Ecosystem management is the complex task of aligning internal capabilities and external partnerships to scale and sustain how an ecosystem creates value for all participants.
Doing this effectively requires a fundamental shift in how firms think about strategy, collaboration, and organizational boundaries.
Business ecosystems are no longer just a fashionable concept; they have become central to how companies organize, compete, and innovate.
Yet many leaders still struggle to grasp how ecosystems differ from traditional business models or what managing them truly entails.
Much of this difficulty arises from fragmented academic perspectives and inconsistent terminology, which obscure the practical implications and leave executives without clear guidance.
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Why Ecosystems Are Changing the Locus of Strategy
Traditional strategy focuses on aligning internal resources and capabilities to the changing dynamics within a specific industry/market to create a competitive advantage.
The goal is to differentiate the firm from the competition through brand positioning
In contrast, ecosystems shift the locus of strategy from the firm to the network. The fundamental unit of value creation becomes the collective output of a coordinated group of partners.
Ecosystem strategy is defined not by isolated firm capabilities, but by how well a focal firm aligns and mobilizes others toward a shared value proposition. Success lies in coordinating interdependent contributions across diverse players with different roles. Typically, this includes complementors, customers, partners, and even rivals (coopetition). These configurations generate value that no single firm could create alone.
This strategic shift has practical consequences. It requires different tools, different roles, and different decision criteria.
Participation, rather than domination, becomes a strategic choice. Firms can lead, follow, share leadership, or multi-home across ecosystems, and each choice entails trade-offs in control, risk, and value capture.
What is Ecosystem Management?
This ecosystem management framework brings together essential components such as strategy, governance, orchestration, and the technological foundations that enable ecosystems to be designed and scaled.
For leaders, this framework offers a strategic guide which untangles the jargon used and provides clarity to the key management actions needed to develop and manage an ecosystem.
The consolidated framework offers a three-layered structure to help firms design and manage ecosystems coherently:
- The Ecosystem Business Model Layer defines how value is created, delivered, and captured across participants. It acts as the architecture of the business, specifying the shared value proposition and the logic that binds the ecosystem together.
- The Management Layer encompasses the principles of governance and orchestration. Governance establishes the rules, roles, and incentives; orchestration manages the ongoing dynamics, coordinates resources, and adapts the system in response to change.
- The Technology Layer provides the infrastructure, standards, and modular assets. As an example, the APIs that enable third-parties to develop products and services.
The layers are deeply interconnected. Decisions about openness and control in governance, for example, directly affect platform architecture and the degree of modularity in the technology layer.
Likewise, orchestrating knowledge flows or innovation incentives requires careful alignment across all three levels.
The Critical Functions of Ecosystem Management
Ecossystem Management: Governance
Governance is about setting the rules of the game.
Governance is not just about control. It is about creating a stable yet flexible structure that enables trust, commitment, and clarity of roles across a diverse set of actors.
A good governance model defines access rights, decision-making authority, behavioral norms, and value distribution mechanisms.
A few key governance questions managers must resolve include:
- How open should the ecosystem be?
- What behaviors will be rewarded or penalized?
- How will intellectual property and data be shared?
- Who has the right to make what decisions?
Striking the right balance is crucial. Overly rigid rules can stifle innovation, while too much openness can lead to chaos, free-riding, or declining quality. Incentive structures also matter. These can range from financial rewards and revenue sharing to status, co-branding opportunities, or access to proprietary tools.
Trust plays a foundational role. It is built through transparency, fairness, and reliability — and it is reinforced by consistent orchestration behavior and conflict resolution mechanisms.
Ecosystem Management: Orchestration
Orchestration is how the ecosystem leader coordinates the activities across the ecosystem to create value.
If governance sets the stage, orchestration is the performance. Orchestration refers to the deliberate actions taken to encourage contribution, align actors, and adapt the ecosystem over time. It involves agenda-setting, resource mobilization, conflict mediation, and real-time coordination.
Effective orchestration requires sensitivity to interdependencies. It is about more than steering — it involves sensing, responding, and sometimes reshaping the network. Orchestration practices include:
- Maintaining knowledge mobility across the network
- Establishing feedback loops and shared learning routines
- Synchronizing resource contributions across timelines and roles
- Adapting governance in response to co-evolutionary dynamics
Importantly, orchestration is a continuous, hands-on process. Leaders must engage with both macro-level patterns and micro-level interactions. They must align agendas, manage tension between innovation and control, and evolve the ecosystem’s configuration as it grows.
