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Ecosystem Businesses Are Changing the Rules of Strategy

August 8, 2019
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Summary.   

Most of today’s fastest-growing companies — from Amazon and Google, to Alibaba and Tencent, to Uber and WeWork — are explicitly positioning themselves as ecosystem players, as hubs within networks of customers, suppliers, and producers of complementary services. We don’t yet know if these so-called ecosystem orchestrators have an enduring advantage. For every Google or Tencent that is hugely profitable, there is a Spotify, a WeWork or an Uber that continues to lose money. But regardless of how successful they prove to be, it’s important to understand that they are playing by a different set of strategy rules than traditional firms. Rather than building moats, they are operating turnstiles.

Why are business ecosystems suddenly such a hot topic? It’s not as though they’re a new idea. The term “ecosystem” has been used in business for 20 years. Companies including Volkswagen and Toyota have been orchestrating huge networks of suppliers and distributors for more than 50 years. Lloyd’s of London, the insurance marketplace, is a classic ecosystem and was founded in the 17th century.

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