Most companies, at one point or another, need to decide what kind of ecosystem they want to build or operate in. Consider a coffee maker like Keurig. Should it supply all of the pods for its machines (a closed ecosystem) or should it allow third parties to provide them (an open ecosystem)? Similarly, electric vehicle manufacturers like Tesla face the decision of whether to make their charging stations exclusive to their own cars or available to competitors.
Should Your Company Build an Open or Closed Ecosystem?
Four research-backed principles to help you determine what’s right for your company.
July 23, 2024
Summary.
One of the biggest decisions companies need to make is whether they want to build in a closed, proprietary ecosystem or an open one. While this is often thought of as a problem for digital companies, it applies to electric car makers, coffee makers, and more. When deciding, companies should follow four principles: 1) embrace the idea that open vs. closed is a spectrum, not a binary, 2) balance benefits and costs through centralized governance, 3) pursue strategic differentiation through different levels of openness, and 4) help educate regulators on the tradeoffs.
New!
HBR Learning
Innovation and Creativity Course
Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Innovation and Creativity. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
Unlock your team's curiosity and willingness to take smart risks.
Learn More & See All Courses
New!
HBR Learning
Innovation and Creativity Course
Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Innovation and Creativity. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
Unlock your team's curiosity and willingness to take smart risks.