In annual reports, the term ecosystem occurs 13 times more frequently now than it did a decade ago.^[1]BCG Henderson Institute analysis, based on annual and other SEC filings, for global public companies with sales of more than $10 billion or more than $20 billion in market capitalization. But like any buzzword, it’s often overapplied. The term has been used to refer to everything from a country (“China is the second strongest ecosystem…”) to a support function (“the HR ecosystem”), a portfolio of products (“the Darico ecosystem is made up of 5 products”), and even a bundle of services intended to make people happy (“a happiness ecosystem”).^[2]B. Joffe, “Ecosystem 101: The Six Necessary Categories to Build the Next Silicon Valley,” Techcrunch, Sept. 1, 2012; Business Wire, “Accenture Extends Its Partner Cloud to Integrate With … Continue reading

Behind this semantic overstretch, however, lies a substantive new phenomenon: the rise of dynamic, multicompany systems as a new way of organizing economic activity. Seven of the world’s 10 largest companies, all using technology to disrupt not only their sectors but broad swaths of the economy, now depend on such systems, and ecosystems thinking is more prominent in faster-growing companies across the S&P 500.^[3]According to BCG Henderson Institute analysis as of last quarter of 2018, across the S&P 500, companies that mentioned ecosystems in their annual reporting included Alphabet, Amazon, Apple, … Continue reading

Ecosystems are attractive partly because of the new possibilities they create for products and services spanning traditional boundaries — often using digital platforms, APIs, internet of things technology, and new tools for data gathering and analysis. The growing interest is also driven by necessity: Business environments are evolving more rapidly, requiring the rapid acquisition and coordination of diverse, novel capabilities.

The rise of ecosystems requires a new way of thinking about business — the ecosystems perspective. If we can describe this unique perspective and clear up the myths and confusion surrounding the use of the term, we will put ourselves on good footing to design strategy effectively in ecosystems.