Types of Ecosystem and Strategy

Question 1

By which two key features are ecosystems be characterised?

Answer 1

• the degree of complexity
• extent of orchestration

Question 2

What is the Degree of Complexity ?

Answer 2

Concerned with the number of participants operating in an ecosystem and complexity of activities they undertake.

Question 3

What is Extent of Organisation ?

Answer 3

Is concerned with the strength of a participant to influence others in ecosystem, and degree of formality that exists between participants within the ecosystems.

Question 4

Name the 4 types of Ecosystem:

Answer 4

1.) Hornet’s Nest - high complexity, loose orchestration
2.) Shark tank - low complexity, loose orchestration
3.) Lion’s Pride - High complexity, tight orchestration
4.) Wolf Pack - Low complexity, tight orchestration

Question 5

What is High Complexity?

Answer 5

High barriers to ecosystem entry exist and the threat of new entrants is low. Participants position is fairly stable as capabilities possessed are hard for others to copy. Petrol and Oil.

Question 6

What is Low Complexity?

Answer 6

Low barriers to ecosystem entry exist and threat of new entrants is high. Participant’s position is weak as capabilities required to operate are easy to copy.

Question 7

What is Tight Orchestration?

Answer 7

Certain participants have ability to influence others in ecosystem.

Question 8

What is Loose Orchestration?

Answer 8

Participants have a limited ability to influence others in ecosystem.

Question 9

What are the Features of Shark Tank?

Answer 9

• Low complexity and loose orchestration
• Focus on creating value through innovation and differentiating due to barriers to entry are low and threat of new entrants is high. Participants have to look after themselves.
• Strategy should be based on need for constant differentiation and brand building. *High risk position as new entrants may challenge existing ways of working.

Question 10

What are the features of Lion’s Pride?

Answer 10

*High complexity, tight orchestration
* Threat of new entrants is low as result of complex nature.
* Participants focus on strategies that align strategic objectives with those of orchestrator. Powerful participant can eventually challenge and take over the role or orchestration.

Question 11

What are the features of the Hornet’s Nest?

Answer 11

• High complexity, loose orchestration
• Barriers to the entry are high but there are limited orchestration.
  *Pursue strategies aim at keeping their offering relevant. Involves being responsive to what customers want and focusing on development of internal capabilities needed to deliver what customers want.

Question 12

What are the features of the Wolf Pack?

Answer 12

• Low complexity, tight orchestration
• Low Barriers to entry and high degree of orchestration.
  *High Levels of orchestration suggest that ecosystem as a whole is highly advanced.
• Orchestrator exists but doesn’t have as much power and influence as in Lion’s Pride ecosystem.
• Participants should aim to build their brands to defend position and differentiate their offering where possible.
• Creating strong relationships with orchestrator is crucial given the ease for others to enter the ecosystem.

Question 13

What are the 4 Ecosystems Strategies?

Answer 13

1.) Develop competences and capabilities - put staff through training.
2.) Build brands to support differentiating products and services - brand management may incur costs if this involves advertising and promotional campaigns.
3.) Develop products and services to help keep them relevant to the needs of customers - undertake market research. costs of developing products and services are also likely to be significant
4.) Building relationships with other participants including with orchestrators - build relationships with other participants in ecosystem. Include costs of monitoring and enforcing service level agreements (SLAs) with suppliers, and costs of ensuring compliance with rules required by ecosystem orchestrator.

Question 14

What are the risks of Ecosystems?

Answer 14

• Failure to identify suitable partners to build relationships with
• New Ecosystems may not easily be understood or well received by key personnel.
• Joining the wrong ecosystem represents significant risk to an organisation.
• Greater levels of co-operation and collaboration increase risk that confidential or sensitive business info is unintentionally shared with other participants.
• Other participants can be controversial and cause damage to organisation’s reputation.