The Power of Ecosystems

A nice piece in Fast Company by John Sviokla on the power of ecosystems.

The interesting question is whether you can plausibly make the transition from a closed/vertical industry model to an ecosystem/horizontal industry model.  It is hard to think of examples of companies successfully making that transition (got any candidates?).

The revenue hit when you move from owning the whole pie to accepting a smaller part of what you expect to be a much bigger pie is not a leap many companies are willing or able to make.  This is especially true of hardware companies trying to become software companies because the existing hardware revenue you give up (or at least put at risk) typically dwarfs the available software revenue in the short and even medium term.  It is also true of companies trying to move from low volume, high cost models to high volume, low cost models.  The problem is to get to high volume, low cost, there is usually a low volume, low cost waypoint. The radical change in cost structure required is just too painful for most companies to contemplate.