Strategy as Ecology - Levien and Iansiti

Question 1

Overview

Answer 1

Levien and Iansiti assert that the reasons that Microsoft and Wal-mart have seen the success they have is due to their work to support the ecosystem in which they operate.

This creates ‘symbiotic’ relationships that benefit the firms collectively by giving them an advantage over competing networks, as well as customers.

e.g. more than half of wal-mart’s cost advantage comes from the way it has organised its ecosystem of partners. By sharing information, wal-mart is better able to match supply and demand across the ecosystem.

Question 2

symbiotic relationships

Answer 2

These relationships form between firms in an ecosystem, whereby they depend on each other, for mutual gain.

Question 3

What are the determinants of a healthy ecosystem?

Answer 3

Productivity - a network’s ability to transform technology and other raw materials into lower costs and new products.

Robustness - capability to survive disruptions and unstable environments.

Niche Creation - capacity to increase meaningful diversity through the creation of valuable new functions or niches.

Question 4

match strategy to the environment

Answer 4

Keystone

• when business is at the centre of network of asset-sharing relationships.
• turbulence

Physical Dominator

• stable environment
• acquire partners and assets needed to operate.
• vertical/horizontal integration

Niche

• when environment is turbulent
• develop expertise which differentiates from competitors.

Question 5

keystone

Answer 5

• aim to improve the health of the overall ecosystem by providing a common set of assets
• e.g. microsoft’s windows OS or Wal-Mart’s procurement system.
• increase ecosystem productivity by increasing organisation/efficiency.

e. g. eBay.
- platform increases the productivity of the network, performance standards (seller/buyer feedback) enhance stability.
- shares value - charges only a small fee.

Question 6

physical dominator

Answer 6

vertical/horizontal integration to manage/control large proportion of the network directly.

little opportunity for meaningful ecosystem to arise

Question 7

niche

Answer 7

specialised capabilities that allow it to differentiate from other companies in the network.

leverage other resources from other niche players, means that the company can focus all of its resources on its expertise.

by nature niche players are dependent on others.

value creation and innovation