Georgia Investment Network

Recent Blogs

Pitching Help Desk


"Joined, submitted, we're moving forward. Excellent site, thanks again... "
Steve Smith - EquipmentFX

 BLOG >> Recent

Business Ecosystems [Design
Posted on January 14, 2015 @ 12:37:00 PM by Paul Meagher

This will be the third blog in my series on Ecological Business Design. In my first blog, Ecological Business Design, I introduced the idea and it's possible benefits. In my second blog, Find Your Niche, I tried to demonstrate that the ecological concept of a "Niche" might be useful for thinking about how to design a business. The ecological concept of a niche is more evolved than the business use of that term and provides a cluster of useful concepts for thinking about the market for your business and how to manage it over time.

In today's blog I want to explore another central concept in ecology called tropism, which is also related to the concept of a food web, which in turn is central to defining what an ecosystem consists of. Many business writers and academics like to talk about the startup ecosystem, an innovation ecosystem, or simply a business ecosystem. It is quite sexy and accepted to do so. The problem I have with many of these articles and papers is that concepts from ecology actually play very little role in their theoretical approach so the authors should have simply used the term "system" instead of "ecosystem" (or no reference to "system" at all). One recent example, is White Paper: Announcing 5 Ingredients For Fostering A Thriving Startup Ecosystem. In this paper the author argues for the importance of 5 ingredients for creating an environment for startup success: talent, density, culture, capital, and regulatory environment. I have no issues with any of these suggested ingredients or their importance, however, I fail to see the motivation for using the term "ecosystem" to characterize this list of ingredients.

What more do we need in order to legitimately use the phrase business ecosystem (or startup ecosystem or innovation ecosystem)?

In my opinion you need to incorporate the concepts of tropism and food chains into your discussion. An ecosystem is not just a juxtaposition of elements (or ingredients) existing within an environment. Those elements have specific types of energetic relationships to each other. These energetic relationships are often hierarchical and are referred to as the tropic levels of the ecosystem. At the base level there are "producers" such as plants which provide the foundation for all the tropic levels of the system. The next tropic level is a "consumer" of these plants, namely, a herbivore of some sort. That herbivore in turn may be consumed by an omnivore or carnivore called a "secondary consumer" which in turn may be consumed by another carnivore higher up in the food chain. Each level in the food chain involves a loss of energy as only a fraction of the biomass from the level below it is converted into the biomass of a consumer occupying the next level up in the food chain. The hierarchy is not strict because an omnivore, for example, can feed both from the base level of the food chain (the producer level) and some level of consumer organism below it. Because the hierarchy is not strict we might be inclined to call it a food web rather than a food chain. Nevertheless, there is still some notion of tropic levels in a food web as we can analyze each organism in terms of what it eats and what eats it.

The top level species in the food chain is called the apex predator, however, we need to be careful here because ecosystems do not tend to have neat linear orderings like the levels of a hierarchy in a government organization. Ecosystems are more likely to have a circular or cyclic arrangement and the way ecosystems do this is by having another type of component in them called "decomposers". So the apex predator dies, or is killed by some unfortunate accident, and is in turn eaten by a host of micro-organisms from bacteria, to larvae, to beetles. Although we can talk about some organism as being the top of the food chain, that organism eventually gets recycled into the food web through the action of decomposers who might be viewed as occupying the top of the food chain if they weren't so tiny. The notion of their being a "top" of the food chain can be problematic depending on how you view the role of "decomposers".

To summarize so far, my claim is that if you want to use the term "ecosystem" as a metaphor to think about how your business might fit within the larger business environment, then you need to think about where you fit within a chain of producers, consumers, and decomposers. Furthermore, you should consider what level you are at with respect to the base level of the system (the producers) and what that might entail in terms of how much energy/profit you can extract out of the system. There are usually not more than 5 tropic levels in a food chain as there is progressively less energy available at each higher level. The quality of the energy at higher levels in the food chain is more concentrated so supplies more energy per unit consumed, however, there are fewer units at higher levels. To use the term "ecosystem" to characterize the landscape of a business entails, in my opinion, identification of analogues for producers, consumers, and decomposers in the system and the tropic levels each of these entities occupies in the system. It might also involve thinking in terms of circular arrangements rather than just linear arrangements of these entities. Most business writers don't go this far when they use the term "ecosystem" which makes me wonder whether they are justified in using the term as these types of relationships are foundational when thinking about what an ecosystem consists of. The species (or biotic) elements of an ecosystem are not simply juxtaposed next to each other but have specific energetic (or tropic) relationships to each other.

In 1942, the theoretical ecologist Raymond Lindeman died before his last and most influential paper was published (he died tragically young at 27) called The Tropic-Dynamic Aspect of Ecology. It had a huge impact on ecology and highlighted the importance of using energetic relationships, or tropic levels, to organize thinking about what an ecosystem consists of. One of the reasons the paper is still worth reading is because it contains a very interesting and useful diagram that summarized his understanding of what a lake ecosystem consists off. It illustrates all the ideas that are discussed in this blog - producers, consumers, decomposers, circular (or cycling) arrangements, and tropic levels. The tropic levels in this diagram are indicated by the upside down "v" beside the different levels which denotes the efficiency of the energy conversion at each level (how much of the consumed food is converted to biomass). Depictions of food webs in today's textbooks are somewhat dumbed down compared to Lindeman's own representation of what a food web in a lake ecosystem consists off. Lindeman's own diagram was an evolution from other diagrams he referenced in his thesis (each one trying to capture what an ecosystem consisted of).

