Optimization Glossary

Digital Ecosystem

What is a digital ecosystem?

The world of commerce has gone digital. Your company is inevitably part of a digital ecosystem already. 

A study by Forrester Research noted that by 2022, 58% of all US sales will be digitally impacted -- i.e., conducted partially or entirely within a digital ecosystem. A digital ecosystem is similar to a conventional, environment-based one. It's a little more than a network of stakeholders interacting -- in this case digitally -- in ways that create value and evolve to benefit everyone involved. Your company plays a role in a digital ecosystem, but your role in digital ecosystems is not immutable. Your business needs to be flexible enough to evolve and change depending on circumstances or interactions with other stakeholders. 

Below we cover all the fundamental concepts of digital ecosystems, including: 

  • The value-added-benefit of positioning your business for growth in a digital ecosystem

  • A proven strategy to help your business navigate into new digital ecosystems 

  • The different roles your company can play in a digital ecosystem and improving the customer experience

  • The importance of finding the right software platform to maximize digital ROI and business opportunities as you integrate your new digital transformation

Digital ecosystems offer an overabundance of business opportunities

You should view digital ecosystems as unexplored landscapes full of untapped possibilities. 

Digital ecosystems are always more extensive than any single business ecosystem and often decimate traditional market boundaries. They typically pull together various markets and stakeholders from diverse industries, connecting them in ways that were unimaginable before the digital revolution. 

Since the turn of the millennium, the world's most successful companies and growth drivers have almost all achieved their positions of dominance by broadening their role within larger digital ecosystems -- of which their original business model was merely a part. 

How Google leveraged digital ecosystems

Google offers a prime example of this. It started as a small web browser search engine. However, it soon realized its core service -- search -- could be integrated into a variety of new markets. Gmail, Google Maps, Docs, mobile operating systems, cloud infrastructure and innumerable other digital business endeavors sprang up from this fledgling search company. Google seized the opportunity to create new services connected to its core business, resulting in monstrous growth. Amazon has demonstrated the same digital platform development over the years by enhancing the customer experience through its website, app and social media.

Digital ecosystems provide companies the most opportunity for diversified growth and innovation in today's world of ecommerce. 

Developing a digital ecosystem business strategy

How can you position your company for success in a given digital ecosystem? Every company should follow a three-step approach when evaluating how it can offer value and earn revenue in any ecosystem. 

Contextualize your current business in the digital ecosystem

The first step to navigating a new digital ecosystem is to determine the role and position your core business or products currently have in it. 

If your business caters to digital clients already, you are halfway there. The next step is to determine how you can incorporate a service or product into additional, complementary digital ecosystems you aren't currently serving. The most significant hurdle may be pushing executives to contextualize your business more broadly.

Perhaps your company has never thought of itself as part of the digital economy. In this case, you may have more upfront work to do -- collecting data about your competition in the digital landscape and how your customers use digital. You also have a distinct advantage. Your company is less likely to be locked into a particular business ecosystem, and you may be more flexible to embrace how your business might branch out digitally into new sectors. 

Three business roles found in every digital ecosystem

Ecosystems are interdependent. By participating in a digital ecosystem, your business will play one or several roles for other stakeholders. It's essential to identify which value your service or product provides other stakeholders. It's also crucial to understand that the healthiest digital ecosystems consist of many partners, all adding importance differently. Ecosystems are never monolithic.  

There are three broad roles that companies play in digital ecosystems. Your business will likely occupy more than one role, depending on the service or product you are offering.

1. Digital ecosystem orchestrator

Ecosystem orchestrators offer products and services that connect diverse stakeholders and create added value for other companies at large. 

Ecosystem orchestrators tackle the risks, challenges and complexity of helping other businesses and create new markets. Other companies would miss out on selling or producing services if it weren't for ecosystem orchestrators. 

Apple went from PC manufacturer to digital ecosystem orchestrator after it invented the iPhone. The iPhone didn't originally come with an App Store -- until Apple decided to create a whole business model allowing companies to sell mobile software to consumers right on the phone. As iPhone and later iPad sales continued to skyrocket, so did opportunities for companies participating in the brand-new app market in order to profit. Today, Apple earns roughly twice as much from their digital service ecosystem than Mac computer sales. 

2. Digital ecosystem producer

Producers create value in the digital ecosystem by generating products or services that are useful and add value for numerous stakeholders. Crypto currency miners earn revenue by running complicated calculations on their servers, which creates currency for businesses and customers to exchange. More commonly, digital commerce companies like PayPal and Square offer online payment systems used in diverse digital ecosystems and economies worldwide. 

3. Digital ecosystem consumer

As the first two roles produce value, digital consumers extract it. Every individual and enterprise is a digital consumer across different business sectors. 

When your employees pay for a Lyft ride, you participate in the digital transport ecosystem orchestrated by Lyft -- with inspiration from Uber. If your company accepts PayPal or Square payments, you extract value from their services. Consumers are the stakeholders that redistribute capital throughout numerous digital ecosystems. 

Monetize your role in the ecosystem

The digital ecosystem is not a pro-bono endeavor. The last step is to make sure you can monetize your place in the ecosystem. 

Your goal is always to create additional value and opportunity across all of your business channels. Sometimes monetization is finalized outside of the digital ecosystem -- perhaps you market and recruit customers digitally but provide them tangible services (e.g., solar panel installation). Determine how to increase revenue and market share as your roles change and evolve within the ecosystem. If you fail to take monetization seriously, you may find your business going by the wayside. 

Build your business on solutions designed for digital ecosystems

Businesses need to migrate into digital ecosystems now to remain relevant in the future. Establishing a foothold in pertinent -- and even tertiary -- ecosystems now can help buttress your company against competition tomorrow. 

Digital success today requires more than a WordPress site and CRM, however. You need to build today for the ecosystems of tomorrow. You may want to explore using a cloud-based digital experience platform (DXP) or an agile CMS like Optimizely Content Cloud. These are scalable, web-based tools that are robust and flexible enough to engage digital stakeholders on any and every channel.