Business ecosystem is a term that means a group of platform operators and complementary operators . For example, a product called iPhone consists of a platform operator called Apple, which has iOS software and terminals (iPhone), and a complementary operator that provides apps, accessories, communication lines, and so on.
In recent years, the platform business has been attracting attention, but the term “ecosystem” is a combination of the operator responsible for the platform and the complementary operator for that operator, “ one ecosystem (ecosystem) . By metaphorically understanding it, it is a way of thinking used when considering the strength and added value of the ecosystem itself (the entire group).
For example, when considering “what is the difference between iPhone and Android in the smartphone business” and “which is more strategic”, we analyze in units of ecosystem.
In general, the gathering of many complementary businesses in an ecosystem will increase the size of the ecosystem and improve the functionality and value of its products. For example, the ecosystem formed by LINE, a platform operator, is increasing in value every day by gathering not only stamps provided by creators but also complementary operators such as news, music content, and shopping. This increased value of the ecosystem attracts more end users, which incentives and attracts more complementary operators to the ecosystem.
In order for the platform operators that form the ecosystem to succeed, it is important to build a mechanism that allows these cycles to circulate well.
- What is ecosystem
- Types of Business ecosystem
- Advantages of Business ecosystem
- Disadvantages of Business ecosystem
- Business ecosystem success conditions
- Business ecosystem examples
- How to introduce Business ecosystem
- Why you need an ecosystem
What is ecosystem
The word ecosystem was originally a biology word. The English translation of the word “ecosystem”, which means the environment and nature of living things and their connections, is “Ecosystem.”
For example, there are countless creatures such as sea anemones, crabs, starfish, hermit crabs, small fish, and seaweed on the shores of the sea. These creatures live in support of each other, but removing only sea anemones, for example, could disrupt the ecosystem at the site and destroy other creatures.
In other words, nature is preserved by the material cycle of “producers,” “consumers,” and “decomposers.”
An ecosystem in business means a mechanism for companies to coexist and co-prosper across industry boundaries and national borders. The ecosystem includes limited coexistence, such as collaboration campaigns, as multiple different companies and competitors in the same industry may collaborate, but alliances and collaborative development in which producers and logistics companies collaborate are not possible. It cannot be called an ecosystem.
In the digital ecosystem, different fields such as “basic OS”, “developer”, “vendor”, “third party”, “user”, and “venture” maintain their respective environments and create a mechanism to generate profits.
What is important in the IT ecosystem is to build a system in which the parts that make up each component can be equally profitable.
Types of Business ecosystem
There are two types of business ecosystems.
The cloud ecosystem means a mechanism in which each company cooperates by publishing API, which is a specification for data linkage. Another feature is that many companies are participating in the cooperation of related technologies and services. For example, in the case of a labor management system, it is convenient to link with a payroll system, attendance management system, accounting software, etc. The sex will improve. By cooperating with different companies while responding to the diversifying needs of users, it is also possible to retain users.
The data ecosystem is a collaborative relationship aimed at distributing data across disciplines. The data ecosystem is characterized by the sharing and distribution of data among a wide range of companies regardless of field. For example, the data ecosystem is expanding the “IoT market” steadily. IoT data can be widely collected from general IoT home appliances and IoT devices such as factories, and by sharing and distributing such data, the market will expand as IoT home appliances and devices are developed and sold. increase.
Advantages of Business ecosystem
Increasing corporate awareness
The first benefit of building an ecosystem is increasing corporate awareness . By creating an environment where companies can cooperate with each other, each of them will inform their customers, so that they will be aware of information about the products and services of each entrepreneur.
In addition, we often have an advantage in developing services, such as creating new value by making the best use of the excellent parts of each entrepreneur and expanding the range of attracting customers. Customers often have different customer bases, which makes it possible to take a suitable approach to unacquired customers.
Attract many companies and customers
If you can build your own business ecosystem, you can play a central role in the platform and create new markets to meet your customers’ needs.
If you do business alone, the scale of your business will be smaller, but you will be able to do bigger business by increasing the number of companies that cooperate. By building an ecosystem in this way, we can attract a large number of companies, and we can expect to acquire customers accordingly.