In conclusion, ecological business design involves analyzing the big picture of where your business will fit within the context of other businesses and the environment. There are many ways to formulate the "big picture" but if you want to do it using ecological concepts and ideas, then that arguably involves thinking in terms of consumers, producers, decomposers, tropic levels, and cycling arrangements. Lindeman's diagram of a lake ecosystem is suggestive of the type of understanding you might want to strive for when thinking about how your business fits into the big picture, the business ecosystem. I'm not claiming that this is easy to do, but I am suggesting that if want to use the term ecosystem to characterize your business environment it should include some of these ideas otherwise there is not much benefit in using the term ecosystem to describe it. This exercise in defining your business ecosystem is not guaranteed to make your business more money, but it might produce some useful insights because it offers a technique for thinking about the bigger picture of your business in a different and unique way, a way that is grounded in and guided by ecological theory, ideas, and observations.

Note: An entity called "Ooze" appears in the center of Lindeman's diagram. Ooze actually has a scientific meaning and there are several different types of ooze. Lindeman wasn't being mystical here although the central role of ooze in lake ecosystems seems somewhat counterintuitive. Ooze might be similiar to soil in land-based ecosystems.




 November 2023 [1]
 June 2023 [1]
 May 2023 [1]
 April 2023 [1]
 March 2023 [6]
 February 2023 [1]
 November 2022 [2]
 October 2022 [2]
 August 2022 [2]
 May 2022 [2]
 April 2022 [4]
 March 2022 [1]
 February 2022 [1]
 January 2022 [2]
 December 2021 [1]
 November 2021 [2]
 October 2021 [1]
 July 2021 [1]
 June 2021 [1]
 May 2021 [3]
 April 2021 [3]
 March 2021 [4]
 February 2021 [1]
 January 2021 [1]
 December 2020 [2]
 November 2020 [1]
 August 2020 [1]
 June 2020 [4]
 May 2020 [1]
 April 2020 [2]
 March 2020 [2]
 February 2020 [1]
 January 2020 [2]
 December 2019 [1]
 November 2019 [2]
 October 2019 [2]
 September 2019 [1]
 July 2019 [1]
 June 2019 [2]
 May 2019 [3]
 April 2019 [5]
 March 2019 [4]
 February 2019 [3]
 January 2019 [3]
 December 2018 [4]
 November 2018 [2]
 September 2018 [2]
 August 2018 [1]
 July 2018 [1]
 June 2018 [1]
 May 2018 [5]
 April 2018 [4]
 March 2018 [2]
 February 2018 [4]
 January 2018 [4]
 December 2017 [2]
 November 2017 [6]
 October 2017 [6]
 September 2017 [6]
 August 2017 [2]
 July 2017 [2]
 June 2017 [5]
 May 2017 [7]
 April 2017 [6]
 March 2017 [8]
 February 2017 [7]
 January 2017 [9]
 December 2016 [7]
 November 2016 [7]
 October 2016 [5]
 September 2016 [5]
 August 2016 [4]
 July 2016 [6]
 June 2016 [5]
 May 2016 [10]
 April 2016 [12]
 March 2016 [10]
 February 2016 [11]
 January 2016 [12]
 December 2015 [6]
 November 2015 [8]
 October 2015 [12]
 September 2015 [10]
 August 2015 [14]
 July 2015 [9]
 June 2015 [9]
 May 2015 [10]
 April 2015 [9]
 March 2015 [8]
 February 2015 [8]
 January 2015 [5]
 December 2014 [11]
 November 2014 [10]
 October 2014 [10]
 September 2014 [8]
 August 2014 [7]
 July 2014 [5]
 June 2014 [7]
 May 2014 [6]
 April 2014 [3]
 March 2014 [8]
 February 2014 [6]
 January 2014 [5]
 December 2013 [5]
 November 2013 [3]
 October 2013 [4]
 September 2013 [11]
 August 2013 [4]
 July 2013 [8]
 June 2013 [10]
 May 2013 [14]
 April 2013 [12]
 March 2013 [11]
 February 2013 [19]
 January 2013 [20]
 December 2012 [5]
 November 2012 [1]
 October 2012 [3]
 September 2012 [1]
 August 2012 [1]
 July 2012 [1]
 June 2012 [2]


 Agriculture [77]
 Bayesian Inference [14]
 Books [18]
 Business Models [24]
 Causal Inference [2]
 Creativity [7]
 Decision Making [17]
 Decision Trees [8]
 Definitions [1]
 Design [38]
 Eco-Green [4]
 Economics [14]
 Education [10]
 Energy [0]
 Entrepreneurship [74]
 Events [7]
 Farming [21]
 Finance [30]
 Future [15]
 Growth [19]
 Investing [25]
 Lean Startup [10]
 Leisure [5]
 Lens Model [9]
 Making [1]
 Management [12]
 Motivation [3]
 Nature [22]
 Patents & Trademarks [1]
 Permaculture [36]
 Psychology [2]
 Real Estate [5]
 Robots [1]
 Selling [12]
 Site News [17]
 Startups [12]
 Statistics [3]
 Systems Thinking [3]
 Trends [11]
 Useful Links [3]
 Valuation [1]
 Venture Capital [5]
 Video [2]
 Writing [2]