Managing the excess of ecosystems

Alf Rehn

In 2013, game developers Ziba Scott and Alex Schwartz set out to create a very bad game. This might seem an odd thing to want to do and has to be understood in context. Both were frustrated with the ecosystem for games, where masses of sub-par games often crowd out good independent games, such as the one they’d been trying to create. Lacking the funds to do a premium game and market the same, they took part in a hack event and set out to create a terrible game quickly. In fact, their plan was not to create just one bad game, but lots of them – in an automated fashion. They went to an asset store for game developers, bought a functioning slot machine game template for 15 dollars (!), and started customizing it.

Each new, free (ad-sponsored) slot machine they put on the Google Play store had a theme, even a theme song, yet almost the entire process was automated. The enterprising game developers had created scripts that could take a theme based on a word (such as “cantaloupe”) and put in relevant images (automatically scraped from Bing), some text into an about page, and a jingle with the theme word spoken by a robot voice. The scripts could also upload 15 of these generated slot machine games a day to the app store (as this was the limit in place at the time). All the developers had to do was pick a word, such as “ponytail,” and their automated system would create a slot machine with ponytail images, a little ponytail jingle, and an about page with text about ponytails. Granted, the games were awful, but that was pretty much the point.

This peculiar little experiment, which Scott and Schwartz stopped supporting in March 2017, generated more than 1500 games, with a total of 1.6 million downloads. It also generated a modest but fully automated income stream (a small trickle of which is still being generated) for the two developers. It may have started out as something akin to a joke or performance art, but it ended up highlighting both the power of and the problem with ecosystems. An ecosystem can make the impossible possible, like making money from utterly terrible “games.” An ecosystem can also be a space with tremendous amounts of waste and garbage. Learning to balance these tendencies, innate to the notion of an ecosystem, is key to successfully managing the same.

The key issue here is one of excess. Ecosystems, be they in nature or in mobile phone games, cannot exist without a certain amount of waste and excess. A good app store has lots of variety, and many apps that would be of little interest to but a very few customers. A natural ecosystem requires a degree of decay and surplus to feed the system. Another way to put this is to say that without enough diversity, any ecosystem will wither and die. We don’t tend to talk about this as excess, but technically that is exactly what it is. An ecosystem becomes an ecosystem due to an abundance – of species, of suppliers, of slot machines – but stays an ecosystem only if this abundance stays in balance. As our peculiar little case shows, this means that ecosystems can be “hacked.” In nature, this happens for instance if a non-native predator (or nasty virus) is introduced, one that the system isn’t prepared for. In the introductory case, something similar was achieved by leveraging weaknesses in the system. For leaders and managers, this means that the excess of ecosystems isn’t just something to expect to be there, but a resource to be managed.

The excess problem in management thinking

In management thinking, we’ve adopted a mode of thinking that often strives to minimize excess. We have been taught to keep inventory low, to hire when needed, and to stay frugal when we can. We’ve been taught to fear overruns and despise padded budgets. This is problematic for a number of reasons. As seen in, for example, the case of the pandemic of 2020, and the aftermath thereof, keeping processes lean is good when things are rolling smoothly but can be disastrous if there’s a shock to the system. Even though we’ve come to see them as a problem, buffers and backups can be critical in a system, even though they are a form of excess. Contingency plans are always useless until you desperately need them…

What this also has meant is that we have had problems developing cutting-edge thinking in fields where excess is absolutely critical. Take innovation, for instance. If you only invest in innovation projects that have a guaranteed, 100 percent rate of success, you will never innovate. Why? Because the very nature of innovation is such that you need to try out one hundred things to find one that might work. Without the “excess” of failed innovation projects, we would not have any successful ones. This, however, hasn’t always meant that innovation thinkers have had much to say about the great number of ideas and projects that never come to fruition. They are accepted, if somewhat grudgingly, as the cost of doing business. Yet they are rarely theorized, except in the sense that one tries to find ways to salvage more of them or to learn when the right time to pivot from one experiment to another might be. In other words, even in a field that is dependent on excess, we try to lessen it rather than understand it.

The same goes double for ecosystems. The very notion of an ecosystem is that it is an interconnected, self- supporting system. As such, it is dependent on there being a surfeit of resources, the kind of surfeit where the failure of some leads to the success of both others and the system. Management thinking around ecosystems has, however, been slow to discuss how we are to think about this excess in the kind of systems we create ourselves. How can we encourage the good kind of excess, such as people trying out innovative new things, without falling into the trap of bad excess, such as people flooding a marketplace with sub-par offerings?

More is riding on this issue than one might think at first glance. Consider for instance an entrepreneurship ecosystem that actively encourages startups to create copycat offerings, rather than innovation. Such an ecosystem would see the establishment of many quite similar companies, fighting for their individual relevance in an often over-served market, as has, for instance, been the case with e-scooter ride-sharing services. In Copenhagen, which certainly isn’t the biggest of cities, some seven such companies at one point existed side-by-side. Did Copenhagen need this many? No. Did this glut make it difficult for anyone to succeed? Yes. You might say that this is something that the market will take care of over time (bankruptcy being a key form of economic excess management in entrepreneurship), but this ignores the biases existing within the ecosystem itself. Rather than supporting innovative companies, doing new things (which very well may have failed), the start-up ecosystem in at least this instance rewarded the wrong kind of excess.

