The “nature” in digital ecosystems? | Prospire

inspirational leading | February 19, 2021 The “nature” in digital ecosystems?

Author: Andreas Mentel

Recently, there has been more and more talk about ecosystems. If we google “ecosystems” we get over 1.1 billion results, and for “digital ecosystems” – 1.85 million with over 150 thousand articles alone. So, it does not seem to be a niche topic, and based on our research most companies are looking into this one way or another. Why, because traditional ecosystems are being transformed into or substituted by digital ecosystems. The current Covid pandemic has also provided a boost which has leapfrogged its advance significantly.


Will digital ecosystems have an impact on us?

But before we look into that, let us see what defines an ecosystem. According to Britannica: “Ecosystem, the complex of living organisms, their physical environment, and all their interrelationships in a particular unit of space”.

Personally, I find it fascinating to look at nature’s ecosystems as I believe a bridge to the digital ecosystems can be made. Nature’s ecosystems have evolved and sustained over millions of years. According to Sir David Attenborough, the English broadcaster and natural historian, a key reason for their survival is the diversity of species within an ecosystem next to the fact that a balance exists among its occupants, that it never stops evolving and that nature has limited resources. However, once its diversity is impacted, it losses its balance and is ultimately doomed if the diversity is not restored.

So, what can we learn from nature:

  • it takes time to develop and evolve (and there is no assurance for success)
  • it thrives on diversity (and there needs to be something in it for all)
  • it is balanced among its occupants (and its resources are limited)

According to Wikipedia: “A digital ecosystem is a distributed, adaptive, open socio-technical system with properties of self-organisation, scalability and sustainability inspired from natural ecosystems”. 

Digital ecosystems have no physical boundaries.

Due to it being digital, a key difference is that no physical boundaries need to be overcome. However, a digital representation of the physical world will be needed where required. Thus, identification becomes a very critical necessity. All actors within a digital ecosystem will need a digital identification, all goods represented in the digital world will need an identification, and so on. This is where the complexity and risk come into the picture. Although physical goods can also be copied, some more easily than others, in a digital world the risk, its magnitude, as well as the speed is far greater. So, fraud becomes a much larger threat, also because there are no imposed physical boundaries. As a result, the digital identification needs to be very solid and fraud proof. 

On the brighter side, since there are no physical boundaries, the scaling and reach of a digital ecosystem are “almost” limitless and all is available in real time. Thus, whole new business models, new products and services can be envisaged. For example, multiple actors and services are connected in real time and completely new value chains can be created, making existing ones obsolete.

How to get started?

The key challenge for all new ecosystems is the chicken and the egg problem (in our case services and audience). The answer is: both the chicken and the egg need to be there at virtually the same time, as a digital ecosystem is all about audience, services, and transactions. It is only attractive to service providers when there is an audience, and it is only attractive for the audience when there are multiple services and providers. 

Nature had plenty of time to get it right, it also made mistakes and corrections through its evolution. Unfortunately, in digital ecosystems we do not have that time, but we do need to consider mistakes and corrections on the journey, too. For one thing, the triangle of time, money, and quality is also applicable here. So, time (to market) needs to be compensated through investments (into audience building), and the quality needs to be compensated through focussing on a minimal viable product (MVP) service. 

All this is obviously a real challenge for a traditional organisation who have learned to use terminologies like business cases, planed revenue, return on investments, and so on when presenting with new ideas to their decision makers. Since an individual investment into a digital ecosystem may fail, the use of a portfolio of investments enhances the chance for a return-on-investment vs a single investment. For that reason, venture capital funded start-ups or organisations who have significant research budgets do have it somewhat easier. 

In other words, to move into the new digital ecosystems, multiple initiatives and cases should be pursued – i.e., portfolio of initiatives. Again, this is not unlike nature, as not all of nature’s ecosystems were successful either.

One thing to note: a single initiative will either “die a natural death” (likely as a slow painful failure) or succeed exponentially. Thus, a defensive business case on a single initiative as common in most organisations will ultimately be completely wrong for digital ecosystems. A best a business case needs to be done at the portfolio level, with strict tollgates to monitor the progress of each initiative in place enabling regular go/no-go or change decisions.

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