Existence of an ecosystem

It is essential to acknowledge that businesses are not atomic entities but operate in a specific context – the national, industrial, local, etc. A common situation we find in entrepreneurs is that they begin working on venture ideas in the absence of ecosystems and choose inappropriate ways to solve the challenges they face.

Take the case of the Indian software industry. Early players relied on body-shopping to capture the promise of the software services industry but were limited by multiple reasons to adopt this model at scale. The data connectivity was a major challenge that had to be solved to ensure that the industry would take off. Some of the larger foreign players were able to get their own data link, however for many entrepreneurs to take up the opportunity that was being created, the government took to setting up software technology parks to ease the access to infrastructure. The software players, too, got together as an association – NASSCOM and formed a strong lobbying body to ensure that the relevant supporting ecosystem was created for young firms to take off. Today it is so easy to set up an IT services firm in India! All this in about 30 years.

At the micro-level, there are bottlenecks that some entrepreneurs can address by modifying their business models. For example, in the starting days of TaxiForSure, getting drivers on board was a challenge. The founders decided to engage with operators who owned multiple cars to ensure that they were able to address the challenges. In a similar case, TESLA opens its patents to create a common standard that could otherwise limit the adoption of EVs!

While there are some cases where the ecosystem challenges can be addressed by refining the business model of operation, there are many more that require an ecosystem correction. The benefits of rectifying the ecosystem level could enhance the pie for everyone to benefit from.

In the Indian context, we also find that the lack of fabrication facilities have stunted the growth of the semiconductor industry in India. Similarly, the projected growth of pharma and biotech companies into drug discovery has been stunted due to the lack of high-end talent.

The resolution of these ecosystem challenges could be made through joint efforts of the industry (that is all other players like you) and the government, creation of standards, and in some cases, by different ventures working together despite the dearth of support from the government. If your industry is sensing the existence of bottlenecks inhibiting growth, it is more likely you would need to come together for some collective action and thus allow the industry to grow further.

Ask yourself:

Are there any industry level challenges that my competitors and I face in executing my business?

Are these challenges due to the firms’ inability or, are these the bottlenecks in the industry?

Are we paying attention to it? How do we (as a collective) work towards solving these challenges and thus expanding the pie?