As the way businesses operate in society has changed due to the Internet revolution, some business thinkers have begun to see organizations as ecosystems rather than as discrete units. Businesses are no longer seen as monolithic units (everything is "the business") or as bundles of discrete parts that each have their own function. Instead, successful businesses must find creative ways to integrate their various functions so that they can become more productive and effective.
Ecosystem thinking doesn’t just focus on how businesses begin or how technology can be used for greater productivity, it shifts businesses entirely to the ecosystem model, in which every action a business takes can affect all other parts of the system.
Ecosystems 101: How They Relate to Business
Biologists often describe Ecosystems as a community of organisms interacting in their environment. We can analogize that definition to business as well. In a business ecosystem, the relationships between things matter. In fact, they matter a lot. Everything touches everything else. And so the way that humans interact with processes, which interact with applications, which interact with various infrastructures, has a big effect on the system as a whole.
In general, businesses function as an ecosystem because of the large number of interconnected parts spread across the enterprise and even across the globe. Consider a business that manufactures and distributes trinkets. That business depends on its manufacturing personnel to make the trinkets, suppliers to get raw materials to the manufacturing plant so that it can keep running, shippers that send finished products either directly to customers or to retailers that plan to sell them, finance to handle accounts payable, and customer service to handle customer calls and requests. A mistake or delay anywhere in the supply chain can affect all aspects of the business, leading to delays all of the way down the line and interfering with sales as well as manufacturing.
A Shift in Perspective
Although the basics of the ecosystem have always been with us, to truly view business as an ecosystem requires a shift in perspective. In the past, businesses were thought of as monolithic entities that followed a standard organizational pattern. Viewing businesses as ecosystems, however, requires a change in the way businesses are organized altogether.
- Component architecture models allow businesses to quickly identify needs and take action to meet them rather than slowly upgrading themselves
- This model also allows businesses to align their technology needs with their general operating plans, allowing them to integrate technology in a more seamless manner
In essence, component operating models allow businesses to build their IT infrastructure and other organizational structures from the bottom up, creating the exact organizational structure the business needs to best meet environmental, technological, or even political needs not even imagined a few decades ago. The various components can include policies, processes, procedures, activities, systems, business rules, strategies, departments, resources, projects, products, competitors; literally any piece of an enterprise. It is this ‘building block’ approach that enables businesses to be truly agile and shape themselves almost on demand.
The Three Phase Approach
Switching to the ecosystem model requires rebuilding your business organization. There are three phases associated with this transition.
- During the design phase, the organization develops its team, solidifies its vision and identifies any constraints that limit what the business can do.
- During the implementation phase, the business puts its plan into action. This phase is work-intensive, as the business catalogs all its vital processes, adds components for greater efficiency and deploys needed tools and systems.
- During the monitoring phase, the business continually analyzes its ecosystem to see what's working and what isn't, making changes as needed so that the system works even more efficiently.
Creating and cultivating an efficient business ecosystem extends far beyond noting technological changes or implementing new technology to improve existing processes. Instead, businesses must become aware of their organizational structure, work on rebuilding it more effectively and consistently analyze data with an eye towards further improvement. The businesses that are willing to undertake this process are the ones that will come out on top as the 21st century progresses.