A third party Ecosystem represents the interdependent network of suppliers, strategic partners and other third parties through which an organisation can create, deliver and realise customer value.
With increasing market saturation and the spectre of disruption looming universally: profits are under pressure and customer volatility is on the rise. Ecosystems offer a unique opportunity to defend the core, and capitalise on new technologies.
Our mission is to help organisations architect, implement and realise value from Third Party Ecosystems through sharing our latest thinking and bringing industry leaders together to exchange ideas and new ways of working, at our threecosystems community meetups.
In markets with increasing saturation and the spectre of disruption looming universally, profits are under pressure and customer volatility is on the rise.
Organisations need to create new value without breaking the bank or disrupting operations.
Ecosystems offer a unique opportunity for Principals to create new value through commissions on third party customer transactions, and, enhance operations through a more strategic approach to third party management and data liberation throughout the ecosystem.
Taking a holistic view of a Principal’s third parties, ecosystems provide a structured way to manage third parties based on their role, delivered value and the level of control the Principal has.
This marks an important divergence from traditional organisational design, where accountability is delineated between buy and sell side third parties: frequently resulting in different (if not conflicting) management approaches, resource allocation and strategies to buy or sell side third parties.
Fundamentally, Ecosystems allow management to see both the woods and the trees: enabling better decision making and a fuller appreciation of the separation between accountability and control in relation third parties.
The late Clayton Christensen's theory of 'Jobs to Be Done' was a game changer for how many organisations thought about their customer offerings.
One theory holds that the more customer jobs an organisation can deliver on (well), the more satisfied its customers will be and, by extension, the more successful it will be.
Platform Ecosystems enable Principals to do just that: delight customers through expanding the number of customer jobs that it can deliver, without increasing customer complexity or effort.
Supermarkets first achieved this some 80 years ago, this tried and tested model is ready for the digital age.
Whilst it’s true that Principals might only take a small commission from each third party transaction, organisations with large customer bases will quickly benefit from volume.
The Principal's key responsibility is to focus on the operations, integrity and composition of the Ecosystem and its platform. R&D, product management and order fulfilment all sit within the partner’s domain.
In this way, Ecosystem revenue is truly passive: the Principal connects third party offerings to customers. Thereafter it’s the customer's job to buy if they want, and the partners to sell something they need.
In ‘Skin in the Game’, Taleb drives home the importance of carefully defining and aligning incentives with accountabilities.
Well-architected Ecosystems are founded on a system of co-dependent incentives. This, combined with the enhanced oversight and transparency afforded through the Platform and management layers of the Ecosystem work to create the green shoots of a healthy risk culture across even large third party estates.
Effective risk management is further made possible through the clear structure offered in the Ecosystem model, allowing for highly targeted assessment and treatment of risks across each ring and component level.
Disruptors and competitors are Principally after one thing - your customers. Increasing customer stickiness and reducing volatility is key to building market confidence and robust forecasts.
Expanding offerings (albeit through third parties) increases the frequency of interactions and impressions between Principal and customer; each time strengthening the practical and emotional bonds. For example, if you stop using Facebook, you also lose access to a range of peripheral and third party offerings.
In addition, Ecosystem participants stand to lose out if the Principal’s customers leave or is disrupted in some way. Powerful incentives exist for organisations to work together to defend what they have built.
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