Leadership

How to lead your business ecosystem

To succeed in today’s complex market, CEOs must look beyond their own company and focus on shaping the business ecosystem in which their company operates.

What you’ll learn

What defines a business ecosystem
The four core capabilities CEOs need to build in order to cultivate a business ecosystem skillset
What a business ecosystem looks like in practice

Every ecosystem is a series of symbioses. From tide pools to tropical forests, every organism in an ecosystem depends on the others to remain in harmony. The slightest change can disrupt its delicate balance.

But ecosystems don’t only exist in nature. They also exist in business. A business ecosystem is a network of organizations cooperating to deliver a product or service. Given this broad definition, a business ecosystem could include customers, community, suppliers, distributors, competitors and more.

All of these ecosystem stakeholders look to CEOs to shape their company and the ecosystem where they operate. That means the CEO role has shifted considerably. Today, CEOs have to appease more than just their directors and shareholders. They have to address demands from many sectors of society, from employees and customers to government agencies and activist investors.

To understand what this shift means for the CEO role, we spoke with 105 board directors, many of whom are also CEOs. They represent 311 North American companies and 11 industries. Given the vast stakeholder landscape, we discovered that the playbook for successful leadership has changed. The risks are high, as CEOs must decide who and what to prioritize.

To navigate these risks, CEOs need skills that go beyond the traditional daily demands of the position. They need to master a new, softer set of skills. In other words, they have to become a new type of CEO: an enterprise leader who can guide their ecosystem through complexity.

Five ways to take control of your business ecosystem

Here are five steps CEOs can follow to start evolving towards ecosystem leadership.

1 Know the players in your ecosystem

Before attempting to lead a business ecosystem, CEOs have to study its members. They have to understand how each member of their ecosystem operates independently and collaboratively (or competitively) with each other. For example, CEOs must learn the strengths and weaknesses of their members. They must understand how members contribute to the ecosystem and how they link together.

Next, CEOs must understand the external forces operating within their ecosystem. They must recognize outside threats that might compromise the ecosystem’s ability to work together. They also need to consider whether their ecosystem partners can adapt to changes in their environment. Finally, they must look for business opportunities that are mutually beneficial to all within the ecosystem, regardless of the risk of competition.

As they move forward, CEOs need to find a way to unite their business ecosystem partners around a single objective. That objective must benefit the ecosystem as a whole and each partner. For example, the objective could be a shared interest or challenge. An effective way to organize is to form a mission-driven partnership that coincides with your business strategy and serves the greater good.

2 Empower your senior leaders

In order for the CEO to expand their role, they need help from a network of leaders. CEOs need to be able to step back from the day-to-day management of running the business. Instead, they need to focus on setting a clear sense of direction for the organization. While CEOs remain responsible for this direction, they must look to their executive team for help in carrying out their strategy.

These executives must be prepared to help run their business function while contributing to the business ecosystem. In other words, they must be experienced enterprise leaders. They need to step up as thought partners and successors and should be capable of holding their own in conversations with investors, board members and employees.

When CEOs surround themselves with high-caliber executive talent, they’re better positioned to fulfill their role as an ecosystem leader. The good news is that many CEOs have already built an empowered network of leaders. During the pandemic, the speed of disruption demanded that executives make decisions faster than ever before and handle new responsibilities. For these reasons, this current group of leaders is well prepared to act as a partner with the CEO.

3 Cultivate an enterprise mindset and a business ecosystem skillset

Today’s CEOs have to think beyond their organization’s success. Instead, they must consider the role they should play in building a healthy business network that will promote not only their organization’s interests but those of society as well.

This enterprise mindset and business ecosystem skillset came to the forefront during the pandemic. Take, for example, the elite hotels that opened their doors, free of charge, to first responders in New York City. This was both the right thing to do and a benefit to the hotels’ ecosystem.

As a result, healthcare professionals were able to get much-needed rest, keeping them healthy so they could continue treating COVID-19 patients. Treating patients helped address the risks to the public and allowed pharmaceutical companies to pursue vaccine research and trials. As the risks became more known and finite, people became less fearful of going into public and traveling. And, in turn, businesses in the hospitality industry benefited from the public resuming their lives as normally as they could.

