What do you call an ecosystem in which you always see your company as the central actor?
An ego-system. This is how we end up with labels such as the “Google ecosystem,” the “Facebook ecosystem,” the “insert-your-name-here ecosystem.” These labels seem impressive at the get-go, but they undermine an important truth: Ecosystem strategy is alignment strategy.
Defining ecosystems around companies blinds everyone involved to alignment hurdles and limits their ability to craft appropriate strategies. The presumption of centrality makes it harder to establish the relationships needed to achieve their goals: It’s harder for ecosystem leaders to create strategies that attract followers, and harder for ecosystem partners to know which leaders to follow and where to place their bets.
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Apple offers a stark example. The most valuable company in the world has been enormously successful in extending the mobile data device ecosystem it leads — iPod to iPhone to iPad to Apple Watch, encircled by its App Store and iOS platforms. But it has been shockingly disappointing in its efforts to expand into new businesses that require the construction of new ecosystems. Apple’s failures to deliver on ambitious promises — that health care would be the company’s “greatest contribution to mankind”; that the HomePod would “reinvent home audio”; that its classroom education platform would “amplify learning and creativity in a way that only Apple can” — are concealed by the profits gushing from its core ecosystem, but they are failures nonetheless.1 The consequences of these failures are borne not only by Apple, but also by all the companies that joined as complementors in these efforts.
If successfully aligning the partners and other participants in new ecosystems is challenging to a company as sophisticated as Apple, a giant at the height of its power, then (1) no would-be market leader should be deluded into thinking that its success in one ecosystem will naturally translate to leadership elsewhere, and (2) no would-be complementor should assume that following established leaders into new domains is a safe bet.
How can all ecosystem players do better? They can anchor their notion of ecosystems in the value propositions that are being pursued, not in corporate identity.
1. L. Gurdus, “Tim Cook: Apple’s Greatest Contribution Will Be ‘About Health,’” CNBC, Jan. 8, 2019, www.cnbc.com; D. Staples, “Apple Reinvents Home Audio With the HomePod,” DJ, June 9, 2017, https://djmag.com; and “Apple Unveils Everyone Can Create Curriculum to Spark Student Creativity,” Apple, March 27, 2018, www.apple.com.
2. R. Adner, “Ecosystem as Structure: An Actionable Construct for Strategy,” Journal of Management 43, no. 1 (November 2016): 39-58.
3. D. Blumenthal, “Stimulating the Adoption of Healthcare Information Technology,” New England Journal of Medicine 360, no. 15 (April 2009): 1477-1479.