September 2010

"Conceit spoils the finest genius. There is not much danger that real talent or goodness will be overlooked long; even if it is, the consciousness of possessing and using it well should satisfy one, and the great charm of all power is modesty."

Louisa May Alcott

The gopher tortoise is an unassuming land animal that inhabits sandy regions of the southeastern United States. Like many other desert inhabitants it needs to seek shelter from the heat of the sun. Gopher tortoises are very adept at digging burrows in which they can hide during the peak hours of the day. These burrows offer shelter to many other species that are not able to dig underground. Without the burrows dug by tortoises many types of rodents and snakes would not be able to survive. The existence of the gopher tortoise in its ecosystem affects the health of many other species. For more information, see the Gopher Tortoise Activity Book.

The gopher tortoise is an example of a keystone species or keystone. As in biological ecosystems, some companies or institutions in business ecosystems are instrumental for the better well-being of others. They play the role of a keystone. In this article, we examine the question of what makes a keystone a keystone. We introduce two perspectives on that question: one provided by ecology, the other by network analysis. We then review how the term keystone is used by the literature on business ecosystems.

Two lessons that readers should take from this article are that the keystone concept, as used by the majority of the business ecosystem literature, is not clearly articulated, and that there are many unresolved issues in applying the concept to business ecosystems.

Keystones in Ecology

In ecology, keystone is an adjective. It identifies a group of organisms — the keystone species — as essential to the existence of a community or ecosystem. A species is “keystone” if it is instrumental for the well-being of other species. It creates a stable environment for the other species. This definition links back to the stone at the apex of an arch that locks the other stones into place. The notion of keystone has been anchored around two concepts: abundance and interaction.

Keystone species have a disproportionally high impact on their ecosystem relative to their abundance (Power et al., 1996). Abundance can be measured in terms of the proportional biomass of a species, that is, its biomass relative to the total biomass of the ecosystem. This means that the contribution of a keystone species to the productivity, diversity, or abundance of other species is higher than what would be expected based on their share of the ecosystem population.

We also consider a species keystone, if its removal from the ecosystem leads to the extinction of other species. Species interact through intricate webs of consumption (predator-prey relationships) and dependencies. For example, species depend on other species to provide vital resources. A species whose removal does not lead to the extinction of other species is considered "minor" (Brown and Vincent, 1992). Network analysis provides us with an arsenal of techniques to reason about the interactions of players in an ecosystem.

Keystones in Network Analysis

Network analysis approaches to determine key players (keystones) in networks follow a common pattern (Kilkenny and Nalbarte, 2000):

  1. Model an ecosystem as a network of players (nodes) and relationships (links).

  2. Determine the importance of a player or group of players.

  3. Test how sensitive the network is to the removal of specific players.

The approaches are based on metrics to determine the centrality and cohesion of a network. Blockmodeling can be used to extract the functional groups or roles filled by the players in the ecosystem.

One approach to determining key players in a network uses a two-pronged analysis (Borgatti, 2006). First, identify key players that disrupt or fragment the network. Then, identify players to seed with information to ensure optimal diffusion of the information through the network. The former provides an answer to the question of who the brokers and gatekeepers in an ecosystem are that facilitate and control resource flow. The latter helps us optimize the flow of resources, such as money and information, through the ecosystem.

Key players in a network provide cohesion and enhance efficiency (Kilkenny and Nalbarte, 2000). Their removal results in a fragmented network in which players can only interact with other players in the same fragment, but not with players in other fragments. Efficiency can be expressed in terms of the length of the shortest path between the remaining species after the removal of a key player. Path length is a measure of how many intermediaries need to touch a resource on its way from one player to another.

Keystones in Business Ecosystems

The business ecosystem literature describes key players as keystones (Iansiti and Levien, 2004). Keystones have also been conceptualized as catalysts or shapers.

Catalysts introduce customers in one customer segment to customers in another customer segment (Evans and Schmalensee, 2007). As a catalyst, Google offers search services to users and sells ad placement on search results to advertisers. Catalysts have three responsibilities: create a community, provide information that helps customers find each other, and establish rules of conduct. The focus of catalysts is on reducing transaction costs.

Shapers are companies that "seek to alter relationships among large numbers of independent entities to create more value for all concerned" (Hagel et al., 2010). A shaper provides a common vision for the ecosystem; a platform that allows ecosystem members to access the resources of other members and helps attract new members to the ecosystem; and demonstrates its commitment to the platform through its actions. Apple has reshaped the music industry by the creation of the iPod/iTunes ecosystem. As in the case of Apple, a shaper often captures a disproportionate amount of the value created.

While the current business ecosystem literature has contributed new ways of examining how businesses can create and capture value, it has been criticized for its narrow interpretation of ecological concepts. Some of the common misperceptions about keystones are:

  1. There is only a single keystone in an ecosystem. In fact, an ecosystem can contain many keystones. For examples, one needs to look no further than the wireless ecosystem (Basole, 2009) or the mashup ecosystem (Weiss, 2009). Adobe is a member of Microsoft’s Windows ecosystem, but at the same time it is the keystone for its own ecosystem anchored around Flash.

  2. A keystone is the dominant player in an ecosystem. No. Some keystones are created as a common resource by a group of organizations that want to share risk and reduce cost. Ownership and control of the common resource is jointly held between those organizations. The Eclipse Foundation is a good example of this model. Its reason for being is to nurture an open source community around the Eclipse platform and to ensure the availability of complements that enhance the platform.

  3. Keystones are active leaders of their ecosystems. This assumes a top-down view of the world. However, the opposite can also be true. Applying the findings from ecology, a keystone can be a company that provides important resources that many other companies rely on, for example, a semiconductor fab (Mutscher, 2010). Being a keystone has more to do with supplying the ecosystem with resources than being in charge.

Conclusion

The business literature uses the term “keystone” primarily as a noun. Looking back at what we learned about the ecological and network perspective on keystones, doing so, although it is convenient, may limit our thinking about what a keystone is and can be:

  • Keystone as a noun suggests an active entity, driven by the need to become a keystone and to capture most of the value created.

  • Keystone as an adjective characterizes an entity without implying that the entity has to take an active role in becoming a keystone or capturing as much value for itself as possible. Being a keystone is much more about enablement than it is about control.

This notion of "keystoneness" is broader than what the business ecosystem literature portrays. That said, the question whether to use "keystone" as a noun or an adjective may, indeed, be academic. However, there is a lesson for us trying to apply concepts from ecology to business, and there are a multitude of unexplored opportunities for research and creating new businesses anchored around keystones.

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