Creation of new business model
It is also possible to create new business models by forming an ecosystem. The reason why we can create new business models is that we can create new products, services, and business models by collecting ideas and technologies from outside the company.
Until now, it was possible to develop and improve products and services by ourselves, but nowadays, due to the influence of technological sophistication and IT development, it is possible to create a new business with just one entrepreneur. The current situation is that it is difficult.
Creation of open innovation
Open innovation means creating new products, services, business models, etc. while collecting new ideas and technologies from outside the company.
In recent years, it has become difficult to develop and improve products by ourselves due to technological sophistication, IT development, and shortened product life cycle. As a result, even with limited management resources, we are increasingly collaborating with other companies to develop new products and services, and the idea of open innovation is expanding. This has created many benefits in open innovation, such as responding to diversifying user needs, accumulating new knowledge and technologies, and improving business driving force.
Disadvantages of Business ecosystem
If you make a mistake in incentive design, your business will fail
The key to the success or failure of the ecosystem’s development is the ability to continue to attract complementary businesses to the ecosystem. Therefore, if the platform operator makes a mistake in designing incentives for complementary operators, the development of the ecosystem will stagnate.
For example, in 2018, Japanese fashion EC site ZOZOTOWN implemented a discount service for paying members, ZOZO ARIGATO, which caused the withdrawal of stores that disliked the decline in brand value, or the temporary suspension of listings. A situation has occurred. Another issue is the “decrease and stagnation of end users and complementary businesses ” due to the development of a competitive ecosystem. For example, the number of users of the Japanese recipe site “Cookpad” is decreasing due to the breakthrough of competing “Delish Kitchen”.
Business ecosystem success conditions
“ How to gather complementary businesses in the ecosystem ” is of utmost importance for the success of the ecosystem. It is impossible to build an ecosystem without the participation of complementary businesses. With this in mind, here are some key points in the management of complementary operators by platform operators.
Openness and management of complementary businesses
As a platform operator, how much you rely on complementary operators for the products you need in the ecosystem or what you should focus on decisions You will need it.
For example, in the iPhone ecosystem, Apple manufactures complementary smartphones and operates app stores closedly, but Android is open to other companies.
Presentation of incentives
Incentives are needed to attract complementary businesses to the ecosystem. The most obvious incentive is monetary rewards. For example, Mobike, which handles bicycle sharing, is expected to expand by joining the Tencent camp by attracting Tencent users and simplifying payments using WeChat Pay.
On the other hand, in addition to monetary rewards, it is also necessary to stimulate users’ willingness to participate free of charge and to show complementary businesses the social significance of the entire ecosystem. For example, show engineers who develop apps that it is worthwhile to spread their apps around the world through Google Play, and show the future of the development of the Chinese market to EC sites that participate in the Tencent ecosystem. That is one of them.
Business ecosystem examples
Android is the OS for smartphones provided by Google, and is positioned as the platform of the ecosystem that Google forms in the smartphone industry.
The smartphone ecosystem consists of (1) content, (2) content store, (3) OS, (4) hardware, and (5) network. Of these, the platform operator Google plays a central role in developing the OS “Android” and the content store “Google Play.”
Google’s efforts in this ecosystem differ from those of Apple (iOS). For iPhone, you can only buy apps on iTunes, but for Android, you can buy apps other than Google Play. In other words, there is an option for communication carriers that provide networks to have their own app stores.
Elsewhere, Apple monopolizes the manufacture of the iPhone, but Android has an open strategy that allows other companies to manufacture Android-powered smartphones.
These differences in efforts in each ecosystem have a great impact on the management behavior of complementary businesses.
Tencent is the world’s largest game company, but it is characterized by developing various services on its platform.
For example, there are “WeChat” and “QQ”, the largest message apps in China, “WeChat Pay”, a mobile payment service, “Qzone”, an SNS, online games, news, video / music content, and browsers.
The company is also gathering complementary operators on its platform by acquiring domestic and American game companies and other leading game companies such as Supercell and Activision Blizzard.
