Digital Ecosystem- Next Growth Strategy
Widespread use of digital technologies in everyday life has become the new normal. Putting customers at the center of every digital activity has not only scaled adoption but also allowed companies to capture previously unimagined value. Seven of the ten largest companies in the world are ecosystem players—Alibaba, Alphabet, Amazon, Apple, Facebook, Microsoft, and Tencent. This only hints at the power of digital. Uber, founded in 2009, now operates in more than 630 cities across 80 countries, Airbnb amassed an inventory of one million rooms a staggering 50 years faster than Marriott did.
So what are Digital Ecosystems? What’s the benefit? How can a company participate in a Digital Ecosystem?
Definition Digital Ecosystems are comprised of companies, people, data, processes, and things that are connected by the shared use of digital platforms. These partnering Ecosystems are created to enable collaboration and provide mutually beneficial results to all parties involved. The idea is to create a collection of flexible services that can shift around and quickly be adapted to the ever-changing needs of a business. Ex- Uber is a Digital Platform enabling a Digital Transport Ecosystem which includes- Consumers, Drivers and Car Owners. The platform facilitates interaction between consumers and drivers. The platform, in its core, uses payment gateways and a democratic rating system which helps all in the ecosystem. Using the same Platform and its core components Uber is now able to extend to a completely new Ecosystem of Food delivery.
Benefits Through digital Ecosystems, companies are ushering in an era of Sectors without borders by betting big on opportunities that have the potential to realign global markets. Ecosystems will account for 30 percent of global revenues by 2025 which is equivalent to $60 trillion. There will be many defined Ecosystems such as Housing, Transportation, Logistics, Hotels, Clothing, Education, Mobility, Health, etc. Smart and futuristic companies will align themselves to this Digital Ecosystem strategy and will invest most of their time and energy in trying to contribute and get the max out of the ecosystem.
Ecosystems typically provide three types of value:
1. They act as gateways, reducing friction as customers switch across related services. Facebook Messenger, for example, enables users to shop, check into a hotel, message a friend, read the news and chat with a doctor—all through a single interface. Users need not toggle between portals, manage separate log-ins, or spend mental energy maintaining multiple services.
2. They harness network effects. Google Nest, the maker of an ecosystem of smart-home products, provides its customers with a monthly report card that illustrates their energy use and compares it with that of their neighbours to give the context of the number. At the same time, the company creates value for utility providers by providing consolidated information about the demand to help them optimize production.
3. They integrate data across a series of services. One healthcare-data company extracts high-fidelity data from the healthcare ecosystem and applies it to patients’ lives to improve human health.
How to Participate in Digital Economy Becoming an ecosystem player requires far more than technology investments alone. Instead, companies must take a 360-degree view of the organization across multiple dimensions to ensure that their investments align with the requirements. For any company, shifting from industry to an ecosystem perspective requires a significant change in how they define their role in the economy. Adopting an ecosystem perspective—reevaluating the traditional business model and considering partnerships with players both within and outside the industry—could reinvigorate the company’s digital strategies.
Long term Partnerships are important as they have the power of introducing a completely new category of business by combining the strengths of two different set of capabilities. Ex-Apple launched the Healthkit open platform, which offers Apple device users the option to share their health and activity data across affiliated applications on their smartphones. This integration allows users as well as participants from the world of medicine—including physicians, researchers, hospitals, and developers of healthcare and fitness apps—to access valuable data to inform patient care, research studies, marketing, and product development.
Novum Digital (www.novum.co.in) focuses on Digital Experience Empowerment for its clients through dedicated services on Digital Strategy, Digital Content, Social and Advertisement.