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Ecosystems as a metaphor for networked industries: The parallel with nature

The year 2013 marks the twentieth anniversary of ecosystem-based thinking in networked industries. In 1993, The Harvard Business Review published an article written by James F. Moore with the much revealing title “Predators and prey: A new ecology of competition”, an article that later proved to change the perspective of multiple industries completely. In his article, Moore (1993) argued that companies cannot evolve in a vacuum, just like companies cannot solely compete head-to-head. Companies depend on partners, suppliers, customers, and often even on venture capital to progress, or as Moore argued: a predator depends on its prey.

To explain the interdependence of different companies, Moore (1993) introduced business ecosystems – networks consisting of interrelated companies, that are active in multiple industries. By referring to these networks as ecosystems, Moore (1993) deliberately drew a parallel with nature. Similar to nature, business networks are governed by one or more dominant players. However, some central players can destabilize the ecosystem, for example when a dominant predator species eats all the available prey, equal to a dominating firm that through an aggressive acquisition strategy assimilates the majority of firms in an ecosystem. Meanwhile, ecosystems can entirely collapse when external factors change too radically. A drastic increase in average temperature may force a forest to disappear, after which in time another ecosystem may take its place, such as a desert. Comparably, Nokia lost its leading position as a mobile device manufacturer under forces of fast technological change, in favor of Apple, and Samsung. An ecosystem thus, is also subject to a life-cycle, in which continuous self-renewal and evolution are imminent.

References and further reading

Moore, J.F. (1993). Predators and prey: A new ecology of competition. Harvard Business Review, 71(3), 75-83.

Iansiti, M., & Levien, R. (2004). Strategy as Ecology. Harvard Business Review, 82(3), 68-78.