Business Ecosystem Creation

HBS Working Knowledge has excerpts from a forthcoming book by Marco Iansiti and Roy Levien:

Keystone organizations play a crucial role in business ecosystems.

Fundamentally, they aim to improve the overall health of their ecosystems by providing a stable and predictable set of common assetsthink of Wal-Mart’s procurement system and Microsoft’s Windows operating system and toolsthat other organizations use to build their own offerings.

Keystones can increase ecosystem productivity by simplifying the complex task of connecting network participants to one another or by making the creation of new products by third parties more efficient. They can enhance ecosystem robustness by consistently incorporating technological innovations and by providing a reliable point of reference that helps participants respond to new and uncertain conditions. And they can encourage ecosystem niche creation by offering innovative technologies to a variety of third-party organizations.

Broadly speaking, an effective keystone strategy has two parts. The first is to create value within the ecosystem. Unless a keystone finds a way of doing this efficiently, it will fail to attract or retain members. The second part, as we have noted, is to share the value with other participants in the ecosystem. The keystone that fails to do this will find itself perhaps temporarily enriched but ultimately abandoned.

The concept seems similar to that of “platform leadership” which has been dealt with in the past.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.