The Ecosystem Illusion

Hey there!

Two weeks ago I was on a call with a startup founder who was excitedly telling me about joining a major tech platform's "partner ecosystem."

As he described all the arrangement and terms & conditions, I couldn't help but notice how one-sided the relationship seemed.

It got me thinking about how we use the word "ecosystem" in business today, and whether these arrangements actually resemble true ecosystems at all.

This article explores that disconnect and what it might mean for your business strategy going forward.

Introduction: The Ecosystem Promise

"Ecosystem" is the business buzzword everyone loves these days. We hear tech companies talk about their ecosystems, their partners, and how everyone grows together. It sounds amazing - companies with different strengths working together, creating something bigger than what any could build alone.

Look at how the big players sell this vision. Salesforce promotes its AppExchange ecosystem. Microsoft talks about its partner network. HubSpot showcases its integration marketplace. They all paint this picture of a thriving community where everyone benefits.

But the question nobody's asking is: "Are all of these really ecosystems? Or is this just clever marketing?"

The answer matters—because what's sold as an "ecosystem" isn't always one. It's something very different, and understanding this difference could save your business from trouble down the road.

What Is a True Ecosystem?

In nature, an ecosystem is a complex network where different organisms interact and depend on each other in balanced, reciprocal ways. No single entity controls everything. Power is distributed. Relationships are multidirectional.

Key characteristics of a true ecosystem:

• Balanced interdependence - Multiple entities rely on each other
• Distributed power - No single controlling authority
• Multidirectional relationships - Value flows in multiple directions
• Resilience through diversity - The system survives if one participant leaves
• Emergent properties - The whole is greater than the sum of parts

Hub & Spoke vs. True Ecosystems

Many business "ecosystems" are actually Hub & Spoke systems in disguise:

Hub & Spoke Characteristics:

• One central platform controls access and rules
• Partners depend heavily on the hub
• The hub can change terms unilaterally
• Relationships flow primarily through the hub
• Partners compete for hub's attention and resources
• The hub captures the lion's share of value

True Ecosystem Characteristics:

• Multiple interconnected partners
• Distributed decision-making
• Partners can interact directly with each other
• Shared governance and standards
• Value creation is distributed more equitably
• Network effects benefit all participants

The Risks of Hub & Spoke Dependency

When you join what you think is an ecosystem but is actually a hub & spoke system, you face several risks:

1. Platform Risk

The central platform can change rules, pricing, or terms at any time. You've built your business on their foundation, and they control it.

2. Competition Risk

The hub may decide to compete directly with you once you've validated a market opportunity.

3. Commoditization Risk

As more partners offer similar solutions, the hub may commoditize your offering or favor competitors.

4. Attention Economy

You're competing with thousands of other partners for visibility and support within the platform.

5. Value Capture

The platform typically captures significantly more value than partners, despite partners doing much of the work.

Questions to Ask Before Joining

Before joining any "partner ecosystem," ask yourself:

1. Who sets the rules? Can partners influence platform policies?
2. How distributed is power? Can partners interact directly with each other?
3. What are the exit costs? How hard would it be to leave if needed?
4. How is value shared? Does the platform capture disproportionate value?
5. What's the dependency level? How much of your business relies on this platform?
6. Can they compete with you? What prevents the platform from building your solution?
7. How many others like you? Are you one of thousands of similar partners?

Strategies for Managing Platform Relationships

If you decide to participate in a hub & spoke system (which can still be valuable), consider these strategies:

1. Diversify Your Platforms

Don't build your entire business on one platform. Maintain presence across multiple platforms to reduce dependency.

2. Build Direct Relationships

Whenever possible, build direct relationships with end customers, even if acquired through the platform.

3. Maintain Portability

Design your solution to be portable across platforms. Avoid deep technical lock-in.

4. Capture Customer Data

Ensure you can capture and own customer relationship data, within legal and ethical bounds.

5. Build Your Own Brand

Don't just be "an app on Platform X." Build brand recognition independent of any platform.

6. Have an Exit Strategy

Always have a plan for what you'd do if the platform relationship ended.

When Hub & Spoke Makes Sense

Hub & spoke systems aren't inherently bad. They can make sense when:

• You're entering a new market and need distribution
• The platform provides access to customers you couldn't reach otherwise
• You're testing a new product or market hypothesis
• The platform offers infrastructure that would be expensive to build
• You maintain diversification across multiple platforms

The key is going in with eyes open about what you're actually joining.

Building Toward True Ecosystems

If you want to build or participate in true ecosystems:

For Platform Builders:

• Give partners real voice in governance
• Enable direct partner-to-partner relationships
• Share value more equitably
• Make it easy to multi-home (work with competitors)
• Build on open standards when possible

For Partners:

• Look for platforms with partner advisory boards
• Seek out networks where partners collaborate directly
• Participate in industry standards bodies
• Build relationships with other partners, not just the hub
• Advocate for more equitable value distribution

The Bottom Line

The word "ecosystem" sounds collaborative, balanced, and mutually beneficial. But many business "ecosystems" are actually hub & spoke systems where one player holds disproportionate power.

Neither model is inherently better. But knowing which one you're actually dealing with changes everything about your strategy.

Ask the hard questions. Understand the power dynamics. Manage your dependencies. And if you're building a platform, consider whether you want to create a true ecosystem or a hub & spoke system—and be honest about which one you're actually building.

The ecosystem illusion isn't about platforms being evil. It's about clarity—understanding the real nature of business relationships so you can make informed strategic decisions.

Because calling something an ecosystem doesn't make it one.