Think Beyond the Ecosystem

BCG helps technology companies strike a balance between building new businesses and maintaining legacy customers, operations, and products.

Technology disruption comes in many forms, including connectivity and the Internet of Things. Tech companies must strike a careful balance between building new businesses around these disruptions and maintaining their legacy business, including people, processes, and products.

New economic shifts add to the challenge. Also, disruptors can move faster than incumbents when building on existing capabilities within the ecosystem. Tech companies need to react to rapid changes that require ever-increasing business and technical agility.

Technology companies also need to be aware that industry stacks are continuously reshaping. There’s increasing commoditization. And data itself is starting to “hyperscale” beyond company boundaries. As a result, the legacy positions and profit pools of many companies are threatened by start-ups and new entrants with different economics, motivations, and time horizons. 

Regardless of the ups and downs of the market, technology companies can control their own destiny by actively managing their businesses for value creation amidst disruption.

How Should You Respond?

There are four distinct strategies companies can follow to manage the reshaping of industry stacking:

  1. Become a stack builder. Create end-to-end solutions and offer comprehensive integration of new technologies within existing infrastructure.
  2. Focus on providing point solutions. Build best-of-breed offerings and maintain a highly focused portfolio. Supply services and products for both open and proprietary ecosystems.
  3. Operate as a stack orchestrator and/or platform. Seek out strong partnerships in a specialized area, and own an essential piece of the stack.
  4. Specialize in commodity and infrastructure. Maintain high operational efficiency, strong R&D processes, and flexible production methods.

It may seem counterintuitive, but the stack orchestrators—those companies that define the ecosystem—aren’t the only ones that make money. There are winners in each of the four categories. In fact, many companies are now succeeding in areas that traditionally have been challenged and commoditized. If your strategy is carefully defined, you can win no matter where you choose to play.