Over the past couple of years, the business chatter about digitization has changed, somewhat. It’s no longer just about introducing your sales, customer service, marketing teams or inventory management to the age of real-time virtual interaction. Digitisation has escalated to the next level. Today, it’s impossible to discuss digital innovation without mentioning digital ecosystems.
But what is a digital ecosystem, how does it (or will so in the future) impact your business and why everybody is making such a fuss about it? Whether you are an owner, CEO or CIO of a customer or company oriented business, these are the questions you need to answer in order to keep your spot on the ever-crowded marketplace!
What is a Digital Ecosystem?
In the recent years, many companies have been excitedly plastering digital solution over their businesses like teens trendy patches over their jackets and backpacks. However, as the digitalization is maturing, these scattered “bandaid” solutions are no longer sufficient. The future lies in interconnectedness where each and every part of your supply chain from manufacture to end-consumer works in real-time synchrony, thus creating new values and revenue sources.
In Theory:
Digital ecosystem, in essence, is an interdependent bundle of actors (such as people, products, enterprises, customers, regulators, stakeholders) which interact and exchange information virtually via standardized digital platforms and scenarios. An ecosystem brings the strengths and advantages of the scattered digital advances and ties them together under one roof, enabling deeper cooperation and visibility.
In Practice:
Without realizing it, we are already part of many such (more or less efficiently connected) ecosystems.
For instance, banking industry makes for a great ecosystem example as many banks and financial firms use this model to increase customer loyalty through multiple mobile banking applications. One of the products that connect to a larger digital ecosystem is a digital wallet which is compatible with other applications people commonly use for purchases. The value created is in a seamless and safe digital experience where customers do not need to hustle with credit card details, passwords, logins, and fear of theft.
From a business point of view, an excellent example of a functioning ecosystem is payever OS that interconnects shipping, product and inventory management, sales, online marketing, customer service, accounting and overall business management under one roof. Moreover, the system enables you to connect and manage all your online stores in one interface, regardless of who is your ecommerce platform provider. That’s what a digital ecosystem is all about: considering and connecting digital resources inside as well as outside your company.
What are the Core Values of Digital Ecosystem?
The network of digital ecosystems is spreading like wildfire and growing ever more complex which makes it harder to see the values that drive the evolution. When we boil all the happenings down, the digital ecosystems drive value from the following key elements:
- Creation of New Revenue Sources. Application of digital solutions has introduced a vast amount of new revenue streams and even forced a change in commonly used business models. Think about online payment services, ecommerce, ever-evolving role of social media, and so forth, which a few years ago were non-existent.
- Building a More Efficient Cost Structure. For numerous businesses, increased digitization meant significant cost cuts thanks to improved internal processes such as manufacture, supply chain, sales, marketing, etc. Also, subscription and pay-per-use services have opened digital advantages to small and medium business that, until than, were unable to match efficiency of well-established corporations.
- Faster Adoption of New Technologies and Practices. Thanks to open-source applications, innovative services and products, businesses are able to adapt new technologies more swiftly. Faster adoption of new technologies leads to greater technological capabilities and thus, ability to respond to market changes with much more agility.
All of these values are tied by a single thread of software democratization. In other words, being able to leverage a plethora development platforms and open-source lowered the financial and intellectual barriers which, by default, speed up the market transformation and drive further development.
How Can Your Business Drive Value from Digital Ecosystems?
According to the research by Accenture, 82% of executives of leading companies claim industry boundaries are being blurred, if not erased; Hence, new paradigms are emerging for all industries. Whatever the focus of your business — digital or tangible, customer or business to business — changes brought about by ecosystems will affect all your current business processes.
Nevertheless, if you start acting and building your business strategy with core ecosystem value in mind, you will be able to enjoy an unprecedented competitive advantage. The same Accenture study points out that unlike unrelated digital breakthroughs we witnessed in the past decade, ecosystem industry disruptions will be predictable ones. For instance, many automobile makers foresaw that data analytics would have the biggest impact on the insurance industry. Therefore, they started to create smart cars capable of collecting this type of information. This action indirectly improves driver behavior, enables people to obtain personalized insurance deals and prevents insurance fraud.
So, what to do?
Top companies leveraging the strengths of digital ecosystems focus on three key areas: organization, technology, and leadership.
Reconsider Your Business Model
If you represent a company that has been around for some time, it might be useful to go through the existing company process, silos, contracts, and management structure. Determine if all these procedures still stand their ground are at all necessary in the digital era. To be able to keep up with digital ecosystems your business needs to be flexible and agile. The first step, therefore, is to adopt a process that enables change and quick growth.
Keep up with the Digital Advances
Let’s face it, without swift modern tech to back you up; it will be rather difficult to play a meaningful role in emerging digital ecosystem. These systems are built so innovation, learning, and development can thrive and drive the industry forward. Thus, running on outdated software or processing, inaccurate clunky data just won’t do it. Invest time and talent into top technologies be it by transforming your production line into a smart factory, or organizing your inventory and shipping with smart apps. Increasing your business’ digital capabilities is a cornerstone of building an effective digital ecosystem.
Be Open to Change
This point is particularly important for larger business or manufacturers that have been on the scene for a few decades and who are still working with rather clunky management models and systems. It’s hard to wake up a spirit and interventional flexibility of a startup under heavy corporate guidelines and processes. Your job is to stay open to change as well as enable it.
Digital ecosystems are all about change. If you are unable to change your whole company processes at once but feel the need for innovation, don’t be afraid to delegate. For instance, NCC Industry, a large construction company, set out towards digitalization through creating their own startup. The company recognized that startups are much more apt to design digital products without the shackles of corporate policies. Some companies decide to acquire relevant startups or simply create a partnership with other market players (e.g., payever pairing up with Santander to offer installment payment option for online purchases).
Create a Collaborative Culture
Two heads are always better than one! The beauty of the ecosystem trend is the growing tendency to collaborate for the sake of mutual growth and development. Therefore, those who aspire to run successful digital enterprises need to stir away from animosity and rivalry since collaboration will require you to share your knowledge with other players in the industry. However, the highest level of innovation happens only if businesses can absorb, and adopt innovation and advances from their industry and take them to the next level. An excellent example of collaboration is creating open-source software and applications where the creator keeps his intellectual property while giving coders chance to adapt their product as necessary.
Conclusion
Digital ecosystems are the inevitable next stage of the digital revolution. The sooner you start adapting your business strategy towards this model, the better chance you have at maintaining, or even advancing your competitive advantage. Whether your business focus, you need to start stirring towards agility that is only possible by leveraging smart, interconnected digital solutions.
