Ecosystem Evolution Definition
Creating a business model is essential in understanding how your business will function. It maps out your unique value, the key channels to reaching customers, and the funnels that keep your business afloat. One thing that a traditional business model doesn’t account for, however, is the competitive ecosystem that you will play in. Your competitive ecosystem will greatly affect your business and how you innovate to provide unique value.
The ecosystem evolution template is a diagram that integrates a competitive analysis into your business model preparation. It allows you to analyze the competitive ecosystem in the past, present, and future to understand how to create unique value.
This template was initially created by Teddy Pinheiro and is used to “Gain a deeper understanding about the environment your business is working in.” Let’s walk through the steps to utilizing this template effectively.
Ecosystem Evolution Template Explained
Using the ecosystem evolution template is critical to understanding where your competition focuses and where you can create unique value in the market.
There are three columns and three rows, all corresponding to different stages and questions. The three columns represent Yesterday, Today, and Tomorrow. These highlight what businesses have done in the past, are doing currently, and will do in the future.
The three rows represent the competitive ecosystem, the customer perspective (How People), and the market potential. Based on these factors, you will crossreference how your market competed in the past and how they will compete in the future.
Each row will contain a similar analysis that develops as you move across the columns. As you progress through each column, consider these questions to help prompt your team.
- Ecosystem: What does the ecosystem look like? What are the systems and ideas in place? How do companies create value compared to each other?
- How People: How do people use, learn and remember other products within the ecosystem? What is their method of interaction?
- Market Potential: What is the potential for your product/service within the ecosystem? What innovations exist?
Use these questions to guide your contributions in each of the three columns listed below.
Step 1: Set the Scene
The first step is understanding your competitors. Even if you only have a loose idea of how your business functions, map out the main competition and look into their strategies.
What product features do they emphasize? What is their unique selling value? How are they different from similar companies?
Do this for three businesses to gain a nuanced understanding of how they’re different and what they do well. The takeaways will be the core information you draw from throughout the template.
Step 2: Yesterday
Begin by moving column by column and going through each of the three rows. The yesterday column represents the past, so consider how companies developed value, reached people, and expanded in previous iterations. Think about their core value proposition and what initially sparked a need for their solution.
Step 3: Today
The today column represents the present day and current state of your competitive ecosystem. Think about what your ecosystem looks like right now and where there might be a gap in the market.
This column will probably be the easiest to analyze because it focuses on the here and now of the market. Think about what caused you to create this diagram and where you see people struggling now with the current solutions.
Step 4: Tomorrow
The tomorrow column is about looking into the future and analyzing where the market is headed. This should be grounded in market insights and innovations that are pushing the ecosystem forward. Look back at the two previous columns and think about the overall trajectory of the market and where it might land. This should be an ideal target for your business to provide unique and innovative value.
After completing this template, step back and analyze the overall state of the market, where it’s been, and where it’s headed. This information should be a helpful tool when determining your positioning within the competitive ecosystem and how that will evolve.
Ecosystem Evolution Advantages
The ecosystem evolution template provides some key advantages that a traditional business model struggles to replicate. Here are some benefits of using this template.
- Adds Perspective: Creating an ecosystem evolution board helps add perspective to your future business model. Using a traditional business model cannot capture the past and future states of your vision, making it hard to project a future vision within that document. The ecosystem evolution template makes it easy to plan for the future while also establishing value in the present.
- Incorporates Competition: A key part of creating a new business is understanding what your competition does and how they’re valuable. This template highlights how the entire ecosystem functions, whether it’s related to their product, the people using them, or their future innovations. Understanding the trajectory and vision of your competition on a deeper level is super important to creating unique value and finding where you can gain a competitive advantage.
- Helps Determine Positioning: Similar to understanding your competition, this template allows you to determine your own positioning accurately. When you analyze your competition and their vision, you can map out their market coverage. This tells you what’s important to their customers but also shows gaps for where you can play. Understanding your positioning will be vital to getting a foothold in the market, and this template helps create an informed position.
Ecosystem Evolution Example
In the above example, we walk through how the ecosystem evolution template might look when used to picture the evolution of an electric bike company. Here is a breakdown of how we created that template.
Step 1: Set the Scene
We created the ecosystem evolution template based on a company looking to enter the electric bicycle market. This market has seen tremendous growth in the last five years and isn’t anywhere near stopping. There is a lot of competition, but the needs of the users are evolving, and there might be some value in analyzing the ecosystem.
Step 2: Yesterday
In the past, people had little access to e-bikes because they were priced out of the technology or didn’t see an important use case for themselves. There wasn’t substantial retail interest, and the public mainly saw them as toys rather than adequate transportation. There was certainly room for growth in making the bikes faster and more fun and marketing them as a reasonable mode of transport.
Step 3: Today
The current ecosystem for e-bikes is far more robust than it was in the past, with many more competitive options and customers worldwide, whether in big cities or suburban communities. They’ve been adopted as ride-sharing vehicles in many metropolitan cities, and the popular image has shifted from them being toys to being a futuristic and efficient mode of transport. There is still room for growth, but this is mainly focused on the design of the bikes and their role in people’s lives.
Step 4: Tomorrow
The future of e-bikes is very promising and looks to compete with motorcycles and cars as people’s main form of transportation. Bikes will gain usability and durability features as they become the primary mode of transportation for many people. They will also see an increase in accessibility and variety as the market continues to open up. They will hopefully innovate past the bicycle to create more sustainable bike-centric infrastructure.
From this example, we can see a clear trajectory in the competitive ecosystem for electric bicycles that points to more growth and possibilities. You could argue that there is certainly room to play for a company looking to create an extremely stylistic bike, a dependable daily rider, or even a rugged off-road version. Additionally, there could be an entire market focused on optimizing bike infrastructure with the increase in usage among the population.
This example showcases how helpful the ecosystem evolution template can be in determining competitive advantage in an unknown market.