Ecosystem business models are enhancing performance, accelerating innovation and driving transformational growth for organizations.
All CEOs are being challenged to transform their organizations to adapt to a much changed – and continually changing – business context. In response, a growing number of CEOs are embracing ecosystem business models – and with good reason.
A study of more than 800 business leaders leveraging at least one ecosystem business model has revealed that ecosystems make up on average 13.7% of their total annual revenues, drive 12.9% in cost reduction and generate 13.3% in incremental earnings.
But not all ecosystems are created equal. High-performing ecosystems drive on average 1.5 times the cost reduction, and generate 2.1 times the incremental revenue growth, compared to low-performing ecosystems. In fiscal year 2020, companies with high-performing ecosystems also experienced higher average revenue growth and net profit margin overall.
In this edition of The CEO Imperative Series, which provides critical answers and actions to help CEOs reframe the future of their organization, we offer new insights into the rise of ecosystems, how they are driving transformational growth and the best practices of high-performing ecosystems.
We define a business ecosystem as a partnership between two or more entities that creates more value than any individual participant could create on its own.
Ecosystem business models are formed to co-create a product or service, market to a common set of customers and share in the value they generate. At least one participant, the orchestrator, coordinates activities between participants, and all participants have their brands present in the final proposition.
We have explored the evolution of business ecosystem in previous articles, defining what business ecosystem means, why it matters and how organizations can create value through ecosystem integration.
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