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Great Disadvantages from Ecosystem Economy

Lisa Ramadhani by Lisa Ramadhani
6 years ago
in Business News

The ecosystem economy brings sizable economic opportunities. But, they also come with risks. Companies operating in the ecosystem economy need to monitor and respond to four big sets of challenges. Thus, they can avoid disadvantages from ecosystem economy.

Read more: Get to Know Ecosystem Economy

Fragmented Business Landscape

In the next five years, the number of companies building platforms will explode. Experts expect the explosion to happen in almost all fields where startups are encroaching. That includes, fintech, healthtech, edutech or adtech. There will be an expanding number of companies compete with each other.

The massive proliferation may hurt the customer. They will be frustrated by interacting with too many different applications. Besides, enterprise clients will also find difficulties to find the best vendors. At the same time, investors have to also face too many investment targets.

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That, also at the end bring problems to platform companies themselves. They have to struggle to manage complex value chains. That value chains involved many other players in their ecosystem.

Operational Risk

Firms that enable the ecosystem will be targets of many crimes. Starting from state-sponsored cyber attacks, hacking, fraud, legal disputes, to terrorism. Moreover, if they are tech giants. For instance, for big payments platforms, social network or cloud storage platforms hosting a large portion of customers will be interesting targets for cyber attackers.

Tech giants that aware of these risks are investing heavily in bolstering their cybersecurity.

Reactive Governance

Fundamental premises for those operating in Ecosystems is to ensure fairness, accountability, and transparency. Companies, sometimes, choose to cooperate to gain customers, instead of competing. In that case, the participants usually choose to self-govern.

However, once a participant makes mistakes, the influential participant usually gets more scrutiny from the government and regulators. If tech giants CEO has asked for more regulation, we will not see a case like Cambridge Analytica Scandal.

In that case, Cambridge Analytica is the actor making mistakes. It took a large amount of user data without permission. The data was misused to sway an election.

Societal Obligation Unchecked

Customers are an integral part of the success in the Ecosystem Economy. It is important to get their trust. If they think the company cannot protect their data and privacy, they may go to legal and ethical ways. Once their trust is broken, they may leave technology companies. More customers expect increased ownership over their own data.

Tags: AdtechDisadvantagesEcosystem Economyedutechfintechhealthtech
Lisa Ramadhani

Lisa Ramadhani

Reading and travelling bring us the opportunities to understand the complexity of this world.

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