What is your business’s digital ecosystem? If you can’t clearly define and articulate this idea, you have some work to do.
Daniel Calugar, an experienced investor, discusses digital ecosystems, global currencies, and how the two are related in this article. He explores how to envision and strategize an independent ecosystem so that a business is self-sufficient in the unsure future ahead.
In today’s digital world, nearly every company has an ecosystem of partners and products with which they have an interdependent relationship. For top-rated companies, these relationships are deliberate and planned, not haphazard. They are an integral part of their business strategy.
The best way to define these two types of digital ecosystems is to cite familiar examples. It is interesting to note that today’s mega-companies, Amazon, for example, can often be used to illustrate how both of these digital ecosystems operate.
In our first example, let’s see how a partner-based digital ecosystem can add value to both partners. Let’s say you’re an automobile manufacturer, and you see that you can gain a competitive edge by offering an intelligent voice-activated control system to your high-end vehicles.
You could build and maintain your own system or enlist a digital ecosystem partner, like Amazon, to provide the desired functionality using their existing Alexa platform. Amazon is a willing partner because you have become a new audience for its search and shopping features. Expanding your ecosystem to include Amazon decreases time to market and has fewer maintenance and delivery headaches to deal with.
Turning to the independent digital ecosystem, but staying with Amazon to illustrate how mega-companies can play in both sandboxes; when Amazon decides they want to diversify their product offering—let’s say add a subscription music service to their portfolio—they have the resources to purchase or build (whichever they choose) a world-class music streaming service. By doing so, they have expanded their in-house or independent digital ecosystem.
Amazon has built the world’s largest independent digital ecosystem, all the while partnering with thousands of other companies to expand their product reach. This strategy provides enormous business resilience. Each element of the ecosystem enhances the capabilities of one or more of the others. So if one of Amazon’s business units experiences a shortfall, the other tentacles are more than enough to compensate for the loss.
There is not currently a truly global currency. The U.S. Dollar, Euro, and Yen are widely accepted internationally. Still, each fails—and will likely continue to come up short of the definition of global currency—because they are regulated within a specific geographical boundary and require an exchange rate to be translated to the local currency of another country.
This fluctuating exchange rate is a fly in the ointment for constructing worldwide digital ecosystems. A partner-based ecosystem could conceivably have partners worldwide, each with its own local currency and exchange rate. This geographic diversity means that as the exchange rate fluctuates, the viability of the partner relationship changes too.
Many companies, and now a few governments, are looking at cryptocurrencies as a possible solution to problems caused by a lack of a global currency. At this point, crypto is still too unstable, but the idea of a worldwide currency not regulated by any one entity is appealing to many global companies.