Measuring the health of a business ecosystem

Abstract

A business ecosystem is a network of partners around a core technology, who depend on each other for their success and survival (Den Hartigh and van Asseldonk, 2004). An essential characteristic that distinguishes the business ecosystem concept from sectors or supply networks is the explicit modeling of the mutual dependence of the partners: when one partner leaves the network, the value of the network for the others may decline. When a new partner enters the network, the value of the network for all others may rise. Each member of a business ecosystem ultimately shares the fate of the system as a whole. The term Business Ecosystem was coined by Moore (1993) in his Harvard Business Review article “Predators and Prey” and further conceptualized in his book The Death of Competition (1996). Iansiti and Levien (2002; 2004a; 2004b) extended the business ecosystem concept in a working paper, in their Harvard Business Review article “Strategy as Ecology” and in their book The Keystone Advantage. In many high-tech markets, companies do not engage in the competitive battle on their own, but they are part of a coalition of companies around a “platform” technology. A key mechanism here is the presence of network effects. This means that a product becomes more attractive as more customers start using it and as more suppliers offer complementary products and services. The consequence is that competition increasingly takes place on the platform level.