Why thinking in ecosystems pays off

By ir. Pim Schouten

From silos to ecosystems

Silo thinking is out, and "ecosystem" is the new buzzword. It encapsulates the essence of transition thinking, the transition to a digital society. This blog, in three parts, explains why it is important, which principles drive success, and how you can take steps in this direction. In this first part: why thinking in ecosystems pays off.

Ecosystems, IT ecosystems, IT, data exchange, Horizontal Collaboration, Customer- centric operations

Everything is connected, everyone is connected

The transition to a digital world is irreversible and happening rapidly. It affects our world in various ways. First and foremost, it impacts our lives as consumers. Data exchange occurs through platforms, apps, devices we have at home, through education, companies we work for, and businesses where we make purchases. Everything is interconnected through data exchange. This allows us to easily communicate with each other, and a single consumer can sometimes have a greater impact than a large corporation. Similarly, our business world is connected to practices and stakeholders within and outside our organization. In the past, during the industrial era, we could view our company as the hub of a market or a societal field. The goal was to create a need in the customer that matched our offering. Now, through data exchange, the customer is part of our organizational network. The customer decides if and how they need us. New technologies allow customers to make agreements with other customers and, for example, bypass the bank, as seen in Bitcoin transactions. Or customer behavior forces the market to develop new standards, as with the use of robotics and the Internet of Things.

Data exchange between unequal entities within and outside the organization

We are getting increasingly used to exchanging data with a wide variety of parties involved in our personal lives and in the world of our business. An educational organization reports to the government about the number of enrolled students and their progress, exchanges data with publishers for e-learning systems, and provides students with information about the curriculum and class schedules. Patient data is increasingly shared among healthcare institutions, pharmacies, and healthcare providers. In this data exchange, no party is more important than the other. As a company, we eagerly collect consumer data to create new commercial propositions. At the same time, we depend on the consumer's willingness to provide us with data. Conversely, customers in receiving services increasingly depend on accurate and reliable data from a supplier.

Vertical management vs. Horizontal collaboration

Digitalization means we can no longer organize our companies into business units that independently generate profits or departments like IT, HR, Marketing, and Communication that operate as islands. Even top-down management within these silos is ineffective when every employee is connected to information from within and outside the organization in various ways, often beyond official company channels. Vertical management is giving way to horizontal collaboration. We need the expertise of other companies and institutions, as well as customer feedback, to realize our plans for the future. We also need to be able to quickly adjust our plans, if necessary.

Operating consciously in ecosystems

For this way of working, we use the metaphor of the ecosystem. All parties are equally responsible for the whole, and each party has its role and is equally important (in the water cycle, a raindrop is not more important than the river.) If one party drops out, the result as a whole changes, or the ecosystem falls apart. 

Due to the permanent exchange of data, we are connected to all parties in the system, often without knowing what we are exchanging and what function it has for our organization. Willingly or unwillingly, we move with the dynamics occurring in the ecosystem, with the developments and changes in other parties. This complexity increases our business operations. Digitalization requires managers and executives to be aware of the ecosystems in which they operate. With the new regulation on data and privacy (GDPR), it's even more the responsibility of the business to know in which systems the organization operates, why we do it, and what responsibility we want or need to take. 

Ecosystem isn't just a buzzword; it represents horizontal thinking, going beyond the boundaries of your own organization. Jan Rotmans, a guru in the transition to a sustainable world, calls this tipping. In the quality thinking of the last century, we spoke of maturity levels 4 and 5, a level reserved for a very limited number of companies with advanced expertise, such as NASA. Maturity levels 4 (customer-centric operations) and 5 (collaboration beyond the organization's boundaries) are the new norm. Unattainable? That remains to be seen. Blog 2 in this series discusses the way of working and the principles that drive success. 

Want to know more?

Highberg has extensive experience in issues such as these. Therefore, please contact us with your questions about management, ecosystems or other digital challenges.

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