Digital ecosystems: A framework for online business

The digital world has gotten complicated. Really complicated.

Between web sites, smartphone and desktop applications, and a menagerie of social media platforms and services, it’s hard for many businesses to sort out where to focus their efforts. Thinking about all of these elements as part of a broader digital ecosystem can bring some clarity.

The term digital ecosystems has been used (and abused) by others previously (see NOTE at the end of this article), but I have never found any previous definitions sufficiently tangible. Most are technical, abstract, or abstruse; they’re just not that useful for real businesses trying to develop digital strategies and execute online.

In an effort to simplify, I propose the following definition for digital ecosystems (see diagram below):

The digital ecosystem of a business is the combination of all relevant digital touchpoints, the people that interact with them, and the business processes and technology environment that support both.

The digital ecosystem for a business is a mix of touchpoints, people, and supporting elements.

Read on for more detail about why I believe it’s important to think in terms of systems, the relevant elements of digital ecosystems for business, and the critical role that people play in these systems.

From sites to systems

The online world used to be easy to understand and manage for many companies. If you used the Web purely for marketing purposes, all you had to do was build and maintain a corporate web site (which, for many, was hard enough). If your business involved online transactions, things were more complicated, but you could still focus on a single site within your control. Get the design and user experience right, nail the technology, and keep things up to date. Not easy, but manageable. People came to the web site using their desktop computer, found what they wanted, and left.

Unfortunately, it’s not enough for businesses to think about their single, standalone web sites any more. It’s not even enough to focus on all of the other sites that may be within their control. And it’s certainly not enough to think of people sitting at their desks surfing those site(s). The digital footprint for most companies now extends beyond the things within their control. Isolated, standalone web sites represent an incomplete picture of how people engage (in the broadest sense) with businesses online.

Systems thinking to the rescue

The first step to untying this Gordian knot is to think of the digital world as a system of interconnected elements that is (coherently) organized in a way that achieves something (see Donella Meadows’ seminal Thinking in Systems for a deeper exploration of systems theory). The three key concepts in this basic definition are elements, interconnections, and a function or purpose.

A tree is an example of a complex system with elements (roots, leaves, trunk),
interconnections (chemical flows), and a function (to survive).

Elements are the things that make up the system. A tree is a complex system whose elements are its roots, trunk, branches and leaves. Elements don’t always have to be physical and tangible; they can also be intangible things that influence the behavior of the system.

Interconnections are the relationships that hold the elements of the system together. In a tree, interconnections are the physical flows and chemical reactions that govern the processes within it. Information flows are another example of interconnection, and are critical for many systems, especially digital ones.

Function or Purpose is what the system is supposed to accomplish. A football team is a system whose purpose is to win, a university to disseminate knowledge, a business to deliver goods or services in a way that makes money and keeps the business afloat.

Beyond these basic concepts, systems possess a few properties to keep in mind:

  • Systems are hierarchical: Systems can be composed of many other smaller systems (e.g., a business is a system that exists within the broader system of a market economy). In addition, elements can have sub-elements (almost ad infinitum).
  • Systems are dynamic: The behavior of systems over time is of paramount importance. Some systems sit in an equilibrium (static or dynamic), and change very little with time, whereas others have complex and unpredictable behaviors.
  • Systems have feedback loops: Over time, the stocks within systems can be depleted or grow based on flows (via negative or positive feedback loops, respectively).

Ecosystems

An ecosystem is just a special type of system, possessing all of the properties outlined above. The term was originally defined as "the combined physical and biological components of an environment" (Clapham, 1930), but subsequent refinements expanded this definition. The Convention on Biological Diversity has defined an ecosystem as a "dynamic complex of plant, animal and micro-organism communities and their non-living environment interacting as a functional unit."

Ecosystems vs. Systems as an analogy for digital business

What sets an ecosystem apart from any other system, and why are ecosystems a more appropriate analogy for the digital ecosystems of businesses?

The first part of the analogy lies in the intelligent, autonomous and adaptive agents that are a part of these systems, and also the communities formed by them. Whether in biological or digital ecosystems, these autonomous agents and communities are critical elements in the way these systems function. The second important aspect of the analogy is the way these systems evolve when elements are added or removed (cf. food webs). Digital ecosystems are often in great flux, with elements constantly being added and removed, and businesses must be able to think about how things might evolve when they make changes, when elements aren’t functioning well, or when they’re missing entirely.

