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HIGHLIGHTS

  • ‘Good business’ has crossed the profits-only realm, pivoting to a purpose-driven orientation as societal demands and planetary constraints, like widening economic inequality, impact corporate sustainability.
  • ‘Purpose’ is becoming the force majeure for enterprise growth and transformation, and ecosystems are an essential means to those ends.
  • Successful ecosystem collaboration—whether accessed organically or through an alliance, joint venture, or M&A—requires each collaborator to thoughtfully assess their goals, culture, and capabilities, and understand how this enables their future vision.

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PROFITS ARE NO LONGER ENOUGH

Corporates are looking beyond profit margins and inculcating a culture of environmental, social, and governance standards to assess success and long-term business viability.

Customers, investors, and employees consider the way businesses treat their people, the environment, and the communities within which they operate, as critical competitive differentiators. This mindset shift toward  ‘stakeholder capitalism’ is demonstrated by, for example, the fact that companies rated higher in initiatives such as diversity and inclusion and corporate social responsibility (CSR) attract more investors than traditional, profit-oriented businesses. Millennials, in particular, share this economic bias when evaluating employment opportunities and making consumer purchase decisions.

Global challenges such as the pandemic, geopolitical uncertainty, and climate risk further amplify the importance of executives looking beyond profits as their North Star. The rise of environmental, social, and governance (ESG) factors in corporate agendas highlights executive adoption of this broader stakeholder view.

As larger social and economic realities and needs dominate boardroom discussions, CEOs around the globe are revisiting the ‘purpose’ of their enterprises and, in turn, the measures by which they assess success and ensure their businesses’ long-term viability.

Collaboration for purpose-driven growth

 

 

organic vegetable stall

 

PURPOSEFUL COLLABORATION

Ecosystem collaboration is complex, but the C-suite recognizes its increasing importance as a powerful means for growth and profitability.

Over the past few years, much has been written about ecosystems.  While economic ecosystems have always existed, the entities involved in the network did not necessarily knowingly collaborate or exchange value with one another in the service of the consumer’s ultimate purpose like wellness or mobility. Enabled by innovative technologies and inspired by the pursuit of corporate resilience, deliberate digital purpose-driven ecosystems have taken hold and are evolving. Further, through real-time data, new insights inform new business visions at an accelerated rate.

In an example, MIT CISR research found that companies engaged in ‘digital partnering’ with the intent to expand both their ‘reach’ (new customers) and their ‘range’ (new products) achieved higher revenue growth. This is nearly 10 percentage points above industry average.

 

 

 

IDENTIFY AND ADDRESS THE CHALLENGES

The TCS 2021 Global Leadership Study revealed 58% of leaders, versus 35% of followers, include ecosystems when building their future strategy.

C-suites increasingly recognize that the sharing and building upon the assets of ecosystem collaborators is a powerful means for growth and profitability. Therefore, to strive for greater prosperity in their business elevates the need for purposeful growth, which can be achieved with the alignment of ecosystems. However, this can be a complex task for two reasons.

1) Ecosystems evolve as customer expectations change, technologies progress, and larger economic factors shift.

2) Identifying where business visions and resources can intersect is tricky. 

Successful ecosystem collaboration—whether accessed organically or through an alliance, joint venture, or M&A —requires each collaborator to thoughtfully assess their goals, culture, and capabilities, and understand how this enables their future vision and reveals their ‘gaps’ to fulfill them. This insight then informs decisioning on which ecosystem(s) to join, and the companies within which to cooperate. To ensure a mutually beneficial relationship inside the targeted ecosystem, ‘collaboration due diligence’ should:

  • Identify purpose-driven outcomes sought through ecosystem collaboration.   
  • Focus on confirming or denying that by uniting collaborators will be able to successfully mine and create the needed synergies by closing each other’s gaps
  • Embrace and communicate the necessary changes in business models, operating systems, or resource strategies in order to make the success of the collaboration a reality.

 

charity center

 

 

EACH ONE HAS A ROLE

Roles to play in ecosystems vary, but all are needed to deliver.

  • An anchor is responsible for ‘orchestrating’ the ecosystem, typically by providing the infrastructure or ‘platform’ on which the ecosystem operates.
  • A partner brings a differentiated product, service, or capability (for example, customer relationship or best-in-class operational function) suited to the purpose of the ecosystem.
  • All players bring or continuously strive for Lego-like infrastructures that allow the snapping and unsnapping of collaborators’ assets and componentized capabilities employed by the ecosystem, as needed, for agile adaptation to market opportunities and threats.

 

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EXAMPLES IN PRACTICE

Ecosystems can drive new partnerships and business models that had previously not been on the horizon.

Let’s look at two examples of successful ecosystems that changed the business trajectory. Pharmaceutical giant, Merck, whose mission is to ‘invent for life’, naturally fits within the wellness ecosystem, and places a priority on ESG when allocating resources and forming partnerships to ensure access to health and environmental sustainability. 

In pursuit of continually improving patient outcomes and reducing total cost of care, Optum Medical Benefits Management, a United Health Group company, partnered with the National Comprehensive Cancer Network to optimize cancer treatment through a unique point-of-care decision-support tool.

Purpose-led not profit-driven growth

 

 

purpose driven ecosystem

 

A NEW WORLD ORDER 

Finding and aligning on purpose is critical for corporations and all of humanity to overcome our shared challenges and thrive.

Re-ignited by the challenges of the COVID-19 pandemic, the longing for a sense of purpose has set a new trajectory for not only corporations but humanity as a whole.  And collaboration, from alliance to acquisition, is the means for more rapid adaptation to an ever-changing business environment. Businesses that seek to survive for the long term must find or shine a bright light on their purpose and align their strategies and tactics to continually add value in what is projected to be the most transformative decade in all of human history. To paraphrase Spock from Star Trek, “live purpose and prosper”.