Ecosystem Maturity Model
How Businesses Evolve to Become World-Class Partner Ecosystems
We are living in what has been rightly called a “decade of ecosystems”. Today, a large set of industries act like an interconnected network of organizations, technologies, consumers and products – forming an ecosystem. So why do business ecosystems matter?
“No one organization can do it all in this era of digital businesses and a platform-driven economy.”
Ecosystems unlock new possibilities for growth and differentiation by opening completely new evolutionary paths and opportunities for innovation beyond the old industries and company borders. By plugging into these ecosystems, organizations can get access to entire networks. They are then able to find new customers, tap into new sources of data, and improve established business processes. With further inroads into business ecosystems and developments, the product may change the nature of the business, either requiring new partners or changing the business model of the current stakeholders.
Get a detailed look at key indicators at each maturity stage.
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“Organizations gain competitive advantage with ecosystems enabling access to domain experts.”
Instead of innovations being initiated and realized from within, value networks provide customers with a value proposition that could not be achieved based on a company’s own competencies and resources alone.
Business ecosystem is also an overlapping concept with the value network and value chain. In a value chain, organizations are horizontally linked to each other and each provides products or services to the next operator. Value network, on the other hand, has the goal of providing value for firms and societies participating in the network, not only for customers. A value network is more like a web, while a value chain is more like a funnel.
“We are in the decade of ecosystems. 20 years ago it was all about direct sales, then the next 10 years was about marketing automation. But today, the winners are going to market with their ecosystem partners, creating solutions together, opening new markets and use cases, and bringing greater value to customers.”
~ Jay McBain,
Chief Analyst, Canalys (Former Principal Analyst with Forrester)
“Ecosystems are a partnership of equals for all organization sizes”
Ecosystems encourage fluid and varying cooperation between companies of different sizes and different natures. Ecosystems are characterized by the structure, relationships and connections among members, and the differing roles played by them. A whole new set of technologies are today available to manage these relationships and help organizations develop, design, and execute plans to find, recruit, onboard, develop, enable, incent, co-sell with, manage, measure, and report on partners.
These technologies under the umbrella of “ecosystem management” are also featured in Forrester’s Channel Software Tech Stack 2021.
It’s clear that ecosystems are a critical business priority in order for organizations to take advantage of these market dynamics and continue to grow and lead in your market. If you agree, then the first question you’ll want to tackle is – how does my company stack up against others in the market?
That’s great! You’re asking the right question.
As the leader and having created the Ecosystem Business Management category, we’ve developed an Ecosystem Maturity Model to help you and your organization take a self-assessment, the first step along the journey to becoming a world-class ecosystem-led organization. Let’s dive in!
Figure 1: Ecosystem Maturity Model – An Ecosystem Maturity Model to help you and your organization take a self-assessment, the first step along the journey to becoming a world-class ecosystem-led organization.
Stage 1. Pre-Idea
At this stage, one can see seeds of support within the management to develop a partner ecosystem. While the core business still follows the traditional distributor/ reseller model, there is some inclination to develop and co-sell products and services with partners. The organizations at this stage still have a profit-oriented approach, and the idea of joint value creation and distribution is nowhere on the horizon. The focus at this early stage of maturity is industry-specific and firm-centric.
This is where organizations would take a leap of faith and try their hands at dabbling in the concept of ecosystems. They may start working with a few existing vendors and test the scenarios of them being strategic partners in pursuit of creating value for customers by improving their products and services.
The available resources at this stage are scarce, leading to no major breakthroughs for a convincing move towards an ecosystem model of business. Sometimes organizations need an external push from competitors, regulatory changes, market demands and rising customer expectations to make them cross the threshold of being just at the pre-idea stage. Most eventually have that coming before they actually start their ecosystem journey.
Traditional distributor/ reseller model
Few strategic ecosystem partners
Traditional value and supply chains
Platform business – Not considering
Stage 2. Starting
At this stage, businesses start ecosystem activities, but they are still dominated by reselling as the primary partner activity. A reseller is a company or individual that purchases goods or services with the intention of selling them rather than consuming or using them. This is usually done for profit. Reaping the benefit of this new revenue stream, leaders in these organizations may show hostility towards new ideas and conflicting goals.
