Journal Article

HOW HEALTHY IS YOUR BUSINESS ECOSYSTEM?

Pidun, Ulrich, Reeves, Martin, Wesselink, Edzard

2021

Overview

Paying attention to the right metrics and red flags is crucial for leaders to avoid common pitfalls in the development of business ecosystems. Less than 15% of ecosystems are sustainable in the long run, with strategic blunders in their design being a major cause of failure. Metrics such as the number and engagement level of marquee partners, number and engagement level of high-value customers, and customer feedback can help assess ecosystem health in different phases of development. Red flags include critical partners not joining the ecosystem, the wrong users subverting the value proposition, opinion leaders leaving, and frequent changes to the value proposition. In the scale phase, metrics such as the number of new active customers, number of new active partners, number of successful transactions, and unit cost per transaction are important. Red flags in this phase include a persistent imbalance between participants on both sides of the market, ecosystem growth reducing value for one side of the market, increasing misuse of the ecosystem by users, declining quality indicators, and rising operating model complexity. In the maturity phase, metrics such as churn rates of customers/partners, revenue per customer, contribution margin per transaction, retention costs for customers/partners, and acquisition costs for customers/partners are key.

• Publisher: Sloan Management Review,Massachusetts Institute of Technology, Cambridge, MA
• Subject: Business ecosystems / Business failures / Business performance management / Business success / Cost analysis / Customer services / Evaluation / Financial performance / Methods / Organizational life cycle