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For an entrepreneur who chooses to build a business in an existing business ecosystem, participating as a member of an ecosystem may offer the following advantages:
1. Market entry barrier reduction: joining an existing ecosystem can significantly reduce the technology barriers to enter a market, which in turn reduces the time to money, startup costs and ongoing operations costs.
2. Access to customers: ecosystems provide ready access to a well-defined, often international, base of customers. Access to customers is often one of the most difficult challenges for a startup to overcome and achieving access to customers can be one of the most expensive operational costs at the early stage of development as the revenue is just starting to ramp.
3. Operations cost reduction: ecosystems provide infrastructure services that reduce operations and startup costs, allowing the entrepreneur to avoid spending time on non-value activities such as information technology, process and technology.
4. Elimination of regional limitations: or local barriers related to access to talent, which no longer restricts a particular business operation to a large population center. The forming and operating of the business can now be location-independent.
For an entrepreneur who chooses to create a new business ecosystem and associated keystone organization, the business ecosystem model offers the following advantages:
1. Makes niche markets viable: keystone organizations can leverage niches by allowing members to make more money than they might as independents due to lack of reach or lack of community.
2. Leverages international disparities: a business ecosystem can allow widely differing costs of labour around the world to be harnessed, which can undermine the economics of incumbent providers.
3. Makes scarce skills abundant: ecosystems can harness under-employed experts and aspiring professionals for a wide variety of products and services.
4. Collaborative communities: help redefine the keystone organization assets to widen its value to member companies; communities can also help develop and sustain the assets to reduce operations costs.
Chuck Reynolds
Contributor
