1.
Planning Your Business Strategy in the Corporate
Ecosystem
Maya Townsend, Partnering Resources, CIO
What happens when you discover that your biggest client is the innovation and loyalty that come from engaging people
cannibalizing your product? This happened to one along the value chain.
international technology company. It threw the leadership
into an intense conversation about strategy. They emerged The flip side, of course, is that organizations engaging in
from the discussion with new resolve: to plan for the future deep collaboration tie their fates to the success of the
based not just on the company, but on the ecosystem in ecosystem, not just their own success. For example, if
which it operates. Microsoft were to go under, there would be a lot of
companies in trouble: systems integrators, value-added
The concept of the corporate ecosystem has appeared in resellers, software trainers, and so on.
technology journals for years. Simply put, it's the idea that
today's companies are embedded in multiple, complex
Mapping Your Ecosystem
relationships that make them interdependent on each other
for success. But it's only recently that corporate leaders are
realizing that an ecosystem is more than a concept. The If your company's fate is intimately tied to that of other
ecosystem has intense implications for how companies organizations, some of which are your competitors, you're
plan for the future, and they ignore those implications at going to think differently about their success. To bring this
their own risk. thinking into your next planning effort in a productive way,
start with a simple vulnerability assessment.
The Complex New World of the Ecosystem
The purpose of the vulnerability assessment is to identify
the companies, industries, organizations, and issues upon
Traditionally, executives worried about competition from which your organization depends in order to be successful.
rival firms. It was a straightforward world: the firm controlled Brainstorm the events that could disrupt your
its resources, advantage derived from a company's assets organization's operations, impede its ability to deliver or
and organizations made money based on their ability to undermine its profitability.
deliver value within their supply chains.
Let's walk through the process with the hypothetical
Today's organizations look very different. Rather than EdgeTek Corporation. EdgeTek produces ancillary
stand-alone players battling for market share, companies hardware, most important, the cords that connect MP3
form networks and alliances and collectively deliver value to players to car stereo systems. EdgeTek's ecosystem-the
their customers. Consider these recent aggregations: organizations with which it has interdependent
relationships-includes its assembly plants in China, car
• Novell joined forces with IBM on an ambitious open- manufacturers, MP3 manufacturers and even local
source project while collaborating with IBM rival universities that provide a source for new talent.
Microsoft to boost Windows-Linux interoperability.
• Salesforce opened its Force.com developer site, Here's the initial list of potentially disruptive events for
building interdependencies with organizations as EdgeTek:
varied as CRMfusion, with six employees, and
Electronic Arts, which earned $3.1 billion in 2007.
• An increase in defects at the Chinese assembly plant
• Keane provides application outsourcing services to forces recalls or increases production costs
Miller Brewing Company, creating a dual-sourced IT
workforce with staff from both Keane and Miller.
• Shipping disruptions delay delivery to distributors
• MP3 players lose popularity and market share,
reducing demand for company's cash cow
By creating deep alliances, each of these organizations
• Changes to MP3 technology force product
realizes value beyond that which it could deliver
reengineering
independently. In fact, Siebel Systems' founder, Tom Siebel,
attributed his company's explosive growth between 1997 • Direct partnerships between MP3 player
and 2000 to its web of relationships. A web of consultants, manufacturers and carmakers diminish the need for
technologists, system implementers, and suppliers EdgeTek's products
collaborate with Siebel to bring their products to market. • Unionization of Chinese workers causes work
Not only does Siebel incur lower staff costs, it also gains stoppages and production shortfalls

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• Product tampering brings negative publicity and While mapping, look at not just at organizations, but also
imposes recalls individuals. Who specifically can be influential? This is
• Recession decreases market for luxury items where a network analysis can come in handy by
identifying the strength of relationships between your
• Decrease in qualified labor inhibits ability to achieve
company and those critical to the organization's future.
sales quotas
• Loss of leadership talent inhibits company's strategic
growth Perhaps the organization has good connections with
universities but only weak ties to local communities. Or
perhaps the company's network shows strong connections
With the list of disruptive events in hand, the next step for to local organizations but weak links with government
EdgeTek is to determine the likelihood any of these events regulatory and support agencies. With this information, a
will occur. MIT professor Yossi Sheffi and MIT Center for company can put plans in place to develop the relationships
Transportation and Logistics director James B. Rice Jr. that will help sustain the company in its ecosystem.
have recommended creating a map with two axes:
probability of risk and consequences of risk.
We've Mapped Ecosystem Risks: Now What?
Here's what that map might look like for EdgeTek:
What does understanding your corporate ecosystem mean
practically for corporate leaders?
You must look beyond your own company. You can't
live in a bubble. You need to be aware of what's
happening in the outside world, particularly in ecosystem
organizations. Furthermore, you need to become
competent at hypothetical thinking. For example, what if
that potentially disruptive event occurs? What would the
corporation need in order to respond?
You must pay more attention to relationships within
your ecosystem. Get in front of the people with the power
to significantly impact your organization's health and
sustainability. Not only do you need visibility, you also
need strong relationships, not just with stated partners, but
also with the entities that have the power to significantly
disrupt or sustain your business. If that means taking more
Risk Map for "EdgeTek Corporation" time with headhunters, supply chain partners or union
groups, so be it. It may also mean taking the time to
Looking at the map, we see a high probability for five discuss the state of the industry with ecosystem partners,
events. Of those, four have severe consequences for the cosponsor conferences, hammer out mutually beneficial
organization. That's where EdgeTek must focus its attention. deals, or find ways to collaborate with competitors.
The next step is for EdgeTek to identify the players
associated with each event. Whose actions can precipitate You must be flexible. The beautifully articulated plan
the event? Who can influence it while it's under way? Who developed last year might not work when the business
can help clean up the aftermath? environment changes. When a fire at a Philips Electronics
plant in 2000 slowed delivery of cell phone chips to
For example, in the case of "lack of qualified labor," we customers Nokia and Ericsson, Nokia dispatched 30
might identify players as: employees to Philips to help restore operations. Was
deploying resources to Philips in Nokia's plan? No, but it
achieved the results Nokia needed: getting its products to
• Local universities that provide a source for high- market and achieving its sales plan for the year while
potential employees; Ericsson faltered.
• Local communities that develop opinions about the
value of working in EdgeTek plants and encourage or Ecosystems aren't going away. Instead, they're becoming
discourage community members to work for EdgeTek; increasingly complex as companies become more deeply
• Local trade unions that advocate for labor training, entangled and supplement their core competencies by
compensation and safety; developing strong alliances and partnerships. The good
• Job training programs that build workforce skill and news: For those with foresight and creativity, your
knowledge; ecosystem can help your company thrive.
• Government education departments that influence the
quality and extent of learning provided to citizens; Maya Townsend is founder and principal consultant of Partnering
• Government trade bureaus that can provide incentives Resources. For more information, visit
for companies seeking to train and hire unemployed www.partneringresources.com or e-mail
maya@partneringresources.com.
people.
© 2007 CXO Media Inc.