HOW TO START AN ECOSYSTEM

In order to attract partners to the roadmap that has been laid out, the ecosystem leader needs to be able to communicate a strong value proposition to potential partners.  An ecosystem will prosper only if it is attractive to all the partners that need to be involved, who also must succeed once they join.

In our experience, ecosystem leaders often start with the wrong question when identifying potential partners. The temptation is to formulate a list of partners based on their size, reputation, or importance in the industry.  Taking that approach amounts to putting the proverbial cart before the horse.

The first question an ecosystem leader needs to ask is what set of capabilities will be necessary to get a positive spiral of learning, innovation, and growth under way in the ecosystem. –This in line with Jacobides et al (2019) fifth success factor. — Will the ecosystem need to attract partners with capabilities in certain technologies, or those who can deliver capacity, or maybe those who supply complementary services? Does the ecosystem need partners that can provide access to new customers, based on their reputation or existing relationships? Will it also need partners with strong market making skills to unlock latent demand and overcome the conservatism of potential buyers? Asking these questions will enable the lead company to understand the key capabilities that the ecosystem needs to get started.

The capabilities list is unlikely to be complete, or 100% correct, at the outset. Unanticipated needs for capabilities will emerge as the ecosystem develops. But to start the ecosystem, the ecosystem leader needs a working hypothesis about the key capabilities that will be required.  Again, there is a basic choice about how best to recruit the first partners: by proactive targeting or attracting them with a honeypot. Both approaches need to be underpinned with a clear value proposition that will encourage partners to engage with the ecosystem. And then once the ecosystem is up and running, new partners who bring novel skills will be attracted to it.

Let’s go back to the case on Alibaba. When Alibaba launched the Ant Financial ecosystem, it used the fact that it already had 350 million customers using its Alipay online payment and escrow service as a honeypot to attract partners. Alibaba itself lacked capabilities in financial services, but with an average of 80 million transactions flowing through Alipay each day, the potential benefits to potential partners of working with Alibaba to build a new ecosystem around financially active customers was obvious.

Dassault Systèmes (DS) took the approach of proactively targeting lead customers to partner in each new application industry when it wished to expand. In automotive, for example, it was Toyota; Gucci for consumer goods and retail; Novartis for pharmaceuticals. In seeking to engage early with these partners, DS was looking for some very specific characteristics: leading-edge companies that need solutions not available on the market, a willingness to invest time and resources in co-innovation, and recognition that the benefits would be available to others as the ecosystem expanded, but they would enjoy first-mover advantage.

Next section – Proposition 5 – Shrink the entry barriers for potential partners

Previous section – Proposition 3 – Develop and share an initial roadmap for the ecosystem

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