Research Highlight

Surviving in an Increasingly Digital Ecosystem

Every large and ambitious company today should be trying to figure out how to become a destination for its customers.

Peter Weill and Stephanie Woerner Reading Time: 5 min 

Topics

Permissions and PDF
Digital Ecosystem

In summer 2015, MIT Sloan Management Review published our article “Thriving in an Increasingly Digital Ecosystem,” which introduced four business models for the digital era. We argued that given the amount of turmoil digital disruption is causing, it’s time for companies to evaluate these threats and opportunities and start creating new business options.

We identified four ways that companies can operate:

  1. Suppliers, such as insurance agents, which are typically in the value chain of another powerful company;
  2. Omnichannel businesses, such as large retailers and banks, which provide customers access to products across multiple channels, combining physical and digital;
  3. Ecosystem drivers, such as Amazon.com Inc. and Tencent Holdings Ltd.’s WeChat, which become destinations for more and more of their customers’ needs by offering complementary or sometimes competing services; and
  4. Modular producers, such as PayPal Holdings Inc., which provide plug-and-play products or services that can adapt to a variety of ecosystems.

Much has happened between since we began our research in 2012, and it’s time to update.

We have collected new data and completed new case studies that help us understand that it’s no longer about how companies can thrive, but rather how they must reinvent to survive — because that’s the key issue today.

How the Competitive Landscape Has Evolved

Three findings dominate our new research:

In the past five years, we have seen a consolidation — a Darwinian shaking out — of ecosystem drivers and modular producers. Back in 2013, over half of the ecosystem drivers we identified in our survey were small enterprises, often startups, trying to create a blockbuster business. The successful ones — which rely on having great platforms — have grown rapidly, while the others failed and often disappeared (or were acquired). As a result, the number of companies embracing these two business models has decreased markedly. From 2013 to 2017, companies that were predominantly ecosystem drivers fell from 20% to 9%, and modular producers fell from 18% to 8% (from 998 companies across two surveys).

More companies have embraced an omnichannel business strategy. Omnichannel businesses are more focused on meeting customers’ life event needs, but statistically we saw relatively few omnichannel businesses that were really great at customer engagement. It’s a big challenge to take a business designed for the physical world, add a digital channel, and make the new customer experience seamless.

Topics

About the Authors

Peter Weill is chairman and senior research scientist of the MIT Sloan Center for Information Systems Research (CISR). He tweets @peterdweill. Stephanie L. Woerner is a research scientist with CISR who tweets @SL_Woerner.

Tags:

Reprint #:

59236

More Like This

Add a comment

You must to post a comment.

First time here? Sign up for a free account: Comment on articles and get access to many more articles.

Comments (2)
Deepak Hooda
The Organisation structure should support the strategy or the structure should be changed to adapt to the strategy whichever is quicker. Failure to do this will result in wasted efforts and a lost opportunity to influence and dominate the market as new technology may replace the old sooner than expected.
Chuk pant
Since many organizations believe that their current, fragmented strategy is good enough are hesitant to move to an omnichannel approach. Change is hard and it can lead to ultimate failure in this digital world. On the other hand change can also be wildly successful, but eventually, we organizations have to adopt the change and embrace a more connected strategy to meet the ever-growing consumer demand of a seamless experience across multiple channels. 

The solution rests on an omnichannel strategy that offers the benefits of the online platform while still allowing space for uniqueness.

See this white paper on omnichannel experience  : https://www.ciowhitepapersreview.com/customer-experience-management/omni-channel-commerce-customer-experience-606.html