Platforms & Ecosystems, Part 1: Why Growth is Challenging

coral reef.jpg

Platforms and ecosystems. These terms are being thrown around a lot these days, for good reason. Most of the high-growth and high-value firms -- Apple, AirBnB, Uber, Amazon -- have been built on these concepts from the ground up.

But what do these terms mean exactly? Can any organization evolve to this mode of thinking, and should they? What is a useful strategy framework that can handle and simplify the complexity of business and ecosystems? We'll be exploring these questions in a series of articles. Let's start with the groundwork of definitions.

Growth today requires a new mindset

Let's back up and take a critical look at how business works today. We inherited our business practices from Henry Ford over 100 years ago; Ford taught the world how to transcend individual craftsmanship and evolve into mass production and scale. But this model is only effective for linear manufacturing processes; it's not effective within a fast-changing, complex world where businesses must deliver loyalty-building experiences. Linear processes and silos have become barriers to growth and agility. We need a fundamentally different way of working to make our organizations fit for the future.

Let's find an analogy. What could give us insight into how to manage a lot of moving parts (departments, business units, regions, partners, value chain, etc) for a variety of customer types (consumer, small business, enterprise, cultural variations, demographic and mindset variations) and knit them together into a coherent whole to achieve a set of outcomes?

Consider a natural ecosystem like a coral reef, in which numerous unrelated species coexist in harmony. A coral reef doesn't require coordination; it's self-sustaining because one species' waste is another species' food. The value generated within the ecosystem is the engine that maintains and grows the entire system. It serves as a magnet, attracting others that want to participate in this value exchange.

My current working definition of ecosystem is "self-sustaining value creation across interdependent entities with shared goals," and I'm very open to groupthink to evolve this definition.

Why doesn't your organization operate like an ecosystem?

Technically any business today should be an ecosystem. All your departments, business units, partners, etc. are (or should be) "interdependent entities with shared goals." The system should be easily self-sustaining; growth should be natural. And yet most leaders struggle to gain alignment and move their business forward. Numerous transformation efforts (digital! CX! innovation!) are applied more as band-aids without much impact, because the root cause hasn't been addressed.

Any ecosystem is an emergent property of a set of conditions. A coral reef cannot exist without the right location, water temperature and nutrients. Therefore, to get any set of diverse participants to begin operating as a singular whole, we need to look to the properties of complex systems for guidance. That means focusing on the conditions that allow growth to occur naturally... it can't be forced or even directly guided.

Defining the conditions for a self-sustaining ecosystem

I'll tackle this one in the next post, but here's where I'm headed: Condition #1 for a self-sustaining ecosystem is shared value. For example, survival is the core value in a coral reef, and the currency of value is food; different types of food, or nutrients, are exchanged across species.

If your organization is not growing naturally and easily, I'd argue that you haven't defined value - and how to create that value - in a way that is relevant and meaningful across all parties, both internally and externally. More on this in Part 2.