Business Ecosystems

Pay Attention to Your Business Ecosystems –

A Key to Sustainable Success

Mark J. Komen, President

Kodyne, Inc.

Minneapolis, MN

You likely wouldn’t build a house without a blueprint, buying up lumber, drywall, windows, wire, flooring, etc. and having that delivered to your site and THEN figure out what to do with those materials, where they go, how they go together. You get the picture. The blueprint allows you to design where the pieces go, how they fit and see if you missed anything before the walls go up. Imagine excavating a basement only to discover the dimensions are wrong and what’s planned for above the ground isn’t going to work because the house now sits on the lot facing the wrong way!

Similarly, architecting a business is no easy task. Businesses are complex enterprises that need to leverage people, processes and technology to create and deliver goods and services to their customers or clients. This is sector-independent in that for-profit, not-for-profit and government organizations all share the responsibility to get the most from their resources. In other words, the pieces need to be designed to work together in the most optimal or efficient way.

As an employee (or even volunteer), it’s easy to become focused on the roles you play in your immediate area that contribute to organizational functioning and success. What is often lost is visibility into how the entire organizational system works, with its various parts and idiosyncracies. Similarly, higher-level managers/executives may not be aware of exactly how other parts of the organization function – just that they exist or are necessary.

I refer to various parts of the organization as ecosystems that have specific needs to operate maximally and that these ecosystems are most often dependent on each other.

Since most organizations I am familiar with produce something, I will call that ecosystem, where the actual work gets done, as “The Factory.” Factories have inputs and outputs. They may be manual, partly automated or completely automated once set up to operate. The Factory operates from a set of defined processes and procedures in order to produce outputs efficiently and repeatably with minimal errors. The Factory that produces widgets is easy to understand, whether we’re considering the manufacture of shoes, cars, clothing, metal parts, televisions, computers or airplanes. All start with either individual raw materials or subsystems and are manipulated into final products (or next-stage products like assemblies that go into other assemblies to produce final products). Typical resources needed: orders, raw materials/inventory stock, work instructions, people and equipment. The Compliance environment of The Factory ensures compliance with rules, laws and regulations, quality metrics, customer requirements, statutes and the like.

That’s the obvious example so now let’s look at a service business through a Factory lens, say a law firm. Cases come in, are assigned to an attorney or attorney-led team who documents the case parameters (maybe a lawsuit, contract or civil/criminal charge), does the research, comes up with a plan to address and produces a deliverable (contract, court hearing, negotiation, etc.). Typical resources needed: cases as input, reference library access, processes and people. I believe it’s legitimate to extrapolate this Factory concept to hospitals, accounting or engineering firms, schools, churches, government agencies, even charities with their respective operational needs.

Surrounding The Factory is “The Administration” ecosystem that manages things like the executive management of the organization (including planning and financial functions), procurement of raw materials/vendor management, hiring and staffing, billing, IT, facilities management, receiving income/donations/grant money, dealing with investors, lending institutions, insurance companies, etc. However, a key subset of The Administration is the one that feeds the Factory its work and without which, The Factory sits idle. This is the Marketing and Sales or income-generating engine which exists with a focus on the outside world or market by creating and promoting messages about the organization’s offerings and the availability and access to the goods and services. After all, the Factory cannot function without an order that comes from a sale. I believe that Amazon was designed to automate the sale/order placement process and remove direct human involvement at the front end of the process. Shoppers find what they are looking for on Amazon’s online catalog and place the order and pay for it with no personal interaction with Amazon staff. The order goes right to The Factory where fulfillment, packaging and shipping/logistics occur. I only have interacted, on very rare occasions, with Amazon customer service personnel when I had questions about an order. The service likely exists in Amazon’s Administration ecosystem.

An obvious challenge is managing all these component parts if you are a sole practitioner who needs to wear all the hats involved. Certainly, some pieces can be outsourced – sales lead generation, accounting and tax preparation, web development and IT infrastructure, etc. Yet these component parts still need to be aligned and managed appropriately.

So, keeping The Factory running is the goal of most organizations. However, The Administration must keep the organization’s marketing messages relevant and continually refine its sales process to align with customer buying habits. Without a steady stream of sales orders or income, The Factory will go idle once its in-house, work-in-process is finalized and delivered. If too much time goes by, the organization’s overhead will eat into profits to the point where the organization is operating at a deficit and this situation likely becomes a harbinger of the end of that business’s life cycle.

Similarly, a poorly operating and/or poorly maintained or outdated Factory creates problems like quality issues or late deliveries that erode customer confidence, tarnish the brand of the organization and eventually stem the flow of orders or income – all areas of concern for The Administration. Now we’re back to considering that untimely ending.

Recognizing that synergies are involved here produces a stark reality of shared fate. As aptly stated by American author Charles Brower, “You cannot sink someone else’s end of the boat and still keep your own afloat.”

In conclusion, both The Factory and The Administration ecosystems are interdependent and require the right amount of nurturing and attention to reach both their optimal levels of performance and sustain the overall health of the organization.