What Do Bucket Hats and Business Ecosystems Have in Common?

It‘s that rad 90s throwback style, no doubt.

Originally published in 1996, The Death of Competition: Leadership and Strategy in the Age of Business Ecosystems written by James F. Moore, was one of the first books I could find that detailed the emergence of B2B collaboration, particularly in the high-tech, telecommunications, and pharmaceutical industries. Ecosystems have been an incredibly hot topic over the last few years, and a lot of that conversation is happening here at PartnerHacker. For example, we have now have Chief Ecosystem Officers, and partner ecosystems are being elevated to the boardroom.

So, I was curious to see how perspectives on business ecosystems have changed over the decades…and if it’s finally time to bring back cargo pants.

(Sidebar, I’m obsessed with the PHT-shirt I got at their SaaS Connect launch party, and wore it for about three-days while on vacation getting through this read. Not pictured: bucket hat.)

Moore's fundamental argument is that the nature of competition has shifted from rivalry between companies, to rivalry between ecosystems. You need to pick one, or lead one. Moore observes that most business failures result from an organizations inability to sufficiently “co-evolve” within the surrounding business, social, and regulatory environment. This stems from a lack of strategic collaboration between vendors, suppliers, and adjacent market leaders. It’s quite the statement and I think it continues to resonate today.

For business ecosystems, he witnesses a four-stage, cyclical growth model.

Pioneering > Expansion > Authority > Renewal

Throughout these stages, the primary activities, value drivers, cooperative challenges, and competitive challenges change throughout the cycle. This mandates the ecosystem leader will need to consistently shift their strategy and resourcing in order to succeed. The interesting aspect is that there is clear evidence that ecosystems are progressing through stages at faster and faster rates, which presents an even bigger challenge for leaders.

Perhaps my favorite aspect of this book is that it starts off with an ecological metaphor, explaining that there are two predominant styles of an ecosystem; Hawaiian and Costa Rican. Both are beautiful, tropical paradises of erupting volcanoes and ecological diversity.

However, Hawaii consists of a remote, yet isolated ecosystem.  It’s extremely fragile because it’s susceptible to new entrants which may threaten to dominate the existing, defenseless landscape if they are not able to (or interested in) cohabitating.

Differently, Costa Rica’s ecological system has witnessed a constant onslaught of new invasive species from the North and South America for nearly three million years. This ecosystem sits squarely on a land bridge, in the crossroads of two massive continents. Because it has been forced to adapt and change, this ecosystem has proven to be much more robust and resilient. A great example of this in action is how Costa Rica’s Conservation Portfolio has been able to successfully Lower Deforestation, Protect Primates, and Increase Community Participation.

Moore ultimately argues that the same principles apply to businesses. Long-term sustainability and competitive advantage arise from the ecosystem’s ability to maintain open boundaries, facilitate learning and knowledge sharing, but also adapt to the challenges from new entrants.

The book wraps up by making the statement that ecosystem leaders must create a framework participation that encourages and provides structure for diverse, unexpected activity within the economic community. I love this concept of the Open Ecosystem Participation Framework. How fast an ecosystem incorporates new contributions is a function of the openness of the framework for contribution — and of how many new contributors have the motivation and ability to join up.

Overall, it’s a solid read that is packed with tools and frameworks that are still applicable today. However, the reality is that we are in a brave new world where the rate of change is accelerating and switching costs are plummeting as technology continues to advance. Jay McBain (the Godfather of Ecosystems) does an unparalleled job summarizing where we’ve come and where we’re going on the technology front. His epoch is roughly the year 2000, which ushered in the decade of direct sales via CRM. In 2010, we entered the decade of direct marketing. Today (2022), it’s the early innings of the decade of ecosystems where we are optimizing against the importance of partners and indirect influence. I think these are very impactful developments that have undoubtedly shaped the very nature of how business ecosystems will operate in the future. With that, I invite you to consider a few questions with me:

— Am I participating in a Hawaiian or a Costa Rican ecosystem?
— How are best practices for Pioneering and Expanding an ecosystem different today than 1996 and what can we learn?
— What should a modern Open Ecosystem Participation Framework look like today?
Seriously, when are cargo pants coming back?

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