We see five consequences of the rise of digital ecosystems. Companies that master their complexities will thrive.
A Surge of Big Data. Devices and ecosystem apps generate huge amounts of fast-moving data in a variety of forms. Customers will expect to receive value from the use of their data. A company that is skilled in analytics and can convince customers that it will use the data well will outcompete those that don’t. (See “How to Get Started with Big Data,” BCG article, May 2013, and Rethinking Personal Data: Strengthening Trust, a World Economic Forum report produced in collaboration with BCG, May 2012.) Organizations that control and drive the most benefit from the data will win.
Blurred Boundaries. The lines separating industries such as automobiles, retail energy, consumer goods, insurance, digital media, and telecommunications will continue to dissolve as new entrants move into the adjacencies and niches created by digital ecosystems.
Connected Products and Services. Consumers will evaluate products on the basis of their ease of use anywhere and at any time. Products and services will no longer be judged only on their ability to function independently; they will also be judged on how they function as part of a digital ecosystem of other products and services.
The Emergence of New Industry Roles. Data custodians, such as organizations that offer customer loyalty cards that work across companies, manage data on behalf of an industry. Meanwhile, digital-data aggregators insert themselves between the customer and the traditional product or service provider to add value—for example, services that allow customers to compare and apply for products from a range of competing financial companies. Companies that are slow to react to the latest digital disruptions may find themselves replaced by an ecosystem provider or may discover that an aggregator is standing between them and the customer.
The Rise of Ecosystem-Platform-Endorsed Products. Ecosystem platform providers aim to generate additional revenues from their network. So they will increasingly give an advantage to “preferred” digital devices, such as those that feature proprietary embedded chips or are sold through their own networks of stores.
As products in the home, office, stores, and streets become more connected, companies in a range of industries will find that they are no longer in the business they once thought they were. For example, this is playing out today in the auto insurance industry, which is about to be dramatically restructured as telemetric and sensor data from devices in cars record driving behaviors and integrate the data with insurance pricing, product design, and claims management. (See “Big Data: The Next Big Thing for Insurers?” BCG article, March 2013.) But who will dominate the emerging space? Will it be insurance companies, car manufacturers, network providers, or new entrants that specialize in devices and analytics? Companies that stand still in the face of such change will not be deft enough to adapt.