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Business Ecosystems for Dummies

Business Ecosystems

“No man is an Island, entire of itself; every man is a piece of the Continent, a part of the main” (John Donne, 1624).

The term business ecosystem is directly borrowed from ecology. It describes the way in which ‘actors' such as businesses, customers, local authorities, educational institutes, and third sector entities (or charities and non-governmental organisations) interact and depend upon each other.

In ecology, organisms interact with one another to create a self-sufficient and sustainable ecosystem. In a similar way a business produces a product or service with the intention of making profit, but interacts with other actors to produce an ecosystem.

Believe it or not, you might well be reading this article on one of the best examples of a business ecosystem. Your mobile phone is only useful when there is a functioning operating system running on it. That, in turn, is only enjoyable when you are using interesting apps and browsers on your phone. Finally, you are only able to use all of these because you receive data from your mobile phone service provider. Together, the mobile phone manufacturer, operating system and app developers, and data service provider combine to allow you, the end user, to have an enjoyable experience.

Cooperation vs Competition

In any ecosystem, there is a certain amount of healthy competition, as organisms compete for valuable resources. However, when any one species becomes too dominant, the ecosystem as a whole begins to suffer.

Finland’s History of Cooperation

Finland has a strong history of businesses working in cooperation. In fact, the Pellervo Society (Finland's service organisation for cooperative businesses) was established in 1899. Currently, there are over 4 million individuals involved with cooperatives in Finland, representing small groups of sole traders and sole practitioners to large groups like OP-Pohjola Group and Suomen Osuuskauppojen Keskuskunta (SOK) – more commonly known as the S-Group.

With such a strong focus on cooperation, it is perhaps not surprising that companies in Finland often work very closely together.

The Tampere Region Leads the Way

Although business ecosystems may arise organically, they can also be managed to become more efficient and provide better value for all involved. Tampere was the first city in Finland to recognise the value of an ecosystem approach and has incorporated business ecosystem thinking into its economic programmes since as early as the year 2000 with initiatives such as eTampere - a programme for digitising the economy. Since the late 2000s, open innovation platforms have been founded in the Tampere Region including DEMOLA, New Factory, Mediapolis, and Kampusareena at the Tampere University of Technology. These on-going projects focus on stimulating innovative cooperation and co-creation between educational establishments, students, companies, third sector parties, and the public.

Over the years, such stimulating environments have given rise to some great success stories, such as Framery, a company that make innovative soundproof booths for open-plan offices. This award-winning company began back in 2010 when founders Vesa-Matti Marjamäki and Samu Hällfors became involved with Protomo (now New Factory), through a joint student and Demola project. Last year, Framery turned over more than €17 million, and this year hopes to increase that to €45-50 million. The company employs around 160 people, with plans to increase to over 200 in the near future.

I asked CEO and Co-founder Samu Hällfors how being involved with an innovation platform had shaped Framery’s development. He advised that in Protomo they had “the opportunity to get involved with like-minded people and companies that were in the same situation.” When I asked why he had specifically chosen to partner with Protomo, he said that

“In 2010 the time was different - the start-up boom wasn’t the same as it is today. There was not that many new business platforms or tools at that time. [we were] excited about the atmosphere and other entrepreneurs at Protomo who were tackling same type of issues and situations.

Business Ecosystems Benefits: not Just for Business

I reached out to Dr. Niina Immonen, Director of Smart City Solutions and Business Development services at Business Tampere, We discussed the business ecosystems of Tampere, including Smart Tampere, an organisation that aims to create a city in which information and innovation are freely shared for the benefit of local residents as well as business. The main themes Smart Tampere focus on are Smart Mobility, Smart Health, Smart Buildings, Smart Industry, Smart Infrastructure, Smart Education, and Smart Government and Smart Citizen. Dr Immonen expressed the importance of open information and the role of the city in business ecosystems, especially when it comes to innovation

“The ethos of Smart City is: Open. Smart. Connected. This is only possible when there is open access to data. We want to promote experimenting and piloting in Tampere. One way in which we can do this is to make information freely available to third parties, and encourage businesses to use the city as an experimenting platform and partner through various open innovation platforms”.

Tampere City: A business Ecosystem Facilitator

Tampere City achieves this by acting as a business ecosystem facilitator, testing platform, and investor: especially through their procurement. By making the procurement of services for the city as open as possible, and encouraging freedom of information, the city saves money on tendering services (which ultimately benefits citizens), stimulates local businesses to provide innovative solutions to city issues, and generates information that will be available to all.

A good example of how Smart Tampere benefits everyone is the new Tramway. The Tramway will be constructed by a Limited Liability Company, Tramway Alliance, comprising the City of Tampere, VR Track Ltd, YIT Construction Services Ltd, Pöyry Finland Plc and, by means of a sub-alliance contract, Ratatek Ltd. The Tramway represents an estimated investment of approximately EUR 283 million in the city of Tampere. By acting as a partner in the Alliance, the City of Tampere helps facilitate openness and transfer of information between not only the partners in the Alliance but also other transportation companies and the general public. The Tramway will generate returns on the investment by stimulation the local economy through urban regeneration and provide better commuting for workers.

Business ecosystems work across borders

It can be tempting to think of business ecosystems only in terms of geography. We talk about ‘the Tampere business ecosystem'. But in reality (and much like organic ecosystems), business ecosystems work across geopolitical borders. Jolla is a mobile phone company originating in Tampere which employs around 100 people in Finland. Jolla is the developer behind the open source based mobile operating system Sailfish. They have recently partnered with Sony, the Tokyo-based mobile communications giant, to launch a range of premium Sony Xperia devices utilising the Sailfish OS. In this case, the local innovation has lead to a network of thousands of international open source developers and collaboration with international companies.

Business ecosystems can come in a range of sizes and shapes and operate in single or multiple business sectors. While many arise organically, with careful management, stimulation, and input from actors such a local authorities, business ecosystems can grow and attract international notoriety. If you would like to find out more about the business ecosystem in Tampere, check out the Smart Tampere pages.

About the writer

Ashley D Penn is an international Landscape Architect and writer originally from the UK who now works for Jolma Architects in Tampere. He has written extensively about subjects as diverse as architecture and garden design, through to business and property development. He lives in Nokia with his wife and daughter.