Incredible complexity. So many moving parts. Almost impossible to fully understand and depict. These are all descriptions of business ecosystems. Yet people continue to try to understand the big picture—their environment—and how it affects their companies. There’s good reason to do so. If companies can improve their understanding of their ecosystem, they have an edge that can help them find opportunities, assess potential threats, find collaborators, and monitor trends. In this post, we’ll look at a few different ways organizations depict and understand their business ecosystems.
The Corvallis Business Ecosystem
How do you get politicians, business owners, programmers, and staff members on the same page? How do you help them mobilize, focus energy, and commit to real action in order to grow a region’s economy?
Economic Development Director of the Corvallis Benton Chamber Coalition John Sechrest faced just this challenge in Corvallis, Oregon several years ago. He was responsible for spurring economic development in Benton County. As he says, “[we needed to] create flow in the economic system, to increase the number of jobs and companies in the region.” The area couldn’t compete with New York or South Carolina by giving incentives to new companies. It needed another way to develop economically.
Corvallis’ major assets were a large university (Oregon State) and Hewlett Packard. The combination of IT strength, creativity, and brainpower created a ripe environment for start-up organizations. To help those start-ups survive, however, cross-sector commitment was needed.
With designer Becky Clarkson, Sechrest developed a one-page visual to describe the Corvallis start-up business ecosystem. He explains: “I was trying to bring politicians, staff workers, business owners, and programmers into the same conversation. I had to create a central metaphor.” That central metaphor was the harvest, which tied into another local industry, wine growing. Chambers seeded the diagram with Corvallis landmarks, like the Business Enterprise Center (depicted just below Acceleration).
The Corvallis Business Ecosystem map shows the elements of the start-up ecosystem. It depicts activities as a progression from outreach (in the top left corner) to facilitation, funding, acceleration, and cluster development (groups of self-reinforcing companies).
What difference did the diagram actually make? Here’s what Sechrest says:
The ecosystem diagram allowed us to communicate the different parts of the system and to show that we had to do more things than just one project. [It] helped us to cross organizational boundaries and to bring more people to the table. It also made it possible for people to engage more heavily in one project knowing that other projects were being addressed by other parts of the ecosystem. It created a focus for the development work.
eBay engages with buyers who receive bidding opportunities for objects they desire and a fun auction environment. In exchange, buyers’ money flows through eBay and bolster quality through seller ratings. On the flip side, sellers gain a site for listing salable items and build reputations through eBay. In exchange, eBay provides a simplified auction process and provides support for a fee.
Buyers and sellers aren’t the only ones who profit from eBay. Volunteer user groups share technical knowledge and contribute to eBay’s growth.
Verna Allee, who designed this map, writes: “What makes eBay especially interesting is how it demonstrates the potential for a value network to expand prosperity. Because of eBay, quite a number of people who had not been able to earn income suddenly had a way to participate in the economy. Others found a hobby could be leveraged to create additional income.” (According to AC Nielsen 724,000 people earned their primary livelihood through eBay in July 2005.)
Technology Business Ecosystem
When people think of Baltimore, they often think Orioles, soft shell crabs, and maybe Hairspray. They don’t usually think about technology. Dave Troy, a technology entrepreneur in Baltimore, and others are trying to change that. Troy developed a simple ecosystem map to show the critical points in the ecosystem he hopes will develop in Baltimore. Modeled after the systems that make Silicon Valley, Boston, Austin, and New York work, this map shows the basics:
- Ways to engage (at the bottom of the map) – Venues for new participants, entrepreneurs, investors, hackers, and others to come together and innovate. Explains Troy, “By ‘venues’ I am talking about spaces that offer opportunities for daily, ongoing interaction between individuals. They’re ‘high touch’ while being ‘low risk.’ Think coworking, hackerspaces, regular café co-working, incubators and accelerators, and educational institutions.”
- New business creation (at left) – Troy explains that “With the prolonged exposure made possible by the ‘mix’ phase [participation in venues], entrepreneurs can make more informed decisions about who to go into business with and have likely had more time to refine their ideas before ever beginning. This means a lower failure rate for new startups than in a less-developed ecosystem.”
- Growth of product and service companies (at top) – Through the process of incubation and investment, some companies will naturally grow and thrive. As they do, entrepreneurs and equity holders will leave the organizations (at right) and, hopefully, reinsert themselves in the cycle by starting new conversations and supporting new ideas.
It’s a simple model that helps people have a clear and productive conversation about the elements that make a successful technology ecosystem.
Found a unique ecosystem map? Please share!
See here for more on how to map and analyze your company’s business ecosystem.