To cultivate an ecosystem skillset, CEOs must build four core capabilities:

The ability to be "radically human": Ecosystem CEOs must demonstrate curiosity, openness and vulnerability, responding to others with genuine interest and empathy. In other words, they must become emotionally intelligent.
The ability to balance stakeholder needs: CEOs must seek opportunities to generate shared value and turn competitors into collaborators. A prime example is the collaboration between Apple and Google in creating COVID-19 contact tracing application program interfaces and platforms. In building their ecosystem, they included developers, governments and public health providers to "slow the spread of COVID-19 and accelerate the return of everyday life."
The ability to lead by influence with little to no formal authority: Outside their organization, CEOs must rely on something other than the inherent power that comes from their title. Instead, they must rely on their reputation and earn the respect of their peers. They also need to understand the ecosystem landscape (our first step listed above), be committed to win-win outcomes and be willing to compromise when their desired outcomes aren’t possible.
The ability to take on a public persona: A CEO in today’s business landscape must be prepared to answer to a much larger group of stakeholders than a traditional CEO. To excel in this role, CEOs need a thick skin so they aren’t ruffled by complaints and criticisms. They also need to be familiar with current ecosystem issues in order to bolster their credibility with stakeholders. And they need poise and confidence so they can wield influence over other powerful players in their business ecosystem.

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4 Build an infrastructure to connect the ecosystem

Companies are built for collaboration. They’re designed with structures and teams that are focused on reaching a goal.

However, business ecosystems tend to be disconnected, consisting of individual parts that lack formal organization or governance structures.

CEOs need to figure out how to fill the organizational void in business ecosystems. Options include industry coalitions, public-private partnerships and other organizations that serve as an overarching structure for coordinating ecosystem actions. Examples of these groups include the CEO Water Resilience Coalition, the Global Food Safety Initiative, the Network for Greening the Financial System and CEO Action for Diversity & Inclusion.

A business ecosystem in practice

It is clear through the efforts of CEO Action that there are many benefits of formally organizing a business ecosystem. This organization is “the largest CEO-driven business commitment to advance diversity and inclusion in the workplace.”

The coalition consists of more than 2,200 CEOs and presidents from more than 85 industries who are all acting toward a singular purpose: the “shared belief that diversity, equity and inclusion is a societal issue, not a competitive one, and that collaboration and bold action from the business community — especially CEOs — is vital to driving change at scale.”

This large-scale involvement from global CEOs has led to:

A committed network of CEOs
The opportunity for people to pledge their support
Coalition-sponsored and company-led efforts that advance CEO Action’s agenda
Workshops, tools and resources that encourage the involvement of like-minded individuals
Collaboration among companies and local organizations, nongovernmental organizations and government policymakers
A platform that allows members to take action and share successes and challenges with each other

CEO Action’s steering committee, composed of CEOs and leaders from several organizations that compete with each other — Accenture, BCG, Deloitte US, The Executive Leadership Council, EY, General Atlantic, KPMG, New York Life, P&G and PwC — has enabled the coalition to take bold action to drive change.

5 Anticipate the risk that comes from navigating complex social and political interests

There’s inherent risk when CEOs respond to the demands of stakeholders beyond their four walls. They may have to deal with issues that are new and unfamiliar, with no easy answers. They may be challenged by activist investors who talk about social responsibility and ESG matters but still expect organizations to maximize short-term gains instead of taking a long-term approach toward creating value.

When they step outside their company’s bubble, CEOs must navigate a complex web of social and political matters. No matter which stance they take on these issues, they’re likely to disappoint, if not outright alienate, some stakeholders.

And when CEOs bite off more than they can chew, between handling matters for their own company as well as their business ecosystem partners, there’s a risk that they’ll engage in a lot of activity but have minimal impact.

This requires careful consideration of potential risks. Ecosystem CEOs should consult their trusted partners before tackling multiple ecosystem issues. Their trusted advisors, board, peers at other organization and industry experts can advise which efforts may have the biggest payoff. And, to make sure they uphold their responsibility to their own organization, they must remain mindful of the impact on their day job.

Of course, there’s also the potential upside of taking on these issues. At least some segments of society will embrace the CEO’s efforts and this in turn will improve public sentiment about the company. A stronger reputation in the community can attract more customers and employees who welcome a community-minded approach to business.

The company may also enjoy the benefits of deeper, more productive relationships with governments and societal institutions. And when diverse coalitions work together to solve pressing problems, they’re more likely to come up with innovative solutions.

Now is the time to become a business ecosystem leader

The most effective CEOs know that they cannot act alone. No company, and no industry, is an island. Every organization is a member of an ecosystem. The most successful organizations are likely to be led by ecosystem CEOs who recognize the unique opportunity of this moment to become a force for good and build a more sustainable business that simultaneously serves all stakeholders.

To learn more about our perspective on the leadership of business ecosystems, check out the full article in the Harvard Business Review. And to learn more about becoming an enterprise and ecosystem CEO, check out our professional development for leaders.