public policymakers. Business ecosystems pose an extra challenge for regulators because innovation by ecosystem
actors tends to use novel technologies
and business models for which adequate
regulation does not yet exist—think of
ride-sharing services or cryptocurrency.
Moreover, ecosystems blur boundaries
of industries for which traditional regulation has been crafted—think of mobile money that falls between financial
regulation and telecom regulation.
Ensuring good governance of business ecosystems may rely on multiple
mechanisms. First, new levels of transparency of buyer-supplier rating systems
would help maintain good service quality and keep corporate conduct in line.
Second, governments may work more
collaboratively with private-sector actors who know more about the new technologies and markets to be regulated,
though one must beware of “regulatory
capture” by powerful interests. Third,
governments may endorse outcome-based regulation by becoming “
1 Super-regulators approve
non-government (profit and not-for-profit) organizations as regulators. Private regulators are then authorized to
set their own standards and rules as long
as they meet certain outcomes, such as
data security or privacy. In today’s geopolitical world, digital technology enables, but also potentially threatens, the
viability of business ecosystems. Thus,
business ecosystems would be in trouble if not governed well.
1. Hadfield, G. Rules for a Flat World. Oxford University
Press, New York, 2016.
2. Moore, J.F. Predators and prey: A new ecology of
competition. Harvard Business Review, (1993), 75–86.
3. Sako, M. Business models in strategy and innovation.
Commun. ACM 55, 7 (July 2012), 22–24.
Mari Sako ( firstname.lastname@example.org) is Professor of
Management Studies at Saïd Business School,
University of Oxford, U.K.
Copyright held by author.
evolution. The ecosystem perspective
will remain particularly useful for the
21st century. I conclude by considering
the implications for innovation, corporate strategy, and public policy.
Being part of a business ecosystem implies that actors are associated with opportunities for value creation and risks
of value destruction. In other words,
business (and non-business) actors are
interested in value “co-creation,” but to
state the obvious, some win and others
lose. Although there has been much recent discussion regarding competition
between digital platform ecosystems,
we must focus our attention more on
within-ecosystem competition between
different types of actors. The mobility ecosystem is a good case in point. To
win, being a first mover with a novel idea
or new technology always helps, but that
is not the only way, as I explain below.
Balancing collaboration and competition with a broad range of ecosystem actors is central to engage in cross-cutting
innovation. As a business entity, your
suppliers are “partners” as well as potential competitors. For instance, in a
mobility ecosystem, automakers must
treat electronic software providers or
public regulators as partners to seek a
joint innovative solution for a specific
smart city. In this world of partnering, business activities are likely to be
evaluated for simultaneously creating
value for the business and satisfying
social goals. Moreover, business success or failure will depend in part on
cultivating skills to facilitate complex
coordination of expertise, and to access assets that you do not own. These
capabilities create distinctive advantages that some players may leverage to
win out in a business ecosystem.
Last and not least, business ecosystems
require good governance for sustainabil-
ity and evolution. This is challenging at
the best of times with no easy solution,
and should not be a concern just for
they in Silicon Valley or Bangalore, are
communities of stakeholders with re-
sources organized around the process
of entrepreneurial opportunity discov-
ery, pursuit, and scale-up. As such, this
type of ecosystem is defined as a system
of value-creating activity that can be
sustainable, self-governing, and evolu-
tionary. To the extent that people and re-
sources are imperfectly mobile, startup
ecosystems continue to be embedded
in a specific geography, even with the
spread of crowdsourcing and virtual
Another notable example is the mobility ecosystem with connected cars,
ride sharing, and driverless transportation. This ecosystem is in the making in so-called “smart cities” due to
huge potential in exploiting digital
technologies. At present, all sorts of
actors are vying to become the aggre-gator of “mobility as service,” with a
view to reaching a shared goal to make
a step change in improving mobility,
reducing congestion and pollution,
and raising the quality of life of citizens. The mobility ecosystem is geographically anchored, but cuts
across industries with competition
and collaboration between incumbents (such as automakers and
component suppliers) and new entrants (such as technology startups
but also incumbents in electronics
and telecommunication). Collaboration is also necessary between the
private sector (with the likes of Uber
and Lyft championing the “sharing
economy”) and the public sector with
its city planners and politicians.
The mobility ecosystem has the
promise of being sustainable (because
the actors’ shared goal is to reduce congestion and pollution), self-governing
(though for now with different ideas
about the nature of regulatory oversight), and evolutionary (with different
smart cities likely to find different solutions to the same problem over time). In
this way, the mobility ecosystem helps
us focus our attention on the essence of
business ecosystems in general.
Ecosystems in the 21st Century
Business ecosystems may be an elusive
metaphor for many readers. In this
column, I have suggested the term is
applicable only when we see elements
of sustainability, self-governance, and
Different types of business ecosystems.
(in resource use today and the future)× ××
(with some competing rules) × ×
(via competition and experimentation) × ×