Embracing ecosystems will require companies to adjust their business strategy. Six principles can aid executives in this transition.
Adopt an ecosystem mindset
First, companies need to widen their perspective of competitors and opportunities, adopting a truly multisectoral lens and defining the ecosystems and industries where change will be fastest. They should also identify critical new sources that brings the most meaningful value for an expanding consumer base.
In essence, to chart a path to build an ecosystem future, companies must refine their vision and ask questions to their leadership team:
- What surprising or disruptive factors might affect our company? How do we get ahead of them? What assets and resources would we need?
- How can we translate our physical assets and long-term customer relationships into insights that secure our market position while establishing an advantage over competitors, including the digital giants?
Follow the data
In a borderless world, data serves as valuable currency. Competing effectively as an ecosystem means aggregating massive volumes of data as well as building capabilities to store, process, and analyze that data to generate actionable business insights.
Companies can gain deeper data insights from ideas that sounds good on the surface but often fall short of their potential to become winning models. For example, loyalty and consumer-facing mobility applications are great tools for businesses to provide significant savings for consumers and connect with their customers. The insights from these applications in turn allows businesses to uncover new growth opportunities and, at the same time, understand their customers’ needs and preferences to serve them better.
Build emotional ties to customers
Today, winning customers’ loyalty through an emotional connection is the ultimate prize. Businesses are investing in tools to do so, such as data to customize their product and service offerings, content to engage customers, and digital models to support seamless customer journeys and address pain points. By building emotional connections with customers, companies can also occupy attractive space in critical ecosystems.
For instance, Google’s and Alibaba already have a large existing customer base on its own. But they innovated and launched various products such as Chrome and Gmail for Google, and Alipay and the financial platform Yu’E Bao, because they wanted to expand into new customer segments outside of their base. Capturing new sources of revenue was an additional bonus to this purpose.
Evaluate existing governance and talent strategy, and adjust operating models to the new paradigm
In a world of ecosystems where industry boundaries move fast and data analytics becomes a core competitive advantage, companies will also need to attract the right talent and to develop governance models and agile ways of working that are necessary for rapid innovation. In Vietnam specifically, where top digital talent is in high demand, this means companies across industries will increasingly need to spend resources to recruit, onboard, and train these talents, while also ensuring they are placed in an environment where they can perform and deliver.
This might also require Vietnamese companies to embark on new ways of acquiring talent. To ensure innovation, apart from reimagining internal talent management, companies should consider closer cooperation with external parties such as start-ups or venture-capital funds—this is a proven way to start thinking outside of the box and introduce new, positively disruptive types of talent.
Change your partnership paradigm
An ecosystem economy offers new opportunities for specialization. To take advantage of them, companies need more and different kinds of partners. In a dozen markets across the globe—including Brazil, Russia, Turkey, and Vietnam, where data sets are currently less robust compared with those of other regions—a new wave of partnerships is aiming to make the whole greater than the sum of its parts. Many banks globally are already leading by examples in this space, developing multiple partnerships with lifestyle companies to create a financial gateway for all of a customer’s daily needs (for instance, booking a restaurant table or tickets to the cinema).
Regardless of an organization’s geography, primary industry, and level of data readiness, executives can start by asking what white spaces they need to fill, which partners can best fill those gaps, and what “value proposition might be mutually beneficial. They must also consider how to design an infrastructural and operational framework that supports a steady exchange of data, ideas, and services with outside entities—critical fuel for innovation.
Distinguish and tailor—fit your strategy
Any leader in Vietnam will shortly need to define their ecosystem strategy, understand how their industry is getting disrupted, and make a choice. They can either defend the business as is, modernize and digitize it, partner with others to develop the same competitive advantage as an ecosystem, or join, or even build one. Not all businesses will become an orchestrator of an ecosystem; this will require a strong existing user base, or assets that make it easy to gain customers at low cost. But businesses can still capture substantial value by being a partner or a supplier. Companies that don’t aspire to shape an ecosystem but consider being a partner will need to ensure they have a defensible product or service value proposition that is hard to replicate for the digital players, and possibly “plug” themselves into digital platforms—treating them as one more channel.
In this context, executives must be clear on their source of value creation for the industry, the risk and nature of digital disruption, and also their internal capabilities. Based on this assessment, most players will shape a strategy that, either alone or through partnership, helps the company navigate the ecosystem world.
The six golden rules are best practices in developing ecosystems that create higher value. We advise leaders to regularly assess and reevaluate their capabilities in each of these categories to build or acquire what they need to succeed.
Massive ecosystems that span industries are on the rise, and tremendous amounts of value will be shifting. Companies in traditional industries that have long been insular and protected may be most vulnerable to cross-boundary attack. By devising the right strategy and approach, leaders can go on the offense. Now is the time to survey the landscape and start shaping nascent opportunities.
ABOUT THE AUTHOR(S)
Bruce Delteil is the Managing Partner of McKinsey in Vietnam, where Alex Le is a consultant. Marcin Miller is an associate partner in the Ho Chi Minh City office.
The authors wish to thank Marco Breu, Violet Chung, Miklos Dietz, Matthieu Francois, Hamza Khan, Thao Le, Teddy Nguyen, Istvan Rab, Zac Townsend, and Thuy Tran for their contributions to this article.