An Agenda for Business Ecosystem Leadership – Part 3 of 4

In an effort to structure the largely uncharted arena of business ecosystem leadership challenges we identified twelve key issues executives need to be aware of. They represent, in no particular order, the essence of the numerous inputs we received from expert conversations, a mini think-tank, and the results of a global survey we conducted in 2019 at the Center for the Future of Organization at the Drucker School of Management (CFFO).

We summarized the 12 issues in our opening LinkedIn article in which we also suggest a working definition of the meanwhile ambiguous buzzword “ecosystem”. The descriptions of the individual issues are deliberately short; they are only meant to map the agenda and stimulate conversation.

To make the reads not too long, and to allow for more differentiated feedback and comments on the individual items, we present them in four installments. Installment #3 looks at the portfolio management challenges that emerge in an ecosystem context: How to deal with Multiple Ecosystems, with Multiple Relationship Types, and with Multiple Operating Models.

As always, comments and remarks on each of the challenges are very welcome.

7      Dealing With Multiple Business Ecosystems

Mastering the complexity of multiple ecosystem dynamics that belong to
various business spaces and/or functional arenas

The complexity of ecosystem management grows with the complexity of an organization. Larger companies are typically part of multiple formal and/or informal ecosystems that are structured and/or emerge along their various business spaces. Each business unit – actually, each product/market segment – must shape and leverage its own collaborative architecture. These networks may partly overlap, but they all come with distinctive dynamics related to the industry and market space they are playing in.

Take for instance Heraeus, a German “hidden champion’ that engages in 11 very different businesses structured in more than 100 companies. Many of them enjoy global industry leadership in areas such as precious metal trading, medical solutions, fiberglass, photovoltaics, specialty lighting, sensors, or electronics, to name a few. Heraeus’ ‘Products and Solutions’ webpage lists 50 industries they serve with distinctive product and service portfolios – i.e. distinctive ecosystems.

Add to this the different functional domains which also deal with their specific stakeholder universe – such as a company’s ecosystem of start-ups and innovation hubs; customer engagement and co-creation platforms; supplier platforms; the network that relates to technology partnerships, to executive development; and so on. You end up with a complex network of networks that defies traditional command and control leadership.

In such cases, the corporate center can only provide an overall strategic-organizational framework that defines and designs the cornerstones of a company’s ecosystem engagement. This may include fundamental principles of leadership and organization, such as policies that push decision power to the periphery, fostering horizontal collaboration, providing budgeting autonomy, and more. It may also include enabling structural support such as providing an appropriate IT infrastructure and the establishment of network supporting roles. It may also include the creation of a dedicated unit that supports businesses and functions in their ecosystem activities, helps them developing related capabilities, and that serves as a roadblock buster against counterproductive structures and processes.

A well-designed corporate framework will enable a more agile operational engagement of the periphery that actively shapes and leverages the various ecosystems – an engagement that naturally cannot happen on the necessarily remote corporate level.

Creating a framework/categorization/typology of ecosystems and gaining a better understanding of their interplay and potential synergies is worthy domain for further research.

8      Relationship Portfolio Management

Dealing with the multiplicity of relationship and deal types that constitute an ecosystem

The portfolio management challenge gets exacerbated by the multiplicity of relationship types that constitute an ecosystem, such as joint ventures, licensing agreements, technology partnerships, open innovation platforms, and more. Each deal type follows its own collaboration rationale, its own silent or explicit agreement. While some principles of networked collaboration may be valid for all relationships, treating them with a cookie-cutter approach does not work.

Recent research from the Boston Consulting Group found that a typical ecosystem architecture includes 6-7 different deal types from 5-6 industries[1]. Each relationship comes with its own strategic importance and distinctive power dynamic that determines the degree of boundary permeability. The degree of openness, the type of financial arrangements, the sharing of IP ownership, etc. will differ substantially depending on the strategic role and the related kind of agreement with the ecosystem partner,

An effective ecosystem policy framework requires a deep understanding of the idiosyncrasies of each operating model and relationship type, and a high degree of flexibility to accommodate the multiple rationales that come with each collaboration. Companies who lack this understanding and flexibility are likely to be relegated to a limited set of relationships they feel “comfortable” with. They will miss out not only on opportunities that “uncomfortable” partners may offer; they also limit their influence in the overall ecosystem.

• Orchestrating Multiple Operating Models

Dealing with the idiosyncrasy of ecosystem participants that tend to differ
substantially in size, business model, operating model, culture, and more

Adding to the complexity of managing multiple deal types, ecosystem participants tend to differ substantially in their size, their business model, and their operating model. An ecosystem may include digital platform players, such as Google or Amazon; large incumbents from the “old economy” who are in different stages of digital maturity; smaller niche players that are highly specialized; university labs and start-ups that hold critical IP; various customer segments; and more. They may act within different regulatory environments, and they may come with different ownership structures.

Large organizations, who tend to fight complexity by creating standard operating procedures and complex legal frameworks, have a hard time dealing with this kind of massive diversity – especially when it comes to working with partners beyond traditional contractual arrangements. What’s more, they tend to think and act within the mental framework of “their” industry, which results in an unconscious business/operational model bias and a limited strategic-operational horizon.

Industries with long and stable product life cycles are particularly challenged. “Our existing partnerships, our joint ventures, our licenses – they go 30-40 years” says Tim Holt, COO of Siemens Energy, the world’s largest energy corporation: “We now see a massive shift to much shorter durations and less bilateralism. How do you do a partnership in this context? For traditional businesses, this will be a big challenge – not just on the digital front, but in a broader sense to get into this new flexible partnership and alliance mindset”[2]

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This article is part of a LinkedIn series about Organizing for Business Ecosystem Leadership. It is based on a recent research project conducted by the Center for the Future of Organization at the Drucker School of Management at Claremont Graduate University (CFFO).

If you would like to get immediate access to the entire study, you may download an electronic copy of the report here or get it as a physical booklet or Kindle version here.

To deepen our understanding of the subject, CFFO plans to launch a global dialogue and action platform on topics related to business ecosystem leadership. If you are interested to receive an invitation to the platform, contact research@futureorg.org.

Thanks for reading! We look forward to your comments and contributions to the conversation.

Previous articles of this series:

1 | Organizing for Business Ecosystem Leadership (Introduction and Overview)

2 | An Agenda for Business Ecosystem Leadership – Part 1 of 4

3 | An Agenda for Business Ecosystem Leadership – Part 2 of 4

[1]   Lang, N, Szczepanski, K., Wurzer, Ch.: The Emerging Art of Ecosystem Management. BCG Henderson Institute, January 2019.

[2]   Author interview with Tim Holt, conducted on October 25, 2019

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