Marco Iansiti is the David Sarnoff Professor of Business Administration at Harvard Business School and a Cofounder of Keystone Strategy Inc., a consulting firm focused on strategy and innovation management. Roy Levien is a Principal at Aldaron and Founder of Keystone Advantage LLC.
Iansiti and Levien explain, “what the new dynamics of business ecosystems mean for strategy, innovation, and sustainability.” They point out that, in recent years, in industries as different as personal computers and personal care products, “companies [have] leveraged multiple organizations in distributed supply chains, integrated technological components from a variety of business alliances, collaborated with a number of channel partners to distribute their products, and leveraged complementary services from banks, insurance providers, or retailers.” As a result, many industries have been forced to create or become involved in a fully networked structure, one “in which even the simplest product or service is now the result of collaboration among many different organizations.” For example, Microsoft and Wal-Mart have a decisive competitive advantage in large measure because they are “keystone” companies in their respective ecosystems. More specifically, both of them understand that their fate is shared with that of the other members of their business network. Rather than focusing primarily on their internal capabilities (as many of their competitors did), they emphasize the collective properties of the business networks in which they participate, and treat these more like organic ecosystems than traditional supply chain partners. They understand their individual impact on the health of these ecosystems and the respective impact of ecosystem health on their own performance...[For that reason] “a new, holistic approach to strategy is critical to an increasingly broad range of firms in our economy as they face the new set of challenges and responsibilities created by competing in business ecosystems.”
All organizations involved in a given ecosystem must, of course, rigorously monitor but also take an active role in nourishing that system’s health to promote and facilitate the leveraging of an enduring and evolving core. However, it remains for keystones to provide both the vision and the leadership needed, especially in response to market design, operation, and competition. They must also facilitate and support integration, innovation, and adaptation within their ecosystem. “This is the price that keystones must pay for their privileged position at the hub of a business network and as owners of enduring assets: Keystones must manage the health of their ecosystems as a key business strategy.” The challenge for each niche player is to decide in which ecosystem to become actively involved in, and, with which keystones to be associated in a strategic alliance.
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