Digital Ecosystem Economy Picture Credit: accenture.com
The term ‘Ecosystem’ was first used in 1935 in a publication by the British ecologist Sir Arthur Tansley. He devised the concept of an ecosystem to draw attention to the importance of the transfer of materials between organisms and their environment. According to Wikipedia, an ecosystem is a community of living organisms in conjunction with the non-living components of their environment, interacting as a system. These biotic and abiotic components are linked together through nutrient cycles and energy flows. Energy enters the system through photosynthesis and is incorporated into plant tissue. By feeding on plants and on one another, animals play an important role in the movement of matter and energy through the system. Ecosystems are dynamic entities—they are subject to periodic disturbances from which they recover through feedback loops. All the parts in an ecosystem work together to achieve balance. A healthy ecosystem has many species and is less likely to be damaged by human interaction. Although humans operate within ecosystems, their cumulative effects are large enough to influence external factors like climate. If there is not sufficient light or water or if the soil does not have the right nutrients, plants will die. If the plants die, animals that depend on them will die. If the animals that depend on the plants die, any animals that depend on those animals will die. Obviously, it is in human’s vital interest to stop this deadly cycle and to rebalance our natural environment for our own survival.
The Emergence of the Business Ecosystem
Starting in the early 1990s, James F. Moore, presently member of the Dean’s Council of the Harvard School of Public Health, introduced the strategic planning concept of a business ecosystem. He defined the ‘business ecosystem’ as an economic community supported by a foundation of interacting organizations and individuals. The economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organisms also include suppliers, producers, competitors, and other stakeholders. Over time, they tend to align themselves with the directions set by similar companies. Those companies holding leadership roles may change over time, but the function of an ecosystem leader is valued by the community because it enables members to move toward shared visions to align their investments, and to find mutually supportive roles. Moore used several ecological metaphors, suggesting that the firm is embedded in a (business) environment, that it needs to coevolve with other companies, and that “the particular niche a business occupies is challenged by newly arriving species.” This meant that companies need to become proactive in developing mutually beneficial (“symbiotic”) relationships with customers, suppliers, and even competitors. Using ecological metaphors to describe business structure and operations is increasingly common especially within the field of information technology. For example, J. Bradford DeLong, a professor of economics at the University of California, Berkeley defines business ecology as “a more productive set of processes for developing and commercializing new technologies” that is characterized by the “rapid prototyping, short product-development cycles, early test marketing, options-based compensation, venture funding and early corporate independence”. Another work defines business ecology as a new field for sustainable organizational management and design, one that is based on the principle that organizations, as living organisms, are most successful when their development and behaviour are aligned with their core purpose and values .
The Circular Economy Ecosystem
A circular economy is based on the principles of reducing waste and pollution, keeping products and materials in use and regenerating natural systems. In a research report to the European Commission “The Potential for Substituting Manpower for Energy”, Walter Stahel and Genevieve Reday sketched the vision of an economy in loops (or circular economy) and its impact on job creation, economic competitiveness, resource savings and waste prevention. Promoting a circular economy was identified as national policy in China’s 11th five-year plan starting in 2006. The Ellen MacArthur Foundation has more recently outlined the economic opportunity of a circular economy, bringing together complementary schools of thought to create a coherent framework, thus giving the concept a wide exposure and appeal. Meanwhile the Foundation’s efforts have gained wide acceptance, mainly from companies engaged in the Manufacturing and the Logistics/Transportation sectors. A circular economy ecosystem can be achieved through the purposeful design of material recovery processes such as:
- Extend the life of materials and products, where possible over multiple ‘use cycles’.
- Use a ‘waste = food’ approach to help recover materials, and ensure those biological materials returned to earth are benign, not toxic.
- Retain the embedded energy, water and other process inputs in the product and the material for as long as possible.
- Use systems-thinking approaches in designing solutions.
- Regenerate or at least conserve nature and living systems.
- Push for policies, taxes and market mechanisms that encourage product stewardship, for example ‘polluter pays’ regulations.
In summary, a circular economy articulates the logic of how an organisation creates, offers and delivers value to its broader range of stakeholders while minimising ecological and social costs, defining an ecosystem which is gaining strong support in climate change debates.
