Business Network or Business Ecosystem?
Here is a key element of entrepreneurial strategy that is often overlooked. It is important for entrepreneurs, especially in early stages of their business to differentiate between business networks versus business ecosystems. If you fully grasp the distinction between these two concepts, you are well on your way to understanding how to improve business ecosystem performance. A business network is a particular grouping of elements of commerce that are, in one way or another, connected to a central (or common) connection point. Thus, by definition a business network forms a “net” of interlinked elements. For our purposes a business network is an interlinked collection of individuals. The concept of business networking is the process of establishing a mutually beneficial relationship with other business people, within a meaningful framework of value for the individual or group actually doing the “networking.” There is no disagreement that a professional network of individuals is a critically important contributor to entrepreneurial success. The enormously popular and valuable online service LinkedIn is a good example of a networking system. However, with the growing rise in popularity of the term business ecosystem there is a blurred line of distinction between the two terms – network and ecosystem. In some respects, one might see the terms business network and business ecosystem as synonymous, or very similar in function. In our book, They Will Be Giants we introduced the “Godfather” of the phrase business ecosystem, James F. Moore. Moore’s own short version of what he intended to convey by inventing this terminology, went something like this: “The term… ‘business ecosystems’, refers to intentional communities of economic actors whose individual business activities share in some large measure the fate of the whole community.” For purposes here we will use two simple, high-level definitions to provide context in our discussion: Ecosystem = a system formed by the interaction of a community of living organisms with their environment, in conjunction with the nonliving components of their environment. Business Ecosystem = a commercial form of an ecosystem; in this case any business exchange system of interconnecting and interacting parts, as in a given company and the communities, markets, and technologies in which it conducts its activities. The purpose of this book is to help shape your thinking and activity towards a model that exerts substantially stronger influence and control over the results produced by your business ecosystem. You might think about the distinctions between a network and an ecosystem along these lines:
A business network creates opportunities,
A business ecosystem creates results,
In upcoming blog posts we’ll dive into the difference between a business ecosystem and a "Purpose-Driven Business Ecosystem". Briefly, it looks something like this: Purpose-Driven Business Ecosystem = a Business Ecosystem [as defined above] formed for a specific purpose and set of values determined by the originator and/or participants of the said ecosystem. Hint: if we expand on the definitions above we get…
A business network creates opportunities,
A business ecosystem creates results,
A purpose-driven business ecosystem creates optimal results– in the specific context of the purpose of your business.
All of these arrangements can be useful... once you decide what you want to accomplish with your business.
