Driving Growth in Digital Ecosystems
Developing the right capabilities for digital partnering is key to getting value from your ecosystem strategy.
Image Courtesy of Harry Campbell/theispot.com
High-growth companies don’t go it alone. Increasingly, they are achieving results by creating and orchestrating digitally connected ecosystems — coordinated networks of enterprises, devices, and customers — that create value for all of their participants.1
Companies whose dominant business model is ecosystem driver — in both B2B and B2C domains, such as energy management, home ownership, and financial services — experienced revenue growth approximately 27 percentage points higher than the average for their industries, and had profit margins 20 percentage points above the average for their industries, according to our research.2 That 2019 global survey of 1,311 executives also found that successful drivers achieve outsized results by attracting the partners needed to provide complementary — and competing — products and services that make their ecosystems seamless “one-stop shopping” destinations for customers.
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Complementary offerings make it easier for customers to obtain comprehensive solutions to their problems. For example, when China’s largest insurer, Ping An, realized that its customers wanted not only insurance but also a means of addressing their medical and well-being needs, it created Good Doctor. The Good Doctor platform offers 24-7 one-stop health care services that are provided by pharmacies, hospitals, and about 10,000 doctors. In September 2019, Good Doctor reported serving more than 62 million customers monthly. Moreover, nearly 37% of Ping An customers used more than one of its services in 2019 — an important measure of ecosystem success.3
Successful ecosystem drivers also offer their customers greater choice, even when that entails featuring competing offers. In Australia, real estate platform driver Domain partners with about 35 mortgage lenders to offer homebuyers more loan choices.
References
1. P. Weill and S.L. Woerner, “Thriving in an Increasingly Digital Ecosystem,” MIT Sloan Management Review 56, no. 4 (summer 2015): 27-34; and P. Weill and S. Woerner, “Surviving in an Increasingly Digital Ecosystem,” MIT Sloan Management Review, Nov. 17, 2017, https://sloanreview.mit.edu.
2. MIT CISR 2019 Top Management Team and Transformation Survey (N=1,311); “growth” refers to revenue growth compared to industry average.
3. “Ping An Good Doctor Has Become the First Online Healthcare Platform With More Than 300 Million Registered Users,” PR Newswire, Sept. 23, 2019, www.prnewswire.com; and “Announcement of Audited Results for the Year Ended Dec. 31, 2019,” Ping An, Feb. 20, 2020: 9, www.marketscreener.com.
4. J. Pellegrino and R. Doyle, “Domain Investor Presentation: 2020 Half Year Results.” PDF file. Domain, Feb. 20, 2020: 9, www.asx.com.au.
5. I. Sebastian, P. Weill, and S.L. Woerner, “Three Strategies to Grow via Digital Partnering,” MIT Sloan CISR Research Briefing XX, no. 5, May 2020, https://cisr.mit.edu.
6. Combined regression of digital readiness and curation against ecosystem market share was significant: R Squared Adj. = 0.148, p = 0.000. Both readiness (p = 0.02) and curation (p = 0.03) were significant predictors.
7. I. Sebastian, P. Weill, and S. Woerner, “Partnering to Grow in the Digital Era,” MIT Sloan CISR Research Briefing XIX, no. 6, June 2019, https://cisr.mit.edu.
8. Digital readiness is an additive construct based on the three components — distinctive, digitally organized, and open — measured at the company level.
9. “Life Events,” Fidelity Investments, accessed July 13, 2020, www.fidelity.com; “Fidelity Makes It Even Easier for Firms to Build Tailored Technology Platforms With New Self-Service Capabilities in Its Open Architecture Digital Store, Integration Xchange,” Business Wire, Feb. 18, 2020, www.businesswire.com; and “Third-Party Marketplace,” Fidelity Investments, accessed July 13, 2020, https://clearingcustody.fidelity.com.
10. Sebastian et al., “Partnering to Grow.”
11. Sebastian et al., “Three Strategies.”
12. “Fidelity Makes It Even Easier for Firms.”
13. “Crop Science R&D Pipeline Update: Delivering World Class Innovation.” PDF file. Bayer, Feb. 13, 2020: 29, www.investor.bayer.de.
14. Curation is an additive construct based on the three components — joint goals, sharing benefits, and sharing information — measured at the ecosystem level.
15. “Climate FieldView,” The Climate Corp., accessed July 10, 2020, https://dev.fieldview.com.
16. M. Stern, “Advancing the Digital Transformation.” PDF file. Bayer, Dec. 5, 2018: 214, www.investor.bayer.com.
17. E. Cosgrove, “Checking In With Climate Corp.’s Open Platform Strategy and the Future of Ag Data,” AgFunderNews, Jan. 30, 2018, https://agfundernews.com; and “Frequently Asked Questions,” The Climate Corp., accessed July 13, 2020, https://dev.fieldview.com.
18. “Climate FieldView Terminates Platform Partner Agreement With Tillable,” The Climate Corp., Feb. 14, 2020; and L. Bedord, “Picking a Data Partner,” Successful Farming, May 6, 2020, www.agriculture.com.