Deloitte Report: Fundamental Transition Underway as Business Ecosystems Come of Age

Report highlights accelerating shift from relatively self-contained corporations to co-creative business ecosystems

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Apr 16, 2015, 07:00 ET

NEW YORK, April 16, 2015 /PRNewswire/ -- Deloitte has released its latest Business Trends Report, "Business Ecosystems Come of Age." According to the report, the rules, best practices, business models and even the mindsets that have served organizations and business leaders well for decades are coming under increasing stress.

"In this fast-changing economy, the ecosystem concept has taken root far beyond the tech sector, and is now a crucial focal point for innovation, analysis and strategic planning," said Mike Canning, national managing director of Deloitte Consulting LLP's Strategy & Operations practice. "New means of creating value have been developing everywhere in the form of interactive and fluid configurations of economic relationships and activity – and smart businesses around the world are responding."

The report highlights that the importance of cross-firm and cross-industry relationships, partnerships, networks, alliances and collaborations is growing exponentially, and that "ecosystem" strategies are becoming an increasingly deliberate, conscious and designed driver of successful business transformation.

Similarly, the imperatives for businesses to learn and to translate learning into innovation have never been greater. And, as many corporate leaders have recognized, the smartest people don't all work in any one organization. Ecosystems provide businesses access to sharp minds and smart resources, whether they are located with suppliers, customers, research organizations or independently.

Eamonn Kelly, chief marketing officer for Deloitte Consulting LLP's Strategy & Operations practice, comments, "The 'art of the possible' is expanding rapidly. It is becoming increasingly possible for firms to deploy and activate assets they neither own nor control, to engage and mobilize larger numbers of participants, and to facilitate more complex coordination of expertise and activities. This is fundamentally altering the key success factors for organizations, forcing them to think and act very differently than they have in the past. And this is true across multiple sectors and disciplines."

Changing Portfolios – what do we really need to own?
Firms have always used mergers and acquisitions to accelerate their entry into new businesses and markets to build their competitive strengths. However, in the emergent era of ecosystems, they will increasingly reconfigure their assets for a new collaborative economy in which ownership and control often matter less, while relationships and access to the assets of others matter more. This will transform their M&A strategies in the process. Deliberations about both M&A and divestitures are being informed by a new calculus for sizing up available options, with some firms now thinking in terms of ecosystem plays.

One clear implication is that deliberations about strategic transactions are becoming a more prominent and constant item on top management teams' strategy agendas. Rather than experience them as occasional, highly distracting, and disruptive events, they are building a competence in fluidly managing their asset portfolios on an ongoing basis.

New enterprise platforms emerge
In a setting where multiple firms are creating value through coordinated activity, new means are being created to help orchestrate their decisions and activities. In the highly digitized and atomized markets of the 21st century, this coordination increasingly happens through platforms — infrastructural layers designed to establish common standards and reduce transaction costs. Platform businesses can be classified into several different types, and the platform type that could have the greatest potential may just now be unfolding: platforms explicitly designed to accelerate and scale the potential for learning and innovation by their participants.

As companies work to develop strategies for future success, many are explicitly defining what their "platform plays" will be: Some will identify platform opportunities that have yet to be developed, and choose whether to create those individually or by forming associations. All should survey the platforms arising in their markets and consider the degree to which they will be active participants in them.

Ecosystems recast wicked social problems into "wicked opportunities"
Many kinds of "wicked problems" – complex and seemingly intractable social challenges ranging from malaria to dwindling water supplies – are now being reframed and tackled with renewed vigor. Virtually unprecedented networks of non-governmental organizations, social entrepreneurs, governments – and yes, big businesses – are forming around them, and recasting them as wicked opportunities to be solved through new collaborations.

Effective leaders in the coming decades will often be "tri-sector athletes" capable of engaging and collaborating across all realms, and also catalyzing change across networks where they lack formal control.

The Business Trends Report, "Business Ecosystems Come of Age," is a collection of nine articles that explore the ways businesses can thrive in the new world of ecosystems:

Business Ecosystems Come of Age – evolving ecosystems reveal new opportunities for innovation alongside new challenges for many incumbent enterprises.
Blurring Boundaries, Unchartered Frontiers – boundaries and constraints that have traditionally determined the evolution of business are dissolving, allowing new ecosystem possibilities to flourish.
Wicked Opportunities – major social problems are being recast as wicked opportunities to be solved through new collaborations.
Regulating Ecosystems – ecosystems enable more rapid, cross-cutting innovation, challenging regulators to find ways to protect the public's interests while keeping pace with innovation.
Supply Chains and Value Webs – supply chains become value webs that span and connect whole ecosystems of suppliers and collaborators.
The New Calculus of Corporate Portfolios – ecosystems are compelling strategists to value assets in new ways, often generating different conclusions about what should be owned.
The Power of Platforms – properly designed business platforms become powerful catalysts to create and capture value.
Beyond Design Thinking – in a world of ecosystems, leading companies are adding rigorous analysis and synthesis to design thinking to capture the power of integrated design.
Minimum Viable Transformation – ‏large companies are using lightweight, readily adaptable versions of reconfigured business models to reduce risk through rapid iteration and validated learning.

To learn more, access the full report here and follow the conversation online via #businessecosystems

"It will take many years for the economic and business consequences of business ecosystems to be fully discovered, understood and codified," said Canning, "But one thing is for certain: disruption is never ending and the possibilities are evolving rapidly."

About Deloitte's Strategy & Operations Practice
Deloitte's Strategy & Operations professionals bring deep industry experience, rigorous analytical capabilities, and a pragmatic mindset to our clients' complex business problems. Our strategy capabilities span corporate and business unit strategy, M&A strategy, and sales and marketing. Our operational capabilities reflect the unique issues facing manufacturing organizations, service businesses, and infrastructure operations. These are joined with capabilities in finance, performance management, and business restructuring.

About Business Trends 2015
Business Trends is an annual report from Deloitte's Strategy & Operations practice. Deloitte's third-annual Business Trends report explores how forward-looking leaders and organizations can thrive in a world of ecosystems. The nine articles in the report can each be read as a stand-alone, and collectively they provide an integrated overview of a historic transition in the world of business in the 21^st century.

As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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