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Could the world be ruled by business ecosystems that are led by data?

Already, data is the driving force behind many different types of businesses. The following step is to connect the data dots between the different companies.

by Sam
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The natural world can serve as a wonderful source of motivation for business. In the business world, ecosystems, which are systems in which a variety of living things coexist and cooperate to produce a thriving entity, have been replicated. Humans are dependent on a diverse array of goods and services, the delivery of which is increasingly provided not just by biology but also by dynamic groups of businesses working together. Data is the fundamental building block for this.

Business ecosystems that are led by data are thriving, and this is because they provide a singular source of digital information that enables independent economic players to provide services that are beneficial to customers. Collaboration is now a source of competitive advantage wherever data is shared, whether it be Amazon or eBay, Airbnb or Alibaba; and it’s not just online marketplaces that are thriving either.

Over the course of the previous year, more than half of the largest companies in the world seriously engaged in ecosystem business models with innovation in a variety of economic sectors. Businesses are implementing ecosystem models, which consist of a network that is connected by flows of data, services, and money, and in which the functionality of the whole is superior to that of the sum of its parts.

There is no doubt that the dramatic increase that we have witnessed over the past few years has been fueled by the proliferation of digital platforms, connectivity, and data. When an ecosystem is successful, it can give users access to new capabilities, scale quickly, be very adaptive, experience high asset productivity, and transform entire industries.

Successful ecosystems also benefit from and make use of the network effect, which states that the value of the ecosystem to both its users and its suppliers rises as its size increases.

This is due to the fact that data-driven digital platforms are in a better position to provide additional value to customers, such as cost-effective personalised recommendations across a wider selection of products. This has resulted in a significant expansion of what is available, eliminating the prior trade-off between complexity and reach.

The ability to provide an explanation is a primary area of concentration for business ecosystems. There is a general perception that it is difficult to take complicated issues involving data and explain them to stakeholders.

When Safaricom offers embedded insurance through the Mpesa super app, large traditional players quake in their boots. On the other hand, CitizenTV’s entry into the digital video market shifts markets. Why? Because participants in an ecosystem have the ability to exploit and shake up entire economic sectors on a large scale.

Even as far back as 2011, the chief executive of Nokia was quoted as saying, “Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem!” The comments made by Stephen Elop are still relevant today. Such strategies cannot function without the data they collect on their customers and partners.

However, the model of a business ecosystem encompasses much more than merely virtual shopping malls like Jumia. Currently, it is being implemented all along the value chains. This is something that John Deere is working toward with its smart-farming ecosystem, which connects tech-enabled tractors with cloud computing, field mapping, and data analytics in order to achieve the aforementioned goal. Maersk’s primary objective is to integrate container logistics from beginning to end in order to assist its customers’ supply chains. This is accomplished by connecting the relevant dots in the areas of transport, finance, and port services. Both companies are aware of the benefits that come with being information-driven businesses.

Reliant upon a universal data platform

Rolling out shared data and a digital platform was the first step for those companies that have found success with an ecosystem model. This is the essential component that enables other players to connect with one another and collaborate while utilising a single source for customers and supply chains. This makes it possible for businesses to benefit from one another. As more information is gathered across the ecosystem, data flywheels begin to gain momentum as well. These flywheels are responsible for informing how, what, and when products and services are made available to customers.

“However, businesses need to begin by determining how data can be used to drive business strategy. The use of data lakes as a method of storing data is becoming more widespread. This is primarily occurring because it is simple to perform analytics on data lakes and then use the results of those analyses to feed an ecosystem of business tools that can make use of the data “Christian Pedersen, who serves as the chief product officer at IFS, explains.

This is the key point at which data-driven business ecosystems diverge from traditional digital platforms. Ecosystems are dependent on stakeholders having access to shared data in order to inform their strategies and decisions. Their achievement is also heavily reliant on how people comprehend and make use of this information; consequently, the more straightforward and simple it is, the better.

“The ability to provide an explanation is a primary area of concentration for business ecosystems. The complexity of the issues surrounding data is often seen as challenging to explain to stakeholders, and this perception persists. However, in the modern era, we are witnessing the emergence of new methods such as explainable AI, which gives people access to significantly more information in a significantly shorter amount of time, allowing them to make decisions that are more reliable “points out Pedersen.

A difficult model for a business.
It is not simple to participate in a data-driven business ecosystem and gain its benefits. It is difficult to fathom the scope of companies like Meta, Tencent, Gojek, or Yandex. According to the findings of a study conducted by the BCG Henderson Institute, only 15% of the 57 ecosystems under investigation were sustainable over the long term. It’s a jungle out there, with a huge rate of attrition, and incumbents, who dominate markets, are even less successful than large tech or startup players. There are a lot of people starting new businesses.

According to Reeves, one of the most common mistakes people make is the automatic assumption that they have the right to be the orchestrator of an ecosystem. In reality, the majority of people don’t have this right, and being a complementor can be a viable and attractive role.

“Creating an ecosystem involves expenses and potential dangers. Many of these opportunities can be found in industries that have significant customer friction, such as high intermediary costs, delays, and mismatches. These opportunities can also be found in markets that have not yet been disrupted by digital and data-led platforms. The majority of opportunities in the B2C sector have already been taken advantage of, whereas the B2B and public sector markets still have significant room for growth.”

However, many economic sectors are plagued by overly complex data infrastructures, siloed data, legacy systems, and a lack of real-time information, all of which make it more difficult to create viable ecosystem models. Newer technologies, such as smart data fabrics, which enable organisations to leverage data lakes while building a layer of command and control on top, as well as stitching together distributed information, can help to overcome this challenge. Recruiting individuals with the necessary skills can also be of assistance.

In the face of widespread unpredictability, businesses in every industry are increasingly looking to their data in order to gain a competitive advantage. In addition, organisations are frequently unaware of how much value can be added to their innovation initiatives by the inclusion of data specialists. This is another common problem.

Right now, the data-driven ecosystem business model is presenting new opportunities for particular industries, particularly specialised or underserved niches. These sectors include: However, as Reeves explains, finding opportunities of this kind requires counterfactual thinking as well as imagination, and data can assist in guiding one through the process.

The idea of business ecosystems has been around for some time. The element of data empowerment and the realisation that ecosystems can be scaled quickly and efficiently with the right systems in place are the two things that set this era apart from previous ones. Because of this, the possibility of their expansion is very exciting.

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