Strategy and organizational design in a crowded ecosystem

When I teach organizational design, I start with the observation that organizations survive because they’ve struck a balance with their environment. That environment is now an ecosystem teeming with other organizations seeking their own balance. One consequence is that you cannot separate organizational design from strategy. A second is that both must operate from a deeper understanding of the ecosystem.

Ecosystem has become a popular way to think about the competitive environment. Some of this is simply evolving language preferences; terms go in and out of style. But there is a deeper and more significant rationale for this evolution in terminology. The appeal behind talking about ecosystems lies in the adage that “everything connects to everything else.” While that has always been true, it wasn’t terribly relevant until recently; “everything” didn’t add up to very much. For a long time, organizations had to only pay attention to a well-defined set of customers, a small handful of suppliers, a small handful of competitors, and a handful of other factors that impinged on their freedom to act.

Wouldn’t it be nice to have that sort of environment today? Not only are there more players to consider in every category, those players bump up against one another more tightly. It’s easy to cross an empty room to get to the bar; in a crowded cocktail party it can be hard to move just a couple of feet. You need to think and manage differently if you need to cross that crowded room. To further complicate things our hypothetical room is surrounded by a balcony full of people shouting conflicting, contradictory, yet potentially essential advice.

The temptation is to put your head down and bull your way through the crowd toward your destination. If you’re a bull and you’re in a china shop, this strategy will get you to the other side. You might also think it acceptable that the floor is now littered with broken china. On the other hand, if we are indeed in an ecosystem rather than a china shop, then we trample at our own risk and as risk to others in the broader system. Are we trampling over a future food source? Predators? Poison? Future mates? Risks to others might be ignored; but many risks are to our own future existence.

It’s a popular notion that today’s environment calls for innovators to move fast and break things. If that environment is as tightly packed as today’s actually is, what may end up broken is the ecosystem itself. That’s a contest with no winners.

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