The Forest and the Trees: Managing in Business Ecosystems

Spring Forest
The Forest and the Trees: Managing Business Ecosystems

When I was a kid, one of my favorite things to do was to hike with my parents. We would romp through forests, looking at interesting lizards and trees, finding animal tracks, and admiring the sounds of bird calls. We would arrive at our destination, usually the top of some peak. We’d get to look at the entire forest — the trails we followed, the lakes we missed, the cloud formations — and we’d feel awed and satisfied. We had been in that forest, but now we could see it from above.

Today, it’s time for us to spend a little less time looking at the animal tracks in our organizations and a little more time looking at the forest as a whole. It’s time for us to pay attention to our business ecosystems.

What is a business ecosystem?

Business ecosystems are formed by the dynamic interplay between interconnected organizations that depend on one another for mutual survival. OK, that’s a mouthful. It means companies are constantly influenced by those around them. More than that, their success is dependent on others.

In the olden days, businesses competed against one or maybe a few specific rivals. The Pepsi vs. Coke taste test is a great example. Competing head to head for market share is an easy game to play. You just have to outsmart the competitor to gain more customers.

Today the cola wars and their business ecosystems are more complicated. Pepsi and Coke aren’t just competing against each other. They’re battling with Rockstar Energy Drink, Odwalla, Sobe, and Naked Juice. By the way, Coke owns the first two, and Pepsi owns the second two. That makes things a little more complicated, because the companies are competing with themselves. Then add spring water, coconut water, smart waters, and energy drinks like Red Bull, and the picture gets even more complicated.

I don’t work for Pepsi, so why should I care?

The short answer: What you learned in business school didn’t prepare you for this new world (unless, of course, you had professors like James F. Moore, the founder of the business ecosystem theory).

In this complex world, management by objectives doesn’t cut it. By the time you’ve set objectives, they’re already obsolete, since the underlying assumptions have been disproven or changed radically. And that assumes you can get agreement in the first place across the various time zones, languages, and priorities within your organization. There are also changing regulations, market newcomers, and all sorts of surprises that make traditional planning difficult, if not impossible.

It’s time to think broad, not just narrow. It’s time to look at the forest and the trees. How do you do this?

  • Get allies. Make sure you have people in your network who can help you think about your future, your company’s future, and your industry’s future. Keep your eyes on what’s coming, because nothing remains stable for long these days. Keep in touch with trends and shifts, so you’re not unpleasantly surprised. Great organizations like the World Futurist Society and the Institute for the Future can help you with this.
  • Think differently. Learn new ways of thinking about organizations and ecosystems. Look for articles and people talking about things like ecosystems, strategy in the new world, networks, and complexity.
  • Get outside the forest. Go to conferences and workshops that talk about the big picture, not the details. What do people really need? What are people excited about? Who’s doing related work? Where is there innovation? Who’s entering the industry? What’s happening in related industries? Don’t have travel funds? Try reading magazines like Wired.
  • Experiment. Try some new tools like a vulnerability matrix, a strategy canvas, or a health diagnostic.
  • Keep a sense of humor. Goodness knows we’re all going to need it in this crazy, changing world.

Originally published on Future of Work Enabled, 10/29/2012.

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