*Note to listeners* This episode is part of a special sub-series on business ecosystems.

Felix Oberholzer-Gee is the Andreas Andresen Professor of Business Administration at Harvard Business School. An award-winning instructor, his academic work has been published in the very best, peer-reviewed journals of his profession, and he currently teaches competitive strategy in executive education programs. His work is largely focused on helping businesses apply his framework of Value-Based Strategy, in which businesses learn to identify the biggest value drivers.

Within ecosystem-based competition, he’s identified how to specifically leverage ecosystems in maximizing the value delivered to stakeholders.

In this podcast, he shares:

• How Value-Based Strategy applies to ecosystems, and how to identify where to draw and give the most value within one
• Balancing the dynamics and relationships between your company and different players in your ecosystem
• How to identify what complements are best for your business
• Motivating partners in the ecosystem to make investments in complements that would deliver value to your customers
• What adjustments you need to make within your business model and culture to incorporate ecosystems
• Growing your bargaining power and maximizing the value you draw from an ecosystem as you put more value into it

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"When companies vertically integrate the most common reason for that they will say is, 'I get so much more control.' And then you ask people inside your organization, 'What's the hardest thing to do?' And they will tell you, 'Alignment is hard because I don't really have control over everyone.' Well, which is it? Do you have control or do you not have control?"

-Felix Oberholzer-Gee

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Episode Timeline:

00:00—Introducing Felix + The topic of today’s episode

1:35—Could you describe the concept of your 'Value Stick' to us to get familiar?

3:10—Why are ecosystems helpful in staying competitive?

8:34—How the nature and inclusivity of an ecosystem largely depends on who started it, for what purpose, and the capacity to scale

10:42—How do you balance how much you're depending on an ecosystem for complements with giving away customer relationship ownership?

13:52—The two rules the relationship manager working in ecosystems must remember

17:51—How do you manage a changing relationship (buy-out, M&A, etc.) and the effects of that on how much value is being put in vs. received in an ecosystem?

21:51—When is the right time to seek vertical integration?

23:59—How do you translate your idea of the value stick in a model like ecosystems?

29:03—How does the strategy thinking need to change for a company that's starting to embrace the idea of ecosystems?

33:22—What should you consider about switching costs in relation to ecosystems?

35:20—What are some last closing thoughts you'd like to leave us with?

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Additional Resources:

Faculty

Thank you to our guest John Fallon. Thank you to our executive producer Zach Ness, our producer Nazanin Homayoun Jam and our editor James Pearce. If you enjoyed this episode, please follow, download, and subscribe. I’m your host, Kaihan Krippendorff—thank you for listening.

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