mean it’s getting simpler to use and easier for organisations to collect and analyse data to make informed decisions.
Characteristics of organisations in an ecosystem
Fast and scalable
Using technology, the number of transactions an organisation can undertake has increased, along with the speed in which they can undertake them. Being scalable means they can scale up easily
Drivers of the digital world
- More people now use the internet
- The number of connections is increasing, this allows for more data to be collected and then aids real-time customisation for consumers
- Data analytics is the science of analysing raw data, aids understanding and decision making.
- People are able to interact with machines
- Digital technology and getting connected is becoming more affordable.
- Accessibility for more people living in urban areas.
What are the drivers of consumer change?
- Contextualised interactions
- Connected digital systems
- Real-time
- Service
- Transparency
- Peer reviews
How can companies improve the customer experience
- Design thinking
- Prototyping
- Experiential pilots
- Brand atomisation
What is design thinking?
Design thinking is designing for the individual they are creating the product or service for
What is prototyping?
Prototyping is the development of a prototype product in the early stages of a product’s development. Allows the company to see how consumers interact.
What is an Experiential pilot?
Experiential pilots are used to analyse the behaviour of consumers and how they interact with an organisation’s product or service to help design new products.
What is Brand atomisation?
By thinking about how its products can be designed, brands can allow some areas of its products to be more widely distributed in a variety of different platforms.