Digital ecosystems

So let’s revisit the definition for digital ecosystems proposed above and break it down, given the vocabulary we’ve defined for systems:

The digital ecosystem of a business is the combination of all relevant digital touchpoints, the people that interact with them, and the business processes and technology environment that support both.

Elements: Digital touchpoints

Touchpoints are one set of elements in the digital ecosystem for a business, and they can be broken down into three categories:

  1. Controlled touchpoints: The digital experiences designed and completely controlled by a business include web sites, desktop and mobile (smartphone) applications. These elements involve the most time and investment, and are of primary importance (i.e., get these wrong, and the other touchpoints may not matter too much).
  2. Social publishing touchpoints: Facebook, Twitter, YouTube and LinkedIn are examples of social publishing touchpoints. A company sets up these digital presences, and then publishes content to them. However, they are not completely within company control, since the experience design is fixed by the platform, and because user-generated content is a significant part of the experience.
  3. Third-party touchpoints: Search engines and social review services (e.g., Yelp) are examples of touchpoints out of a company’s control, but that can impact the ecosystem’s behavior.
Elements: People

The second key element of digital ecosystems are people. After all, the ultimate purpose of these systems is to serve their needs. Both external and internal audiences need to be considered:

  • External individuals and communities: Your sites and applications need to be designed in such a way that they support the needs of your external audiences. In many cases, this means individuals, but it could also mean communities (e.g., if there are community elements to your products, services or applications).
  • Internal individuals and communities: Someone has to create, manage and maintain your controlled and social publishing touchpoints. These internal audiences (either individuals or teams) are an important point of your ecosystem. Without them, the elements within your control can’t evolve, respond to ongoing audience needs, and nurture engagement and community (if necessary).
Elements: Business processes

Management of touchpoints is chaotic and inefficient if there aren’t some supporting business processes. Content management and the associated workflows is one obvious area for the creation of a little process. Community management and the response to audience feedback (both positive and negative) are other examples of processes that could enhance the digital ecosystem for a business.

Elements: Technical environment

A lot of technology sits behind a digital ecosystem: the Internet, hosts, servers, application infrastructure, cloud services (e.g., for storage), networks (wired and wireless). While a lot of these things are outside the control of business, some of them are not (e.g., adequate infrastructure to support performance requirements). Just as the environment is critical for biological ecosystems, it’s critical for the digital ecosystem of businesses.

Interconnections: Information flows

Every interconnection in a digital ecosystem is a flow of information, designed to support the function of the system. Examples of information flows include requests for content, contributions of content to social platforms, transactions, and even communications between internal and external audiences.

Interconnections: Hyperlinks

Links are the connective tissue between many different elements of a digital ecosystem. They facilitate the flow of information, and allow people to discover content and find the products and services of interest to them. Links may exist within a given element, or connect different elements in a meaningful way. They help people use the ecosystem to achieve their goals.

Function: Make money by supporting customer needs

For a company, the purpose of their digital ecosystem is to further their ends (i.e., to stay in business). Companies can only stay in business by serving the needs of the people within the system (whether they are consumers or other businesses) in a profitable way. For companies that sell physical products, this may mean making it easy for people to find stores with their products (or buy them online). For service companies, this may mean providing the right information about their services, in such a way that people can make informed decisions about whether or not to use them. For companies that provide content, it means doing everything possible to deliver that content in a way that’s easy to find and consume.

Example: Domino’s Pizza

So what does a digital ecosystem look like for a real business? An example from the fast-food restaurant world illustrates the parts of a living digital ecosystem.

Function: Sell food

In some way, shape or form, every aspect of the Dominos digital ecosystem is geared towards selling more food, since that’s the business they’re in. The most obvious way to do this is through supporting online ordering, which can happen at many touchpoints (e.g., their primary web site, mobile applications, and their Facebook page). Other touchpoints may simply serve a marketing need, to raise awareness about new products or the brand in a way that supports their mission. Nothing they do online in their ecosystem is frivolous; everything ties back to that unifying purpose.

Elements: Controlled Touchpoints

It may come as a surprise, but Domino’s actually has a very robust online presence in terms of their own web sites and applications. It’s interesting, considering that the business is predominantly physical (virtual pizzas aren’t quite as tasty as the real thing).

