As the pace of innovation and technology disruption increases, everything that has worked successfully for organizations and leaders in past decades – the rules, best practices, business models and even mindsets – are being challenged to evolve within a rapidly changing ecosystem, according to Deloitte’s latest Business Trends Report, “Business Ecosystems Come of Age,” released last week.
“The ecosystem concept has taken root far beyond the tech sector, and is now a crucial focal point for innovation, analysis and strategic planning,” says Mike Canning, national managing director of Deloitte Consulting LLP’s Strategy & Operations practice. “New means of creating value have been developing everywhere in the form of interactive and fluid configurations of economic relationships and activity – and smart businesses around the world are responding.”
Though hardly new, the ecosystem metaphor is more than ever appropriate to describe the interconnected nature and constant flux of today’s business landscape comprising “co-evolving communities of diverse actors that create and capture new value through both collaboration and competition.” The report highlights that the importance of cross-firm and cross-industry relationships, partnerships, networks, alliances and collaborations is growing exponentially, and that “ecosystem” strategies are becoming an increasingly deliberate, conscious and designed driver of successful business transformation.
It notes that the supply chain profession has played an essential strategic role in helping forge the “dynamic, collaborative, industry-transcending world of ecosystems” as the era of the vertically integrated corporation wanes and new, more fluid alternatives proliferate. “Many traditional supply chains are becoming increasingly agile, adaptive, and resilient, and are supporting faster and more flexible responses to the changing needs of customers,” the report says.
In fact, it suggests, many “supply chains” appear to be evolving into “value webs,” which span and connect whole ecosystems of suppliers and collaborators. According to the report, value webs are characterized by complex, connected, and interdependent relationships, “where knowledge flows, learning, and collaboration are almost as important as more familiar product flows, controls, and coordination.”
To be sure, in a world of value webs, the essential goals of traditional supply chain management do not go away. But they are often augmented by new imperatives – like learning, agility, and renewal. Collaboration is an addition to, not a replacement of, traditionally more closed, contractual arrangements. Clear commitments to meet rigorously monitored standards and service-level agreements will remain critical. But to claim the benefits of an increasingly fluid and interdependent value web, leaders should surround their contracts with trust; build on transactions and one-time deals to cultivate long-term relationships and mutual learning; combine the power of control with the potential of co-creation; make sure that defined, fixed standards do not create barriers to valuable innovation and co-evolution; and not only leverage leading practices, but also aim to create “next practices.”
Properly activated the report says, these value webs can be more effective on multiple dimensions: reducing costs, improving service levels, mitigating risks of disruption, and engendering feedback-fueled innovation.