On the Intelligent Ecosystem

Abstract

In this essay we explore the evolutionary path of business ecosystems along with the implications and the growing importance of operating as a group to deliver value at scale. The role AI can play in intelligent ecosystems is also examined.

What is an ecosystem?

An ecosystem is a collection of entities where the behaviour of each actor has an impact on all the other actors. In the business world, a healthy ecosystem benefits all actors. In the natural world not everyone can be a predator.

Natural

Natural ecosystems include:

• Rainforests

• Coral reefs

• Savannas

• Puddles.

They do not have a hub or an orchestrator. They emerge because each actor is trying to survive. Some get eaten along the way. Such ecosystems are driven by the pursuit of personal viability as opposed to a collective sense of common purpose.

One might argue that a bee colony is an ecosystem. As they comprise one species they are best thought of as a superorganism that operates within a wider ecosystem.

Man-made

Supply chain

Supply chains are perhaps the original organisational ecosystem. The peasant farmer at one end and the hypermarket chain at the other end. Value was added as the materials passed through each node of the chain. Typically the node that sold the end-product or service controlled the chain. However there are cases where an upstream organisation holds the greatest leverage and so they can dominate the chain.

Traditionally supply chains were rigid. Today they are more dynamically assembled and disassembled. Mass personalisation has turned supply chains into demand chains.

The most effective supply chains are built on relationships that are not simply transactional. However their focus is largely on efficiency of supply.

Ecosystem

Whilst it is a little grey as to what is a supply chain and what is an ecosystem, a way of distinguishing between the two is that a supply chain focuses on supply and an ecosystem focuses collectively on developing offerings.

• The farmer and Walmart are in a supply chain.

• Apple, TSMC, ASML and thousands of app developers form part of a smartphone ecosystem.

Whilst there may be a dominant player in an ecosystem, they are typically open to being influenced by the other actors.

Whilst Amazon started out as an exchange it has evolved into multiple ecosystems. In many respects it is very similar to a natural ecosystem in that the actors participate to get what they can before they are ‘killed’ (acquired, replicated, predatorily priced out). Individual viability trumps collective purpose.

Follow my thinking

The intelligent ecosystem

If you have been following my work, you will know my definition of an intelligent organisation, ie. an organisation that behaves like a living system and is driven by the need to maintain viability, cultivate vitality and create value.

In my view an intelligent organisation needs to be similarly focused. In natural ecosystems viability of each actor and their offspring trumps everything. In supply chains the viability and purpose of the dominant actor set the agenda.

An Intelligent Ecosystem is not governed by simple democracy. Purpose, governance and priorities emerge through the relative influence of its participants, with that influence reflecting the value, capabilities and responsibilities they bring to the ecosystem.

In many business ecosystems, the dominant participant plays a disproportionate role in defining the ecosystem's purpose. The success of the ecosystem therefore depends not on equality of influence but on legitimacy. Other participants willingly align with that purpose because doing so enables them to create value that would be difficult or impossible to create independently.

With influence, however, comes responsibility. The dominant participant has a stewardship obligation to govern the ecosystem in a manner that supports its long-term viability, vitality and value. This means creating the conditions in which participants of all sizes have a genuine opportunity to innovate, compete and thrive. An ecosystem that consistently extracts value from its participants without reinvesting in their success may remain commercially powerful for a time, but it ultimately erodes the diversity, trust and resilience on which its own long-term prosperity depends.

An intelligent ecosystem therefore accepts asymmetry of influence whilst demanding stewardship of that influence. Power is not exercised solely to maximise the success of the dominant participant, but to sustain the health and adaptive capacity of the ecosystem as a whole.

Influence should be proportional to contribution, but responsibility should be proportional to influence. This perhaps sits between an egalitarian and free-market approach.

Here are examples of organisations that lean towards the stewarding end of the spectrum:

• Toyota

• Haier

• Microsoft (under Satya Nadella)

• Morning Star

• Linux Foundation

• Patagonia.

