Digital business models are revolutionizing how leaders conduct business. This is not just a technology industry phenomenon but one that reaches across industries.
With your car having more computing power than your phone from ten years ago, is there any doubt that many industries are heavily technology dependent? Understanding how digital business works makes it clear how Southwest Airlines’ 2022 “holiday meltdown” was actually a technology meltdown.
As we transform into digital business models, we also need to transform our business ecosystems in order to implement and sustain these new technologies. In doing so, we become strategically dependent on ecosystem partnering.
One of the best practices in developing a partnering capability is doing a periodic assessment of that capability so you know where you can improve and shore up weaknesses. The same is true of ecosystems, which are communities of partnerships. But there are some key differences when assessing partnering capability within ecosystems.
While there are many partnering assessments out there that help address partnering capability on a bilateral basis, I have yet to see any that are oriented toward assessing capacity and maturity within an ecosystem. To create an assessment along these lines, I looked at the Partnering Capability Assessment (PCAP) to see where it might fit with ecosystem capability and where there might be gaps.
The PCAP incorporates best practices from The ASAP Alliance Management Handbook, which in the profession is often cited as the bible for alliance management and was also developed to be consistent with the ISO 44001 framework for collaborative business relationships. In the end, I found that while much of the PCAP does apply when partnering within an ecosystem, there are a few things missing.
Differences When Assessing Ecosystems
I define an ecosystem as an interconnected community of partners. This leads to some different criteria in terms of how you assess the effectiveness of your partnering maturity and overall capability. For one thing, I’ve often said that the power of an ecosystem is in the interconnections between the partners and not just the one-to-one relationships that you might have within that ecosystem. In other words, it is not all about you; it is about all the other partners and their ability to collaborate and innovate with everyone else for greater value. It is fueled by the network effect, with each new collaborating member adding value to the whole.
Twenty years ago, we may have called our channel programs or our independent software vendor programs (ISV) ecosystems, but they were immature versions. Interconnection and collaboration were mainly with the central orchestrator, and member interactions were ad hoc. I believe the key to a mature ecosystem capability is in how well you foster interconnection, collaboration and value creation among all the partners to benefit your mutual customers.
Case Study: The Salesforce Platform
Imagine this, you are a Salesforce ISV, meaning you’ve built some complementary capability that is integrated with the Salesforce platform. Maybe you have a sales commissions calculation tool. You want to expand your footprint with other enterprise software integrations like spiff systems or payment systems. Where is the first place you would look for these partners and integrations? Within the Salesforce ecosystem. You also need advisors, systems integrators and implementors that can tie all of this together. And those partners should have experience in implementing and integrating with the Salesforce platform.
Now flip the perspective. What does it mean to Salesforce if its partners are highly successful? If they bring more value to their platform, the ecosystem becomes greater than the sum of the parts. So how do you measure that power? How do you measure how well you can harness that power and apply it to your business?
This is the next leap of value creation within ecosystems where the orchestrators go beyond fostering one-to-one value. They start to optimize the ability of the members to find and construct the right combination of capabilities to serve customers and to effectively build systems within the ecosystem. Again, the Salesforce ecosystem will be the natural place to find the partners you need to complete your ecosystem.
Here are some of the elements to measure the maturity of your ecosystem.
- Partners need to be able to find each other. They need to be able to quickly understand what new features and capabilities they can contribute to meet a customer’s requirement. Do you have a partner directory that is search enabled and facilitates contact and collaboration among partners?
- Assess the level of partner-to-partner engagement. Are these conversations happening? Are partners collaborating in customer pursuits and implementations?
- Identify and track the customer solutions that emerge from these collaborations. Can you support them in a repeatable sales model that scales the business?
- Focus on the customer solution. Make sure you are providing tools and systems that enable partners to coordinate and collaborate around the customer.
- Measure the outcomes. How are customers being served by these collaborations? Can you measure business outcomes realized by the customer? Can you measure the uplift from customer success in stickiness, retention, upsell, cross-sell and loyalty?
You can qualitatively assess each of these elements in a maturity matrix on a one-to-five sale.
1. Ad Hoc. Ecosystem partnering activities are unpredictable and reactive. Failure rates are high.
2. Limited. The benefits of ecosystem partnering are apparent in isolated instances.
3. Foundational. The benefits of ecosystem partnering are well recognized but not consistently applied.
4. Systematic. Ecosystem partnering is embedded in the organization’s management structure and culture but not always leveraged to strategic advantage.
5. Strategic. Ecosystem partnering is prioritized as a strategic capability resulting in a competitive advantage in your market space.
Regular assessment of your ecosystem partnering capability will enable you to build up this muscle and improve your ability to gain a competitive advantage through your business ecosystem. And as your business becomes increasingly digital, your ecosystem becomes an increasingly strategic asset.