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Between Covid-19, geopolitical tensions, rising inflation and interest rates, companies are facing lower growth and more uncertainty. As a result, companies need to think beyond their own boundaries to become more resilient. While many companies are de-globalizing their value chains to become less dependent on unreliable supply chains, numerous new business ecosystems are being established with new or existing partners closer to the firm’s home markets.
Business ecosystems are the emerging model for collaborative and data-driven companies of the future. They are an important step for many companies to become more resilient in times of crisis. Particularly in the face of ever-changing regulations, sanctions, rising prices or more complex challenges such as achieving ESG goals, ecosystems can offer significant advantages in overcoming these hurdles due to their flexibility and access to each other’s capabilities.
This report offers a comprehensive strategic pathway to becoming an effective ecosystem partner company, drawing on unique research which has for the first time identified and quantified the real-world growth potential of the most important ecosystem types and the total addressable markets for business ecosystems.
Why business ecosystems are different
Business ecosystems are made up of individual organizations that work in patterns that are both structured and also self-organizing. They seek to complement one another, using collaboration to create offerings that are greater than the sum of the parts.
Life Areas in brief
A business ecosystem is a different sort of economy, one that will become increasingly dominated by businesses that do not think in terms of business-to-business or business-to-consumer, but rather from an ecosystem-to-human (E2H) perspective. A key part of this new thinking involves a redefinition of the markets that a business serves: in place of the product-first concept, E2H companies think of markets as spheres of business where the defining characteristics are the human needs that drive them. In this report, we call these spheres of business ‘Life Areas’, and have created a unique forecast model for the relative global growth of all the key Life Areas.
Source: Ecosystemizer
The Life Area Mobility includes all present and emerging forms of transportation, as well as related manufacturing, physical and digital infrastructure, and services. Health addresses the need to maintain physical and mental health, with an increasingly patient-centered model that anticipates the E2H ecosystem model. Recreation connects deep-seated ‘need’ themes such as productivity, creativity, concentration, work-life-balance and general wellbeing. Work focuses on value creation, whether that means monetary or intangible value. Consumption ranges from fundamental to higher material needs. Spirituality addresses needs such as belief, faith, meaning, stability, orientation and belonging. Socializing is centered around love, family, communities and friendships. Education serves the human need to gain knowledge, develop skills and enhance the potential for value creation, while in Entertainment, individual needs are primary, yet services often foster a sense of wider belonging. Living is based on the human need to live in and experience a safe, fair, stable, and comfortable environment.
The six-step path to ecosystems
Outlook
The ecosystem economy is a new world, demanding ecosystem-specific skills and strategies. The business world of the future will not be focused on standalone companies but on connections between companies and the markets they serve. The ecosystem is a complex, ambiguous and changing entity, and the ecosystems of the future will embrace very large and interconnected markets and industries worldwide - even as the ecosystems of the present are already emerging as the most cost-effective and profitable way of functioning in the new digital economy.
Alexander Kowarschik has also contributed to this report.
Methodology
Understanding of the ecosystem concept has been hampered by a lack of quantification of the potential of business ecosystems. In order to lay the basis for informed strategic decisions for the ecosystem era, PwC and Strategy& have taken widely available growth forecasts for industries defined according to the UN’s ISIC classification and remapped them onto our chosen ‘Life Areas’ of demand. The data are presented geographically as world forecasts, and also as localized NAFTA and Europe forecasts, including historic data calculations for 2019 and forecast data for 2025 and 2030. For the remapping of the UN data onto our chosen Life Areas, we have developed a model that converts any economic data given in the ISIC classification structure into data on the Life Areas. The allocation was based on objective proxy data designed to achieve an unambiguous reclassification. Where this was not possible, the re-assignment was based on a categorical, qualitative expert estimate. As a result, the numbers shown represent the total addressable market for business ecosystems. The final outcomes were quality-assured in three independent validation rounds with recognized experts.
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