Title: How Do You “Design” a Business Ecosystem? | BCG
Headings: How Do You “Design” a Business Ecosystem?
How Do You “Design” a Business Ecosystem?
Step 1: What is the problem that you want to solve?
Is the problem big enough?
Who would have guessed 20 years ago that posting selfies, photos of your food, and cat videos is such a deep human need that multibillion-dollar businesses like Instagram and YouTube could be built on them?
Is an ecosystem the right choice?
There are many examples of business opportunities that are not well suited for an ecosystem model. Who wants to fly in an aircraft that was built by a loosely coordinated ecosystem of companies?
What kind of ecosystem do you need?
Step 2: Who needs to be part of your ecosystem?
What are the players and roles?
Who should be the orchestrator?
You cannot unilaterally choose to be the orchestrator. You need to be accepted by the other players in the ecosystem.
How can the orchestrator motivate the other players?
Step 3: What should be the initial governance model of your ecosystem?
How open should the ecosystem be?
How can you find the right level of openness for your ecosystem? The decision must optimize the tradeoff between the advantages of a more open setup and of a more closed setup.
We have seen many ecosystems start with a rather closed governance model in order to establish high quality and open up later.
What should the orchestrator control?
Step 4: How can you capture the value of your ecosystem?
What should you charge?
Whom should you charge?
In general, monetization should be designed so that it does not stifle the growth of the ecosystem but instead encourages and incentivizes participation and thus fosters network effects.
Step 5: How can you solve the chicken-or-egg problem during launch?
What does it take to achieve critical mass?
What is the minimum viable ecosystem?
To quickly get to critical mass and build a dense network, many successful ecosystems we observed initially constrained themselves by geography.
Which side of the market should you focus on?
The critical question is which side of the market to focus on initially in order to build critical mass.
Step 6: How can you ensure evolvability and the long-term viability of your ecosystem?
How can you scale the ecosystem?
How can you defend the ecosystem?
Our analysis of successful and failed ecosystems showed that many ecosystems found it easier to achieve scale than to sustain it.
The most effective defense is to ensure that you offer the best available product or platform and the best overall ecosystem solution.
How can you expand the ecosystem?
How can you protect against backlash?
Authors

Content: Its breakthrough idea was to separate car and battery. In this model, the driver purchases a car without a battery, while Better Place owns the battery and charges a mileage-based monthly fee for leasing, charging, and exchanging it. In this way, Better Place could solve several fundamental problems of existing EV offerings: Because Better Place owned the battery, the EV could be offered at a competitive price, and the risk of obsolescence and low resale value due to advances in battery technology was eliminated. Because Better Place built not only charging infrastructure but also switch stations that could exchange batteries in a matter of minutes, the problem of limited driving range was also addressed. And finally, Better Place also solved the problem of electric grid capacity, because as the orchestrator of the EV ecosystem it could balance the power demand from cars with grid capacity. Better Place was thus able to remove substantial frictions and offer an enormous benefit to the world. However, as we will see, the ecosystem failed because of other weaknesses in its design. The specific value proposition of a business ecosystem is context dependent. For example, frictions in traditional retail were much higher in China than in the US, because China had no significant retail or payments infrastructure and it was difficult for consumers to get access to many products they were looking for.