Managing the Ecosystem Optimize Magazine By Marco Iansiti Presented by: Noha Zaki

Concept  Increasingly interconnected world  Smart companies rely on networks (partners, Suppliers, and customers)  Networks are like biological ecosystems (companies succeed and fail as a collective whole)  Ecosystems help companies become more resilient to market changes and more responsive to customer needs

concept  Business ecosystems are wide spread in industries such as: banking, biotechnology, insurance and software  IBM and Microsoft: remain at the hub of their business ecosystems by working with a network of partners to bring products and services to customers

Question How a company best manages assets it doesn’t own but are critical to its success? How a company best manages assets it doesn’t own but are critical to its success?

First Step  Understand ecosystem strategies  Executives must craft new strategies that fit the new networked world  Rely on ‘key stone’ species to maintain the health and productivity of the entire system  eBay, Wal-Mart

Second Step  Use technology as the connective tissue that lets the ecosystem function, grow and develop  Technical infrastructure that allows them to share information and encourage collaboration  CIOs have central roles

Wal-Mart  Success depends on IT decisions that are closely tied to its understanding of its ecosystem  Supply chain ecosystem (from manufacturing to consumer)  Creates value by providing massive new channels to reach consumers worldwide  Capturing customers and sales data by using a computer system that manages thousands of stock- keeping units from thousands of vendors  Analyse data and share it with suppliers  Significant cost advantage

Measuring the health of performance  Robustness:  ability to survive disruptions and unforeseen changes  Provides a buffer against external shocks and provides a degree of predictability  Survival rate of ecosystem members ( customers, suppliers, distributors)

Measuring the health of performance  Productivity:  Ability to consistently transform technology and raw materials( labour, process) into lowered costs, new products, and functions  Measured by return on investment  Niche creation:  Ability to create new, valuable functions and foster diversity that creates real value

EBay Vs Enron  EBay:  keystone strategy, benefiting entire ecosystem  Easy- to use tools (simple for buyers and sellers)  Transparent trust system  85% of web-based auction revenue

EBay Vs Enron  Enron  Make profit ignoring the health of its network  No sharing of information  No transparency  Flamed out through combination of misguided strategic decisions and unethical behaviour

Steps to be followed by CIOs  First month: Take stock of your system  Know your ecosystem and how it’s working  Analyze your role  Understand role of technology  Analyze how your changing ecosystem is impacting your role, your strategy, and your business model

Steps to be followed by CIOs  Second month: look at where you and your ecosystem are going  Is your role in the ecosystem the one you want  Identify the network strategies that work best for you  Determine the assets needed to manage and execute your strategy (potential new partners)

Steps to be followed by CIOs  Third month: Set up metrics to help manage ecosystem  Examine need for new information sources and business applications  Define critical ecosystem measures  Examine partners and develop metrics to assess ongoing evolution  Build ecosystem dashboard  Examine critical technology and information assets that help in shaping the business ecosystem