Managing the EcosystemManaging the EcosystemOptimize MagazineOptimize Magazine

By Marco IansitiBy Marco Iansiti

Presented by:Presented by:Noha ZakiNoha Zaki

ConceptConcept

Increasingly interconnected worldIncreasingly interconnected world Smart companies rely on networks Smart companies rely on networks

(partners, Suppliers, and customers)(partners, Suppliers, and customers) Networks are like biological ecosystems Networks are like biological ecosystems

(companies succeed and fail as a (companies succeed and fail as a collective whole)collective whole)

Ecosystems help companies become Ecosystems help companies become more resilient to market changes and more resilient to market changes and more responsive to customer needsmore responsive to customer needs

conceptconcept

Business ecosystems are wide spread in Business ecosystems are wide spread in industries such as: banking, industries such as: banking, biotechnology, insurance and softwarebiotechnology, insurance and software

IBM and Microsoft: remain at the hub of IBM and Microsoft: remain at the hub of their business ecosystems by working with their business ecosystems by working with a network of partners to bring products a network of partners to bring products and services to customersand services to customers

QuestionQuestion

How a company best How a company best manages assets it doesn’t manages assets it doesn’t own but are critical to its own but are critical to its success?success?

First StepFirst Step

Understand ecosystem strategiesUnderstand ecosystem strategies Executives must craft new strategies that Executives must craft new strategies that

fit the new networked worldfit the new networked world Rely on ‘Rely on ‘key stonekey stone’ species to maintain the ’ species to maintain the

health and productivity of the entire health and productivity of the entire systemsystem

eBay, Wal-MarteBay, Wal-Mart

Second StepSecond Step

Use technology as the connective tissue Use technology as the connective tissue that lets the ecosystem function, grow and that lets the ecosystem function, grow and developdevelop

Technical infrastructure that allows them Technical infrastructure that allows them to share information and encourage to share information and encourage collaborationcollaboration

CIOs have central rolesCIOs have central roles

Wal-MartWal-Mart Success depends on IT decisions that are closely Success depends on IT decisions that are closely

tied to its understanding of its ecosystemtied to its understanding of its ecosystem Supply chain ecosystem (from manufacturing to Supply chain ecosystem (from manufacturing to

consumer)consumer) Creates value by providing massive new channels to Creates value by providing massive new channels to

reach consumers worldwidereach consumers worldwide Capturing customers and sales data by using a Capturing customers and sales data by using a

computer system that manages thousands of stock-computer system that manages thousands of stock-keeping units from thousands of vendorskeeping units from thousands of vendors

Analyse data and share it with suppliersAnalyse data and share it with suppliers Significant cost advantageSignificant cost advantage

Measuring the health ofMeasuring the health of performance performance

Robustness: Robustness: ability to survive disruptions and unforeseen ability to survive disruptions and unforeseen

changes changes Provides a buffer against external shocks and Provides a buffer against external shocks and

provides a degree of predictabilityprovides a degree of predictability Survival rate of ecosystem members Survival rate of ecosystem members

( customers, suppliers, distributors)( customers, suppliers, distributors)

Measuring the health ofMeasuring the health of performance performance

Productivity: Productivity: Ability to consistently transform technology Ability to consistently transform technology

and raw materials( labour, process) into and raw materials( labour, process) into lowered costs, new products, and functionslowered costs, new products, and functions

Measured by return on investmentMeasured by return on investment Niche creation:Niche creation:

Ability to create new, valuable functions and Ability to create new, valuable functions and foster diversity that creates real valuefoster diversity that creates real value

EBay Vs EnronEBay Vs Enron

EBay: EBay: keystone strategy, benefiting entire keystone strategy, benefiting entire

ecosystemecosystem Easy- to use tools (simple for buyers and Easy- to use tools (simple for buyers and

sellers)sellers) Transparent trust systemTransparent trust system 85% of web-based auction revenue85% of web-based auction revenue

EBay Vs EnronEBay Vs Enron

EnronEnron Make profit ignoring the health of its Make profit ignoring the health of its

networknetwork No sharing of informationNo sharing of information No transparencyNo transparency Flamed out through combination of Flamed out through combination of

misguided strategic decisions and misguided strategic decisions and unethical behaviourunethical behaviour

Steps to be followed bySteps to be followed by CIOs CIOs

First month: Take stock of your systemFirst month: Take stock of your system Know your ecosystem and how it’s Know your ecosystem and how it’s

workingworking Analyze your roleAnalyze your role Understand role of technologyUnderstand role of technology Analyze how your changing ecosystem is Analyze how your changing ecosystem is

impacting your role, your strategy, and impacting your role, your strategy, and your business modelyour business model

Steps to be followed by Steps to be followed by CIOsCIOs

Second month: look at where you and Second month: look at where you and your ecosystem are goingyour ecosystem are going

Is your role in the ecosystem the one you Is your role in the ecosystem the one you wantwant

Identify the network strategies that work Identify the network strategies that work best for youbest for you

Determine the assets needed to manage Determine the assets needed to manage and execute your strategy (potential new and execute your strategy (potential new partners)partners)

Steps to be followed by Steps to be followed by CIOsCIOs

Third month: Set up metrics to help manage Third month: Set up metrics to help manage ecosystemecosystem

Examine need for new information sources and Examine need for new information sources and business applicationsbusiness applications

Define critical ecosystem measuresDefine critical ecosystem measures Examine partners and develop metrics to assess Examine partners and develop metrics to assess

ongoing evolutionongoing evolution Build ecosystem dashboardBuild ecosystem dashboard Examine critical technology and information Examine critical technology and information

assets that help in shaping the business assets that help in shaping the business ecosystemecosystem