The Fortune at the Bottom of the Pyramid
The Ecosystem for Wealth Creation
Quote:
“An ecosystem is a complete community of living organisms and the nonliving materials of their surroundings.”
Learning Expectation:
Ecosystem Wealth Creation is a stock, meaning that it is a total accumulation over time. Income is a flow, meaning it is a rate of change. Income represents the increase in wealth, expenses the decrease in wealth. If you limit wealth to net worth, then mathematically net income (income minus expenses) can be thought of as the first derivative of wealth, representing the change in wealth over a period of time.
Review:
The environment is relatively stable and the innovation that comes with diversity isn’t a high priority, you can move to directly control the assets your company needs, by acquiring your partners or otherwise taking over their functions. A physical dominator ultimately becomes its own ecosystem, absorbing the complex network of interdependencies that existed between distinct organizations, and is able to extract maximum short-term value from the assets it controls. When it reaches this end point, an ecosystem strategy is no longer relevant.
If, however, your business chooses to extract maximum value from a network of assets that you don’t control—the value dominator strategy—you may end up starving and ultimately destroying the ecosystem of which you are a part. This makes the approach a fundamentally flawed strategy.
Lessons Learned:
If your business is at the center of a complex network of asset-sharing relationships and operates in a turbulent environment, a keystone strategy may be the most effective. By carefully managing the widely distributed assets your company relies on in part by sharing with your business partners the wealth generated by those assets. Can capitalize on the entire ecosystem’s ability to generate, because of its diversity, innovative responses to disruptions in the environment.
Integrative Questions:
1. What is ecosystem?
2. What is wealth creation?
3. What is the strategy of managing the company?
4. Is there an ability of ecosystem’s to generate?
5. What are the value from a network of assets?