Ecology of competition

1. © Anik Saha
Business Strategy Session 8
Ecology of Competition
<Based on Article from Harvard Business Review, May-June 1993, Predators and Prey, A New Ecology
of Competition by James F. Moore>
Instructor: Anik Saha

2. 2
Driving SCA over competition
Achieve SCA by Out-innovating the Competition
© Anik Saha
Capital Partners, suppliers,
Customers
Create cooperative
Networks

3. 3
Building business community
How to create Business Community
Any Stable structure of community to match fast changing conditions?
Develop leadership to adapt to continuous waves of Innovations?

4. 4
Co-evolution as a Process & Business Ecosystem
Interdependent entities evolve in endless reciprocal cycle
Co-evolution drives changes in different communities as an automatic process
Companies as art of Business ecosystem
• Evolve capabilities around new innovations
• Cooperatively and competitively to support new products
• Satisfy customer needs
• Incorporate innovations in next phase
Ecosystems vie for survival and dominance
Birth of new ecosystem or competition likely to happen
• New technology investment
• Signing suppliers to expand growing business
• Develop critical value to maintain leadership
• Innovations to get rid of obsolescence

5. 5 https://hbr.org/1993/05/predators-and-prey-a-new-ecology-of-competition
Important to Understand stages of Business Ecosystem
Co-evolution process: Complex interplay of competitive and cooperative business strategies

6. 6
Business Ecosystems : Birth Stage
© Anik Saha
Bet on seed innovations leading to revolutionary products
Discover Right customer value proposition
Design Business to server potential market
• Evangelization
• Encourage co-evolution
• ISVs to write programs
• Cooperated with journals, computer stores,
training institutes
• Investing in schools
• Buy and own software
• Controlled approach on distribution
• Controlled sales, support, market
development
• Grow organically
1970
1982: Apple - $583M vs Tandy $466M

7. 7
Business Ecosystems : Birth Stage
© Anik Saha
Co-evolving companies push beyond ‘just’ meeting customer needs
Leaders to initiate process of rapid improvement to drive entire community
Large enterprises sometimes wait till market settles with innovations
• Market sensing
• Define new generation of functionality
• Coordinate with suppliers and partners to bring improvements
Market slowly picks up the ‘fittest’ offering
Once settled , enterprises replicates successful ideas and broadcast

8. 8
Business Ecosystems : Expansion Stage/ Capturing Territory
© Anik Saha
Compete against other ecosystems to control strategic markets
Stimulate Demand of product/services offerings
Meet Demand with supply

9. 9
Business Ecosystems : Expansion Stage/ Capturing Territory
© Anik Saha
A business concept : Many customers value
Scalability to reach broad market
Leverage marketing ,sales, production & distribution power
Challenge: Stimulate market demand without exceeding capability
• Allows entry of small players
• Established players start investing on ecosystem to keep up demand
• Exclusivity through investment in ecosystem could be a better idea!
• Else, ecosystem may innovate to diversify the risk
• Or, control crucial elements of innovations in-house

10. 10
Business Ecosystems : Leadership Stage
© Anik Saha
Guide Ecosystem’s investment directions and technical standards
Ecosystem with robust community of suppliers
Maintain bargaining power by controlling key elements of value
• Scale of production advantage
• Better grip on customer’s needs
• Ecosystem survives on it
Leaders must continue to innovate, shape future directions to extend control

11. 11
Business Ecosystems : leadership Stage
© Anik Saha
Conditions to Leadership 1: Ecosystem having strong growth and profitability
Condition 2: structure of value adding components/ processes attain stability
Stability pushes suppliers to target and develop value and contribute by competing
Dependence on original leader might get reduced as Industry standards established
• Openness in PC architecture ensured less dependence on IBM
• Central ecological contributor
• Bargaining power high as only practical source of processors, database, OS
• Drives higher GP
Central position maintained by heavy investment by followers: No ‘risk’ of swtiching

12. 12
Business Ecosystems : Self Renewal or Death Stage
© Anik Saha
Threatened by new ecosystems and innovations
Dominant companies seek ways to counter new innovations
• Government regulations
• Customer buying patterns
• Macroeconomic conditions
• Usually hospitable to new or formerly weaker business ecosystems
• waves to slow growth of new ecosystem
• Incorporate new innovations into own ecosystem
• Restructure to cope with new reality
• Example: cloud wave vs on-premise

13. 13
Acknowledgement
Article from Harvard Business Review, May-June 1993,
Predators and Prey, A New Ecology of Competition by
James F. Moore
https://hbr.org/1993/05/predators-and-prey-a-new-ecology-of-competition
© Anik Saha