On the Ecosystem vs Channel Debate

Most who have lived in partnerships and channels over the last decade have some reaction to the rising zeitgeist around the term “ecosystem."

The word is everywhere. Networks are buzzing about it, leaders are changing their titles to incorporate it, and influencers are either lining up to critique it or tout it as the best thing since sliced bread.

The rising attention on “ecosystems” has led to a lively debate about whether it’s a replacement paradigm for “channels.”  Many are ready to debate about which is “right." Over the last few months, I’ve been asked a couple of times which side I stand with. To which I usually respond:

“I don’t… the debate makes little sense.”

With rising market trends, influencers and consultants are first to line up and "simplify" topics. Often, the easiest way to do that is to position two sides as being diametrically opposed, as something where folks must “pick the right one” lest they be relegated to the tombs of the forgotten, beside Betamax and LaserDisc.

Why? It serves their best interest. 

1. Influencers want people to subscribe to their philosophy, and making people choose a side creates dogmatic followers. 
2. Consultants want to sell you a clear roadmap or panacea, and simplifying a problem while amplifying the sense of urgency around it makes the sale easier.

However, the truth is almost always more nuanced. In this case, Channels and Ecosystems are not diametrically opposed. Here is how I define a channel and an ecosystem:

A channel is:

A group of entities or individuals that are aligned to a distinct route to market (route) and create a similar value for end customers and/or vendors. 

An ecosystem is:

A community of channels working together within an environment, creating greater value than the individual channels could independently.

In a successful ecosystem, participants:

• Engage flexibly across multiple channels, and collaborate closely on joint go-to-markets (GTMs)
• Act within a fertile environment that enables them to flourish with minimal intervention
• Generate greater value than the sum of the potential of each independently

Through this lens, the debate between these two falls apart, along with the need to align to a side. 

3 Guiding Principles for Consideration

When set up well and continually nurtured, ecosystems can generate a GTM landscape where every participant, direct and indirect alike, can flourish together.

• Amplifying value for end customers
• Accelerating revenue and consumption growth for the company
• Minimizing operational overhead required to manage each channel 

However, while an ecosystem is a fantastic aspiration, there is no shortcut or panacea to building one. 

Ecosystems are successful when a company creates an environment where connecting robust individual routes amplifies their overall impact, resulting in exponential, synergistic growth. However, if a company hasn’t established successful routes, doesn’t have a clear vision for how its solutions will be delivered via an ecosystem, or hasn’t invested in the infrastructure (such as programs, benefits, resources, tools, etc.) to enable an ecosystem to flourish, it may simply not be ready.

• Inhibiting overall GTM effectiveness of the company
• Inflating operational overhead required to manage each route
• Eroding trust, commitment, and focus of its top partners

To those aiming to form or grow ecosystems, a few guiding principles to consider:

1. Build vibrant routes first: Before trying to introduce your channels to an ecosystem motion, ensure each individual route has a defined partner value proposition, aligned incentives, meaningful resources, and defined rules of engagement. That way introducing additional collaborators won’t make a joint GTM overwhelming or stifle growth.
   
   
2. Engage in earnest: At its core, this is game theory. One bad actor, misaligned route, or internal business function can poison the well for everyone. If all participants are truly bought in and trust one another, everyone benefits; if one part of your organization or channel network is not participating in good faith, it can impact the efficacy of the whole ecosystem.
   
   
3. Think like a gardener: The goal is to build an environment where many entities with different business models and care-abouts will flourish together. Perhaps the most important part of any ecosystem is not the players, but the business architecture. Cultivating one that creates harmony across your programs, processes, incentives, rules of engagement and tools will result in a self-sustaining and ever-expanding biome.