Businesses have more access to data today than ever before. Cloud computing, the Internet of Things, and Internet 4.0 are making amazing things possible in today’s business landscape.
But, most experts feel that what’s been accomplished thus far is only a fraction of our potential for innovation. As a result, there’s been a growing movement to democratize innovation via business ecosystems.
Companies with business ecosystems are in a unique position. They can leverage those ecosystems to innovate at a faster pace than their competition.
Today, we’re going to discuss how these businesses can harness their true innovation potential through democratization. We’ll take a deep dive into business ecosystems, as well.
Our hope is that, by the time you’re done reading this article, you’ll have a better understanding of how you can move your team out onto the leading edge of your industry.
But, there’s a lot of information to cover, so let’s jump in.
What Are Business Ecosystems?
The term ecosystem tends to get thrown around a lot. Everybody has their own definition for what it means, exactly. The definition we’re probably most familiar with is from our elementary and middle school science classes.
There, an ecosystem describes an environment where all of the members survive, and thrive, off of each other. An example would be the ocean. Within our oceans, millions of species are dependent on each other to live.
Each organism has its role and plays a key part in the life cycle of the ocean at large.
Business ecosystems are no different. If you consider each business an “organism”, a business ecosystem is when 2 or more businesses come together to serve the same group of customers. Each company acts as a participant in the ecosystem.
But, one participant acts as the leader and guides the direction of the overall ecosystem. A key factor in this arrangement is that no company gets overshadowed. All members of the ecosystem must have their brands represented equally.
Why Are Ecosystems Important?
So, why are business ecosystems important? That’s a great question. The term is becoming a buzzword among academics in the business world. But, the fact remains that there is concrete evidence of a growing “ecosystem” movement.
There’s no doubt that the modern business world moves fast. In fact, it may even be a struggle for companies to keep up at times. Transitioning to a business ecosystem model can help companies to keep up with this hectic pace.
Companies can pool resources and brainpower together to innovate more quickly and more effectively. They can also work together to deploy more capital, faster to spur on more innovation.
Businesses typically have three ways to grow. They can either build out new departments and opportunities themselves, they can acquire another company, or they can partner with an existing business.
Building on your own takes too much time and resources. Any time a company sees an opportunity to innovate, they would have to deploy manpower and capital to start from the ground up. The process is too slow and cumbersome to keep up with the competition.
The other option would be to buy another company. This can still work in the modern business economy. The challenge, however, is that sometimes the price tag is too high.
Partnering for Agility
Therefore, in today’s economy, we find most businesses leaning toward the third option: partnering. Partnering is a quick and easy way to capitalize on innovation opportunities.
In the past, partnering with another business had some major challenges. Technology gaps made communication and day-to-day operations between partners a major hurdle to conducting business effectively.
Fortunately, that’s all changed now thanks to cloud computing. Being able to communicate, share files, and collaborate over the cloud is allowing for partnerships of all kinds. The barriers to partnership anywhere around the globe have been torn down.
But not just any business can jump into the business ecosystem arena and decide to partner. Companies need to take care in structuring and positioning themselves in a way that’s conducive to partnerships.
Where Does Democratization Come In?
With businesses partnering to achieve innovation, where does democratization come into play? First, it would help to get a better idea of what democratization actually is.
The democratization of innovation is the idea that businesses are working together, and with customers, to evolve and innovate their products. This entire landscape is possible because people have more access to technology today than ever before. In fact, this process of democratization is changing business terminology.
We are no longer customers. Because of our role in the innovation of products and software platforms, we’re now known as users. We’ve essentially become part of the development team.
This is an amazing development for businesses because R&D is becoming a thing of the past. Management teams no longer need to allocate a large chunk of their budget and other resources to the R&D team.
Innovation is being outsourced.
Business ecosystems rely on this democratization process. Think of democratization as bringing something to the masses. Businesses are taking that concept and applying it to their capital, their manpower, their intellectual property, and their data.
This gives companies an unprecedented level of collaboration. Modern businesses are taking the phrase “two heads are better than one” and supercharging it.
This type of economy is new to all of us. And, with anything new, there are going to be some kinks along the way. Many experts are calling for changes to major business legislation to adapt to this new economy.
In particular, scholars are calling for changes to Antitrust laws. They’re contending that the very framework of what we consider a “monopoly” needs to shift to adapt to the modern age.
Companies like Amazon and Google have grown into tech giants. While their influence on society is net positive, something needs to be done to allow these companies from growing too large. The waters originally were murky, but now that we understand more about business during the cloud economy, we can begin to see the writing on the wall.
Innovation For All
Business ecosystems and the democratization of innovation are taking the global business landscape to the next level. What type of growth do you think we’ll see from it in the near future? Let us know in the comments below.
If you have any questions about how to bring your business into the cloud age, contact us today. We are always happy to help.