When markets become disrupted by new technologies and competitors, many legacy companies struggle to keep up. They are often simply ill-prepared to develop new products and services in the midst of the uncertainty. Rather than attempting to go it alone in such circumstances, some companies reach out to partners with an eye toward building a broader ecosystem that will boost their competitive strength. But what types of ecosystems will work best in a dynamic environment?
Perhaps the most common forms of ecosystems are centralized, where the company functions as the “hub.” These tend to work well in stable environments where the key issues have already been worked out. In Amazon.com Inc.’s ecosystem for ebooks, for example, the online retailer works with the maker of its Kindle tablets and an array of book publishers but keeps the respective partners separate from one another.