  
  

These organisations are less so:

• Amazon

• Uber

• Apple

• Google

• Meta.

But this is not a collection of good and bad organisations in terms of their respective ecosystems. Each of these players are clearly intelligent and each of these creates significant value. If they became too extractive in their behaviour it would create an opportunity for a less extractive player. All ecosystems are subject to the wider disruptive forces shaping the world today and those forces include customer sentiment.

Each of these players has developed the capacity to govern value creation, and that is what keeps them viable. It might be argued that those that are more stewarding oriented are also cultivating vitality as opposed to simmering resentment. So a stewardship orientation cultivates a thriving ecosystem.

Intelligent organisations recognise that there are advantages to being part of something bigger and will either build the ecosystem around them or join one or more established and thriving ecosystems.

Where the purpose of the ecosystem is dominated by one player there is a risk that the ecosystem will be led over a cliff. In much the same manner that a CEO obsessed with sticking to the strategic plan despite the fact that the world is now different from when the plan was created.

This dynamic is evident in geopolitics. For decades, the United States acted as the principal steward of the post-war international order, helping to maintain security, open trade and international institutions. More recently, it has placed greater emphasis on its own national interests, illustrating a perennial challenge of stewardship: those who contribute most to the health of a system often bear a disproportionate share of the cost.

Intelligent ecosystems address this challenge by distributing both responsibility and initiative more widely. As more participants contribute to the purpose and health of the ecosystem, the system becomes less dependent on a single steward and more capable of adapting to changing circumstances. This creates the conditions for emergent behaviours that no central actor could have anticipated. By contrast, extraction-oriented ecosystems remain dependent on the purpose assigned by the dominant participant. In many respects, extractive ecosystems retain an industrial-era ethos.

Sharing is caring

One of the most important sources of organisational value is stakeholder capital. Stewardship-oriented ecosystems recognise that stakeholder capital is built not simply by maintaining cordial relationships but by helping participants become more capable.

They invest in the long-term success of the ecosystem through knowledge sharing, capability development, innovation, trust, fair governance and the creation of opportunities for participants to create and capture more value. As the ecosystem becomes stronger, and as trust compounds, so too does the value of every participant's stakeholder capital.

In living systems:

• The immune system defends the whole body

• The nervous system shares information and coordinates the response

• The endocrine system regulates hormonal activity.

  
  

Living systems develop coordinating systems that serve the interests of the whole organism rather than just those of individual organs. Intelligent organisations and ecosystems exhibit the same principle.

The intelligent ecosystem thus senses, decides and acts as one living organism. Unlike a rainforest where viability reigns, intelligent ecosystems through common purpose create significant value and recognise that that is achieved by cultivating vitality.

The AI-driven ecosystem

AI has the potential to significantly enhance ecosystem performance. The use of information technology to improve ecosystems is nothing new. Inventory management, logistics scheduling and digital marketplaces have long increased the efficiency of coordination between participants.

What is changing is the cognitive layer that sits above these operational processes. Until now, that layer has been largely human. People built the trust between participants, negotiated relationships, interpreted weak signals, exercised ethical judgement and resolved conflicts. AI introduces the possibility of augmenting many of these cognitive functions, enabling ecosystems to sense, coordinate and adapt at a scale and speed that would previously have been impossible.

So AI has an obvious role to play in this cognitive layer, particularly when it augments the people involved in ecosystem orchestration. The arrival of agentic AI suggests that the human contribution to the cognition layer will decrease and eventually be eliminated.

Another potential development would be a single ecosystem LLM (Large Language Model), which would provide ecosystem actors with a common and evolving view of the world. However this might lead to issues around who owns / controls / supports the LLM.

More broadly can AI agents be trusted and might they act in a biased manner, ie it is trained with the the dominant actor’s, or even the platform provider’s, interests in mind? Disputes may arise over data ownership. Poor information and thus poor decision making could potentially damage the ecosystem.