  • Dominos.com: The primary web presence for Dominos includes the ability to review the menu, order online, track orders, and get coupons. It also contains links to all other digital touchpoints.
  • International sites: Dominos has physical presences (and web sites) in 70 countries (see the complete list)
  • Pizza Turnaround: Blog site with social media integration tied to their "Oh Yes We Did" marketing campaign about a re-invigorated Dominos pizza.
  • Show Us Your Pizza: Social sharing site that allows Dominos fans to upload photos of their pizzas, with the winner(s) getting $500 (site does not appear to be active at present).
  • Dominos blog: A company-run blog devoted to all things Dominos, including food (e.g., pizza, chicken) and other media sites.
  • Behind the Pizza: Flash-based interactive storytelling with gamification (i.e., explore, collect points, win Dominos rewards). Although technically embedded within the blog site, this application is essentially a standalone.
  • Pizza Proverbs: Contest site with user-generated content, where Dominos fans could submit their own "Pizza proverbs". Winners of the contest had their statements immortalized on Dominos pizza boxes. Contest ran at the end of 2010 and no longer appears active.
  • Gift cards site: A site devoted to the Dominos loyalty program, where users can come, login, find out their rewards status, and manage their rewards accounts.
  • Corporate site: Dominos corporate presence with company information, a careers site and linkage to international and investor relations content.
  • Investor relations site: Content for Dominos investors, hosted externally by Phoenix Investor Relations, but with a design wrapper tied to the corporate look and feel.
  • Mobile web site: A mobile-specific version of the site optimized for a smartphone experience, with content, design and functionality geared for this form factor.
  • iPhone application: A native ordering and "Pizza tracker" application that allows people to order then track, in real-time, the status of their pizza orders. Place orders on the web, over the phone, or through the app, and then track progress.
  • Android application (UK and Ireland): Another mobile application with ordering (although it appears to lack the tracking functionality available in the US app).
Elements: Social publishing touchpoints

Dominos has presences at most of the major social publishing touchpoints:

  • Facebook: The primary Dominos page on Facebook (2.9MM "Likes" as of this writing), with an embedded ordering application and links to other online presences (e.g., local Dominos Facebook pages, 70 country-specific web sites, games, photos, and videos)
  • Twitter: Primary Twitter presence for Dominos pizza (hosted by Phil from Dominos HQ), with over 30K followers as of this writing. Account is active, and contains a mix of promotional content, customer support activity, customer engagement and fun content.
  • YouTube: Official online video channel for Dominos, with close to 300K channel views and more than 4MM video views.
  • LinkedIn: Corporate profile of Dominos on the popular professional networking site, with links to corporate staff profiles, 2000+ employee profiles, and open positions within Dominos corporate.
Elements: Third-party touchpoints

Aside from connections to the usual suspects (e.g., search engines), content about Dominos exists at many social sites geared towards location-based services (which makes sense, given that Dominos is predominantly a physical business). There’s also a fair amount of content in the press and blogosphere, given the size and reach of the company. Examples of third-party touchpoints based on these elements include:

  • Social media mentions: In addition to the social media presences maintained by Dominos, there are also the uncontrolled social media mentions around Dominos (e.g., what people say about Dominos pizza on Twitter). Many companies monitor these streams of information for customer sentiment, or to connect with people on customer service issues. Some companies also go so far as to integrate real-time search streams into their other digital presences, which takes quite a bit of courage (since you get the good, the bad, and the really ugly all at once).
  • Search engines: Google, Bing, Yahoo and other search engines all drive visitors to most sites on the Internet; Dominos is well represented in each of these domains. Many infrequent buyers probably bypass Dominos sites altogether and just search for locations in a given area (e.g., Dominos in Oakland, CA), but this could easily lead to traffic back to the Dominos ecosystem at some point.
  • Location-based services: Every company that has physical outlets needs to pay attention to location-based services and related platforms for user-generated content (e.g., Yelp, FourSquare, GoWalla). For example, consider the Yelp page for this Dominos location in Oakland: one and a half stars (out of five) with lots of terrible reviews…Not the greatest PR for one of your company’s franchises, but clear feedback for Dominos that might allow them to improve their customer experience, which people might tweet about, which might drive customer acquisition, which might…You get the idea.
  • Blogosphere: Articles on Dominos appear in a number of blogs, usually related to news stories, marketing campaigns, or coupons. While this may be a minor part of Dominos’ ecosystem most of the time, it could easily become important if there were a significant news story to break (e.g., the video released of Dominos employees engaging in unseemly behavior with pizza ingredients).
  • News: Stories about Dominos often appears in the news, which could have impacts on its digital ecosystem. Social news sites (like Digg) can also be highly relevant when it comes to driving traffic (e.g., during the Dominos video scandal mentioned above)
Elements: People

