Towards change: the business ecosystem

Time for change

“The future needs of two customers used to give me over half my volume, enough volume for major investment decisions. Today I need to base investment decisions on the future needs articulated by 15 of my customers. Our business today is the business of managing an ecosystem.” This comment from a CEO in the pet industry reflects a wave of change happening across many industries. 

Globalization versus fragmentation

Two opposing drivers for business success are of growing importance: globalization, demanding large volume brands, and fragmentation of consumer needs, demanding niche brands.

The large company was invented a century ago to enable the co-operation needed for a large volume brand. Lower distribution costs and the invention of new technologies had led to a globalization of business. Small independent companies using small machines and labour-intensive processes were growing less able to afford the cost of business. Their choice was to form a few large stand-alone companies manufacturing a few big brands.

Integrating stakeholders

Today we have new technologies and new distribution systems taking globalization into a new paradigm of big and small. Consumers can order whatever they want, from almost anywhere in the world, from the smallest single-person company or the largest of players, on Amazon, Alibaba and Ebay for example, and pay for it with PayPal, VISA, Mastercard et cetera. All six of these were developed to be ecosystem platforms, integrating multiple stakeholders on a level playing field. The same individual might be consumer, retailer, manufacturer and new product developer. The founders of these six businesses recognised early on that, in their industry, the successful companies of the future would be those that created ecosystems of stakeholders. Just as some companies in the pet industry are viewing the future, such as the one referred to above, it is time to go beyond the single organization to an ecosystem of stakeholders.