How ecosystems create value for their members
February 14, 2019
February 14, 2019
An ecosystem is the network of cross-industry players who work together to define, build, and execute market-creating customer and consumer solutions. Ecosystem-based companies are creating tremendous value on a global scale, which is driving strong interest from many organizations to evolve towards an ecosystem-based business model. Almost half of executives (46 percent) say they are actively seeking ecosystems and new business models.1
How have these organizations been able to create and capture so much value?
The rationale behind the incremental value of an ecosystem model compared to a traditional business model is based on the ability to create network effects. In short, network effects represent the growth in value for all with every platform participant that joins.
Network effects represent the growth in value for all with every platform participant that joins.
Traditional companies follow a typical production and distribution value chain to customers, resulting in little interaction between sellers and end customers. This limits the scope of the network effect for traditional business models. There are two kinds of network effects typically taking place in an ecosystem, same-side network effects, where an increase in usage leads to a direct increase in value for other users. This is, for example, the case with telephone systems, or social networks. And cross-side network effects, where the increase in usage of one element increases the value of other elements and vice versa, such as with phones and apps.
In an ecosystem, network effects increase as the number of ecosystem participants and the quality of their participation increase. Several value drivers can have a positive impact on the number and quality of participants.
This is the theory, right? But in practical terms, how have successful organizations enabled and developed network effects to create and capture more value than those with traditional business models?
The economic impact of network effects is driven by the number of an ecosystem’s participants and by the quality of their participation.
Several value drivers can affect both the number of participants and quality of participation. Accenture Strategy analyzed which value drivers have been adopted by successful ecosystem-based organizations. While each organization has developed a different strategy, common value drivers emerge:
Many company leaders see a strong future in ecosystems. In the next three to five years, they believe ecosystems will create new competitive advantage (56 percent), allow them to better serve customers (50 percent), and drive innovation and disruption (44 percent).2
But how do you execute an ecosystem vision? From our analysis we can derive several insights:
1 Accenture Strategy, Cornerstone of Future Growth: Ecosystems, 2018
2 Accenture Strategy, Cornerstone of Future Growth: Ecosystems, 2018