These will no doubt be addressed over time leading to a cognition layer that can sense, decide, act and predict like an opportunistic living organism. Today caution is advised.

What is your organisation?

Not every organisation can be a dominant player. Most organisations are not Haier, Amazon or Apple. It is nonetheless worth reflecting on where your organisation sits on the evolutionary continuum.

Here is a crude attempt at an evolutionary framework:

Level 1 – Machine

Your organisation is process oriented. The focus is efficiency, turning resources into value at the lowest cost. Keeping the machine running is key. Little attention is paid to the market beyond some increasingly inaccurate predictions about future demand.

Level 2 – Innovative machine

As a leader you are sufficiently aware of the market to know that innovation is important. In some markets this is table stakes. However as disruption increases, keeping pace with the changing market becomes more challenging.

Level 3 – The lone wolf

Your organisation has embraced intelligent organisation principles and is very sensitive to the environment. It’s no longer a machine. But you do not enjoy the protection of a pack and that is a problem when other packs perceive you as a threat. Thus the focus is on remaining viable in an increasingly harsh world.

Level 4 – Ecosystem player

Your organisation is woven into one or more ecosystems. You have reframed your organisation’s purpose to align with the ecosystem(s). Think leader at work, parent at home and citizen in society. Your organisation has multiple identities.

Level 5 – Orchestrator

You have either built the ecosystem around you (Salesforce, Apple) or taken over an existing ecosystem (Microsoft from IBM, Google from Yahoo). You enjoy the position, but you must invest significantly in maintaining the ecosystem health.

Level 6 – Orchestrator sine qua non

Your organisation may enjoy a dominant position in the ecosystem, but life would go on if it ceased to exist. If the London Stock Exchange ceased to trade, the trading would simply move elsewhere. Visa collapses, Mastercard will happily take over. Amazon marketplace ceases to exist, Alibaba will take up the slack.

But there are some ecosystems that need the dominant player to thrive to exist. This ensures every actor in the ecosystem is rooting for the dominant player. Salesforce and Apple come to mind. The ecosystem is now behaving as a personal immune system.

• Levels 1 – 3 are becoming increasingly unsustainable.

• Level 4 – 6 might be considered the safe zone.  It might be a question of taste, will or luck as to whether you ascend above level 4. But regardless of which of these you find yourself in, you are still at risk if that ecosystem collapses and all your eggs are in that one basket.

NB. That building your own ecosystem from scratch can be both costly and offer little by way of value. Haier’s noble attempts to create the internet of food and the internet of clothing make a lot of sense but are not quite the success intended. Nonetheless the shift in thinking is to be applauded, ie the move from selling appliances to creating ecosystems. I think we will see more of this trend. Emerging examples include:

• Apple around health

• John Deere around precision agriculture

• Siemens around industrial digital twins

• Microsoft around AI productivity.

The bigger ecosystem

Business ecosystems must contribute to the community, national and global ecosystems that they are naturally part of.  The players must recognise that a degrading global ecosystem will have a bearing on the organisation’s business ecosystem. Similarly applying stakeholder management principles to where your footprint includes nations and communities is an intelligent move. No less so to the ecosystem’s relationship to the planet.

Conclusion

The concept of ecosystems is not new, but the Internet, a global ecosystem where leadership is distributed, dramatically accelerated their emergence. Increasing geopolitical uncertainty, supply chain disruption and, more recently, advances in AI are likely to accelerate the trend further. Increasingly, organisations will operate as participants in multiple, interconnected ecosystems rather than as standalone enterprises.

There is safety in numbers, but resilience comes from diversity. The challenge is not whether to participate in ecosystems, but how to avoid becoming dependent on a single orchestrator, platform or partner. Intelligent organisations cultivate positions within multiple ecosystems, building relationships, capabilities and options that allow them to adapt as the landscape evolves.

In an increasingly unknowable world, the winners will not be those with the strongest individual position, but those best able to thrive within, and across, the ecosystems of which they are a part.