If you are a part of today’s global business world, whether as an active participant or an avid spectator, you are already aware of its cut throat competitive nature and sheer importance of support function or the business ecosystem. Business ecosystem is seldom talked about in public circles despite its imperative importance in the business world, nowadays more than ever due to already levelled playing field.
Having successfully spearheaded creation, development and management of strategic partner ecosystems in years past, I’m a very strong proponent of business ecosystem and feel compelled to offer personal endorsement and share the rationale for its existence.
So, why am I such a strong advocate of a business ecosystem and what value if any can it create for your business? Although by definition, ecosystem is a biological community of interacting organisms, business ecosystem has nothing to do with biology or organisms, instead it’s an interconnected network of businesses including manufacturers, suppliers, tactical and strategic partners, outsourcing firms and platforms which are collaborating in harmony with aim to achieve a joint objective set forth jointly.
For example, if your business is an end-to-end ICT solution provider which specializes in managed IT services, you’d ideally have to team up and align with technology partners e.g. IBM, HPE, CISCO, Oracle as well as system integrators (SI) e.g. Accenture, Orange Business Services (OBS), Atos etc. to be able to deliver a full-fledged end-to-end IT solution. Without them, you’d be incapable of such a feat.
To truly appreciate sheer importance of business ecosystem, you need only look at the big multi-billion dollar multinationals i.e., Microsoft, Oracle and CISCO which are heavily reliant and dependent on their business partner ecosystem for service and solution design, delivery and support, without which these mammoths wouldn’t be able to deliver their services or survive. Shocking or not, the truth of the matter is that the importance of business ecosystem must not be underestimated. So depending on your business, industry and competitive landscape you can benefit from business partner ecosystem in more ways than one. Here are some of the most notable ways.
1. Capabilities and service portfolio offering
In order to keep up with the demand of the marketplace and your target audience but also to stay ahead of the competition, your business will inevitably have to continuously evolve and grow through innovation. Considering that innovation and growth tend to be rather costly and take a fair bit of resources e.g. people, capital and time, one way to cut cost and achieve quicker go-to-market (GTM) is by the way of business collaboration and partnership with complementing companies.
What this simply means is for you to identify businesses within your marketplace or vertical which cater to the same target audience and offer services which are complementing to yours. By teaming up with such businesses you’d be able to expand your capabilities and service offering fairly quickly and inexpensively but also get a leg up on your competition. All of this would inevitably lead to a higher revenue over time.
2. Footprint and new market penetration
Assuming your business is a formidable force in your current marketplace which leads the competition by a mile and controls majority or the market share. With such a strong foothold you want to expand your footprint and increase revenue so you set your eye on another prospective market which has insatiable need for the services your business specializes in and offers.
However, that market is dominated by an incumbent who controls 75% of the market share and is set for a total market domination in years to come. Entering such market is extremely difficult and oftentimes futile due to high barriers to entry. Nonetheless, there are ways of doing it successfully and one such way is via strategic collaboration with existing players in the target market.
When entering a foreign markets dominated by incumbents, the smartest thing to do is to establish a strategic relationship and align with the most influential and dominant player you possibly can. However, for such strategic partnership to exist, your business must be beautifully positioned to complement incumbent and help them increase their footprint locally – within their marketplace – but also, expand into your marketplace with your support, should they so desire. Either way, for any business partnership to work it has to be a win-win.
Often times, the most dominant incumbent in a foreign marketplace you intend to enter into will be your arch competitor which offers the very same services as you hence, sees no value in teaming up with you. As a matter of fact, they will do their level best to keep you out of their marketplace.
In such case your best bet is to identify and align with their competitors, often times the underdogs, which will help you establish your presence and jointly with them, compete with the dominant incumbent. Clearly, for this to work you have to offer a tangible value and betterment for those underdogs, otherwise you’ll remain on your own.
3. Revenue boost and additional revenue stream
By teaming up locally in your marketplace with a strategic partner which offers complementing services and or products to yours can clearly help boost your revenue considerably. Also, in the case of a new marketplace you desire to penetrate with the help of a ‘local’ – well established – players who also offer complementing services to yours, you could fairly easily generate additional revenue stream and improve your top line over time quite significantly.
Wrapping it all up
The foregoing are only some of the ways by which a business ecosystem can benefit your startup. No matter what your current market share may be, how well positioned your startup is or how diverse service or a product offering you may have, there will always be the times when your target audience demand services you can’t deliver and products you don’t have readily available. To avoid being caught up unprepared and unable to fulfill your clients ad hoc wants, needs and desires, think ahead, forge strong strategic alliances and build a diverse business ecosystem.