Jan Ondrus, Prof. of Information Systems and Associate Dean of Faculty at ESSEC Business School Asia-Pacific, looks at the pitfalls of corporate purpose and how business ecosystem orchestration can dovetail value creation with the common good.
E for Ecosystem: Giving power to corporate purpose by Tom Gamble. Related research: Professor Jan Ondrus, ESSEC Asia-Pacific, S. Remy, J. Kolokotsa, Y. El Ouarzazi & N. Glady: Business ecosystem orchestration in the service of corporate purpose.
Ins and outs
Purpose can be an elusive notion for companies and organisations to grasp. Take the following: make better products, don’t be evil, understand and solve the healthcare needs of people across the world. Who got it right and why? While Nissan, Google and Sanofi – the respective organisations behind the above statements – all had purpose in mind when they created their rallying calls, only Sanofi it seems managed to successfully pin it all down. Let’s look closer.
Purpose has long-featured as a way to empower organisations with a higher and more meaningful objective than just profit. And this, not only to positively impact its employees but also the wider community beyond the organisation. The problem is that in many cases, purpose has mainly been applied inside the corporation. The example of Nissan is telling. Making better products indeed galvanized its workforce into doing just that, with great results – but it acted more as an inwardly-focused ambition rather than an outwardly focused purpose, failing to both clarify benefits to customers let alone a broader circle of stakeholders. Likewise, Google’s don’t be evil missed the target, being so wide and generic that it failed to differentiate the firm from other organisations – after all, no business organisation deliberately aims to be evil.
So how can purpose reach its full purpose? On the one hand, states Prof. Ondrus and his colleagues, it is authenticity that counts. Leaving behind empty rhetoric, purpose must be characterised by appropriate action. Purpose should also provide a vision of the ‘new world’ the organisation wishes to take its community of stakeholders to. Moreover, it should be broad but not so much so that it loses its relevance to the corporation’s business activities. And finally, purpose and vision are linked to change and transformation.
It is here that things become challenging for an organisation. If purpose is outward-oriented for the benefit of the common good, then making positive social impact the primary objective goes far beyond the traditional CSR approaches of reducing or making amends for the negative impact business activities might have. Social objectives can even run counter to business objectives. And, because classic management and leadership is inwards-oriented, inside the firm, transforming behaviours and mindsets to the wider perspective may stretch and strain the corporation, not only systemically but also psychologically. Purpose beyond profit implies expansion and transformation in the ways it does business with the outside world – and such novel interaction might prove daunting to achieve, most notably because it calls for tying links with a wider, more diverse community of stakeholders. This is where Jan Ondrus and his colleagues step in. With fellow researchers, Jan Ondrus, Prof. of Information Systems and Associate Dean of Faculty at ESSEC Business School, Singapore Asia-Pacific, turns a new leaf among the volumes on corporate vision and purpose to focus on business ecosystem orchestration as an answer.
Conducting business not-as-usual
What is a business ecosystem? Ondrus defines it as a community of diverse stakeholders who put resources in common to co-create value. For him, the pace and scope of changes across industries and accelerated innovation across the economy – sparked by digitization – mean that business are increasingly no longer able to compete alone to create value. Planning, organising, and coordinating (i.e. orchestrating) such ecosystems has been recognised as the expertise of such household names as Apple, Google and Amazon, each of which work within a highly complex ecosystem of very diverse stakeholders. The latter refer not only to connections such as suppliers, but unconventional types of organisations like non-profits or communities. As such, concludes Prof. Ondrus, the business ecosystem fulfils an essential prerequisite for corporate purpose in that it harnesses diverse stakeholders from outside the boundaries of the organisation, thereby achieving real social impact without compromising profit.
The Business Ecosystem: Be the external change you want to see
If business ecosystems embrace a wider scope of stakeholders and interactions, they are also a great way to understand the business environment as a much bigger community of stakeholders than was formerly perceived. Not only suppliers, customers and competitors are included in the stakeholder net, but those having related objectives, aligned goals or complementary resources. Take pharma companies, for example. These are frequently involved with government bodies, health agencies, practitioners, hospitals and patient organisations – but not just in the role of supplier, customer or competitor. They may also co-create value. Spurred by more complex and fast-changing business environments, improved communications and digital innovations, stakeholders increasingly need to co-create competitive bundles of products and services. They join forces, pool resources, share knowledge or jointly develop new knowledge or solutions – not independently inside each stakeholder as is the traditional case, but interdependently. Moreover, business ecosystems also encompass value exchange through market transactions. Take aircraft manufacturers. Traditionally, they exchange products or services with upstream components suppliers and downstream airlines. But to remain competitive, they also now need to co-create with non-primary stakeholders – airports, industry associations and flight servicing providers. Co-creation can also take place when companies co-create with their own suppliers or even customers – like software companies where user communities actively contribute to enhancing products.
Go forth and co-create
Co-creation opportunities are a crossroads where business ecosystems and corporate purpose meet, states Prof. Ondrus. With each encounter with a stakeholder, companies may ask themselves if it provides an opportunity to further their purpose. However, stakeholders should be chosen wisely. Building a limitless network of them might disrupt the balance of who exactly owns and drives the purpose. Moreover, the simple fact of being impacted by or impacting the corporate purpose isn’t enough to justify an interaction between the company and the stakeholder. Unless the interaction is a form of value creation, it leads to nowhere and will hardly have impact on the wider, social dimension that is sought after through a corporate purpose. In fact, very few stakeholders actually meet the mark. There may be a divergence of goals, unwillingness to cooperate through a lack of belief in the corporation’s social impact, an absence of complementarity between resources, or simply the fact that company and stakeholder resources are located on opposite sides of the planet.
Intelligent orchestration of a business ecosystem and its various players may, however, provide opportunities for all, especially if the stakeholders’ various purposes can be broken down into goals and aligned in order for co-creation to occur. Co-creation does not, indeed, necessarily have to be purpose-driven per se: the simple fact of co-creating value means that a stakeholder naturally inherits some of the value produced – thereby representing an actual piece of the social impact the corporate purpose intends.
Prof. Jan Ondrus points to the practical implications of ecosystem orchestration for corporations. It enables assessment of stakeholders in co-creation opportunities, aligning wider purpose to co-exist with profit, and breaks down the high ambitions of a broad purpose into manageable and very tangible steps. So when Sanofi offers a vision of understanding and solving the healthcare needs of people across the world, it does so with a whole ecosystem of stakeholders and value co-creation at hand. And corporate purpose no longer seems that elusive at all.
- Read a related article: Sweeping with the Enemy: Coopetition as a strategy for a better world
- Link up with Jan Ondrus via LinkedIn
- Explore ESSEC Asia-Pacific
- Browse the programmes on offer at the ESSEC Singapore campus.
Learn more about the Council on Business & Society
The Council on Business & Society (The CoBS), visionary in its conception and purpose, was created in 2011, and is dedicated to promoting responsible leadership and tackling issues at the crossroads of business and society including sustainability, diversity, ethical leadership and the place responsible business has to play in contributing to the common good.
Member schools are all “Triple Crown” accredited AACSB, EQUIS and AMBA and leaders in their respective countries.