The Power of Ecosystems: Beyond the Buzzword.

Consider the frequency with which we casually use certain words without fully appreciating their impact on our professional psychology. One such seemingly simple word that conceals a rich history and psychological depth is “ECOSYSTEM.”

Coined in the 1930s by British botanist Arthur Tansley, the term originally referred to a localized community of living organisms interacting within their environment. These organisms engage in intricate relationships, involving competition, collaboration, resource sharing, co-evolution, and adaptation to external disruptions.

Business strategist James Moore “In a business ecosystem, companies co-evolve capabilities around an innovation: They work cooperatively and competitively to support new products, satisfy customer needs, and eventually incorporate the next round of innovations”.

If you think, Apple explicitly designed its products and services as an ecosystem that would provide customers with a seamless experience. The catchphrase “Once you get into the Apple ecosystem, you get addicted to it” illustrates Apple’s success in understanding the psychology behind ecosystems.

Similarly, Ethereum created an ecosystem for developers and protocols in the early days and it is sitting on the top. It’s not like Ethereum is the best chain out there, there are better chains but Ethereum has that ECOSYSTEM you just cannot get out of. Somehow, Solana managed to do the same with its cult community.

Hence, the rise of ecosystems is an opportunity for creating a powerful new competitive advantage. The CEO of Nokia similarly described a landscape of ecosystems as: “The battle of devices has now become a war of ecosystems”. Now you understand the depth a single word can hold. In a competitive landscape, it’s in our hands to decide how we either build, catalyze, or join an ecosystem.

Also, some ecosystems emerge without dominant players. For example, in China, the term “shanzhai” was formerly described as fake or pirated products, but is now commonly referred to as the “shanzhai ecosystem”. Similarly, memecoins started as a mere joke with Dogecoin is now what we call a memecoin ecosystem.

While some might dismiss “ecosystem” as a management buzzword, it holds practical utility. Ecosystem thinking introduces a new frame and mindset, reflecting a profound shift in the economy and business landscape.

Let’s delve deeper:

1. First, ecosystems often drives the involvement of a diverse range of organizations to allow the creation, scaling, and servicing of markets beyond the capabilities of any single organization. Consider what Layer 2 solutions (L2s) are doing for the Ethereum ecosystem.
2. Then comes the competitive edge that creates an opportunity for other actors to co-create technologies and tools for a better competitive ecosystem. What other blockchains are trying to do — create better than what exists or solve the issues with existing ones.
3. Third comes the Participants in ecosystems that are bound by shared interests, purpose, and values and they protect the ecosystem as a shared “commons.” This cooperative dynamic enhances the longevity and durability of ecosystems, seen in the communities like Solana Maxi, Ethereum Maxi, Celestia Maxi, and more.

Hence, with the help of these ecosystem communities, which will often include customers who were traditionally regarded as passive recipients rather than active participants, most Web3 protocols/chains are thriving. The rise of ecosystems fundamentally transforms the success factors for leading organizations, challenging them to rethink their strategies, business models, leadership, core capabilities, value creation, capture systems, and organizational models.