In their strategy as ecology, Iansiti, and Levien explores business strategy in a unique way. First, they recognize the success of two giant multinational and very different organizations; Microsoft and Wal-Mart. The success of Microsoft and Wal-Mart is attributed to internal efforts, including aggressive marketing, well framed vision, and strategies of the founders.
However, Iansiti, and Levien (68) claim that only a fraction of their success is attributed to internal efforts. The major success factors are contributed by the success of the business networks of these companies. These networks form the business ecology, a poorly understood area. The authors use the analogy of a biological ecosystem to bring out the meaning of loose networks of outsourcers, distributors, and suppliers, and how they contribute to the success of an organization.
They examine evaluation of the health status of the business ecosystem, and explain how one can determine his place in the business niche, and how to build up the tactic that matches the task of the business in that environment. Lastly, they assess the usefulness of the analogy and its implications.
Meaning of Business Ecosystem
Iansiti and Levien (69) define a business ecosystem as establishments within the network of an organization, linked to the organization thereby affecting its business operations. They collaborate with business operations making it successful. Typically, business ecosystems consist of myriads of players, including distributors, and suppliers, companies where the organizations have outsourced its activities, and institutions providing financial services.
In addition, manufacturers of complementary products are part of the business ecosystem because they affect the sale of the products. Customers and opponents form business ecosystem if their feedback and activities affects the products, and roles of a given organization.
Assessing the Health of a Business Ecosystem
In assessing the health of a business ecosystem, one should consider indications the business will keep creating opportunities for its sphere of influence and dependants. As a result, the authors suggest three decisive measures of assessing the health of a business system. They include robustness, productivity, and niche creation.
For productivity, one considers the ability of a business network to constantly convert expertise, innovation, and unrefined materials into new products and lower cost operations based on return on investments. For robustness, a network should withstand disruptions, such as change in technology, measured by survival rate of members within the ecosystem. For niche creation, the ecosystem ought to exhibit innovation leading to diversity.
It considers the extent to which the budding expertise is being used in the company to produce assortments of fresh products and services. One should support the well-being and firmness of the business ecosystem to advance the well-being of his or her firm. This depends on his or her current role and potential within the network. According to Iansiti and Levien (71), these roles are played by keystone, niche players, and dominators.
Matching Business Strategy for the Environment
The selection of strategy is based on the vision of the organization and is affected by the circumstance in which the organization functions. In this case, general echelon of hurly-burly and the intricacy of the relationship of the business with other players in the ecosystem are considered. As a result, several strategies apply in specific situations.
Niche strategy is applied where the organization is facing constant rapid changes and where it ought to center on a closely defined section to control other organization’s assets. Keystone strategy applies in the situation in which the company is operating in a turbulent situation at the center of complex networks that requires allotment of resources.
The physical dominator tactic is applied to the situation in which a business operates in a full-grown industry, but depends on a set of connections of outside assets. Value dominator strategy, on the other hand, is applied in a situation in which the business is supposed to dig out the value of a network it has little control. If an organization operates independent of others in an established and unwavering atmosphere, there is no need for ecosystem strategy, though the business is subject to revolutions.
Usefulness of the Analogy of Strategy as an Ecosystem
Strategy as an ecosystem implies that a business has a large base of interconnected members who depends on each other. If members thrive, the business thrives, and vice versa. This analogy, though not very perfect, mirrors the contemporary business situation by touching on areas ignored by business organizations. The use of the term ‘ecosystem’ rather than ‘community’ implies the complexity of the system with many drivers of success and failures.
Implication of the Perspective of the Ecosystem
The ecosystem as a strategy in an organization implies that integration is essential for a business organization. It implies that the scattering of innovation across a broad spectrum and the significance of interdependency in trade. Also, an action taken by one business organization affects other organization within the network.
Conclusion: Ecology More than a Strategy
Considering ecosystem in business operation is more than a mere strategy. If the ecosystem is healthy, new products, and services can influence the potential of present products and services. In addition, there is no longer an isolation of product concept and design. Based on the information in this article, it means there is little focus on identity marks of products, but rather the focus is on how the product fits and develops its structure.
Works Cited
Iansiti, Marco and Roy Levien. “Strategy as Ecology.” Harvard Business Review 82.3 (2004): 68-78. Print.