Understanding the Business Ecosystem beyond the Customer Value Proposition
Ecosystem, now has become one of the business buzzwords. When you ask ten people what it means, you will probably get ten different definitions. My first exposure to the term “ecosystem” can be dated back to my grade school science class, where we were introduced the “ecosystem of the ocean”. By that time, ecosystem to me was all about biodiversity, food web, and nature.
The core essence of an ecosystem is balance — all members of that system work together to create a collective value that everyone can benefit from.
Now that we are in a business context, we should have a more proper definition of the “business ecosystem” that multiple business parties reside in to create business values.
According to BCG Henderson Institute,
a business ecosystem is a dynamic group of largely independent economic players that create products or services that together constitute a coherent solution.
The existence of a business ecosystem requires at least one party being responsible for the structure and performance of this ecosystem: day-to-day operation, value creation and exchange mechanism, supply chain management, customer service etc. Going back to the example of the ecosystem of the ocean mentioned earlier in this article, it occurs naturally, rebalances itself if there is any change. Each party in a nature ecosystem exists only to seek stability and to survive, whereas the entities or the economic players in a business ecosystem have an overarching purpose to create collective value for their shared customers. With that being said, maximizing the values for the common customers is no doubt the most critical objective for all players in this ecosystem. Therefore, value proposition, Jobs-to-done frameworks coupled with personas and journey maps are often used together to illustrate the relationship of the current states versus the desired outcome of the customers.
However, what’s often missing in this approach is the understanding of various value propositions of other stakeholders or entities in the ecosystem. Thus understanding the players and their roles and relationship in one business ecosystem is equally important than understanding the customers values. When my team was working on a class project to reimagine the post-pandemic offerings of Airbnb, we used the ecosystem map, which is also called a ERAF (Entity-Relationship-Attributes-Flow) diagram, to get a holistic understanding of their business landscape. From the size of the circles, we could clearly see the emphasis on their digital products. However, what stood out to us was the complexity of the value exchanges or relationships from the Hosts compared with those from the Guests. The exercise of mapping out the Airbnb Ecosystem helped us uncover a new innovation opportunity with the host being our primary customer.
Looking at the business problem for an ecosystem perspective leads to a greater chance of success.
