Platt Perspective on Business and Technology

Global marketplace diversity as business ecosystem niche space – 1: applying a basic bio-systems model

Posted in strategy and planning by Timothy Platt on July 19, 2011

I have recently posted four installments in a series on marketplace diversity in Business Strategy and Operations (see postings 160-162 and 167) and as I wrote them I found myself thinking in terms of a very specific conceptual model, that I ran into many times as a graduate student and also on the job – when I still worked as a biologist and before I transitioned into information technology and business.

An ecological niche can be defined as the relational position of a species or population in its ecosystem. Basically, this means defining a niche in terms of the qualities and behaviors that define how this species exists and coexists with other life forms, and I will add with the features of its non-biological context as well.

When two species occupy what is essentially the same niche, they are in direct and immediate competition for the same resources they each need for their survival and perpetuation. This may mean they are targets for the same predators in predator/prey systems as well, or that they seek out the same prey or both. I add, though, that it is competition for any type of quality or property of the shared environment that counts here, as a basis for meaningful niche overlap. So if two insect species, for example, differ in seemingly every other way as far as their niche properties are concerned, but they both require the same exact type of wall crevice to lay their eggs in, they are significantly and even crucially competing for a same ecological niche for at least a key portion of their life cycles.

Unique niches, free of this direct competition convey selective value. And adaptive selection (see evolutionary adaptation) and evolutionary models would favor perpetuation of any genetic variability that would lead a species into this less pressured unique ecological niche advantage.

I have written a number of times about marketplaces and market spaces, citing them in terms of business ecosystems, and I acknowledge that I have seen others take recourse to this same phraseology. I do not, however, simply invoke an ecological model as loose metaphor. I see a great deal of formal overlap in how systems of species and systems of businesses are organized and in how they interrelate. Businesses do in fact collectively organize and both cooperatively and competitively in ways that closely mirror many of the features of a biological ecosystem. And at the core of this basis of similarity, I would cite that the concepts of niche and niche space apply similarly to both. Here, a niche space can be defined as the total range of qualities, features and interaction types that can be found in at least one species niche in a geographic region or local ecosystem – a complete and comprehensive listing of all of the features and qualities that the species there use to define their particular ways of survival and propagation of next generations. And I will add that niche width applies here too.

With that in mind as a basic framework as to how the concept of a niche is used in biological systems, I turn to more directly translate these terms to a more strictly business context.

• A business ecological niche is the set of parameters and constraints that functionally define a business, including market pressures, operational and strategic processes and priorities, and products and services offered – essentially any details that can either serve to create unique market value of significance to the marketplace or competition within that marketplace from duplication of what other businesses offer.
• A business niche space is the complete ensemble of niche parameters and constraints actively in place in at least one business in the overall marketplace under consideration, plus any synergies that businesses create by containing effective combinations of features and processes within them.
• In this context, niche width is a measure of flexibility in being able to anticipate, and at the very least respond to market changes and pressures. Businesses that operate within narrow niches lack resiliency and businesses that effectively create and operate within wide niches are agile and flexible, and are better positioned to maintain their market share or even to grow it.
• And realized niche width is a measure of what a business can do in the immediate now, and without having to undergo preparatory changes. This is capacity to rapidly recognize and take advantage of opportunity and it is ability to rapidly adjust to unexpected challenges.

This is simply a first posting on a more complex topic, and with an immediate goal of simply defining a few terms, and setting a foundation for more detailed analytical discussion. I am going to pick up on this again with a sixth series installment.

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