Dynamic Capabilities: Surviving and Thriving Through Change
Ecosystems are inherently dynamic. They evolve due to shifts in technology, customer needs, regulation, and internal co-evolution between members. As such, dynamic capabilities are essential for both the ecosystem orchestrator and participants.
Dynamic capabilities enable firms to sense emerging opportunities, seize them through reconfiguration, and transform internal operations. These capabilities allow a firm to evolve its business model, adjust its role within the ecosystem, and reallocate resources to new positions of strength.
Three types of dynamics are crucial:
- Exogenous changes like new technologies, pandemics, or regulations that impose external pressures.
- Endogenous interactions like changes in roles, trust, or cooperation among participants.
- Orchestrated modifications like a new API standard, adjusted incentive model, or governance reform led by the orchestrator.
Leaders must develop capabilities to navigate all three. This includes foresight practices such as roadmapping and scenario planning, as well as experimentation, learning routines, and resilience-building.
Lifecycle Management: Ecosystems Emerge, Grow, and Mature
Ecosystems are not static. They move through identifiable lifecycle stages: emergence, expansion, maturity, and sometimes renewal or decline. Each stage presents distinct challenges and strategic priorities.
- Emergence requires testing the value proposition, securing early participants, and establishing legitimacy.
- Expansion involves scaling participation, increasing generativity, and managing growing complexity.
- Maturity demands robustness, deeper integration, and conflict management as competition within the ecosystem intensifies.
- Renewal becomes essential when inertia, saturation, or new disruptions call for reinvention.
Ecosystem leaders must tailor their governance and orchestration to these stages. In early phases, flexibility and openness matter more. In later stages, structure, discipline, and conflict resolution become central. The ability to navigate transitions is what separates resilient ecosystems from those that fail.
The Strategic Role of Technology
Technology is more than an enabler — it is often the substrate of the ecosystem. Digital platforms, modular architectures, APIs, and data analytics shape how value is created, coordinated, and scaled. Technology defines the boundaries, interfaces, and generativity of the ecosystem.
Platform ecosystems in particular depend on careful design of:
- Modularity: Decomposing the system into stable cores and flexible peripheries.
- Access controls: Determining who can build what, with what standards.
- Complement management: Encouraging the right mix of variety, quality, and innovation among third-party contributors.
Well-designed technical architectures reduce coordination costs and amplify participation. Poorly managed ones lead to fragmentation, low-quality offerings, or loss of strategic control.
Firms like Apple, Google, and Amazon demonstrate how platform design and ecosystem orchestration work in tandem. But even non-platform ecosystems — for instance, in smart cities or supply chains — require technical backbone and interoperability standards.
From Theory to Practice: What Leaders Should Do Differently
Understanding the layers and dynamics of ecosystems is only half the battle. The real challenge is turning insight into execution. Here are five priorities for leaders seeking to apply ecosystem thinking in practice:
- Clarify Your Role: Decide whether you aim to orchestrate, participate, share leadership, or multi-home. This decision affects governance choices, investment strategy, and partner engagement.
- Design for Alignment: Focus on defining a compelling value proposition, aligning incentives, and ensuring that all partners benefit from the ecosystem’s success.
- Build Adaptive Governance: Use both formal contracts and relational mechanisms like trust and shared norms. Adjust openness, access rights, and decision-making as the ecosystem evolves.
- Invest in Orchestration Capabilities: Develop the capacity to coordinate, adapt, and resolve tensions. Orchestration is an ongoing capability, not a one-off design.
- Monitor and Evolve: Establish metrics, feedback loops, and learning routines. Anticipate lifecycle shifts and proactively manage transitions between stages.
Executive Takeaways
Ecosystems redefine how firms compete and create value. They are dynamic, multi-actor systems that require new approaches to strategy, governance, and leadership. A practical framework for ecosystem management reveals that:
- The business model is the architecture of value — define it clearly and design it to scale across actors.
- Governance sets the conditions for participation — align incentives, define rules, and foster trust.
- Orchestration is the ongoing management of complexity — coordinate actors, adapt practices, and evolve the system.
- Technology is the infrastructure of collaboration — use modularity, standards, and tools to enable innovation and scale.
- Dynamic capabilities are the lifeblood of resilience — sense, seize, and transform to survive change.
Firms that master these elements will not only survive the transition to an ecosystem world — they will shape it. By thinking in layers, managing in cycles, and investing in orchestration, leaders can turn complexity into competitive advantage.
