What are the reasons for the appearance of several ecosystems in Russia in recent years? And is it related somehow with the isolation of Russia that began in 2014 and its impact on the opportunity for Russian companies to invested in foreign projects?
Without noting the impact of the events of 2014 on the economy, I believe that in this particular case it is negligible. Ultimately, the leading Russian ecosystem “Yandex” is legally owned by Dutch company Yandex N.V. and traded on NASDAQ. It is unlikely that the opportunity to invest in foreign projects is off the table for them.
As for the real causes… I think we just came to a stage when large corporations in Russia have accumulated a sufficient user base and, equally important, technological potential for processing similar data sets, which is a vital need to build ecosystems. This explains the significant degree of their geographical isolation, since any ecosystem is built around the user, and most Russian corporations have a sufficient audience only in their homeland and, possibly, in CIS countries. I assume that low competition also contributes to the rapid growth of ecosystems and the general trend towards monopolization — typically for the Russian market.
But given that the emergence of ecosystems is a relatively new phenomenon, and debates still arise concerning definitions of the ecosystem and its boundaries, researchers have yet to find the real reasons for their appearance.
Where did the idea of creating an “ecosystem business” come from in Russia?
There is also no consensus on this issue, including because there are no generally accepted criteria of an ecosystem. Some argue that the concept was proposed in 2002 by European researcher Francesco Nacira and his colleagues, but in reality, the first mention appeared in James Moore’s 1993 work.
It is generally accepted that the first business ecosystems arose in the USA and China, however it is difficult to clearly trace where they came from in Russia. Possible appearance of such companies is a logical consequence of the market development in the current economic and technology conditions.
Is it possible to assess the success rate of such a business model in the West?
A lot depends on the valuation criteria: is it capitalization, revenue, net profit or something else? What is more important in this case? In our crazy world, the company is not obliged to be profitable to be considered successful.
Nevertheless, the largest players (such as Amazon, Apple, and Google) show good financial indicators and continue to develop confidently. Another thing is that, more or less, it is not possible to assess accurately the ecosystem separately from the rest of the business — accordingly, its contribution to the overall success of the company remains in question.
Is there a link between the development of large ecosystems and reduced competition for small businesses?
In the medium term, consumers and small businesses may even find themselves in a significant win as big players with significant financial resources and aggressively competing for market share, will often subsidize the services offered and goods. However, if the state does not act appropriately in a timely manner within the framework of antitrust legislation, the market becomes monopolized with all the resulting negative effects on both consumers and small business.
Costs, profitability, ecosystem payback periods based on the example of existing ones. Do they have future?
It is difficult to give plausible calculations. Despite the ability to analyze financial reporting of public companies, we cannot unequivocally say what picture we would see if each of the services could work separately and, accordingly, what is the degree of ecosystem influence.
The decision to create a digital ecosystem lies in a strategic plane with a planning horizon of 5–10 years. Even with all the necessary internal information, giving forecasts for such a period is a thankless job.
By Dmitry Krasichkov, serial entrepreneur, founder of Octasoft, deputy general director at Verus Group of Companies, co-founder of a network of e-sports clubs