Organizations with a long-term vision and strategy may take small steps towards ecosystems and platform business models. They may form task-oriented connections and collaboration with partners on specific initiatives like joint solutions to deliver better value to their customers and achieve a higher wallet share in select accounts.
Organizations at this stage face interoperability challenges. Each partner in the ecosystem operates with its own unique set of systems, processes, and workflows which hinders true collaboration. The mindset of partners is still about controlling internal resources and other hierarchical controls. But there is a growing recognition that ecosystems and platforms are the way to go in the future. They try their best to put the basics in place to encourage collaboration.
The focus at this stage is largely limited to building mockups, prototypes and identifying innovation partners. At this stage, specific areas of business can be supported with ecosystem management tools that enable higher levels of collaboration and automation. These tools can be used to support co-innovation, co-marketing and co-selling efforts within the ecosystem.
Task-oriented connection and collaboration
Narrow focus/usage of ecosystem model
Opportunistic, initiative focused
Loose alliance Interoperability challenges
Platform business –Evaluating
Investments in collaboration tools
Stage 3. Progressive
This is probably the most critical stage of an organization developing a partner ecosystem strategy, where organizations build a broader ecosystem focus that is beyond simple tasks and begins to scale with greater interoperability. This is a stage where the initial challenges of managing the partnerships could be detrimental to the success and growth of the ecosystem.
According to a Gartner 2020 survey of managed service providers (MSPs), solution integrators and consultancies, 61% of respondents amongst participants of hyperscaler cloud providers partner programs felt “visibility into opportunity pipelines” in those programs was below expectations. Another survey by IDC revealed that for partners the most important attribute when considering partnering was “ease of doing business”. 91% of respondents ranked it highest among a list of other attributes like market/customer demand, best-in-class technology/ product, partner support resources.
At this stage, it is easier to build partner programs that are based on engagement frameworks that guide the success of partner ecosystems, but transparency, consistency, and clarity are actually the most critical determinants of the success of business ecosystems. There is space for opportunistic partner relationships, but you will get the most value from partnerships that are built for the long haul.
The focus at this stage is on having validated prototypes, customer journey maps, formal innovation agreements, employee engagement and participation, setting co-innovation targets and opportunities. There are co-created value propositions and aligned partner go-to-market plans and a growing focus towards setting up a platform business with an ecosystem of partners contributing to customer value. There is also limited co-selling based on specific use cases and scenarios. These use cases help partner organizations test assumptions on Minimum Viable Products (MVP) when developing new product and business solutions that can be extended to business ecosystems.
Investing in a scalable ecosystem business management tools at this stage could help simplify and automate partner engagement. Without a management tool, the true momentum and value of this high-level collaboration among partners cannot be realized. The partnering co-sell motions at this stage should ideally be converted to wins in order to keep all participating entities interested in the long-term vision of the partner programs. Also, it is good to fail while stakes are low and learn from these failures to build a strong foundation for the ecosystem.
Firm-centric, for-profit orientation
Broad focus/usage of ecosystem model
Co-created value propositions
Spirit of “co-opetition”
Diffused Industry and market fragmentation
Horizontal value creation
Ability to rapidly scale
Aligned partner Go-to-Market
Platform business – Enabled
Investments in Ecosystem Business Management tools
Stage 4. Mature
At this stage, organizations achieve true ecosystem and value design orientation. They witness higher shared activities and relationships, allowing value to accrue to all ecosystem participants. The participants are invested in an ecosystem’s thinking and behaviour. The industry ecosystem partners are well developed and contributing at this stage. The ecosystem also witnesses an early-stage market consolidation, bringing a lot more focus on jointly developed and offered products and services.
According to one BCG research article, 83% of digital ecosystems involve partners from four or more industries and 53% involve partners from six or more industries. This is exactly how mature ecosystems operate. Some partner programs could see even hundreds of partners collaborating. There is thus a focus on cost savings, developing and leveraging new revenue streams with a clear and shared process for joint product development. These ecosystems adopt open innovation to build next-generation capabilities to continue reaping the benefits.
