Ecosystem strategies will rewrite the rules of competition

In the book Ecosystem Edge, Arnoud De Meyer and Peter J. Williamson argue that the rules of competition and strategy as Michael Porter defined them in his seminal work on Competitive Strategy 1 will be redefined when we start implementing ecosystem strategies.

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The classic cost-leader strategy

“The classic cost-leadership strategy […] based on growing the volume of products and services a company produces will be replaced. In a world of competing ecosystems, cost advantage will come from aggregating the scale of your entire partner network to spread the fixed costs of investments in everything from design and innovation through to production and distribution. Your ability to reap network economies will become decisive. […]

The classic differentiation strategy

“The classic differentiation strategy […] will also have to be rewritten. Competing on innovation in a world of ecosystems is all about your ability to leverage learning generated right across the ecosystem to fuel your own innovation and facilitate innovation by your partners. The power of your own brand will still be important. But how well you harness the halo effect of your ecosystem partners’ strong brands will become critical, especially in the early stages of developing your ecosystem. […]”

The focus strategy

“Porter’s traditional focus strategy meant targeting a narrow segment of the market and tailoring the offering to serving its needs to the exclusion of other segments. This involved streamlining the offering to the unique features that segment was prepared to pay for, or pruning the product range back to include only those products that appealed especially to them. These moves would allow a company to differentiate itself by satisfying customers with unusual needs or cut its costs. Ecosystem strategies, by contrast, enable the ecosystem leader and its partners to achieve many of the advantages of focus while still appealing to a wide range of customers with different, and often complex, needs. This is because, while you stay focused, you can rely on a diverse set of partners to serve the needs of different customer segments with tailored offerings that dovetail with your own core contribution. […]”

The agility strategy

“More recently, many companies have sought to combine classic competitive strategies with increased agility. Management literature is replete with advice on how this can be achieved, with suggestions ranging from change management programs through to the creation of ambidextrous organizations.2 Ecosystem competition, however, calls for a very different perspective on agility. Flexibility comes, in large part, from the fact that ecosystems are capable of self-organization a partners adapt and evolve their strategies out of self-interest as the environment changes, much as do buyers and sellers in a market. Rather than simply struggling to make their own organizations more agile, ecosystems leaders take advantage of the capability of their ecosystem for self-organization to enable offerings to customers, as well as the value network behind it, to become more fluid.”

This is summarised in the following exhibit :

Cost Leadership

Internal economies of scale

Network economies among and across partners


Innovation based on R&D and internal capabilities; the power of your marketing and brand building

Innovation based on learning generated across the ecosystem; magnifying your brand using the halo effect of partners’ brands


Focus by streamlining the offering and product range

Focus by co-opting partners to broaden the offering


Organizational change management and restructuring

Harnessing the ecosystem’s self-organization capabilities

1 Porter M. E. , Competitive Strategy, (New York: Free Press, 1980)

2 Cristina B. Gibson and Julian Birkinshaw, “The Antecedents, Consequences and Mediating Role of Organizational Ambidexterity, Academy of Management Journal 47, no. 2 (April 2004): 209‒26.

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Ecosystem strategies will rewrite the rules of competition

by EcosystemEdge