Dominos has more than 9000 franchise stores spread across all 50 United States and 70 countries, which means lots of customers and lots of employees, many of whom probably use the Dominos digital ecosystem. Their sites and applications are well-designed, with many social components and feedback channels (e.g., user-generated content, contests, integration of real-time Twitter streams). Consider their pizza tracker…How much more user-centered could you get? The thing most people want to know when they order fast-food delivery is when it’s going to show up; Dominos makes it easy to do this through multiple digital touchpoints. Their International sites also demonstrate a clear commitment to making great experiences for all of their audiences.

The Pizza Turnaround sites and campaign offer the greatest example of the connection between Dominos and its customers, and the role the digital ecosystem plays in this interaction. Dominos took feedback from social media channels and elsewhere (e.g., "Your pizza crust tastes like cardboard"), published it, and retooled their entire 50-year-old pizza recipe based on this feedback. It all went up on the Web, in multiple sites, for everyone to see. While many companies are engaging in behavior like this now, nobody was when Dominos did it originally; they were mavericks. It clearly demonstrates that they understand the connection between people and product, and how their digital ecosystem (and social media) can strengthen that connection.

Elements: Business processes and technology

Without a doubt, Dominos makes significant investments in their technology infrastructure and in the business processes to support everything they do. I wasn’t able to find any specific online references to their internal operations or technologies (as it is all likely proprietary), but based on some of my experiences working with other fast-casual restaurants, it takes a lot of money and effort to make all of this stuff work right.

Summary

For companies with any presence online, systems thinking is an intelligent way of making sense of the digital world. By thinking of their digital touchpoints as elements of a broader digital ecosystem, companies can develop more coherent strategies, reduce execution and management costs, and create better experiences for their customers.

Other posts in this series:

NOTE: A few words about terminology

In the interest of completeness, here are the other primary definitions or references I found in my research online for the term digital ecosystems:

Perhaps others have proposed definitions, but I didn’t dig deep enough to find them. If you’ve got feedback about my proposed definition, or any of the ideas above, I’d love to hear it! Semantics in the digital world are still evolving, and the only way we can achieve a lingua franca is through intelligent discussion and debate.

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  • http://twitter.com/davcron dave cronin

    Provocative stuff, Ryan.

    While I’ve often used the term “ecosystem” to talk about a constellation of digital experiences, I often felt a little dishonest with the”eco-” prefix. Though in reading this, it just now occurs to me that the “eco-” can refer to the biological component that is people.

    I might have missed it, but it might be worth considering more about the boundary between the digital and physical/in-person. When done successfully, this service design approach better supports customer needs and branding/selling objectives (see the Apple store).

    • http://twitter.com/bitstrategist Ryan McCormack

      Thanks Dave!

      I agree that the overlap between the physical and the digital is an important one (you didn’t miss it — I just didn’t include anything about it in this post). Service design lives right at the intersection of the two, and is another key to great customer experience. Maybe that’s worth another post; it’s too easy for businesses to slip into binary thinking (i.e., the digital OR physical world), as opposed to thinking holistically (digital AND physical).

  • Greg Green

    I like this analysis of the modern company’s communications problem. Specifically the Domino’s example, which when fuloly laid out does make you wonder how large a team of people they have managing all these components and what that costs. What would be the real impact if, for example, Domino’s ditched twitter? Seriously, who cares what domino’s tweets?

    What I’ve observed as a Micro ISV (Independent Software Vendor) is that user expectation is that all these components and the amazing ajax functionality that goes with them should also be available from small companies. “Let’s just build a social collaboration portal, you know, a Website, all the documents and everything will go through there.” one client said to me, with no knowledge of what this implied.

    So will this scale advantage enable larger companies to outpace the little ones who can never get that momentum because they can’t hit all those customer touchpoints? Will the big only get bigger at the expense of the small?

  • People marnie agency

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    marnie digital
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