business ecology

On Aug 16 2007, Q Interactive reinvested in Didit for SEM. Both are excellent companies.

In thinking about business ecology, there are many dimensions, layers, and spaces to consider: companies in markets (both horizontal and vertical) are competing and cooperating, selling and buying, and otherwise connected in numerous ways, forming a complex and dynamic picture.

Within this metaphor, there is an “ecological divide”, a separation that often escapes our attention: good companies compete, cooperate, transact, and connect with good companies while the hopeless ones live amongst themselves.

Why is this?

In truth, it is not all that puzzling. Business are social animals just like human beings are social animals. They survive better and are happier when they are connected. The desire to connect, relate, share and transact with each other is there by nature. The order of separation comes not from lack of intention, but from the barriers that prevent the actuation of it. In this case, there is the technological barrier, the capability barrier, the communication barrier, even barrier in business cultures! All of these together contribute to a much higher transaction cost for the relationship.

It makes sense.

What about the vendor-client relationships?  Why would a vendor care if the client is competent or not in their relative marketplace? There seems to be no problem for sup-bar vendors to take on sub-par clients, rights?

My experience tells me that it is in fact very expensive to serve sub-par clients; some costs are explicit, while others are hidden/latent/opportunity costs. It would certainly take another post to full elaborate this point.  Suffice it to say that I am now very sensitive to how my clients stand in their respective markets during project/relationship evaluation.

What’s been your experience?