If you aren’t embracing an ecosystem-focused business model in 2022, you’re almost certainly missing out on huge revenue streams and endless opportunities for innovation, collaboration, and growth.
Don’t just take my word for it; increasing numbers of top industry players are preaching the benefits of ecosystem-focused business models and partner-positive company culture.
“Most global companies are now actively considering the ecosystem business model given its value-generation potential: growing the core business, expanding the network and portfolio, and generating revenues from new products and services,” reports McKinsey.
Recent research from EY points in the same direction, stating that more and more companies – across geographies and industries – are putting their digital ecosystem strategy at the fore in a bid to drive stakeholder value. That’s because they’ve realized that the better your ecosystem performs, the better your bottom line performs. “High-performing ecosystems drive on average 1.5 times the cost reduction, and generate 2.1 times the incremental revenue growth, compared to low-performing ecosystems,” reports EY’s Greg Sarafin.
High-performing ecosystems drive growth, improve the likelihood of R&D success, and result in better business outcomes than M&A.
In particular, EY’s research found that companies with the best performing ecosystems reported excellent growth, thanks in large part to access to new territories, new joint offerings, and cost-effective delivery and distribution. Research and Development likewise benefitted, thanks to easy access to top talent, expertise, and assets. Finally, business leaders reported that thriving ecosystems resulted in higher growth opportunities and faster execution compared to more traditional Mergers and Acquisitions.
When creating a digital ecosystem strategy, start by identifying your ecosystem value-creation agenda archetype.
McKinsey’s article, How do companies create value from digital ecosystems?, recommends building your digital ecosystem strategy around your particular value-creation agenda. This is based on three main archetypes, as illustrated in the below graphic:
· Archetype 1: Growing the core business through partnerships
The aim of this archetype is earning more revenue from core products and services, and merchant-funded platform usage. The first goal of this digital ecosystem strategy is to sell more existing products through your ecosystem, and then later, begin to provide more extensive offerings and charge new merchants for using your platform.
· Archetype 2: Expanding the network and portfolio, generating revenue from new products
The main goal for this archetype is leveraging higher customer lifetime value through partnering with new partners. “Companies can capture value from many sources including customer-funded new products and services, merchant-funded platform usage, and third-party-funded data monetization.” (McKinsey)
· Archetype 3: Building an end-to-end solution to customers and improving operational efficiency
Businesses that fit into this archetype aim to optimize their infrastructure and technology and then offer them to partner companies. This results in new revenue streams and lower operational costs.
Put customer experience first, and partner experience second.
Above all, every aspect of your digital ecosystem strategy needs to be geared towards solving a real customer need or providing an excellent customer experience. Choose partners based on your customers’ challenges, problems, locations, and favorite tools and technologies. Look for integrations that make your customers’ lives easier. Connect with customers via their favorite channels and remove friction from the buyer journey by selling apps and services via modern eCommerce platforms such as marketplaces.
In addition, your partners need to be seen as a second set of customers. With more vendor choices available to them than ever before, partners have the freedom to choose who to partner with based on the best partner experience offered. Put yourself in the running by providing partner incentives, using a partner portal to simplify and improve partner processes, and giving partners a new revenue stream in the form of a marketplace specifically designed to sell partners apps and/or services.
Use a marketplace as your ecosystem growth engine.
Marketplaces are fertile grounds for growing thriving modern ecosystems. In fact, as marketplaces continue to gain popularity and trust with B2B buyers, selling SaaS products and services via an eCommerce marketplace is absolutely essential to any growth-focused digital ecosystem strategy.
B2B-specific marketplaces accelerate the B2B sales cycle, create new ecosystem opportunities, and provide partners with new revenue streams. As a result, your marketplace becomes a magnet for new partners and resellers, growing your ecosystem and attracting new customers.