Why Ecosystems Matter for Business Value and Growth

The time for ‘going it alone’ in business is behind us. Today, smart businesses are building and fostering resilient ecosystems – an often hidden asset that can keep your business ahead of the game. 

Ecosystems are a core business asset and a key part of successful business strategy. Although they’ve always been important to business, ecosystems are absolutely crucial today, especially for small businesses and start-ups. Let’s explore why.

A brief history of business ecosystems

In nature, ecosystems are pretty much everywhere. In business, ‘ecosystem’ became a tech buzzword in the early 2000s with the rise and dominance of Silicon Valley. The world started to wonder: why are so many globally dominant technology companies starting there? What’s so special about Silicon Valley? And the short answer was: it offers a rich ecosystem of interconnected and mutually reinforcing resources. 

During the dot com boom and crash, the term ecosystem became over-hyped. This turned many business owners and entrepreneurs off the concept. This is too bad, as it’s exactly the time when ecosystem health started to really matter. Today, ecosystem health is essential for successful, sustainable business growth. Not just in tech. And not just in the Valley. Everywhere.

So, what is a business ecosystem? And what could a stronger ecosystem mean for your business?

Understanding the business ecosystem

A business ecosystem is a very broad network of organisations, customers, suppliers, partners, governments, not for profits and even competitors. That’s right: it’s not just a supply chain. It goes way further.

A supply chain is highly formalised and relatively transactional. Supply chains tend to focus on the linear flow of goods or services, like a river. An ecosystem, in contrast, is a much broader spectrum of interactions, like the entire environment through which the river flows – forests, mountains, lakes, the whole gambit.

Here’s the hyfen8 definition so we know exactly what we’re talking about here: An Ecosystem is a dynamic and interconnected web of relationships that creates and captures value through semi-coordinated sharing of resources. 

That might sound complicated, but it’s not. Ecosystems are the relationships your organisation has with other people and organisations. It includes what you do with these relationships. Examples include knowledge exchange, resource sharing and innovation.

Ecosystems are potentially dynamic and can offer organic, unexpected benefits. For example, you enter a partnership with another company to develop a resource, and end up developing much more together. This potency makes Ecosystems highly valuable.

Your Ecosystem might be the best asset you’ve never paid attention to

Because of their inherent diversity, Ecosystems can provide access to all kinds of resources, knowledge and innovation that you as an individual business can’t access by yourself. These extra resources can be the difference between your business thriving or failing. 

Even though the term has only recently become trendy in the business world, Ecosystems have always been key to business success and growth. Even in the small country village of yesteryear, businesses relied on local communities and networks between towns to craft and sell goods. In this sense, interconnectedness has been part of business and commerce for many centuries.

These days, however, we have the advantage of digital technology. This means businesses can work closely with many different types of players: freelancers, huge multinationals, governing bodies and businesses literally anywhere around the planet might all form a part of your Ecosystem. 

Being part of an Ecosystem that’s rich in the resources your business needs offers a huge competitive advantage. To this end, in a volatile market, Ecosystems aren’t a ‘nice to have’. They’re essential for ongoing customer and stakeholder relevance – in other words, to your business’ success.

Curious about how your business Ecosystem can drive growth and value? Read our Ecosystem Value article now.