Ecosystem Play to Generate $100T by 2028, Accenture Says
Digital disruption can be a scary thing. You either innovate by building a digital platform that leverages big data and emerging tech like AI, blockchain, and the Internet of Things, or you get disrupted by somebody who can. But the good news is you don’t have to go it alone. In fact, according to a new report from Accenture Strategy, companies that leverage their surrounding ecosystems to build disruptive products and services will generate a mind-boggling $100 trillion in value over the next 10 years.
That eyebrow-raising assessment was delivered recently in a new research paper from Accenture Strategy titled “Cornerstones of Future Growth: Ecosystems.” The report is based in part on a survey of 1,252 business leaders that Accenture Strategy conducted to ascertain how they’re evolving business models to handle the potential negative and positive aspects of digital disruption. The survey found that about 50% of business leaders say they have already built or are currently building an ecosystem to respond to disruption, and another 10% more are seeking to build one.
Which begs the questions: Just what exactly is an “ecosystem,” how can a company build one, and in what way can it help?
An ecosystem, according to Accenture Strategy is:
“…The network of cross-industry players who work together to define, build and execute market-creating customer and consumer solutions…The power of the ecosystem is that no single player need own or operate all components of the solution, and that the value the ecosystem generates is larger than the combined value each of the players could contribute individually.”
Brick and mortar retailers, for example, are leveraging an ecosystem when they expand their reach to customers by selling products through online portals, such as Amazon or EBay. Hospitals can also tap into the ecosystem train by using rideshare services, such as Uber or Lyft, to help move patients to and from appointments.
We’ve definitely seen our share of digital disruption over the past 10 to 15 years. Physical stores selling books, toys, and music are few and far between, and thanks to Amazon’s $1-billion acquisition of PillPack, the neighborhood drug store could be next. Uber, which doesn’t own any cars but does have a popular ride-sharing app, is worth an estimated $50 billion, the same amount as General Motors, which made 3 million cars last year.
But according to Accenture Strategy’s survey, the potential disruption is just getting started. The survey found that 76% of business leaders say current business models will be unrecognizable in five years, and that the rise of the ecosystem play will be the main culprit.
Big data and technological innovation will play central roles in the ecosystem play. Accenture Strategy cites the partnership between Microsoft and GE and the companies’ integration of the Azure and Predix platforms as a good example of an ecosystem at work. A budding ecosystem that includes Google and Wal-Mart, similarly, is designed to make it easier for customer to order products via AI-powered Google Assistant, Accenture Strategy points out.
In some ways, the ecosystem concept bares some similarity to the “innovation chains” that Forrester analyst Brian Hopkins has explored in his research lately. Hopkins says that companies that can successfully link together disparate but related technologies (such as big data analytics, AI, distributed ledgers, IoT, cloud, and quantum computing) have a better chance at creating “breakthrough innovation” than those who lack the experience and expertise in those technologies.
While business executives seem to agree that leveraging ecosystems will be a key to future survival, many of them don’t know how to pull it off. According to the Accenture Strategy survey, only 40% of respondents said they have the capacity and experience to build, monitor, and manage an ecosystem at the moment.
Part of the problem with the ecosystem play is that companies are loathe to give up control, which must happen for an ecosystem to be successful. Accenture Strategy says sharing data is “essential” to sustaining an ecosystem, but adds that 44% of executives are hesitant to share company assets or secrets. Investment in data governance capabilities was identified as a critical need for enabling safe data sharing.
Pursuing an ecosystem play can often mean working with one’s business adversary. Turning these competitors into “frenemies” is a good way to head off the risk of business disruption, said Accenture Strategy Managing Director Oliver Wright.
“Due to increasing market pressure, we’re likely to see more companies – particularly those that have traditionally been competitors – join forces as they look to create new growth and achieve competitive agility,” Wright stated in a press release. “‘Coopetition’ will continue to grow and exciting partnerships will form as a result, some of which have already remade markets and industries around the world.”
Michael Lyman, the senior managing director for Accenture Strategy, says companies can no longer create sustainable growth by going it alone. “They need the help of partners to form ecosystems to innovate and create new customer propositions, expand their customer base and enter new markets,” he said in a press release.
Ecosystem capabilities are not evenly distributed across industries. Telecommunication firms, banks, and utilities have the strongest ecosystem capabilities today, while companies in the insurance, healthcare, and travel industries are the weakest.