5. How Many Ecosystems Should You Manage?
Some successful orchestrators manage a number of synergistic ecosystems, each covering a different part of the business and leading to a different path for expansion.
The Chinese tech giant Alibaba grew by creating an expanding set of connected ecosystems, starting in one market and shifting to others as it capitalized on customer information and refined its understanding of customer needs. It began with 1688.com (a wholesale marketplace), created Taobao (a C2C marketplace), moved into TMall (a third-party-seller B2C ecosystem), and expanded to Juhuasuan (a sales and marketing platform). And it is a part owner of Ant Financial, the world’s most valuable fintech firm, which aims “to expand its ecosystem by penetrating more consumption scenarios in daily life.”
The most obvious consequence of this dynamic is the growing dominance of national e-commerce and e-services by a small number of firms. In China, the almost equally huge Tencent and Baidu compete with Alibaba, which in many ways they resemble. Their Western equivalents are Google, Apple, Facebook, Amazon, and Microsoft. Aspiring to provide a unified service, these companies are shifting into ever more sectors, often through interfaces such as voice-activated assistants that appear seamless to the consumer. Mobility firms are doing similar things. Uber’s expansion—think of Uber Eats and all the ventures of Uber Everything—demonstrates the company’s ambition to integrate multiple ecosystems and manage the customer interface. Southeast Asian mobility firms such as Grab (Singapore) and Go-Jek (Indonesia) have gotten into payments as well, aiming to make themselves indispensable to the final customer.
As Marco Iansiti and Karim Lakhani recently noted,
such hub firms are becoming formidable strategic bottlenecks that can direct the lion’s share of value to themselves. But although it may seem that the future belongs to big, established firms with deep pockets and technological prowess, smaller upstarts (like Alibaba when it started, less than 20 years ago) and nontechnology firms have the potential to muscle in. The Chinese insurance and financial services conglomerate Ping An began by becoming more technologically savvy and soon ventured into adjacent areas, starting with health care and extending to lifestyle, in the process becoming the world’s most valuable insurance group. It did so by creating focused ecosystems such as Ping An Good Doctor, which combines AI with physicians to provide medical advice, and Ping An Haofang, the country’s largest online property platform. It has invested in Autohome, China’s largest used-car marketplace, and in entertainment, through an alliance with Huayi Brothers. It then combined those verticals with some of its own units, including Ping An Bank and Zhong An insurance, to create the PingOne account: an offering that seeks to capture every customer interaction.