Building Open or Closed Ecosystems: A Question of Organizational Strategy and Leadership, by Jonathan H. Westover PhD

Abstract: This article explores the strategic decision between open and closed ecosystem approaches for businesses, drawing on 15 years of management consulting experience. The article argues that neither approach offers a universal solution, with each presenting distinct advantages and tradeoffs that must be evaluated against a company's specific context. Open ecosystems foster innovation through collaboration, diverse thinking, and network effects, while closed systems provide greater control over user experience, intellectual property protection, and profit margins. The article presents practical considerations for organizational decision-making, including industry norms, organizational capabilities, customer needs, and governance structures, supplemented by industry examples that demonstrate successful hybrid approaches. Rather than advocating for either extreme, the author recommends a nuanced, context-driven strategy that may evolve over time, emphasizing that the most effective ecosystem design aligns with a company's unique vision, capabilities, and industry circumstances.