From silos to synergies: Embracing ecosystem thinking to innovate in a VUCA world
By Dr Guy Bate, Director of the Master of Business Development (MBusDev) programme
In today’s rapidly evolving business landscape, traditional strategies focusing solely on market share within defined industry boundaries are becoming increasingly insufficient. For New Zealand executives, embracing an ecosystem strategy offers a compelling path to sustained growth and innovation. In the strategy and innovation field, Ron Adner’s book, “Winning the Right Game,” provides inspiration for understanding and leveraging ecosystem dynamics, which can be particularly beneficial in the contemporary business context.
We live in a VUCA world — characterised by Volatility, Uncertainty, Complexity, and Ambiguity. This environment requires that businesses be more adaptable, resilient, and innovative. Traditional strategies that focus narrowly on competing within fixed industry boundaries are often inadequate in such a dynamic context. Ecosystem thinking, by contrast, offers a holistic approach that can help businesses navigate these challenges more effectively.
Silo-based thinking in strategy
Traditional strategies often focus on outperforming a well-defined set of rivals. As a strategist in the pharmaceutical industry, I saw how focusing on typical market share metrics (e.g., share of sales, share of prescriptions, and share of promotional voice) fostered a narrow view. Strategy was enacted within the constraints of these measures. This approach often frustrated our ability to collaborate creatively with other healthcare stakeholders — including our supposed competitors — to deliver value to patients. A powerful quote frequently (but likely incorrectly) attributed to strategy scholar Peter Drucker resonates here: “What gets measured gets managed — even when it’s pointless to measure and manage it, and even if it harms the purpose of the organisation to do so.”
Such traditional competitive thinking overlooks the value creation opportunities within the broader business ecosystem. For instance, a New Zealand tech firm that only focuses on local rivals might miss opportunities to collaborate with international tech giants, universities, and research institutions, stunting its innovation potential. Additionally, a fixed competitive focus can make firms less adaptable to market changes. A traditional retailer focused on local competition might be slow to embrace digital transformation, putting it at a disadvantage when consumer preferences shift to online shopping.
Pursuing market share often prioritises short-term gains at the expense of long-term resilience. Companies might cut costs aggressively or engage in price wars, undermining investments in R&D, employee development, and sustainability initiatives crucial for future success. A narrow market focus can also prevent firms from recognising and leveraging innovations from other industries. For example, a New Zealand healthcare company might miss out on digital health advancements from the tech sector if it focuses only on local healthcare providers.
Traditional market definitions can also blind firms to disruptive threats outside their industry. The transportation sector, for instance, might be unprepared for new mobility solutions like ride-sharing or autonomous vehicles. Traditional strategies may not fully leverage advanced data analytics, missing new opportunities and threats beyond the immediate competitive set. A financial services firm might not invest in analytics that could identify emerging customer needs or fintech innovations.
Shifting to ecosystem thinking
In contrast, an ecosystem strategy encourages us to think of ecosystems, not competitors. Success requires understanding your firm’s role within an ecosystem and how to leverage these connections in a coordinated way to bring value propositions to the market. This means aligning interests and creating win-win scenarios for all ecosystem participants.
Drawing on Ron Adner’s ideas, here are some broad steps for embracing ecosystem thinking:
- Ecosystem mapping and strategic foresight: Identify key players in your industry and, importantly, those that may cross traditional strategic groupings. Consider partners, suppliers, customers, and non-traditional players (e.g., research institutes, not-for-profits, government entities) and incorporate these into your strategic analyses. Understand their roles and strengths and how they can complement or disrupt your business now and in the future. This will help you to identify new opportunities, sensitise you to broader ecosystem shifts, and develop responsive strategies.
- Strategic collaborations and co-creation: Actively seek those partnerships that enhance your value proposition and drive innovation. Again, when doing so, avoid the myopia of traditional boundaries. By fostering ecosystem-spanning collaborations, you can tap into new resources, technologies, and markets that would be inaccessible on your own and redefine the games of competition and innovation.
- Adaptability and continuous learning: Foster a culture of continuous learning within your organisation. Encourage your team to stay informed about global trends and be adaptable to changing ecosystem dynamics. Responsiveness to changes within the ecosystem allows your organisation to respond quickly to disruptions and seize new opportunities as they arise, ensuring resilience and sustained growth.
By moving beyond a constraining focus on competitive advantage within established industry groups, New Zealand executives can leverage the interconnectedness of modern business ecosystems.
So, in conclusion, consider this challenge: Resist the reliance on traditional market share-based performance measures in your strategy work. Instead, think about how you might apply the steps above in your business to transform silos into synergies. From there, ask what sustained success means for you in a VUCA world. This will likely translate to a very different set of metrics that better align with drivers of innovation, responsiveness and agility.
Reference:
Adner, R. (2021). Winning the right game: How to disrupt, defend, and deliver in a changing world. MIT Press.
Interested in deepening your knowledge about innovation and business strategy?
Our Master of Business Management offers a practice-focused programme designed to build your capabilities as a strategic manager – learn more at auckland.ac.nz/mbm.
Innovation expert, Dr Guy Bate, is the Director of the Master of Business Development (MBusDev) programme and a lecturer for the Master of Business Management (MBM) programme at the University of Auckland Business School. He also sits on the Board of Editors for Research-Technology Management (RTM).