In addition, the payment service “WeChat Pay” uses QR code payment, which does not require a POS cash register, to allow two stores to be introduced as complementary businesses. In addition, by investing in the sharing bicycle “Mobike”, WeChat Pay will be used when using the service, and we will increase the value of the ecosystem by arranging complementary businesses that have synergies with the services developed by Tencent.
Apple is one of the leading companies in the ecosystem. Apple mainly works in two forms, product and content. First, in terms of products, we work with companies that make screens, cameras, chipsets, and keyboards, which are necessary parts for iPhones and MacBooks provided by Apple. Collaboration is an example. For Apple, which makes iPhones and MacBooks, and for companies that make parts, each other’s existence is indispensable for increasing profits.
In terms of content, cooperation with Apple Music, iTunes store, and App store (each app) is an example. Revenue is generated between Apple, which provides devices and platforms, companies that provide music, videos, and apps, and users who use them.
In this way, Apple is building an ecosystem in which profits are not monopolized by Apple and mutually generate profits, while focusing on the platform operated by Apple.
Microsoft, which develops and sells software, is co-developing new applications with other companies and strengthening its cloud platform based on data obtained from partner companies.
Microsoft is also famous for developing various new products and services in collaboration with automobile-related companies, such as autonomous driving, electric vehicle development, ride sharing and ride-hailing service initiatives. Microsoft looks to the potential of automobiles in the future, provides its own AI services, IoT, etc., and provides support systems to enable automobile companies to build and expand digital functions. ..
In this way, the technology of other companies is an important growth factor for Microsoft, and the quality service of Microsoft is an indispensable factor for other companies as well, which is the key to the success of the ecosystem.
Amazon is a company that has developed its business through the development of a large ecosystem. Amazon is famous for shopping malls, but it also offers various products and services such as cloud computing, tablet devices, and smart speakers.
By building a platform that is attractive to both businesses and consumers in this way, we have established a method for attracting a large number of customers.
The reason for the success is that Amazon started from the EC mall and expanded the market to enter by building a platform with an ecosystem. As a result, we are able to generate high profits in a wide range of fields, and building a platform that makes it easy for other entrepreneurs to participate is also a factor in success .
How to introduce Business ecosystem
1. Confirmation of your company’s position
To realize an ecosystem, it is important to confirm your position in the market . Whether your products and services can be at the center of the ecosystem, be part of an existing core ecosystem, or are you in a position to benefit from the introduction and participation of your products and services in the ecosystem? It is necessary to confirm.
2. Examining the optimal business ecosystem
To maximize the synergies for your company, you need to consider the optimal ecosystem. Compare the ecosystems offered by many companies to determine how they can work together and how to participate in the ecosystem. Participation in an ecosystem can be costly to some extent, and whether or not it is cost-effective for your investment is also an important factor in achieving an ecosystem.
3. Consider the benefits for your company
It’s important to see what benefits your company can benefit from having an ecosystem in place. It takes a lot of time and money to make a profit from the introduction of the ecosystem. It is necessary to make the introduction of the ecosystem known within the company and to obtain internal cooperation. Moreover. We will make preparations such as inventory of subdivided operations existing in the company, optimization of costs, and arrangement of information sharing means inside and outside the company. Information sharing is essential because the ecosystem is premised on cooperation between companies. Select the tasks to be incorporated into the ecosystem and organize them into an efficient workflow.
Why you need an ecosystem
In order for various companies around the world to cooperate and coexist and prosper together, it is important to build a system that can contribute to each other’s profits.
The development of IT technology in recent years has been wonderful, but the development of IT technology has diversified the services that can be provided, making it difficult for a single company to complete a product or service. Therefore, it is necessary for companies and products to cooperate with each other and to have a relationship that complements the lack of each product or service.
Business ecosystem requires cooperation between companies
In order for Business ecosystem to work efficiently, we need an environment in which participating companies can work together to maximize performance. If the ecosystem doesn’t work well, only some companies can make a lot of money and lead to an ecosystem monopoly. It takes a lot of preparation and consideration, but consider introducing an ecosystem to open up new markets.