Add ecosystem thinking to your digital transformation strategy!

In early 2015, when the much-hyped term “digital transformation” was still young, PAC defined three stages of digital transformation that the majority of businesses typically go through: digital frontend transformation (stage 1), digitally integrated enterprises (stage 2) and digital ecosystems (stage 3). Since then we have discussed the three-stage model with numerous customers and used it in many consulting projects. And while of course every company follows a highly individual transformation path, the three stages have provided a good reference for evaluating the current state of digital transformation in companies and industries.

Today, in early 2017, we find that many companies around the world have taken measures to digitally transform their frontends (stage 1) as well as to digitize their backend processes and integrate them with their customer-facing processes (stage 2). However, we believe the time has come for every company to think about the third stage of digital transformation: digital ecosystems.

Digital ecosystems address customer demands in entirely new ways: not from the perspective of an individual provider, but from the perspective of a complex human need – irrespective of traditional vendor or industry categories. In an ecosystem economy, competitive advantage will be determined not by the strength of a single company, but by the strength and innovativeness of the entire ecosystem and its partners. We are currently seeing the emergence of quite a number of digital ecosystems – and we present a variety of them in our latest SITSI InSight Analysis report ‘Towards New Digital Ecosystems’. However, it is not yet “state of the art” for companies to follow an ecosystem strategy and enter into collaborative, cross-industry business and innovation networks.

In my view, it is absolutely crucial for companies that are not yet part of an ecosystem to start working on it as soon as possible. Companies in all industries should re-evaluate their current digital transformation strategies and add a heavy dose of ecosystem thinking to it! They have to consider what ecosystem strategy to follow, start building partnerships and adjust their business and technology strategies accordingly. Otherwise they risk not being able to actively shape – or dominate – a digital ecosystem, but rather having to accept the rules set by others.