Complex ecosystems — rules to survive

This article was authored by Jouko Ahvenainen, and was originally posted on telecomasia.net.

When you start a new business or go to work in an industry or business sector that is new to you, one challenge is to understand the ecosystem. What all different roles are in the ecosystem, who are the key players, what would your role be, who is more a partner than a competitor. It is said that it takes 10,000 hours to learn enough to be successful in a new business. Wireless, mobile and connectivity businesses are now also entering new business areas.

I met First Partners, a UK-based research firm, at MWC. They had interesting and useful ecosystem maps, for example, from M2M & IoT Market, Automotive In-Vehicle Infotainment, and Mobile Payment and Banking Market maps (you can download some of these for free here). It really prompted me to think how many actors and roles these industries have, and how much work it is to find your own role there. I have personally also done a lot of work to understand ecosystems better, such as the emerging digital finance ecosystem (see a sample here).

In the telco and mobile industries we have also gone through a significant change, carriers don’t dominate the business anymore as they used to do. At the same time, some new players, like mobile application stores, have got a very important role in the ecosystems. Changes have also created opportunities to bypass some old actors of the old ecosystem.

Typically it is crucial to understand the ecosystem to make successful business. Maybe sometimes in B2C business you can sell directly to the end-user and not worry about all ecosystem players, but it rarely happens in B2B business. Some ecosystems are also open to get new actors and adapt to new needs, but some others are quite the opposite, they want to maintain the existing status quo. But the IoT, Automobile and digital finance examples demonstrate that also the old players of old ecosystems must prepare themselves to new things and ecosystems. And sometimes it is better to forget the old ecosystem and focus to build a new one.

It is not good to ignore the ecosystem, but another grave mistake is to overestimate your own role in it. And this  is something many telcos and traditional telco infrastructure companies have done when internet technology and companies have brought new solutions and business models.

No one can build an ecosystem alone. That’s why each company should understand its own role, but also have the right attitude to cooperate with other important actors. And the cooperation requires business models where all parties can win. These things should be easy to understand, but we have seen too many times in the telco business that someone tries to dominate something alone and get the main part of the profit – and in that way destroys the whole business model.

Now that IoT, smart cars, digital finance and new media solutions among other things are emerging, we again witness a lot of work to build new ecosystems. It is never easy, many moving parts and many parties try to find a business model. We can nevertheless summarize some important rules to be successful in a new ecosystem: 1) your old position guarantees nothing in a new ecosystem, 2) you cannot create the whole ecosystem alone, 3) all parties in an ecosystem must be able to make profit, 4) each actor should focus on areas where it is better than the others, and 5) no ecosystem is stable, better to adapt to a constant change.

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