Five Skills that Help You Shape Business Ecosystem Performance

Contributing to the performance of an ecosystem requires more than just the delivery of your part of the value proposition

I am delighted to share with you the 9th edition of my series on Business Ecosystem Leadership, which discusses in more detail the various dimensions of the capability framework we developed at the Center for the Future for Organization. This one deals with the capability to manage the operational excellence of an ecosystem.

Like a traditional organization, ecosystems need an operating system that assures a customer-centric, effective, and efficient delivery of the ecosystem’s value proposition. But the nature of ecosystems as a network of semiautonomous players makes the creation and maintenance of organizational excellence a significantly more complex task.

We will see that contributing to the performance of an ecosystem requires more than just the delivery of your part of the value proposition. It is a delicate design challenge that is highly political in nature. I will first take a look at the conundrum we face in this context before I suggest five skills that will help organizations to master this challenge.

What constitutes operational excellence?

Achieving and sustaining operational excellence is one of the most formidable tasks that leaders of an organization face

Striving for operational excellence means to create and continuously manage a socio-technical infrastructure that is aligned with the purpose and strategy of the organization, delivers value for its customers, and assures financial, social, and ecological sustainability.

Such an infrastructure must include mechanisms that assure a thorough understanding of the market the organization intends to serve. After all, there is no business without a customer, as Peter Drucker famously stated.  At the same time, it must support the delivery of the company’s specific value proposition by structures, processes, and policies that assure a great customer experience.

Equally important, the infrastructure must be designed to optimize all the internal and external processes that lead to an efficient, cost effective, sustainable, and profitable creation of the specific products and services that the organization offers to the market. After all, there is no business without a profit that sustains its operations.

And finally, it should be designed as an enabling infrastructure, leveraging the creativity, energy, and skills of the organization’s talent, ensuring connectivity and collaboration between stakeholders, and creating a culture of continuous learning and development.

Considering the above, achieving and sustaining operational excellence is one of the most formidable tasks that leaders of an organization face. It requires not only strategic sophistication and organizational creativity but also the leadership acumen to decide about the cornerstones of the operating system and, most importantly, assure its implementation.

 What does this mean for business ecosystems?

Like any organization, an ecosystem needs structures, mechanisms, and processes to deliver value in a cost effective, sustainable, and mutually profitable way

Operational excellence of an ecosystem means pretty much the same as it does for organizations. After all, an ecosystem is nothing else than an organization of organizations; it has a purpose, customers, and a value proposition. It creates and delivers products, services, and a customer experience. And it needs structures, mechanisms, and processes to deliver value in a cost effective, sustainable, and mutually profitable way.

However, other than in traditional organizations, ecosystems cannot rely on the established frameworks of corporate law that regulates membership, decision powers, labor relations, and more. There are no a priori legitimized roles and responsibilities the members of the system can fall back on. An ecosystem includes by definition multiple organizations, with their distinctive operating systems that must be connected to form an effective meta-organization (see my thoughts on the challenges of polydexterity management).

This requires the design and implementation of dedicated meta-organizational roles as well as policies, processes, and mechanisms that assure a productive connectivity with each participant of the system. Defining and staffing such roles and developing the other elements of an enabling socio-technical infrastructure is a delicate and difficult process. The self-interest of the stakeholders (keyword EGO-system) and the murkiness of ecosystem governance make the establishment of the “rules of the game” a highly political task and process that requires significant diplomacy skills.

 A Dual Design Challenge

We need new roles and responsibilities that are dedicated to ecosystem leadership

To make things even more challenging, we must not forget that the creation of an operating infrastructure for the ecosystem has an impact on the operations of each participating organization. After all, companies can only play a credible and effective ecosystem role if they optimize their contribution through adjusting their internal structures, processes, and mechanisms in a way that assures excellence in what they bring to the party – both in terms of value creation and organizational alignment with the ecosystem’s rules of engagement.

Such an adjustment requires new internal roles and responsibilities that are dedicated to ecosystem leadership.  They need to be equipped with sufficient influence so they can not only mitigate the structural conflict between the rationale of the ecosystem and the interest of their own organization but also have a prominent voice in driving the structural and cultural agility needed for engaging in co-creation and cross-boundary collaboration.

Five Critical Skills

Ecosystem performance management transcends the traditional task portfolio of managing operational excellence

Providing a constructive contribution to the operational excellence of a business ecosystem is an important element of ecosystem leadership. It means to play a prominent role in designing and implementing a sociotechnical infrastructure that assures a customer-centric, effective, and efficient delivery of the ecosystem’s strategy and value proposition.

To be able to play this role, organizations and their leaders must develop a new set of capabilities that transcend the traditional task portfolio of managing operational excellence. Here are five critical skills and routines organizations must develop and nurture that will help both them and the ecosystem to master this challenge:

1. Develop a thorough understanding of the ecosystem’s value creation process. This requires an appreciation of the various contributions that the ecosystem members bring to the party as well as an understanding of the interplay of the value streams that constitute the specific value proposition of the ecosystem.
2. Engage in co-shaping the organizational architecture of the ecosystem that optimizes its operational performance. This requires design sophistication and significant diplomatic skills to influence and align diverse stakeholders without having formal power.
3. Be willing and able to take on cross-organizational roles that enable ecosystem operations. This includes membership in bodies that develop and govern ecosystem rules, knowledge brokering between stakeholders, inter-organizational community management, inter-organizational data management, and more.
4. Commit to establish dedicated internal roles that support effective ecosystem participation. Such internal roles represent the other side of the coin of external ecosystem engagement. As the former, these roles are Janus-faced and require sufficient seniority so they can mitigate – ideally even leverage - the structural conflict between the ecosystem and the own organization.
5. Align internal policies and processes with external collaboration requirements. In most cases this will mean an emphasis on agility by empowering of the periphery of the organization and supporting a culture of self-organization through an enabling role of the corporate center.

I’d be curious to learn about your opinion what it takes to co-shape the operational excellence of a business ecosystem. Are the five skills and activities that I suggest sufficient? What did I miss? As always, I love to see your comments and engage in conversation. And if you like the topics I am writing about, please subscribe to this newsletter and follow me and the Center for the Future of Organization (CFFO).

This is the 9th installment of a multi-part series on a capability framework for business ecosystem leadership. It is based on our work at the Center for the Future of Organization at the Drucker School of Management at Claremont Graduate University (CFFO). If you would like to get immediate access to the entire framework, you can get it as a physical booklet or Kindle version here.

To further deepen our understanding of the subject, we have launched a global dialogue and action platform with special emphasis on Business Ecosystem Leadership and the related transformational challenges. If you are interested to receive an invitation to this platform, please send me an email or a DM.