A consumer-centric approach, combined with a broader outlook beyond traditional industry borders, ensures an optimum ecosystem conceptualization and enables firms to adapt to changing landscapes. This enables tackling sustainability collectively. It provides the ability to bring together diverse stakeholders, including companies, public-sector organizations, and communities for leveraging collective expertise, resources, and perspectives.
The necessity of Ecosystems; The Tragedy of the Commons
In a peaceful village nestled among hills and a serene lake, a community thrived off nature's blessings. The lake, a shared resource, sustained them for generations through respectful fishing. But a skilled newcomer, eager for wealth, began overfishing and earning extra money. Others followed suit, depleting the once-plentiful fish.
Realizing they acted in their own self-interest, without considering the impact on the common resource, the villagers argued over a solution. They were torn between punishment and conservation. An old sage suggested a contest: catch the most fish in a day but pay 100 gold coins to the community if victorious.
Eager to show their prowess, they all joined. The newcomer won but paid the contribution. Seeing him penalized for greed, the villagers learned the value of balance. They fished mindfully, implementing equitable quotas, and the fish population recovered, ensuring the lake's bounty for all.
The story of the villagers and the lake is a cautionary tale about the Tragedy of the Commons. The Tragedy of the Commons is a concept in economics that describes how shared resources can be depleted if individuals act in their own self-interest without considering the impact on the community.
The villagers in the story were able to find a solution that allowed them to continue to enjoy the bounty of the lake while also protecting it for future generations. The only way you can overcome The Tragedy of the Commons and adverse interests is by utilizing an ecosystem approach, with participants willing to cooperate and work together.
Sustainability Ecosystems
The urgency to improve the sustainability of the business environment has never been greater. Climate change, resource depletion, and social inequalities are compelling reasons for businesses to take immediate action. In kind, companies have taken stock, with roughly 75% of the world’s 166 biggest greenhouse-gas emitters had a net-zero emissions ambition by 2050. However, far only ~33% are setting 1.5 ˚C-aligned goals in the short- and medium-term. While it is easy to judge organizations, it should be acknowledged that addressing sustainability can be both daunting and confusing.
This is, however, not a solitary effort. The transition to a sustainable society requires a collective effort, exactly like the tragedy of the commons. Collaboration among diverse stakeholders, including companies, public-sector organizations, and communities, enables the pooling of expertise, resources, and perspectives required for comprehensive and effective solutions. This cooperative Ecosystem approach offers an array of benefits for organizations willing to embrace it:
- Increased innovation: Ecosystems can help to accelerate innovation by bringing together actors with different skills, expertise, and resources. This can lead to the development of new and more sustainable solutions to problems.
- Improved efficiency: Ecosystems can help to improve efficiency by sharing resources and knowledge and ensuring an equitable approach. This can lead to cost savings, a more sustainable use of resources, and participation of parties who would otherwise not partake.
- Increased impact: Ecosystems can help to increase the impact of sustainability efforts by making it easier to scale up solutions. Rather than only have one organization as benefactor, the entire ecosystem can utilize the solution. This can lead to a more significant and lasting impact on sustainability challenges.
To make the most of this opportunity, companies need to carefully strategize their entry into the ecosystem economy. The journey begins by identifying the playing field and potential sources of competitive advantage. A consumer-centric approach, combined with a broader outlook beyond traditional industry borders, ensures an optimum ecosystem conceptualization and enables firms to adapt to the changing landscape.
To maximize the benefits and minimize the risk of pitfalls, a structured approach for establishing an ecosystem is required. Based on extensive research and client experience, Deloitte has developed a four-phase methodology.
Orchestrating Ecosystems
A step-by-step guide to creating thriving business ecosystems
1. Strategize
- Define your strategic goals: What do you want to achieve with your ecosystem? This could be any positive sustainable impact
- Identify opportunities and unmet needs: Understand your current customer and sustainability needs and trends to prioritize opportunity areas.
2. Design and facilitate
- Design your ecosystem: Clearly define the purpose and objectives of your ecosystem, identifying the problems it will solve or the opportunities it will seize. Determine your value proposition and which cross-sector ecosystem you want to engage or build.
- Define your operating model and roles and responsibilities: Define the roles and responsibilities of selected ecosystem participants and create a governance structure, decision-making mechanisms, and a set of KPI’s around your type of OpModel (e.g. Open vs Closed and/or sequenced, centralized, facilitated, self-organized, etc.).
- Create value mechanisms and incentive structures: Clearly define the way the ecosystem creates value for participants and orchestrators, and how each of the stakeholders are incentivized to contribute and remain motivated
3. Minimal viable Ecosystem (MVE)
- Create the MVE: Define the minimum set of components and features to deliver on your core value propositions, and select a small group of participants to start
- Create MVE proofpoints: Build and deploy the MVE, and specifically test and iterate to optimize the delivery of the value proposition
4. Scale & Nourish
- Scale your ecosystem: Evaluate the ecosystems current capacity for scaling, and develop an ecosystem expansion strategy, aimed at further increasing impact
- Monitor and improve: Apart from expanding the ecosystem, also continuously monitor and improve the ecosystem using KPIs, feedback mechanisms, and continuous improvement initiatives to enhance the participant experience and ecosystem functionality
Recently, Deloitte and PostNL launched and orchestrated an ecosystem called Econnections using the above four-phase approach. The initiative set out to accelerate sustainability in e-commerce, with as goal to make 500 million online purchases more sustainable by 2026. To achieve this, an ecosystem of large organizations in the e-commerce sector and innovative startups was created to work together to pilot and scale sustainable solutions over the entire e-commerce value chain.
What can we learn from this ecosystem? There are three key basic principles all sustainable ecosystems should focus on:
- They are intentional: Sustainability ecosystems are created with the specific goal of solving sustainability challenges and generating impact. It is important to continuously repeat and remind each stakeholder of the collective ambition during the existence of the ecosystem.
- They are cross-sectoral: Effective ecosystems bring together different sectors, such as government, business, and civil society. You cannot solve this issue alone; you must leverage others to generate impact.
- They are focused on collaboration: Sustainability ecosystems are built on the principle of collaboration, without collaboration there can be no impact. Collaboration requires being bold about what you want, and supportive in the ambition of others. Remember; you all pursue the same (sustainable) objective!
While ecosystems may not be the answer to every sustainability challenge or opportunity, their adoption is on the rise, and companies must be ready to leverage this transformative force. Strategic choices should be meticulously weighed to ensure that the benefits of ecosystems outweigh the risks. To succeed in this new landscape, firms need to strike a delicate balance between their own capabilities and those of other ecosystem partners. This, in turn, enables productive collaboration, significant capability increase, and a stronger connection to markets and consumers.
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Marieke Commandeur
I am proud to be part of the Deloitte Sustainability team, with a focus on strategy and sustainable housing. Helping our clients to accelerate their sustainability transformation is what drives me. My expertise lies in the financial services industry. Having 20 year of background in the financial services industry itself, for me sustainability and strategy is all about what you actually do, the choices you make. For your customers,for your business. Connecting end-2-end to make your strategy actionable.