Identifying Your Ecosystem
I remember leading an ecosystem study within a huge company several years back. At the time, there were about 30 alliances, and not all of those were really active. We had several conversations about the overall philosophy behind the Alliance program. Was it meant to be a select group of strategically important partners? Or was it meant to include every company that brought some value to the relationship, no matter how small? Or something in between? The answer would drive whether the 30 became 10 Alliances, or 100. There are other factors impacting ecosystem size.
PARTNERS VS. ECOSYSTEM EFFECTIVENESS
What is overall ecosystem objective? That answer should provide insights on the number of ecosystem participants. If the objectives are strategic, then the number of participants is probably low. But if objectives revolve around driving top line revenue, then the number of ecosystem partners could be large. And the ecosystem objective may change. For example, the growth curve of a company might suggest more ecosystem partners during high growth periods and fewer during low growth or retraction periods.
PARTNERS QUOTA
Having more partners means more opportunities, right? Well, no, not really. Again, it is not unusual for a small segment of the ecosystem to drive the volume of qualified opportunities. Especially the companies that are large enough to have a fairly large dedicated sales force. While other partners may bring in opportunities from time to time, the absolute number of opportunities, and their total dollar value, will be driven by a couple of partners.
Managing a large number of partners (ex. - engineering firm and contractors) also probably means more internal competition. If an engineering firm works with many contractors/builders then how does the engineering firm advise the client? Do you recommend certain contractors based on project type? Or likelihood to finish on time/budget? Or just provide a list of capable firms and stand back? And how will the client react to any lack of specific recommendation? Conversely, how will contractors not selected react to the engineering firm? Even within the engineering firm different contractors may have advocates, which then causes conflict within the engineering firm itself.
TRUST
Do you trust all ecosystem partners the same? The answer is probably not. Some partners will have established a reputation for quality, timeliness, cooperation, flexibility – either good or bad. And it can be a situational answer. An opportunity’s size alone can impact how ecosystem partners view each other. That could be a situation where an opportunity is seen as too small for the larger players to bother, or a large opportunity where the smaller partners have never delivered that volume.
COST VS. BENEFITS
Costs versus benefits of managing partners. Every ecosystem partner requires care and feeding. With a large ecosystem, there is substantial cost to maintaining quality relationships and meaningful information flow. Ultimately you begin to wonder whether the top line revenue is worth the cost of Alliance team members and others. Or maybe you have an internal constraint to the size of the Alliance team; in that case it is better to determine how many partners can be reasonably serviced and let that influence the size of the ecosystem.