A new study from the Cambridge Service Alliance urges businesses to understand the complex, interconnected ecosystems they operate in if they want to survive and compete. If they don't grasp the issue, the research team warns, they could be courting disaster.

Successful large-scale organisations, such as cities, are already ahead of the curve on this - recognising and adapting to their business ecosystem.  So too, according to the Alliance, are corporate giants such as Google and Apple, who effectively co-ordinate efforts to achieve a common purpose, resulting in unprecedented levels of specialisation, scale and agility.

But, the researchers who conducted the study say, whether they realise it or not, all firms operate in one or more business ecosystems. Yet the phenomenon has remained poorly understood.

Professor Andy Neely, director of the Cambridge Service Alliance, says: “The fact is that many executives would struggle to describe the full complexity of the ecosystem they inhabit or the players within it. But by understanding those ecosystems and their role in them, companies can create an advantage - they can generate new opportunities and seize others that might otherwise have eluded them.”

Up to now, what is known about business ecosystems has been limited, Professor Neely explains, and it’s been difficult to draw meaningful conclusions for more complex sectors such as energy, utilities, healthcare and public services.

So the research team turned to the most complex ecosystems of all – the business ecosystems of cities. They examined three cities, Vienna, London and Chicago, chosen because of their reputation for success and innovation relating to quality of life and a thriving economy.

What they found was that while these ecosystems and the players within them were complex and diverse, in essence they boiled down to four role types - resource providers, problem solvers, constructors and architects.

The Cambridge Service Alliance research highlights the key points at which companies can or should exploit their ecosystem, and describes a three-step approach to identify ecosystem opportunities, with tasks that include:

• Identify who the players are and what their business models are.
• Identify the goal that unites all the players.
• Examine the business models of all the players and build the ecosystem business model.
• Identify the ecosystem roles, such as who brings the resources, who solves the problems and who manages the process.
• Determine what the rules of the ecosystem are and examine the relationships.
• Establish how the money flows and where the power lies.
• Identify the gaps and how to tackle them. This includes deciding whether you can provide a better solution to your part of the challenge, or to another part of the challenge, and establishing whether the solution is properly integrated.

Professor Ivanka Visnjic Kastalli, who led the research project, says: “Companies are looking for fresh ideas on how to innovate their business models. Studying how their ecosystems function can give them access to a set of radically different and potentially disruptive ideas. The problem is companies know little about how to analyse the ecosystems in which they operate.

“This is where our research comes in,” she adds. “We give them the tools to identify ecosystem opportunities and decide which ones to implement. A structured approach to identifying and evaluating opportunities helps executives make the right decisions and steer their organizations to survival, growth and long term success.”

Download the report here.

More information about the Cambridge Service Alliance.