Thinking smarter about excess in ecosystems

So, what is to be done? In short, we need to develop our thinking around excess, and start to think about balance rather than austerity, and quality rather than blind competition. This is not an easy thing to do, as it requires something more than the usual corporate tools and metrics. The kind of balance we’re discussing here doesn’t fit easy calculations of ROI, and it is difficult to put a KPI on the quality of your ecosystem’s excess. That, however, doesn’t mean that one cannot think in productive ways about these issues. In fact, one could argue that it is precisely the obsession with saving and austerity that has made such metrics the lingua franca of much of the corporate world. What thinking about excess requires is a kind of excessive thinking, the kind of thinking that goes beyond simple optimizations. This will at times demand that the person engaging in such (management) thinking follows the adage of F. Scott Fitzgerald, namely that “the test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.”

Thinking about balance and excess in ecosystems is precisely this – the balance of allowing whilst limiting. Here, remembering the natural roots of the notion of ecosystems can be quite helpful. Natural systems are the way they are because they have developed over very long periods of time, complete with feedback-loops that ensure self-regulation. Natural selection has led to there being a balance between predators and prey, and between all the interrelated systems. The genius here lies in the feedback-loops. Excessive growth in one category was countered with limiting measures in another, and an abundance in one resource attracted those who could utilize it effectively.

It should be noted, however, that such delicate balances were not established in a matter of months or years, or even decennia. True, balanced ecosystems can take centuries to establish themselves. For people who think about business ecosystems, this is of course an unfathomably long time. At the same time, it goes to show that a balanced ecosystem isn’t something that you can just wish into being. Instead, it is something that requires curation and care.

The care and feeding of ecosystems

When thinking about a properly functioning ecosystem, there are at least three key issues that a leader must continuously consider:

  1. Does the ecosystem contain enough excess to allow for “mutations”?
  2. Is there a function in place to cull localized overdevelopment?
  3. Is there a function in place to cure localized underdevelopment?

We shall in what follows go through each of these points separately, but they are presented together above to emphasize that these are elements that should be considered as one holistic issue – managing necessary excess in ecosystems.

Does the ecosystem contain enough excess to allow for “mutations”?

The power of ecosystems derives at least in part from the way in which they can generate novel solutions. Consider a start-up ecosystem. It is only because it allows for many experiments, most of which fail (and are thus a form of excess), that it can generate a few successful cases. In other words, for an ecosystem to be powerful, there needs to be room to fail and space to test things out. In nature, ecosystems developed out of ample resources (and as we humans tend to either consume or poison these, the ecosystems struggle), and in the start-up scene they developed out of the riches in, for example, Palo Alto. Attempts to create business ecosystems on a shoestring, in contexts where there was little room for failure and a continuous battle for scant resources, have similarly often failed. To manage an ecosystem, then, you need to ensure excess and ample resources, often for an uncomfortably long time. We might call this “feeding” the ecosystem, and the important thing to understand here is that this entails ensuring that some resources will be wasted in this process. Yes, wasted.

Is there a function in place to cull localized overdevelopment?

In issue 1, we had to ensure the existence of waste and excess in the system. However, such excess can create localized overdevelopment. In our introductory case, this meant that the ecosystem around Google Play allowed for some absolutely lousy slot machines to proliferate. Managing an ecosystem thus also means that while you are feeding the system with some excessive resources, you need to pay attention to this kind of “mushrooming” behaviour. In nature, this is often visible, but in more digital environments (which in contemporary business tends to be all environments) this requires to pay attention not just to KPIs but to data-points all over the system. If you do not have processes in place to detect overdevelopment in one part, you are inviting people to hack your ecosystem.

Is there a function in place to cure localized underdevelopment?

Mushrooming isn’t the only problem you have to worry about. In a natural ecosystem, we often think that the rule is “eat or be eaten.” However, in a balanced system there needs to be space for everyone, and if one part shrivels and dies, that can cause cascading problems. Think about it, is the solution to lousy slot machine games to have no slot machine games? Of course not. There are people who enjoy them, and there might even be some who enjoy more obscure ones. Like ones about ponytails or cantaloupes. By creating a drought of such more marginal commodities, you may well be driving people away from the ecosystem you’re there to build. So, the same attention that you pay to data that can indicate excessive growth you need to pay to dearth and lack of diversity. As difficult as it is, and as much wisdom as it requires, you need to be able to find just the right amount of excess, heeding the genius of Oscar Wilde – “Everything in moderation, including moderation.”

The never-ending story

Ecosystems demand excess, yet excess can kill an ecosystem. This is the paradox the business leaders who wish to excel in a world of ecosystems need to deal with. There are no KPIs for just enough excess and balance in all things, yet these are critical for business success in the world of Ecosystems Inc. What leaders need to embrace in this strange, interconnected world is the paradox of both going all in with experiments and judiciously fertilizing and starving sectors as the data comes in.

Nature does ecosystems well, but nature can afford the endless deaths and the decay that comes with this. Business ecosystems can’t, at least not at scale, so percipience and judiciousness have to be our new lodestars. We won’t learn these without experience, though. We need to think and talk about excess, and learn when this tips over and when it feeds the system. All this will require a revolution of management thinking, which has for such a long time been staring blindly at efficiencies and prudence, to the point of becoming highly fragile to surprising external shocks. The next business world we build needs to be more resilient, more capable of self-regulation. Here ecosystems are a wonderful notion, if we can take in the fact that excess is neither our enemy nor our friend. It is a resource, just like so many others in an ecosystem, and it too needs to be managed. The leaders of the world of Ecosystems Inc. will be the ones who can master this most dynamic and most volatile of energies.

Alf Rehn is Professor of Innovation, Design, and Management at the University of Southern Denmark, sits on numerous boards of directors, and is author of Innovation for the Fatigued (Kogan Page, 2019).