Business ecology

Current Definitions of Business Ecology

The use of the term "business ecology" is not new. Yet, previous conceptualizations of the term have not yielded a meaning that sufficiently represents the fullness of either word. Rather, "business" is addressed in a narrow economic sense rather than relational one. "Ecology" is used more metaphorically than literally as much of this section illustrates. Furthermore, "business ecology" has not been well defined. As a result, it is subject to different uses, most of which are not grounded in ecological theory or method. The term "business ecology" is used in one of two ways:

1. To define tightly knit, inter-company relationships, or "business ecosystems"

2. To survey businesses' impacts on natural systems

With regard to the first definition, several web sites and articles have appeared espousing the importance of developing business ecologies and creating business ecosystems in order to offer better and faster service particularly within the computer industry. This idea appears to have emerged from James F. Moore's The Death of Competition (1996) and was further developed by Moore's later work. In The Death of Competition, Moore examined the importance of the company's context - its ecosystem. Moore (1996) defined the business ecosystem as follows:

"An economic community supported by a foundation of interacting organizations and individuals - the organisms of the business world. The economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organisms also include suppliers, lead producers, competitors, and other stakeholders. Over time, they coevolve their capabilities and roles, and tend to align themselves with the directions set by one or more central companies. Those companies holding leadership roles may change over time, but the function of ecosystem leader is valued by the community because it enables members to move toward shared visions to align their investments, and to find mutually supportive roles." (p. 26)

In his book, Moore used several ecological metaphors. For example, he suggested that the firm is embedded in a (business) environment, that it needs to coevolve with other companies, and that "the particular niche a business occupies is challenged by newly arriving species" (1996, p. 3). Moore's later work has included consulting to companies, such as Intel, and informing them that "they would have to construct new webs of relationships and help seed emerging business ecologies" (Reinhardt, 2000, section Digital Rebar, para. 1). This meant that companies need to move out of their comfort zones, so to speak, and become proactive in responding to and taking part in changes that are happening in their industries and economies.

Using ecological metaphors to describe business structure and operations without discussing a company's relationships with the natural environment appears to be increasingly common especially within the field of information technology (IT). For example, J. Bradford DeLong, a professor of economics at the University of California - Berkeley, has written that business ecology is "the pattern of launching new technologies that has emerged from Silicon Valley" (DeLong, 2000, para. 1; also see Cohen, DeLong, and Zysman, 2000). He has defined business ecology as "a more productive set of processes for developing and commercializing new technologies" that is characterized by the "rapid prototyping, short product-development cycles, early test marketing, options-based compensation, venture funding, early corporate independence" and other qualities exhibited by Adobe Systems (DeLong, 2000, para. 6 & 4, respectively). DeLong has explained that the new business ecology greatly differs from the older, time-consuming method of developing new products and technologies.

DeLong also has expressed that the business ecology model is likely to last "because it's a better business ecology than the legendarily lugubrious model refined at Xerox Parc - a more productive set of processes for rapidly developing and commercializing new technologies" (DeLong, 2000, para. 6).

On its web site, Mangrove Software has defined business ecology as "(t)he interaction and correlation of economic conditions, technology, customers, employees, corporate partners, shareholders, and competitors forming the environment under which a business operates" (Mangrove Software, Inc., 2001, para. 1). The Montague Institute (1993), a company that focuses on information technology and management, has defined business ecology as "interacting systems consisting of companies, their customers and suppliers, and other players in the business environment" (para. 1). Kenneth L. Kraemer, director of the University of California - Irvine's Center for Research on Information Technology and Organizations, has explained, "It is the applications that firms buy or create themselves that bring value-added to the firm and to its business ecology of customers, suppliers and business partners" (UCI Communications Office, 1999, para. 11). Meanwhile, Stephen Abram, Vice President of Micromedia, Ltd., has asserted that the Web is "maturing as a business ecology" (Abram, 2000, section on Stephen Abram, para. 4).

In another web article, Tom Gruber, co-founder and CTO of Intraspect Software, has speculated that the economy of 2021 will become even more of a business ecology. Gruber, using business ecological metaphors extensively, has stated, "Imagine that companies are like organisms in an evolutionary landscape" (para. 4). Following Darwin's logic, the fittest companies survive as the business ecology changes" (para. 4). For example, Gruber has explained, over a century ago, Ford Motors did well using methods of mass production, an assembly line, and insourcing. However, Ford began to outsource its production "[w]hen the ecology evolved." Gruber (n.d.) has stated that such evolution in the ecology of the business world is "punctuated now and then by radical changes in the environment" and that "globalization and the Internet are the equivalents of large-scale climate change. Globalization is eliminating the traditional advantages of the large corporation: access to capital, access to markets, and economies of scale" (Gruber, n.d., para. 5-6). Thus, business ecology merely reflects the ever-changing business context.

The superficial link between business and ecology is made by others as well. Vinod K. Dar, Managing Director of Dar & Company, a Maryland-based firm that specializes in business strategy for energy and utilities companies, has written, "Evolution on the Internet is no different from physical evolution but with vastly compressed life cycles and faster genetic mutation" (Dar, 1999, para. 1).

Meanwhile, the article "ASPs - Creating a New Business Ecology" (Kaminsky, 2000) reflects the move within the application service provider (ASP) industry toward creating relationship networks and focusing on core competencies. As its author has written, "According to the gospel of Cisco Systems, companies inclined to exist together within an "ecosystem" facilitate the imminence of Internet-based application delivery" (Kaminsky, 2000, para. 1). Books such as Corporate DNA (Baskin, 1998) also use natural systems metaphors without discussing the real interfaces between human business and ecological systems.