HBR Guide to Setting Your Strategy

CHAPTER 12

Ecosystem Businesses Are Changing the Rules of Strategy

by Julian Birkinshaw

Why are business ecosystems suddenly such a hot topic? It’s not as though they’re a new idea. The term “ecosystem” has been used in business for 20 years. Companies including Volkswagen and Toyota have been orchestrating huge networks of suppliers and distributors for more than 50 years. Lloyd’s of London, the insurance marketplace, is a classic ecosystem and was founded in the 17th century.

What’s changed is that most of today’s fastest-growing companies—from Amazon and Google, to Alibaba and Tencent—are explicitly positioning themselves as ecosystem players, as hubs within networks of customers, suppliers, and producers of complementary services. Industry ...