The key factors driving transformation in the digital ecosystem

Let’s start with something basic. How is an ecosystem defined? “An ecosystem is a community of living organisms in conjunction with the non-living components of their environment, interacting as a system.”

Drawing parallel from this definition, a digital ecosystem would comprise a network of independent economic players and partners, joining forces to create more valuable digital offerings than a single entity's product or service. Historically, companies have had joint ventures or alliances with a few industry partners to share risks or enter new markets. However, now the “enterprises of the future” collaborate in the digital ecosystems of partners across industries to take their offerings to the market.

It’s the future of doing business. Any company that has not begun working on these lines has already started its backdating journey. It will indeed be slated to become obsolete. Just the way e-commerce companies like Amazon or Flipkart disrupted the shopping experience. Or the way ride-sharing companies like Uber and Ola made point-to-point travel unthinkably convenient, and Oyo and Airbnb disrupted the hotel industry by making travel affordable. They have disrupted their respective industries and also created related industries, contributing to overall economic growth.

While there could be many contributing factors driving transformation in the digital ecosystem, I am listing down a few from my own experience and research.

The ever-changing consumer behaviour has become increasingly crucial. Competitive advantage is today defined by businesses’ ability to know their customers and personalize and deliver their offerings to them at the right time and place, cost-effectively. Companies that can do so will earn customer's loyalty because today's customer is driven through transactional experiences with a brand. Stores are not going away, but the physical retail experience must evolve to delight shoppers and complement the online experience. Walmart acknowledged as much in 2018 when it launched its Intelligent Retail Lab in Levittown, New York. Experience is a new currency!
New technologies like data and analytics, machine learning, and AI are no longer buzz words. They are meaningful necessities in any business – now and for the future. A firm’s ability to consume information from multiple sources, learn and act faster through leveraging its analytics capabilities will offer it a competitive advantage to thrive in today’s brave new world. Machine learning and AI help re-architect the operating model to achieve continuous excellence in a firm's value delivery. The more a firm optimises the impact of digitisation, the greater is its potential to scale. Learning becomes embedded in its operating model, and it can create more value for the customer. For example, the way a company can capture Amazon's recommendations and promotional messages based on an individual's surfing and buying behavior and offer its products right at that time.
Collaboration across different geographies and cultures will define disruption at scale. There is a strong correlation between global reach with success. A firm that can collaborate with the local ecosystem and coexist with the global ecosystem will serve its customers better beyond any geographical or cultural boundary. For instance, an Indian customer using the Uber app to travel within a US city or booking accommodation in Canada using Airbnb. These are my personal experiences too!
External partners are essential to bringing in differentiated expertise and freshness to the enterprise’s digital strategy. Many enterprises bring expertise from other industries into their digital ecosystem. Such partners lend different dimensions to success, creating a positive impact on the ecosystem, leveraging their overall scalability and flexibility. There may be teething issues but persisting and working together will provide tailwinds to the enterprise’s digital flight.

The above factors make it evident that digital ecosystems are forming and shaping industries across the globe. A firm’s ability to create value defines its business model, and the value delivery is done through its operating model. The more a firm can leverage its network efficiently to create and deliver value effectively, the more it will impact the overall ecosystem's transformation.

It all takes one step of boldness and freshness.

(Nishant Mishra is a serial entrepreneur and the Co-founder of The Higher Pitch, an Experience Consulting company.)