In most cases the businesses become platform-centric, making the ecosystem achieve due importance, gain revenue share within the business, and run as an engine for growth.
This is a stage where extensive use of Ecosystem Business Management solutions is required to make it easy for partners to operate together at scale. These solutions help digitize all partnering processes, collaboration, and business reporting across all partner types and initiatives.
In addition, even when working well, PRM systems were only built to manage resell partners. So partner managers responsible for co-sell motions with SaaS vendors, tech partners, services partners, cloud partners, and others are typically using spreadsheets and never actually log into the PRM to manage their business.
As a result, partner leaders are challenged to get their arms around what’s actually happening in their business – especially as co-selling becomes a larger part of your revenue opportunity. Running a QBR takes 2-3 weeks of collecting data from your partner teams, regions, and product teams. Then assembling the data into a system, tool, or spreadsheet to do data analysis. It’s all challenging, time-consuming, manually intensive, and definitely not scalable.
Ecosystem thinking and behaviour
Well-developed industry ecosystem partners
Orchestration of economic agents
Early-stage market consolidation
Shift to value design: co-created value pillars of creation, delivery, and capture
Next generation capabilities and structural changes
Stage 5. World Class
This is a stage of multiple ecosystems operating in parallel. They act like decentralized and autonomous organizations with a strong purpose orientation. This is when the ecosystem network takes center stage, leading to far greater collaboration among partners. The industry dimension of the business gets blurred with strong collaboration from partners from different domains. These ecosystems are abundance-based with hyper-productivity. There is a clear ecosystem product roadmap with new offerings being launched regularly. These ecosystems now start to witness revenue and market share growth and even challenge many traditional competitors who are yet to make it big in the ecosystem business model. In addition to this, a deep focus on value design also helps in creating more opportunities for the partners.
There are still a few challenges ahead at this stage. Because of the large volume of partner programs, participants, solutions, leads and opportunities, it becomes difficult to manage such a large scale ecosystem. Multi-stakeholder ecosystems also introduce complexity with partners competing for increased roles and share within the ecosystem.
The primary challenge however is around providing visibility to opportunities to partners and support for demand generation. Even with the leading partner programs with top hyperscalers, this remains a huge challenge. This is where investments made in ecosystem business management platforms could be very useful. These platforms help to digitize, connect and enable collaboration between partners.
Most tools, platforms and networks at this stage are self-service and partners feel incentivized to use these platforms and capture available business opportunities. Every contribution by partners helps achieve the ecosystem value, making the partner, employee and customer experience world-class.
While the engagement frameworks across different ecosystem maturity stages may evolve over time, the focus should ideally remain on making it easier for partners to engage and achieve the business objectives. The true linking chain across these stages is standard sets of tools, software, platforms, methodologies, best practices, templates, and workflows that help manage and automate the business processes and relationships between companies, producers, vendors, and ecosystem partners.
Partners at this stage complete the adoption of the complete flywheel of ecosystem management. The flywheel represents the following four segments:
- Co-Sell: Refer opportunities and close business with partners
- Co-Market: Collaborate to generate demand with partners
- Co-Innovate: Build differentiated valuable solutions with partners
- Co-Invest: Manage incentives to align execution with partners
Decentralized, autonomous, cooperative networks
Ecosystems gain significant market share
More than one ecosystem operating in parallel
Value design creates more opportunities
Full flywheel adoption: Co-Sell, Co-Market, Co-Innovate and Co-Invest
Abundance based Ecosystem
Economic paradigm shifts
Platform business – ubiquitous
Partner participation enabled by networks and ecosystem management platforms
WorkSpan is one such platform that connects ecosystem participants on a live network with cross-company business applications to co-sell, co-innovate, co-market, and co-invest to drive revenue together. WorkSpan is organized around partner programs that can be managed to run end-to-end business processes – from ideation to development to managing partner funds – all from a single interface.
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