UK companies building ecosystems could tap into £75 trillion of value
Many global businesses are failing to realise the growth they anticipated before 2020, with trillions still at stake in the next two years. While more than one in six businesses in the UK alone are concerned that growth strategies are susceptible to disruption, honing new ecosystems which include long-time rivals could be the key to delivering exceptional growth.
The rapidly digitising business landscape has enabled a great deal of change to organisational models across all sectors. As linking up with other entities becomes increasingly easy, new methods of ecosystem building have flourished – enabling some previously unthinkable options as a result. According to a new survey, 84% of global business leaders now believe joining forces with other companies to share customer insights, technology and industry knowledge, is critical to their growth strategy. New ecosystems being built to bolster companies’ growth potential are even seeing them partner with ‘frenemies’ – long-time competitors – as wells as organisations in different industries. This is because it presents a significant growth opportunity over ‘going it alone’.
Accenture Strategy surveyed 1,252 business leaders from diverse industries across the world to better understand the degree to which companies are capturing ecosystem opportunities. The researchers found that more than 40% of companies across 20 industries – which make up a combined enterprise value of $26 trillion – are highly susceptible to future disruption from rivals making ecosystem moves, heightening the keenness of businesses to make their own changes. As a result, 60% of executives surveyed said they were looking to build ecosystems to disrupt their industry, and a further 76% asserted that current business models will be unrecognisable in the next 5 years, which ecosystems being the main driver of that change.
The industries found to be most capable of ecosystem changes were telecommunications, banking and utilities. Each were above average in terms of their capacity to collaborate on strategy, culture, talent, partnership architecture, technological fit and innovation – all key themes as multiple industries attempt to tackle talent shortages and the need to adapt to compete with digital disruption.
Analysts believe that changes which enable companies to better address these issues by working together could yield a total value of around $100 trillion for business and society over the next decade. 77% of executives believe that more than half of their company revenues will be generated from ecosystems in the next 5 years, while in the UK specifically, 78% of business leaders agreed that building ecosystems is critical to their strategy.
However, this is no guarantee of success, and according to the paper, executives often lack the vital experience and capabilities to design and execute market-leading ecosystems. Another factor hampering efforts for ecosystem growth is a lingering lack of trust. Understandably, many business leaders have a hard time ceding control when partnering with other organisations – particularly long-time rivals. 44% are therefore concerned about sharing company assets and secrets with other organisations, but they will need to move beyond this to get the most from their ecosystems.
As a result, many of the global executives polled are not witnessing the revenue growth they estimated ecosystem participation would provide them with. This saw a drastic gap between expectations and reality best illustrated by the 58% of companies which targeted a growth rate of 3-4%, with only 40% achieving it. With a slightly higher success ratio, but an even lower target, just 8% targeted 1-2% growth, with 44% succeeding. When aiming for higher levels of success, the figures worsened, with just 12% of companies seeing growth of 5% or more from ecosystems.
Path to success
In the UK, while 76% of UK leaders believe their organisation will generate more than half of its revenues from ecosystems in the next five years, this has left a mere quarter of UK business leaders feeling ‘very confident’ that they will achieve their 2020 growth targets.
According to Accenture, in order to tap into the $100 trillion (or £75 trillion) of value which ecosystems could yield to business and society, UK businesses pursuing disruptive growth by building ecosystems should consider a number of key steps. First, by considering what the strategic intent and innovation goals are upfront, businesses can set a solid vision out for ecosystem players, combining their functional, technological and industrial strengths and capabilities without confusion or distrust.
Second, but equally important, is the identification of optimum partners. Business leaders should look for partners with complementary capabilities, a collaborative mind-set, industry experience, customer relationships and data to set themselves up for success. Again, clarity is the key to trust, and so there must be clear definitions of how data will be shared and how success will be measured, while proper governance frameworks can further reduce friction among participants.
Finally, by orchestrating the ecosystem, companies can drive new value beyond what they’re able to do in isolation. Accenture advises that leading companies of an ecosystem initiate planning and testing for the ecosystem design, while piloting their market play.
Commenting on the findings, Peter Lacy, Senior Managing Director and UK & Ireland lead for Accenture Strategy said, “UK business leaders are quickly realising that they can achieve higher levels of growth by partnering with other companies in ecosystems over going it alone. Each player brings something unique to the table, which can help them innovate, create new propositions, expand their customer base or enter new markets. The beauty of ecosystems is that no single company owns or operates all components of the solution, making the value generated much larger than what could be achieved alone, and the risk is distributed equally.”
