Own your area of business with digital ecosystem management 2/3

Date: 30.05.2017  By: Magenta Advisory  Type: News Comments: 0

In our previous blog post we discussed about digital ecosystem management, what it means in practice, how Scandinavian companies could leverage its potential and how it enables a totally new way to grow for companies from various industries. If you missed the first blog post, it can be accessed here. This week we move forward and talk about the importance of identifying the possibilities and what kind of stages belongs to the journey of becoming a fully equipped digital ecosystem player.

Identify the possibilities of digital ecosystem management 

Digital ecosystem management is about capitalizing on opportunities that present themselves, and is applicable to almost any area of business. It’s an especially good match for highly competitive sectors, where there are many players and rapid innovation is taking place. “The transition to an ecosystem is, by necessity, gradual. Some of the most shining success stories are a result of combining ecosystem thinking with an already successful business model. The shift doesn’t happen overnight, but it’s important to get moving to get ahead”, states Simon Torrance, Senior Advisor on Digital Innovation at BearingPoint.

Telecommunications companies have much to gain from digital ecosystem management: Typically, the focus of Scandinavian telcos has been in mobile-connectivity services, even if 95% of the value lies higher up the chain, in digital ecosystems – an opportunity no company wants to miss. BearingPoint recently released a white paper explaining the way to drive profits by up to 500% in the telco sector.

As mentioned, fintech is going through a vast transformation due to upcoming regulatory changes. Banks and financial institutions are currently mapping out the possibilities the new European Commission directive PSD2 brings. In short, banks must soon offer a lot of their data to third parties, and as we wrote, it’s a great example of how a digital ecosystem management model can help you succeed. Building a platform and a partner ecosystem with a clearly defined business model is surely better than clinging onto old, rapidly changing structures.

Taking the quick change of the business landscape into account, it’s not surprising that enterprise culture lags behind. The way decisions are made and how operations are run would have to accommodate for moving goalposts and a world of uncertainties, but often corporate operations don’t have mechanisms in place to handle such a fluidly changing environment. “To get re-rated by the stock market and drive up your price-to-revenue multiples, there needs to be a clear change. Digital ecosystem management is the area where we see the most promise, but to see the benefits the approach needs to be agreed upon and the mental models of people need to be revised”, explains Torrance.

Achieving exponential growth in today’s economy might seem like a tall order, but is within reach of companies willing to rethink their operations.


How to get started?

The goal is to create a platform that connects producers and consumers directly. Allowing other producers of products or services to join the platform is a key feature of the platform strategy. As the manager of the digital platform in which both the consumers and producers of a given market sector operate, you stand to achieve the exponential growth mentioned.

Before implementing a digital ecosystem management model it is necessary to revise the strategy and business model of your company. A platform strategy takes companies from the old paradigm of protecting a certain market niche to a much more open system.


First step: Basic platform

Once the groundwork is laid and strategy allows for a platform to be born, all that’s left is to create it. The next step is to make your operations lean enough to get new services and even categories of services to the market quickly. This is something where legacy IT can be a huge obstacle – a revision of systems is often needed.

The seed of the platform is, of course, your existing products and services.



Second step: Attract others

Once your platform is up and running with your products, services and data, and with your customers present, attracting services from other developers and companies is the next step. This adds value to customers and makes the platform well-rounded enough that it’s possible for it to become the main platform in its field. The number of services needs to be high enough for your platform to be comprehensive, but it is also extremely important to make sure your platform is well-curated and contains high-quality services.

Third step: Integration of other businesses

Amazon is a great example of the third step – incorporating entire businesses within your platform. This will allow your platform to benefit from others’ customers and market areas, as they reel in their business to exist on your platform. Your platform needs to have reached a stage of technical maturity where it can accommodate a large volume and various needs without hitches.

Fourth step: Nurture growth

When the platform is established as the preferred choice for a significant amount of consumers and producers, it’s time to complete the platform and develop it further. In addition to developing the platform and nurturing growth, some business decisions can be made: For instance, participating in the platform can require that the producers pay rent. This is the stage where you’re accumulating large quantities of data, and it will benefit all participants of your platform.


These steps could help any company in taking the first, or already second or third steps towards business model that takes into account the possibilities that digital ecosystem management provides. Stay tuned again – next we will air our last post about digital ecosystem management that summarizes the key lessons from our expert, Simon Torrance. Until the next week!



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