Business Ecosystems: The New Normal

This introductory chapter provides the foundation for understanding ecosystems as the new normal, offering insights that any firm can leverage to its advantage. This chapter provides a brief history of ecosystems, the roots of the ecosystem concept, and highlights the significance of ecosystem engagement for today’s business leaders. The chapter initially defines what an ecosystem is, also differentiating the concept from related ideas such as strategic alliances and networks. It also considers the reasons why ecosystems—which have been a common business practice in some form or another for decades—are here to stay. The next section of the introductory chapter presents the drivers of ecosystem emergence, which include demanding customers, technological advancements, a mindset shift from ownership to access, and competitive pressures. The chapter’s final section illustrates how ecosystems conquer and transform traditional industries, and how traditional tools like Porter’s Five Forces model need to be revised to account for shifts in industry boundaries. Required shifts include a transition from a focus on threats to opportunities posed by new entrants, from threat of substitution to ecosystem transformation, from supplier pressures to complementor dependence risk, and from customer pressures to user influence and dependence. The chapter concludes with a discussion on the potential end of industries, how ecosystems add a new perspective, and how they may challenge established business paradigms.