Transforming to a Digital Platform Ecosystem
While circular business models are focused on sustainable natural resource issues, the paradigm shift towards digital transformation and data-based services results in new concepts of business ecosystems. The digital economy is based on mass collaboration technology in which businesses and consumers have almost perfect information about goods and services, obtained from sharing their collective experience via cloud-based service platforms. Companies are like organisms in an evolutionary landscape and following Darwin’s logic, the fittest companies survive as the business ecology changes. Low cost communication, ubiquitous email and collaboration software plus lower outsourcing costs make it possible to work in teams that span country and company boundaries to attain global presence. The winners in this new ecosystem are the most socially intelligent organisms: those that are highly intelligent as organizational units with highly developed internal communication procedures as well as external sense organs. In the old ecology of ecosystems, cross organizational relationships were concentrated among a few at the top: the ‘tribal chiefs’ would meet and make treaties. In the new ecology, mass collaboration technology enables many-to-many relationships between organizations. The relationship between the firm and the client is based on the collective experience of applying the firm’s products and services. Above all cloud-based platforms, ranging from convenience services to the provisioning of open source software tools, reduce administrative cost and significantly shorten the time required to develop new products and services.
From the Digital Platform Economy to the Human-Level AI-Ecosystem
Present-day machine intelligence and AI are built to imitate thinking by digitally replicating the process of cognitive decision-making that humans handle biologically. In the last two decades, most of the brain-inspired development of artificial intelligence has been focused on ‘neural networks’, a term borrowed from neurobiology. A whole array of different machine learning algorithms is making significant contributions to the generation of knowledge, in some areas surpassing the intellectual capacity of human’s biological brains. The explosion of available training data and the exponential growth of computing performance are accelerating as human-level AI begins to disrupt existing corporate business models. Machine intelligence is becoming a commodity as intelligence enhanced individuals become key drivers of an economy that increasingly takes on the form of a living organism. Darwin’s concept of evolution suggests that a random or slight change in the genetic makeup of organisms will give it either an advantage or a disadvantage. If the mutation of the organism allows it to survive and reproduce, then that mutation is passed on. If it does not, the mutation dies along with that organism. In the realm of machine algorithms, this is referred to as neuroevolution. Whereas artificial neural networks (ANNs) usually replicate the process of learning different concepts, neuroevolution seeks to recreate the process that creates parts of the artificial brain, a process in which only the strongest (or the smartest) parts will survive. To advance Narrow-AI applications such as image recognition or language processing towards human-level AI requires a transdisciplinary approach which goes beyond the intellectual capacity of a single human being and its biological brain. Consequently, the application potential of collective, transdisciplinary intelligence supported by advanced forms of Internet connectivity, augmenting reality with virtual machine intelligence, will become the foundation of a new AI-Ecosystem. AI empowered humans and their collaborative networks will become the carriers of our socio-economic future, stipulating an array of questions, such as ethics, personal integrity and security. Large corporations with lean management structures will strengthen their position as infrastructure and financing providers. They utilize trusted brands to control the market, rely on outsourcing as much as possible and cooperate with small, highly innovative AI empowered teams or individuals to maintain market leadership.
Back to Nature
One cannot divorce humans from nature, both depend on each other. The current Covid-19 pandemic demonstrates how fragile our body and mind are. In fact, some researchers suggest that the pandemic is ‘nature’s revenge’ because of human’s disregard of our natural habitat and our lack of awareness and consciousness towards nature. While physical health issues and the experience of being locked down stipulate questions about our mental health – with all respect to science – it appears that viruses – and there are thousands of them – can severely disrupt our social and economic structures anytime. Going into isolation seems one way the current pandemic can be overcome. However, implementing home-office based corporate infrastructures to reduce physical contact, seems to be very short-sighted. Humans are by evolution ‘social animals’ with a basic need to interact physically. They need to integrate nature to be ‘earthed’ and this cannot be replaced by networked virtuality.
Due to ongoing advancements in science and technology, new business ecosystems will continue to evolve. Supporting human consciousness and personal development will remain crucial for our evolutionary survival. Consequently, we need a dual-ecosystem strategy: a) caretaking of nature to support our intrinsic mind-body requirements and b) build-up of AI enhanced individuals and organizations to establish economic sustainability. To get there we need:
- A transdisciplinary mindset to generate collective intelligence.
- Collaboration to deal with the increasing complexities of problem-solving.
- Definition, support and protection of our values vis-à-vis machine intelligence.
- Life-long education to maintain competency vis-à-vis the value of experience.
- Socio-economic fairness to reduce the threat of intelligence-monopolization.
Above all, however, we must uphold creativity as humanities greatest asset for long-term survival.