by Julius WiedemannMar 02, 2022
When you think you are choosing between an Apple and a Samsung phone, in fact you are choosing for much more. Microsoft, for instance, didn’t succeed doing mobiles not because their mobile and interface was bad. It was just a question of not coming a full circle in resolving a digital ecosystem. We all live in ecosystems. In the neighbourhood we live, we find most of the things we need for survival, or to navigate the world, such as a bakery, a bank, a clinic, schools, supermarket, gas station, newsstand, and others. In the digital world it is not much different. The difference today is that you must do everything on the device you carry for about 16 hours a day in your pocket or in your hands. The decision of how you pay, which apps you have access to, safety features, privacy, connectivity with people alike, and even social currency, it is all embedded in the devices we choose to use.
The survival of many platforms depends on the rupture and the integration within currently used ecosystems. TV is one of them. Netflix was able to integrate itself into the entertainment ecosystem with a new option that was unthinkable just a few years ago. Facebook, Twitter, LinkedIn and others did the same. As soon as one of these systems became unaffordable for the usual takers, other companies followed suit and created other options such as Disney+, Amazon Prime and Apple TV.
According to TCS, a consultancy service, a digital ecosystem “is a complex network of stakeholders that connect online and interact digitally in ways that create value for all". They tend to have five main characteristics, being customer-centric, data-driven, automated, global, and dynamic. Companies like Amazon understood that regulating the ecosystems was the central point for understanding consumer patterns, and for being able to enlarge its market share. They were able to catch up by adding a number of things, including a Netflix-like platform to Amazon Prime, a supermarket like Whole Foods, a voice recognition system, an automated buying device, a website for indexing films, and others. The Apple App ecosystem alone saw billings rise by 24 per cent in 2020, reaching nearly 650 billion USD. By comparison, the Google Play apps generated about 40 billion in the same year.
In 2018, Apple bought Shazam in an attempt to enlarge its market share in the music industry by being more searchable. As Spotify keeps pushing its leadership in music streaming, others try to catch customers from the other side. The audio information ecosystem is trying to use a variety of tools to keep the legacy of the radio era. Podcast platforms are a typical example. There are many of them, and for a podcast producer for instance, it is crucial now to be searchable in many places. And again, content is king. With digital technologies becoming completely democratised and easy to be implemented, content has become the differentiator to attract an audience. It is almost the only thing that would give a platform some exclusivity.
Corporate systems such as Oracle, SAP, Cisco, IBM, and others are not delivering products. They are not simply delivering specific solutions. They are always thinking about the next step and what problems could they solve if they create the means for people not to get out of their box. They are always delivering ecosystems because they need to guarantee that the customer stays in the loop. And if there is something that they haven’t done yet, it’s easier to buy something which already exists and to plug that into an ecosystem instead of developing it from scratch, most of the times. The moment a system is big enough, it becomes advantageous for other little boxes to be plugged into a bigger engine. It can create end-to-end workflows, and very often a possibility to customise things in between.
Ecosystems can exist in manufacturing, when for example, vendors need to buy from specific sources. It can also exist in healthcare, when a patient has to go through specific pattern of touch points in a treatment. Ecosystems can determine new opportunities and sources of revenue, they can reduce costs by improving efficiency, and it can increase the speed of technology adoption. But all that becomes a little sinister if one becomes too dominant. The only thing meaningful that should be observed against ecosystems is the creation of monopolies.
In the paper “Thriving in an increasingly digital ecosystem”, Peter Weill and Stephanie L Woerner, published by the MIT Sloan School of Management in 2015, argue that “it’s time for companies to evaluate these threats and opportunities and create new business options for the more-connected future of digital ecosystems". In their research, it was found that in 2015 “board members at large companies estimated that 32 per cent of their company’s revenue would be under threat from digital disruption in the next five years; 60 per cent of board members felt their boards should spend significantly more time on this issue next year". And also, that “despite the threats from companies including Uber, Airbnb and Amazon, increasing digitisation offers opportunities for companies to leverage strong customer relationships and increase cross-selling".
Ecosystems always existed, as in nature, but they have never been so much orchestrated by mankind. In this day and age, they offer an opportunity for us to look further into our relationships, trying to find correlations and interactions, generating much-needed efficiencies, and to diminish waste. The basics of nature have never been so important.
Read more from the series Digital Legacies where our columnist Julius Wiedemann investigates the many aspects of digital life.