Ecosystems Set To Redistribute $60 Trillion In Annual Revenue By 2025
In a post back in 2013, I focused on value ecosystems and how they would blur the lines between industries, making Industry constructs irrelevant in the future. At the time, I said the phenomenon would accelerate and companies would ultimately identify the relevant ecosystem(s) that enable their growth strategies. It was clear back then that ecosystems are complex, relationship-oriented, and represent future growth opportunities that are increasingly outside a company’s traditional business.
A company’s relationship portfolio expands as differentiation strategies focus on core strengths and the creation of new value propositions that involve multiple stakeholders. The threat of rapid commoditization drives a company towards excellence in seamlessly swapping partners in and out based on need and performance and sustaining innovation both inside the organization and within a broader ecosystem.
Frank Diana — A Closer Look at Transformation: Value Ecosystems
Fast-forward eight years and ecosystems are a popular topic. Leaders everywhere are looking to leverage the high growth potential of ecosystems and their platform business models. Many of our grand challenges, food abundance, health and wellness, environment, energy transition, expanded mobility, and more, are ultimately addressed via ecosystems. However, an article written by Golnar Pooya states that: less than 15% are successful in the long run. With a lack of trust and wrong governance choices among the principal causes for ecosystem failure. Given that trust is one of the points of failure, it is not surprising that Blockchain is in the conversation. A decentralized and impartial ledger could drive participation in ecosystems and deepen engagement — two critical success factors for ecosystem success. With over $50 billion of capital lost every year because of failed ecosystems, addressing success factors is a must.
To maximize opportunities for value creation, the value network needs to expand and should consist of engaged and active participants. Unless some foundational capabilities are in place to attract more participants and drive more engagement, ecosystems will fall short of realizing the full value potential for their participants.
Golnar Pooya — Ecosystems are a team sport — and blockchain must be the referee
Per the article, trust enabled by Blockchain allows direct competitors to feel more confident about engaging. Collaboration is paramount in these ecosystems, allowing all stakeholders to draw more value. In my experience, two obstacles stand in the way of capturing this value: lack of relationship intelligence, and unwillingness to share data. Anything that elevates the level of trust helps with these two obstacles. While trust is a critical ingredient, a change in mindset is the most important. Ecosystem thinking challenges traditional views of value design.
I’d argue that ecosystem thinking is a broader more comprehensive shift. Value creation and capture in the broadest sense is becoming a collaborative affair that increasingly involves multiple stakeholders within a value ecosystem. Managing in this world is more complex, requiring a collaborative competence that few companies have exhibited.
Frank Diana — Ecosystem Thinking
This transition to ecosystems — several years in the making — is massively impactful. Per the article, an estimated $60 trillion in annual revenue is set to be redistributed across the economy by 2025 through ecosystem growth. I referenced this redistribution in my post on the rise of ecosystems in 2018, adding that it represents roughly one-third of the $190 trillion total revenue pools that were projected to be in the global economy. No wonder everyone is talking about them.
Originally published at http://frankdiana.net on May 18, 2021.
