In a Crisis, Ecosystem Businesses Have a Competitive Advantage

Most companies cannot quickly change their business model to open up new revenue streams. Different activities are interlocked with one another via standard procedures. There’s a high cost to switching internal operations. The result is like a pyramid: sturdy and impressive, but rigid and brittle.

There is, however, a category of companies who can move more quickly. A dozen or so companies are competing in a boundaryless world. Take, for instance, Alibaba Group, which owns the largest online retail businesses in China, but also the world’s highest-valued Fintech (Ant Financial), a global logistics network (Cainiao), a massive digital health care platform (Alibaba Health), a cloud computing service (Aliyun) and companies in many other industries. Or Japan’s Recruit Holdings, which started in HR recruitment and grew to include companies in areas as diverse as tourism, dining, education, used-car sales, and payment systems.

Companies like Alibaba Group or Recruit Holdings create advantages by leveraging partnerships, investments, and alliances to continuously adapt their offering to a changing customer base. We call this an “ecosystem advantage.”