Businesses are increasingly dynamic and interconnected, where success can depend on how well a firm can cooperate with others.
The concept is far from new. Business strategist James Moore noted in the Harvard Business Review in 1993 that "successful businesses are those that evolve rapidly and effectively. Yet innovative businesses can't evolve in a vacuum. They must attract resources of all sorts, drawing in capital, partners, suppliers and customers to create cooperative networks".
Such cooperative networks are commonly known today as a business ecosystem. Much like a biological ecosystem where different organisms interact with and rely on one another to create a healthy, thriving environment, businesses also depend on an ecosystem of diverse stakeholders that contribute to their growth and success.
These stakeholders include customers, suppliers, financial partners, government bodies and industry associations.
The benefits of a business ecosystem are especially applicable to small businesses, as they tend to have limited resources and do not have the economies of scale required to enjoy the same advantages that large corporates have. As such, small businesses need to ensure that they are part of an ecosystem that provides them the knowledge, resources and capabilities to help overcome these challenges.
For example, it can be significantly faster for a small business to develop new products and capabilities by tapping an ecosystem partner's expertise rather than having to figure it out alone.
BENEFITING FROM ECOSYSTEMS
Small business owners tend to use only their internal resources in planning for growth and expansion. Such an approach could prove limiting in results if they do not have the requisite experience and know-how in these areas.
Small business owners should consider widening their lens to identify the areas where they are best equipped to achieve their ambitions and those where they need help. By tapping the strengths of the ecosystem and the relevant partners within, small businesses will also be able to accelerate their learning process or to develop new capabilities.
Therefore, small business owners should consider widening their lens to identify the areas where they are best equipped to achieve their ambitions and those where they need help. By tapping the strengths of the ecosystem and the relevant partners within, small businesses will also be able to accelerate their learning process or to develop new capabilities.
One of the ways we see companies tapping the benefits of an ecosystem is through co-working spaces. Co-working spaces offer companies the ability to connect with other tenants, which typically range from start-ups, technology companies, digital marketing firms and professional service providers such as lawyers, accountants and intellectual property specialists.
Through these connections, business owners benefit by being able to seek collaboration opportunities, cross-fertilise ideas and tap innovative technology as they grow their business. Once the business has decided on the areas in which it needs help, the next step is to determine which ecosystem best suits its needs by asking some of these questions:
•What ecosystems are available to the business?
• Can these ecosystems help to meet performance objectives?
•What role do they play in the innovation process - from providing expertise to the right solutions that will help improve the business' performance?
•Does the ecosystem have the potential to help attract customers that the business seeks?
With an understanding of its needs, a small business will then be able to look for an ecosystem that can help it to catalyse its growth.
Finally, and perhaps the most interesting part, is finding partners within the right ecosystem to catalyse business growth. In determining a suitable ecosystem partner, businesses should consider factors such as the network, industry expertise and capabilities that the partner brings. Apart from looking to traditional partners such as industry associations or government bodies for help, small business owners may be surprised to learn that they can also gain the knowledge or capability required from firms in other industries.
For example, small businesses may not consider working with a budding start-up that has yet to demonstrate a track record for its solutions. However, they may find that by collaborating with the start-up on a proof-of-concept, it could create a win-win situation for both parties. This is because the small business is able to develop a solution that helps in its innovation efforts, while the start-up is able to demonstrate that it has a feasible solution.
Similarly, when it comes to the search for digital solutions that, according to a survey conducted by United Overseas Bank (UOB), is an area of focus for more than two in three businesses this year, business owners may confine their pursuits to technology providers.
Many other organisations in the business ecosystem, including UOB, have come together to provide digital solutions or to help small businesses adopt them.
UOB not only provides digital solutions in the area of banking and payments, but also helps small businesses harness technology to improve operational processes through UOB BizSmart, a cloud-based integrated solution.
In 2017, the bank tied up with SAP to offer complimentary access to the entry-level version of SAP Business One, an integrated enterprise resource planning software, through UOB BizSmart. This lets small businesses gain access to enterprise-level technology, which is typically used by larger companies, more easily and cost effectively.
They will also be able to access instantly up-to-date and critical information such as their financials, sales, customer relationship and inventory. With the information, they will be able to make more informed decisions for better business performance.
As small businesses work their way through the complexities of change today, they need to recognise that they are not alone in this process and that they have the support of the Government, financial institutions and service providers, to name a few.
By connecting with others in an ecosystem, small businesses will be able to unlock more benefits and build sustainable businesses for the future.
•The writer is the managing director and country head of business banking Singapore, UOB.